Interior Contrs. v. Board of Trustees of Newman

• Decision Date: 29 January 2002
• Docket Number: No. 01-4186-SAC.,01-4186-SAC.
• Parties: INTERIOR CONTRACTORS, INC., Plaintiff, v. BOARD OF TRUSTEES OF NEWMAN MEMORIAL COUNTY HOSPITAL, and J.P. Murray Company, Inc. d/b/a Murray Company, Defendants.
• Court: U.S. District Court — District of Kansas

185 F.Supp.2d 1216

INTERIOR CONTRACTORS, INC., Plaintiff, v. BOARD OF TRUSTEES OF NEWMAN MEMORIAL COUNTY HOSPITAL, and J.P. Murray Company, Inc. d/b/a Murray Company, Defendants.

No. 01-4186-SAC.

United States District Court, D. Kansas.

January 29, 2002.

Donald R. Hoffman, Jason P. Hoffman, Hoffman & Hoffman, Topeka, KS, for plaintiff.

Larry M. Schumaker, Shook, Hardy & Bacon, L.L.P., Kansas City, MO, Michael D. Strong, Lewis, Rice & Fingersh, L.C., Kansas City, MO, for defendants.

MEMORANDUM AND ORDER

CROW, Senior District Judge.

The case comes before the court on the motions to dismiss or, in the alternative, motions for summary judgment filed by the defendant J.P. Murray Company, Inc. ("Murray") (Dk.16) and the defendant Board of Trustees of Newman Memorial County Hospital ("Trustees") (Dk.20).¹

The plaintiff, Interior Contractors, Inc. ("ICI"), filed a consolidated response opposing the motions (Dk.22), and the defendant Murray filed a reply memorandum (Dk.26).

The parties orally argued their motions on January 24, 2002. Having reviewed all matters submitted and researched the relevant law, the court issues the following as its ruling on the motions.

The plaintiff is the disappointed bidder on a project involving the construction of a connector building and kitchen addition at Newman Memorial County Hospital. When the Trustees awarded the contract for this construction work to other bidders, the plaintiff ICI brought this action under the civil rights statute of 42 U.S.C. § 1983 and the declaratory judgment statutes of 28 U.S.C. §§ 2201 and 2202. In its verified complaint, the plaintiff asserts federal jurisdiction exists by reason of a federal question (28 U.S.C. § 1331), diversity of citizenship (28 U.S.C. § 1332), and a civil rights violation (28 U.S.C. § 1343). The complaint, however, does not allege facts to support either federal question or diversity jurisdiction. The civil rights statute appears to be the only possible basis for federal jurisdiction.

RULE 12(B)(6) STANDARDS

A court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Dismissal should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.1997) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)), or unless an issue of law is dispositive, Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). "The purpose of Rule 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true." Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993); see Hospice of Metro Denver, Inc. v. Group Health Ins. of Oklahoma, 944 F.2d 752, 753 (10th Cir.1991) ("Dismissal of a case pursuant to Fed. R.Civ.P. 12(b)(6) requires the legal determination that the plaintiff can prove no set of facts in support of his claim to entitle him to relief.") (citations omitted). The Tenth Circuit has observed that the federal rules "`erect a powerful presumption against rejecting pleadings for failure to state a claim.'" Maez v. Mountain States Tel. and Tel., Inc., 54 F.3d 1488, 1496 (10th Cir.1995) (quoting Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir. 1986)).

A court judges the sufficiency of the complaint accepting as true all well-pleaded facts, as distinguished from conclusory allegations, Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir.1998) and drawing all reasonable inferences from those facts in favor of the plaintiff. Witt v. Roadway Express, 136 F.3d 1424, 1428 (10th Cir.), cert. denied, 525 U.S. 881, 119 S.Ct. 188, 142 L.Ed.2d 154 (1998); see Southern Disposal, Inc. v. Texas Waste Management, 161 F.3d 1259, 1262 (10th Cir.1998) (court "need not accept ... conclusory allegations as true."). It is not the court's function "to weigh potential evidence that the parties might present at trial." Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir.1991). The court construes the allegations in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir.1991). These deferential rules, however, do not allow the court to assume that a plaintiff "can prove facts that it has not alleged or that the defendants have violated the ... laws in ways that have not been alleged." Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) (footnote omitted). Dismissal is a harsh remedy to be used cautiously so as to promote the liberal rules of pleading while protecting the interests of justice. Cayman Exploration Corp. v. United Gas Pipe Line Co., 873 F.2d 1357, 1359 (10th Cir.1989).

A 12(b)(6) motion must be converted to a motion for summary judgment if "matters outside the pleading are presented to and not excluded by the court" and "all parties ... [are] given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Fed.R.Civ.P. 12(b). Written documents attached to the complaint as exhibits are considered part of the complaint and may therefore be considered in connection with a motion to dismiss under Rule 12(b). Hall v. Bellmon, 935 F.2d at 1112 (citing Fed.R.Civ.P. 10(c)). "[I]f a plaintiff does not incorporate by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to the plaintiff's claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion to dismiss." GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d at 1384.

Because those issues that are dispositive here do not require consideration of evidence outside of the documents attached to the complaint or referenced therein, the court follows the standards governing Rule 12(b)(6) without resorting to the standards and procedures governing summary judgment motions. To provide a fuller context of the events leading to this litigation, the court may refer to certain other facts for background purposes only, but they will play no other part in the court's decision on the dispositive issues.

FACTS

1. The plaintiff ICI is a Kansas corporation with its principal place of business in Topeka, Kansas. The defendant Trustees is an entity created under Chapter 19, Article 46 of K.S.A. and vested with authority to manage and control Newman Memorial County Hospital in Emporia, Kansas. The defendant Murray is a Missouri corporation doing business in the State of Kansas. The Board of County Commissioners of Lyon County, Kansas, ("Commissioners"), is a body politic created under Chapter 19, Article 2.

2. Murray contracted with the Trustees to serve as the construction manager on the Trustee's hospital construction project known as the "Connector Building and Kitchen Renovation."

3. As part of its duties as construction manager, Murray was to solicit bids from subcontractors and suppliers for work it did not customarily perform. The Hospital then was to decide which bid to accept after receiving advice from Murray and the architect. A supplemental condition to the agreement between Murray and the Trustees provided that the work would "be awarded to the lowest and best bid."

4. Murray advertised an Invitation to Bid the Project on April 9, 2001. The advertisement announced that the sealed bids were due on August 23, 2001, and contained a clause stating that: "The hospital reserves the right to reject any or all bids and to waive any informality or technicality in bidding, if it be in their best interest to do so."

5. Murray issued Bid Instructions in July of 2001 which set forth specifications for twenty-six bid items for work being let under the contract at that time ("Project"). The Instructions also outlined the bid procedure, general conditions, scope of work, and repeated the Hospital's reservation of the right to reject any or all bids. As to the "Form of Proposal," the Instructions specified that a bid proposal must "include all work in accordance with the Bid Instructions" and that a proposal was to "identify separately, costs for all items listed on the proposal form as it pertains to your scope of work." ICI points out that the Instructions nevertheless characterized the contract as being "lump sum." The Instructions further provided that "[e]ach subcontractor shall be responsible for removal of his debris from the site."

6. On September 6, 2001, the plaintiff ICI submitted its bid proposal to the Hospital within the deadline extended by Murray for sealed bid proposals. ICI's bid covered five categories of the Project for the lump sum of $1,640,000. Instead of breaking down the cost for each category of work being bid, ICI's completed bid proposal form referenced for each category the same total cost for performing all five categories being bid.

7. On September 6, 2001, Murray opened the sealed bids and read them aloud to the audience of bidders. On the Bid Items numbered 7.24, 9.2, 9.3 9.5 and 9.6, ICI's lump sum bid was lower than the total of the competitor's lowest bids submitted on those categories.

8. On or about September 10, 2001, Murray notified ICI to "break its bid into sections" or its bid would be "thrown in the trash." ICI complied and provided separate amounts for the five different categories.

9. ICI's bid and all other initial bids came in over budget, and no contract was awarded on the basis of those bids.

10. Working with the architect, Murray and the Hospital undertook some value engineering on parts of the project in an effort to reduce the construction costs and to bring the project within budget. On September 13, 2001, Murray issued a memorandum to all potential bidders that...