John J. Brennan Const. Corp., Inc. v. City of Shelton

• Decision Date: 03 August 1982
• Citation: 187 Conn. 695,448 A.2d 180
• Court: Connecticut Supreme Court
• Parties: JOHN J. BRENNAN CONSTRUCTION CORPORATION, INC. v. CITY OF SHELTON et al.

Page 180

448 A.2d 180

187 Conn. 695

JOHN J. BRENNAN CONSTRUCTION CORPORATION, INC. v. CITY OF SHELTON et al.

Supreme Court of Connecticut.

Argued April 8, 1982.

Decided Aug. 3, 1982.

Emanuel N. Psarakis, Hartford, with whom was Charles B. Spadoni, Hartford, for appellant-appellee (plaintiff).

Foster M. Young, Derby, for appellees-appellants (defendants).

Before HEALEY, PARSKEY, ARMENTANO, SHEA and BORDEN, JJ.

BORDEN, Associate Justice.

This is an action for damages for breach of contract ¹ instituted by John J. Brennan Construction Corporation, Inc. (Brennan) against the city of Shelton (city) ² arising out of the proposed construction of a sewer system. The trial court found that a contract had been entered into, which the city had breached, and awarded damages to Brennan. Brennan appeals, claiming that the court erred in its method of calculating damages. The city cross appeals, contending that the court erred in finding that a contract had been entered into.

The trial court's memorandum of decision, as supplemented by those facts which were admitted in the pleadings and which appear from the unquestioned documentary exhibits in the case, discloses the following undisputed facts. In 1978 the city decided to extend its sewer system along Keron Drive. On or about May 15, 1978 the city issued invitation for bids # 558 (IFB) for the construction of a system of sewers, including the sewers on Keron Drive. In response to and in compliance with the IFB Brennan submitted a bid proposal. The bids were opened on June 9, 1978 and Brennan was the lowest qualified bidder. Brennan, a general contractor who has been in business in Shelton for many years, has done other work for the city, including sewer construction.

There are a number of provisions of the city charter and the IFB, discussed more fully below, which are significant to this appeal. Section 6.4.4.2 of the charter designates the city's purchasing agent. ³ Section 6.4.4.3 provides for competitive bidding on all expenditures of $1500 or more. ⁴ Article 11 deals with the award to the lowest bidder if adequate finances are available and the rights of the city if they are not. ⁵ Article 13 reserves to the city the right to reject proposals. ⁶ Article 16 deals with acceptance and award of the contract within ninety days of the opening of the bids. ⁷

On August 4, 1978 the purchasing agent wrote to Brennan in part as follows: "The Finance Committee of the Board of Apportionment and Taxation is requesting from your Company another extension of 90 days from the original date of August 31, 1978 on your bid price for this project. This would extend your bid prices until November 29, 1978. Please indicate by letter to this office no later than August 18, 1978 if this extension is agreeable or not. If you so indicate not to extend your prices, your bid bond will be released." On August 10, 1978 Brennan responded as follows: "In reference to your letter of August 4, 1978 our Company is agreeable in extending an additional 90 days on Contract 6--Bid # 558."

On October 4, 1978 C-E Maguire, Inc. (Maguire), which was the city's consulting engineer on the project, wrote to Brennan advising "that subject to receipt of funding approval, the City of Shelton will be scheduling a Contract Signing in the very near future." The letter also requested Brennan to submit a number of documents, such as insurance certificates, bonds and other forms, "so that [they] may be reviewed and incorporated into the Contract Documents for the signing to be later scheduled." Under the contract documents, which include the IFB, "City" or "Owner" is defined to include Maguire. A copy of this letter also went to the mayor, sewer commission, corporation counsel and finance director of the city. On October 16, 1978 the board of alderman, by resolution, approved the financing for the Keron Drive sewer project and authorized the sewer commission to enter into contracts on the city's behalf for the project.

In November, 1978 the city decided to do the Keron Drive sewer project itself by its public works department. It issued a new invitation for bid (IFB # 590) for services, machinery and rental equipment for this purpose, these bids to be opened on December 4, 1978. IFB # 590 was advertised in a newspaper on November 22, 1978. Brennan submitted a bid on IFB # 590 which, on December 4, 1978, the city determined to the lowest bid. ⁸

On November 29, 1978 the mayor notified the board of aldermen that the Keron Drive sewer project would now be done by the city public works department and the board of aldermen voted to authorize that department to perform a portion of the work on the Keron Drive sewer project, to enter into subcontracts for services, machinery and rental equipment, and to reject all bids on the IFB. On December 7, 1978 the city purchasing agent wrote Brennan that the finance committee had rejected all bids on the IFB.

I

The trial court held that the city's right to reject all bids had to be exercised within ninety days after the bid opening on June 9, 1978; that the effect of the exchange of letters between the city and Brennan on August 4, 1978 and August 10, 1978 was to extend the city's right to reject for ninety days from August 10, 1978, or until December 6, 1978; that the city's letter of December 7, 1978 notifying Brennan of its rejection of all bids did not exercise its right to reject within the time allowed for it to do so; and that its failure to reject within that time created a contract between the city and Brennan. We disagree.

It is first necessary to clarify a factual discrepancy between the trial court's finding and the evidence. The trial court found that the city's request of August 4, 1978 for an extension of ninety days and Brennan's agreement thereto of August 10, 1978 gave the city ninety days from August 10, 1978, or until December 6, 1978, to reject. Putting aside the question of the legal effect of this request and agreement, it is clear from the exhibits and from a stipulation made during the trial that the ninety day extension was meant by the parties to be until November 29, 1978, not December 6, 1978. The city's letter of August 4, 1978 to Brennan requested "another extension of 90 days from the original date of August 31, 1978 on your bid price for this project. This would extend your bid prices until November 29, 1978." Brennan's response of August 10, 1978 referred specifically to the request of August 4, 1978 in agreeing to extend "an additional 90 days ...." At trial the city stipulated that the city requested an extension of Brennan's bid price to November 29, 1978. The court's finding of December 6, 1978 rather than November 29, 1978 as the terminal date of the extension is not supported by the evidence and is clearly erroneous. See Appliances, Inc. v. Yost, 186 Conn. 673, 678, 443 A.2d 486 (1982). Although the scope of our review of factual material is limited; id., 676-77; because of the undisputed nature of the exhibits and the stipulation, we proceed on the factual basis that the terminal date of the extension was November 29, 1978.

We hold that no contract was created between Brennan and the city because the city's rejection of all bids, including Brennan's, as voted on November 29, 1978 by the board of aldermen and communicated to Brennan on December 7, 1978 was valid. There was no acceptance of Brennan's bid prior to that rejection.

II

Municipal competitive bidding laws are enacted to guard against such evils as favoritism, fraud or corruption in the award of contracts, to secure the best product at the lowest price, and to benefit the taxpayers, not the bidders; they should be construed to accomplish these purposes fairly and reasonably with sole reference to the public interest. Austin v. Housing Authority, 143 Conn. 338, 345, 122 A.2d 399 (1956); 10 McQuillin, Municipal Corporations (3d Ed.Rev.) § 29.29. "The better authority holds that lowest responsible bidder statutes are enacted solely for the benefit of the public and in no sense create any rights in those who submit bids. 10 McQuillin, Municipal Corporations (3d Ed.) § 29.29." Austin v. Housing Authority, supra, 349, 122 A.2d 399.

A bid is a binding offer to make a contract. 10 McQuillin, op. cit., § 29.65. A bid, even the lowest responsible one, submitted in response to an invitation for bids is only an offer which, until accepted by the municipality, does not give rise to a contract between the parties. Joseph Rugo, Inc. v. Henson, 190 F.Supp. 281 (D.Conn.1960); 10 McQuillin, op. cit., § 29.80. Furthermore, where the municipality "reserves the right to reject any and all bids, no bidder can claim any contractual rights until he has been awarded the contract." 10 McQuillin, op. cit., § 29.77. Our law has evinced a strong policy favoring the right of a municipality to exercise its reserved right to reject all bids. In Joseph Rugo, Inc. v. Henson, 148 Conn. 430, 171 A.2d 409 (1961), the lowest bidder on the proposed construction of a high school, whose bid, along with all others, was rejected, sued to restrain the city from awarding the contract pursuant to a subsequent bid invitation. The initial invitation reserved the right to reject any and all bids. The complaint alleged that sufficient funds were available and that rejection of the lowest bid was arbitrary, unreasonable, capricious, illegal, an abuse of discretion, contrary to public policy and against the best interests of the city and its taxpayers. In upholding the trial court's sustaining of a demurrer to the complaint, we stated: "There is no allegation in the complaint which overcomes the recognized principle of law that where municipalities reserve the right to reject any or all bids they are empowered to do so. Straw v. Williamsport, 286 Pa. 41, 43, 132 A. 804 [1926]; Rhyne, Municipal Law § 10-11. It is true that certain paragraphs of the complaint allege arbitrariness, capriciousness, and similar...