Indiana Nat. Bank v. State Dept. of Human Services, 71787
| Decision Date | 20 July 1993 |
| Docket Number | No. 71787,71787 |
| Citation | 1993 OK 101,857 P.2d 53 |
| Parties | The INDIANA NATIONAL BANK, a national banking association, Appellant, v. STATE of Oklahoma DEPARTMENT OF HUMAN SERVICES; Robert Fulton, Director, State of Oklahoma Department of Human Services; Office of State Finance, State of Oklahoma; Victor Thompson, Director of State Finance, State of Oklahoma; Office of Public Affairs, State of Oklahoma; Delmas Ford, Director, Office of Public Affairs, State of Oklahoma and Oklahoma Development Authority, Appellees, and Prudential-Bache Securities, Inc., Appellee/Additional Defendant. |
| Court | Oklahoma Supreme Court |
CERTIORARI TO THE COURT OF APPEALS DIVISION III APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY, STATE OF OKLAHOMA; Leamon Freeman, Trial Judge.
Vendor submitted bid to the Oklahoma Office of Public Affairs (OPA) to furnish central processing computer equipment for use by the Oklahoma Department of Human Services (DHS). The bid provided a 60 month lease/purchase term, but with each yearly renewal conditioned on approval of the State and appropriation of funds by the Legislature. OPA accepted the bid and awarded a contract to vendor. Subsequently, without prior approval by OPA, DHS executed a modified agreement that included a nonsubstitution clause, which forbid termination merely to substitute other computer equipment to perform essentially the same functions. Vendor assigned the latter agreement to Prudential-Bache Securities, Inc. (PruBache), who assigned to Indiana National Bank (INB). About two and a half years after the initial contract was awarded by OPA, DHS decided to upgrade its computer system and acquire new equipment rather than renew the contract. INB sued DHS for breach of contract and, alternatively, PruBache under certain theories. The trial court granted summary judgment to DHS and dismissed the claims against PruBache for failure to state a claim. The Court of Appeals affirmed summary judgment to DHS, ruling DHS lacked authority to agree to modified terms not part of the bid accepted by OPA. We granted certiorari to the Court of Appeals. A separate, but related, appeal is pending in regard to the dismissal of PruBache. HELD: DHS lacked authority to modify the agreement to add the nonsubstitution clause after OPA had awarded the contract. No evidence exists in the reviewable record OPA approved the nonsubstitution clause, the entity that had to approve it to give it validity. In that DHS lacked authority to modify the agreement without proper approval of OPA and because DHS acted beyond its authority it is not estopped to deny the validity of the modified agreement. The grant of summary judgment to DHS is, therefore, affirmed.
CERTIORARI PREVIOUSLY GRANTED; COURT OF APPEALS' OPINION VACATED; TRIAL COURT JUDGMENT AFFIRMED.
C.S. Lewis, III, Marily M. Wagner, Marc F. Conley, Robinson, Lewis, Orbison, Smith & Coyle, Tulsa, for appellant.
Charles Waters, Gen. Counsel, Roger Stuart, Asst. Gen. Counsel, John H. Harris, Asst. Gen. Counsel, Oklahoma Dept. of Human Services, Oklahoma City, for appellee DHS.
Roy J. Davis, Anne M. Moore, Jane S. Eulberg, Murrah & Davis, Oklahoma City, for appellee/additional defendant.
In this matter appellant, Indiana National Bank (INB) challenges a trial court grant of summary judgment to appellee, the Oklahoma Department of Human Services (DHS). We affirm the trial court. 1
The case concerns the acquisition of computer equipment by the Oklahoma Office of Public Affairs (OPA) for use by DHS. In December 1983, DHS requested OPA to seek bid proposals for the lease/purchase of a central processing computer unit. Although DHS requested a 60 month term, at the time, DHS, and apparently OPA, were under the impression a State agency could not enter into a lease/purchase agreement that would bind the State for a future fiscal year conditioned solely on continued fiscal year appropriations by the Legislature because they believed such a contract provision would violate certain State constitutional and statutory provisions and that the agreement had to contain a clause allowing termination at the end of each fiscal year. The request for bid proposals, thus, provided in pertinent part: 2
In January, 1984, OPA issued an Invitation to Bid. Public Leasing Corporation It is understood and agreed between the parties hereto that the State of Oklahoma is a governmental entity subject to certain funding restrictions imposed by law, which restrictions prevent the State of Oklahoma from making an unconditional committment (sic) to a contract that obligates the State of Oklahoma beyond the current fiscal year or that obligates the State to pay charges which have not been appropriated by the Legislature of the State of Oklahoma. Accordingly, this Agreement shall be renewed for each Fiscal Year during this Agreement if the State of Oklahoma or authorized body thereof has approved such renewal and has had sufficient funds appropriated to continue the data processing function performed by the equipment under this Agreement for such Fiscal Year.
(PLC), not a party here, responded with a bid which included a form lease/purchase agreement for an IBM computer, series 3081. Paragraph 4.1 of PLC's form agreement submitted with its bid provided in pertinent part:
It is further agreed that in the event the State of Oklahoma does not renew this Agreement as provided above, such termination shall not constitute a default hereunder nor give rise to or result in any additional Customer liability or penalty whatsoever, except that [PLC] shall have the right to collect all sums due and owing under this Agreement up to the expiration of the fiscal year for which funds have been appropriated. The State of Oklahoma agrees to notify [PLC] of any nonrenewal and nonappropriation at the earliest possible time in writing. Nothing contained herein shall otherwise limit any remedies that either party may have under the laws of the State of Oklahoma.
(R. 198). (emphasis added).
OPA issued a Notice of Award of Contract to PLC, accepting the bid. The face of the Notice contained the following language: "This contract shall be in force until expiration date or until 30 days after notice has been given by the State of Oklahoma of its desire to terminate the contract". The initial contract period was specified to be 1-1-84 through 12-31-84 on the face of the Notice. Three days after the Notice was issued, Robert Fulton, Director of DHS, executed a similar lease/purchase agreement to the form agreement sent with PLC's bid, but which was modified to add the following nonsubstitution clause at the end of the first paragraph to Paragraph 4.1 quoted above:
This paragraph shall not be construed so as to permit Lessee to terminate the Lease in order to acquire any other equipment or to allocate funds directly or indirectly to perform essentially the same applications for which the equipment is intended.
(R. 10).
About three weeks later Fulton also executed an Addendum to the modified agreement. In February 1984, DHS's First Assistant General Counsel, issued an opinion referring to the Equipment Lease and Addendum No. 1 between PLC and the State (the modified lease agreement). The opinion stated in pertinent part:
2. The Lease ... has been duly authorized, executed and delivered by the Lessee and constitutes a valid, legal and binding agreement enforceable in accordance with its terms.
3. No further approval, consent or withholding of objections is required from any federal, state or local governmental authority with respect to the entering into or performance by the Lessee of the Lease and the transactions contemplated thereby and the Lessee has sufficient appropriation to pay all amounts due under the lease for the current fiscal year.
(R. 69).
In April, 1984, PLC assigned its interest in the contract to Prudential-Bache Securities, In May, 1986, DHS notified INB it would not renew the contract due to lack of appropriations by the Legislature. (R. 230). This reason for nonrenewal is subject to dispute. This is so because DHS replaced the IBM series 3081 with an IBM series 3090.
Inc. (PruBache). Soon after, PruBache assigned to INB. In August, 1985, OPA sent a Notice of Award of Contract directly to INB renewing the existing contract for the time period of 7-1-85 through 6-30-86. (R. 276). The face of the Notice contained the same 30 day termination clause as on the initial Notice sent to PLC.
INB claimed breach of contract because the nonsubstitution clause forbid cancellation to replace with equipment providing essentially the same functions as the IBM 3081. It also claimed failure to pay the June 1986 lease and maintenance payments. In defense DHS argued the nonsubstitution clause was invalid because only OPA had authority to approve such a modification. It also asserted alternatively the new IBM 3090 equipment had greater capacity and additional functions so the nonsubstitution clause was not violated. It also denied it owed the June 1986 payment.
On cross-motions for summary judgment (INB's being partial on the issue of liability only) the trial court denied INB's motion and granted complete summary judgment to DHS determining it was undisputed OPA had not approved the modification. He ruled as a matter of law the nonsubstitution clause was invalid and DHS had the right to cancel the contract. 3
INB appealed. The Court of Appeals affirmed, citing City of Merrill v. Wenzel Bros. Inc., 88 Wis.2d 676, 277 N.W.2d 799 (1979) for the proposition the Invitation to Bid and the bid (and its contents) constituted the whole agreement to which the parties were bound. The terms of these documents control over any conflicting or...
To continue reading
Request your trial
-
Oklahoma Capitol Imp. Authority, Application of
...bond proposal. [See, Matter of the Petition of University Hospitals Auth., 1997 OK 162, 953 P.2d 314; Indiana Nat'l Bank v. State Dept. of Human Services, 1993 OK 101, 857 P.2d 53, 57; U.C. Leasing, Inc. v. State ex rel. State Bd. of Public Affairs, 1987 OK 43, 737 P.2d 1191, 1195; Halstead......
-
Fent v. OKLAHOMA CAPITOL IMPROVE. AUTH.
...1987 OK 43, 737 P.2d 1191, 1195, we upheld a lease covering communications switching equipment. In Indiana Nat'l Bank v. State Dept. of Human Services, 1993 OK 101, 857 P.2d 53, 57, a lease for computer equipment was held constitutional against a debt-limitation ¶ 6 The existence of languag......
-
Osage Nation v. Bd. of Comm'rs of Osage Cnty.
...Oklahoma Dept. of Securities ex rel. Faught v. Blair, 2010 OK 16 28, n. 31, 231 P.3d at 662, citing, Indiana Nat'l Bank v. State Dept. of Human Services, 1993 OK 101, 857 P.2d 53, 64 ("The general rule is the application of estoppel is not allowed against the state, political subdivisions o......
-
State ex rel. Wright v. Oklahoma Corp.
...Civil 2d, § 1366 (1990). See also Cinco Enterprises, Inc. v. Benso, 1994 Ok 135, 890 P.2d 866, 871; Indiana Nat. Bank v. State, Dept. of Human Services, 1993 OK 101, 857 P.2d 53, 59. It is of this change of the burden that Phillips and the Commission complain. They want to challenge the leg......