HOUSING AUTHORITY OF OPELOUSAS, LA. v. Pittman Const. Co.

• Decision Date: 10 March 1959
• Docket Number: No. 17584.,17584.
• Citation: HOUSING AUTHORITY OF OPELOUSAS, LA. v. Pittman Const. Co., 264 F.2d 695 (5th Cir. 1959)
• Parties: HOUSING AUTHORITY OF The CITY OF OPELOUSAS, LOUISIANA, Appellant, v. PITTMAN CONSTRUCTION COMPANY, Inc., Appellee. and PITTMAN CONSTRUCTION COMPANY, Inc., Appellant, v. HOUSING AUTHORITY OF The CITY OF OPELOUSAS, LOUISIANA and George G. Marquette, Jr., d/b/a Marco Construction Company, Intervenor, Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

264 F.2d 695 (1959)

HOUSING AUTHORITY OF The CITY OF OPELOUSAS, LOUISIANA, Appellant, v. PITTMAN CONSTRUCTION COMPANY, Inc., Appellee. and PITTMAN CONSTRUCTION COMPANY, Inc., Appellant, v. HOUSING AUTHORITY OF The CITY OF OPELOUSAS, LOUISIANA and George G. Marquette, Jr., d/b/a Marco Construction Company, Intervenor, Appellees.

No. 17584.

United States Court of Appeals Fifth Circuit.

March 10, 1959.

Joe J. Tritico, Warren E. Hood, Lake Charles, La., for defendant-appellant.

Gerald J. Gallinghouse, New Orleans, La., R. Emmett Kerrigan, Frank J. Peragine, Deutsch, Kerrigan & Stiles, New Orleans, La., of counsel, for appellees.

Before HUTCHESON, Chief Judge, and BROWN and WISDOM, Circuit Judges.

WISDOM, Circuit Judge.

Pittman Construction Company, Inc., the lowest bidder¹ on a contract for the construction of a housing project at Opelousas, Louisiana,² sued to annul the contract awarded the next low bidder, Marco Construction Company. The question for decision is whether the Housing Authority of the City of Opelousas, through its Board of Commissioners, exercised a reasonable discretion, within its authority under the Louisiana Public Works Act,³ in rejecting the lowest bid proposal on the ground that Pittman was not a "responsible bidder".

The case was tried to the Court. After a long trial, the district judge made detailed findings of fact and conclusions of law covering all important issues. He held that the Board's "determination was not the exercise of a sound discretion * * * was not based on good, reasonable and sufficient reasons nor sustained by the evidence * * * but was unreasonable and must be set aside". We cannot say that any material finding of fact was clearly erroneous.⁴ And, we agree with the trial judge's conclusions of law.

I

In this case we have two important principles working at cross-purposes. A public works statute vests discretion in an awarding board. When the board acts fairly and honestly within the reasonable exercise of a sound discretion,⁵ the board's award should not be interfered with by the courts. Public administration would be hamstrung if courts were free to second-guess reasonable administrative decisions. Cutting across this principle, and no less important, is the public interest of the state in securing honest competition and in protecting taxpayers from the evils of favoritism and high prices in the letting of contracts for public works.⁶ Our decision depends on accommodating these two principles in deciding whether the Board acted reasonably or arbitrarily in the determination of what is a responsible bidder.

In determining the lowest responsible bidder on a public works contract, responsibility is not solely a question of financial ability to perform the work.⁷ Decisions in Louisiana and in other states allow an awarding body to consider skill, integrity, judgment, experience, reputation, previous conduct on contracts, and other factors bearing on a bidder's successful performance of his contract. Pittman does not question that the Board was vested with discretion to consider all the factors relevant to the responsibility of a contractor. Nor do we. Pittman argues that on the facts, and as the district court found, the Board of the Opelousas Housing Authority abused its discretion. We are required therefore to take a close look at the facts.

II

The Opelousas Housing Authority constructs and operates low-rent housing projects⁸ in cooperation with the Public Housing Administration.⁹ The PHA furnishes ninety per cent of the financing and helps in the planning and supervision of such projects. Its approval is required when a construction contract is awarded.

In April 1958, the Board advertised for bids for a low rent housing project to consist of 140 dwelling units. Bids were to be opened May 8. The date was postponed to May 22 at the request of Danel-Ryder Construction Co., one of the bidders. H. B. Danel, President of Danel-Ryder, had been a member of the Board up to March 7.

May 22 the Board opened nine bids. The three lowest were: (1) Danel-Ryder — $1,112,500; (2) Pittman — $1,169,000; (3) Marco — $1,169,118. The district court found that the members of the Board were "elated" that Danel-Ryder was the low bidder. The Board went into executive session, then awarded the contract to Danel-Ryder subject to PHA approval. Award to Danel-Ryder would have been in direct violation of an express prohibition contained in the bidding documents and in the PHA annual contributions contract, forbidding a board member to acquire any interest in the construction contract within one year of termination of his membership on the Board. PHA, by telegram, reminded the Board of this prohibition, referred to the fact that PHA previously had denied the request for a waiver "for the special benefit of Mr. Danel", and refused to approve a contract with Danel-Ryder. Manifestly out of patience, PHA wired, in part: "The restrictions in the annual contributions contract between PHA and the Housing Authority were well known to members of your Board, including Danel, they having been the subject of discussions, phone calls and correspondence dating back to July, 1956". PHA peremptorily concluded its telegram: "Please submit promptly your formal recommendations of an award to an eligible bidder." The Board started off therefore with something less than the exercise of a reasonable discretion.

The Opelousas low rent housing development is one of the largest construction projects ever undertaken in the area. The trial judge found that after PHA rejected the Danel-Ryder bid, the project became highly controversial; "Plaintiff, through no fault of its own, was considered an adversary of Danel-Ryder, Inc. (a local firm) in a contest over the contract". The situation became a topic of discussion on the streets of Opelousas. John Thistlewaite, editor and publisher of the Opelousas Daily World, wrote a column on the subject entitled, "The Boys are in a Dilemma".

June 2, 1958, at the Board's request, Albert Pittman (Secretary-Treasurer of the company) met with the Board. Robert F. DeJean, City Judge of Opelousas, attorney for Marco Construction Company, third low bidder, contended that Pittman was unreliable and asked that the Board postpone awarding the contract. The Board examined Pittman thoroughly with reference to: (1) the Desire Street Housing project the Pittman partnership had constructed for the New Orleans Housing Authority; (2) litigation with the Authority that arose out of that project; (3) slow payment of subcontractors and suppliers on that project. Pittman answered all questions put to him and furnished all information requested by the Board. He testified that the Board seemed satisfied with his answers.

June 4, John D. Edwards, Chairman of the Board, telephoned Marshall Amis, PHA Regional Director in Dallas. In response to a specific inquiry from Edwards, Amis stated that Pittman would be acceptable as the contractor. This was later confirmed by telegram. The Chairman of the Board had knowledge, then, on June 4, that the Desire Street litigation was not an impediment to acceptance of Pittman — as far as PHA was concerned.

At noon, June 4, Albert Pittman, accompanied by his father, Theodore Pittman (the President), Charles Pittman (Vice-President), and Slagel (an estimator) talked with Chachere, Executive Director of the Opelousas Housing Authority, while they were passing through Opelousas on their way to New Iberia. That evening in New Iberia, forty-five miles from Opelousas, Randolph McCormick, a Board member in the glass business, and the only Board member with any experience as a contractor, came to Albert Pittman's hotel room to obtain a commitment from Pittman for the glazing subcontract on a prime contract awarded Pittman for the construction of the Post Office in nearby Lafayette, Louisiana. Leo Carron, Vice Chairman of the Board, and Chachere, the Director, were with McCormick, Pittman made no commitment as to subcontract.

By the evening of June 4, therefore, three of the five Board members (the three whose names figured most prominently in opposition to awarding the contract to Pittman) and its Executive Director had expressed no dissatisfaction to the Pittmans, who had good reason to assume that the contract would be awarded to their company as low bidder.

Less than forty-eight hours later, June 6, the Board met and received certain evidence against Pittman, offered by Judge DeJean, attorney for Marco. The trial judge found that "the evidence consisted of: (a) an ex parte affidavit from one Elmore Labiche (a plumbing subcontractor for the Pittman partnership on the Desire Street housing project), which expressed an unwillingness to work for the Pittmans; (b) copies of some of the pleadings filed in the Desire Street litigation; and (c) other hearsay testimony". None of the representatives of Pittman were invited to this meeting, nor did they learn of it until the next day. Prior to the meeting, not one of Pittman's representatives was informed of the Labiche affidavit or of the nature of any of the unfavorable rumors about Pittman that had been reported to certain Board members. The Pittmans, therefore, had no chance to defend themselves against the charges made at this meeting of June 6, or to defend themselves against charges and rumors made to Board members on the streets of Opelousas. They were never informed that there were any irregularities in the form of their bid. The Board adopted unanimously a resolution, offered by Carron and seconded by McCormick, awarding the contract to Marco.¹⁰

June 9, 1958, the Opelousas Housing Authority wrote PHA to request approval of the award to Marco. As the first reason for rejecting the Pittman bid, the Board stated:

"Since the plans and specifications were given out to the prospective bidders, it has been learned that Pittman Construction Co., Inc., was involved in litigation with the Housing Authority of the

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