Gariup v. Stern, 1069S235

• Decision Date: 27 August 1970
• Docket Number: No. 1069S235,1069S235
• Citation: 261 N.E.2d 578,22 Ind.Dec. 455,254 Ind. 563
• Parties: Alex GARIUP and Gariup Construction Co., Inc., Milton Brown, Crystal Redden and Steven Drake, Appellants, v. Claire D. STERN et al., Appellees.
• Court: Indiana Supreme Court

Page 578

261 N.E.2d 578

254 Ind. 563

Alex GARIUP and Gariup Construction Co., Inc., Milton Brown Crystal Redden and Steven Drake, Appellants, v. Claire D. STERN et al., Appellees.

No. 1069S235.

Supreme Court of Indiana.

Aug. 27, 1970.

Saul I. Ruman, Hammond, for appellants.

Joel C. Levy, G. Edward McHie, Hammond, for appellees.

DeBRULER, Judge.

This is an appeal from a decision of the trial court granting appellee Board of School Trustees' of the School City of Hammond petition, filed pursuant to Acts 1967, ch. 357, § 5, being Burns Ind.Stat.Ann. § 3--3305, requesting the trial court to order appellants, plaintiff in the action below, to post bond in the amount of $150,000, or suffer dismissal of the action. Appellants did not post bond and their action was dismissed.

Appellants first contend that the trial court erred in granting the petition and in so doing, finding that the Public Lawsuit Statute, Acts 1967, ch. 357, Burns Ind.Stat.Ann. §§ 3--3301 to 3--3308 applies to this case. The resolution of this issue must be made upon a determination of the legal status of the parties and of the nature of the plaintiffs' claim. City of Elkhart v. Curtis Realty Company (1970), Ind., 256 N.E.2d 384.

The complaint consists of five pleading paragraphs. These contained allegations that the appellee School Board and architect utilized illegal bidding procedures in violation of the public and private rights of appellant Gariup Construction Co., Inc., and that the appellee School Board had, or was threatening to indebt itself in excess of the limitation set by Art. 13, § 1, of the Indiana Constitution. These five paragraphs prayed for attorney fees, injunctive relief, and actual and punitive damages.

The only interest of the appellants Brown, Redden and Drake, as revealed by the complaint is that of taxpayers and citizens of Hammond, Indiana, and patrons of the Hammond Public School System. On the other hand appellants Alex Gariup and Gariup Construction Company, Inc., as unsuccessful bidders on a project to construct a new school building, are shown to have a completely different interest in this action.

The evidence at the hearing showed that Gariup Construction Co., Inc., was a good faith bidder on a school construction project planned by the appellee School Board at a cost of approximately $2,300,000 dollars. A bidder for a public contract is required by the specifications and the statutes governing the bidding procedures on public contracts to do the following in addition to submitting its written bid: 1) To submit a financial statement under oath; 2) To submit a Bidder's Certificate of noncollusion; 3) To submit a bid bond or certified check in an amount equal to 5% of the total bid. If the successful bidder fails to execute the contract within a limited time the bid bond is forfeited as liquidated damages.

The evidence presented showed that in addition to these formal requirements a bidder spends considerable money in preparing a bid on a public project and often attends pre-bid conferences with the architect. From this brief description it is obvious that a bidder for a public contract seeking to have the award of the contract enjoined or voided by the trial court on the grounds of fraud or illegal procedures is in an entirely different position than a taxpayer of citizen seeking similar relief solely for the general benefit of all taxpayers. The bidder invests considerable time, effort and money in submitting a bid and is pecuniarily damaged if allegal procedures are used to his disadvantage. In addition to these factors, the Public Lawsuit Statute defines a 'Public Lawsuit' as follows:

"Public Lawsuit' shall mean any action whereby the validity, location, wisdom, feasibility, extent or character of construction, financing or leasing of any public improvement by any municipal corporation is questioned directly or indirectly, including but not limited to suits for declaratory judgments or injunctions to declare invalid or to enjoin such construction, financing or leasing, and shall mean any action to declare invalid or enjoin the creation, organization or formation of any municipal corporation. This definition, as used in this act, shall not be construed to broaden any right of action as is now validly limited by applicable law. Acts 1967, ch. 357, § 1, Burns Ind.Stat.Ann. § 3--3301(b)'

A bidder's suit seeking judicial review of the bidding procedures utilized by a public authority does not fall within that category of suits questioning the validity of 'construction, financing or leasing' as defined above. For these reasons we hold that a suit by a bidder on a public project seeking court review of bidding procedures is not 'a public lawsuit'. It is a private lawsuit.

However, the suit brought by these appellants is a combination of the private lawsuit of Alex Gariup and the Gariup Construction Co., Inc., and the public lawsuit of the plaintiffs Brown, Redden and Drake. The causes were commingled in each pleading paragraph and as such were not susceptible of separate treatment by the trial court. It was the decision of the plaintiff Gariup Construction Co., Inc., to so combine its suit and from this record it appears that this decision was based upon a desire to strengthen its position and to bring an attack upon a broader front. In these circumstances the trial court was correct in applying the Public Lawsuit Statute to this suit.

The appellants next contend that their evidence was sufficient to avoid the requirement that they put up a bond or suffer dismissal pursuant to Burns § 3--3305, and the trial court committed error in not so finding. Burns § 3--3305 reads in relevant part:

'A hearing shall be had on such petition in the same manner as the hearing on temporary injunctions under Acts 1881 (Spec.Sess.) c. 38. If at the hearing the court determines that the plaintiff can not establish facts which would entitle him to a temporary injunction, the court shall set the amount of bond to be filed by the plaintiff in an amount found by the judge to cover all damage and costs which may accrue to the defendants by reason of the pendency of the public lawsuit in the event the defendant prevails.'

We agree with appellants that a hearing is contemplated under this section, and not a trial, and that plaintiff need not establish such a case as would entitle them to a judgment after a trial on the merits. We have recently so held in Johnson et al. v. Tipton Community School Corp. et al. (1970), Ind., 255 N.E.2d 92. In that case we held that plaintiff in a hearing under Burns § 3--3305 is only required to present evidence to establish that:

'* * * the question to be tried was a substantial one, proper for investigation by a court of equity. It is not necessary that a case should be made out as would entitle appellants to relief on the final hearing; * * *.'

The determination that a plaintiff has satisfied that requirement is to be made by the trial court. In reviewing his decision this court has a different and more limited role. It has been said that we review a ruling on a request for temporary injunction solely to determine whether the ruling of the trial court was an 'abuse of discretion'. Johnson et al. v. Tipton Community School Corp. et al., supra. Green v. Bd. of Commissioners of Scott Co. (1969), Ind., 242 N.E.2d 844; Southport Bd. of Zoning Appeals v. Southside Ready Mix Concrete, Inc. (1961), 242 Ind. 133, 176 N.E.2d 112; Ind. Cancer Society, Inc. v. Marion Co. Cancer Society, Inc. (1959), 240 Ind. 89, 161 N.E.2d 769; State ex rel. Bd. of Medical Registration and Examination v. Henry (1951), 229 Ind. 219, 97 N.E.2d 487; State ex rel. Bd. of Medical Registration and Examination v. Hayes (1949), 228 Ind. 286, 91 N.E.2d 913. In reviewing the trial court finding that appellants failed to introduce sufficient evidence to sustain their burden of showing that their claim was a substantial one, proper for investigation by a court of equity, we are reviewing a negative finding of fact. We will find that the trial court abused its discretion in making this negative finding if, looking to the evidence and all reasonable inferences therefrom which tend to support the ruling of the trial court, that evidence leads to but one conclusion and the trial court reached a different one. We now will proceed to examine the evidence bearing upon the issues before the trial court to determine whether the ruling granting the petition and setting bond constituted an abuse of discretion. Johnson et al. v. Tipton Community School Corporation, supra.

Appellants contend that the trial court erred in failing to find the evidence sufficient to support their allegation that appellees violated the statutes controlling bidding procedures on public contracts, Acts 1913, ch. 228, § 1, Burns Ind.Stat.Ann. § 53--104; Acts 1947, ch. 306, §§ 1, 2, 3, as last amended by Acts 1961, ch. 121, § 1, Burns Ind.Stat.Ann. §§ 53--108 to 53--110. The following narrative is the evidence bearing on this issue.

The appellee School Board adopted specifications for the construction of the proposed Central Middle School and published notice on April 24, 1969, and May 1, 1969, that sealed bids on the project would be received until May 5, 1969. These specifications called for plain exterior concrete panels, but they also included alternate G--6, which read:

'--ALTERNATE G--6--PANEL FINISH--State amount to be added to the base bid to provide a sandblasted finish on all exposed surfaces of pre-cast concrete panels.'

On April 28, 1969, the appellee Carlson-Ried Builders, later to become the successful bidder, inquired of the appellee architect Malcomb Williams, whether exposed aggregate panels could be used in the bid to satisfy the requirement of 'alternate G--6' which utilized a sandblasting technique to expose the aggregate. In response to this inquiry, the appellee Williams prepared an addendum to the specifications, designating it...