Mardian Const. Co. v. Superior Court

• Decision Date: 08 December 1976
• Docket Number: No. 12897,12897
• Citation: 113 Ariz. 489,557 P.2d 526
• Parties: MARDIAN CONSTRUCTION COMPANY, an Arizona Corporation, Petitioner, v. The SUPERIOR COURT of Arizona, and the Honorable D. L. Greer, a Judge thereof, the City of Phoenix, a Municipal Corporation of the State of Arizona, Marvin A.Andrews, Acting City Manager, and M. M. Sundt Construction Co., an ArizonaCorporation, Respondents.
• Court: Arizona Supreme Court

Page 526

557 P.2d 526

113 Ariz. 489

MARDIAN CONSTRUCTION COMPANY, an Arizona Corporation, Petitioner, v. The SUPERIOR COURT of Arizona, and the Honorable D. L. Greer, a Judge thereof, the City of Phoenix, a Municipal Corporation of the State of Arizona, Marvin A.Andrews, Acting City Manager, and M. M. Sundt Construction Co., an ArizonaCorporation, Respondents.

No. 12897.

Supreme Court of Arizona, In Banc.

Dec. 8, 1976.

Snell & Wilmer, by Warren E. Platt, Daniel J. McAuliffe, Donald D. Colburn, Phoenix, for petitioner.

Robertson, Malloy, Fickett & Jones, by John F. Malloy, Tucson, for respondent M. M. Sundt Const. Co.

Andrew Baumert, Phoenix City Atty., by Jess W. Sears, Phoenix, for respondents City of Phoenix and Marvin A. Andrews.

Divelbiss, Gage & Cheney, by Carl W. Divelbiss, Phoenix, for amicus curiae T.G.K. Constr. Co., Inc.

Daughton, Feinstein & Wilson, by Allen L. Feinstein, Phoenix, for amicus curiae Corbin-Dykes Elec. Co.

Ryley, Carlock & Ralston, by Raymond M. Hunter, Phoenix, for amicus curiae C. J. Hassett Corp.

Cox & Cox, by L. J. Cox, Jr., Phoenix, for amicus curiae S.M.P. Mechanical Contractors, Inc.

Moore & Romley, by Elias M. Romley, Phoenix, for amicus curiae Chanen Constr. Co., Inc.

Jennings, Strouss & Salmon, by Clarence J. Duncan, Phoenix, for amici curiae Dorsey Const. Co., J. R. Porter Constr. Co. and E. F. Hargett and Co.

Carson, Messinger, Elliott, Laughlin & Ragan, by C. A. Carson III, Phoenix, for amicus curiae Kitchell Contractors, Inc.

STRUCKMEYER, Vice Chief Justice.

This special action arises out of the award of a contract for the construction of a passenger terminal, an automobile parking garage, and related facilities at Sky Harbor International Airport in Phoenix to the M. M. Sundt Construction Company. Jurisdiction was accepted pursuant to Art. 6, § 5 of the Arizona Constitution. On the ninth day of November, 1976, this Court issued its order directing that the construction contract be awarded to the Mardian Construction Company with a written opinion to follow.

The facts necessary for this decision are as follows. A Call for Bids for construction of the project known as 'Terminal Module Three' was issued by the City Engineer of Phoenix in March, 1976. Bid proposals were to be submitted by September 9, 1976. At that time the lowest bid submitted was that of petitioner, Mardian Construction Company, an Arizona corporation, in the amount of $39,650,000.00. The second low bid, in the amount of $39,858,000.00, was submitted by the respondent, M. M. Sundt Construction Company, also an Arizona corporation. Although the bid submitted by Mardian was $208,000.00 lower than that submitted by Sundt, the latter filed a protest with the City of Phoenix urging that it was entitled to a five percent preference under A.R.S. § 34--241(B) and that Mardian was not.

A.R.S. § 34--241(B) provides:

'B. In awarding the contract for work to be paid for from public funds, bids of contractors who have satisfactorily performed prior public contracts, and who have paid state and county taxes within the state for not less than two successive years immediately prior to submitting a bid on a plant and equipment such as is ordinarily required for performance of the contract for which the bid is submitted, or on other real or personal property in the state equivalent in value to such plant, shall be deemed a better bid than the bid of a competing contractor who has not paid such taxes, whenever the bid of the competing contractor is less than five per cent lower, and the contractor making a bid, as provided by this section, which is deemed the better bid, shall be awarded the contract.'

On September 29, 1976, a hearing on Sundt's protest was commenced before an assistant city attorney. At the conclusion of the hearing on October 4, the assistant city attorney issued an opinion to the Acting City Manager, in which he found that both contractors were 'duly licensed and qualified to act as the general contractor' on the project, that both had 'satisfactorily performed prior public contracts', but that only Sundt was entitled to a bid preference under the statute. Thereafter, the Phoenix City Council voted to award the contract to Sundt. On October 13, a special action was filed in the Superior Court of Maricopa County and heard on October 19 through October 26. The present petition was filed the day following the entry of a judgment in the Superior Court favorable to Sundt.

As a preliminary to our conclusions it may be stated that the constitutionality of the statute A.R.S. § 34--241 has twice been considered by this Court, the first time in 1953 in Schrey v. Allison Steel Mfg. Co., 75 Ariz. 282, 255 P.2d 604, in which we said:

'Appellants contend that everyone must be allowed to enter into these contracts on the same basis; that a distinction based upon the differences between a taxpaying and non-taxpaying bidder for these public contracts exceeds legislative power. With this we cannot agree. * * *

The legislature has the right to regulate the letting of contracts for public works to be constructed by the state or its political subdivisions.' 75 Ariz. at 286--87, 255 P.2d at 607.

and held:

'(T)he state, in contracting for the expenditure of tax money, had a reasonable basis for granting a five per cent preference to contractors who, through the payment of taxes for two years, have made a contribution to the funds from which they are to reap a benefit.' 75 Ariz. at 287, 255 P.2d at 607.

We note also the question presently raised on respondent's motion for rehearing as to whether the statute conflicts with Art. 9, § 7 of the Arizona Constitution was answered in Schrey. It was held that the statute did not confer a donation or a grant to a corporation contrary to the Constitution.

Twenty years later, in City of Phoenix v. Superior Court, 109 Ariz. 533, 514 P.2d 454 (1973), we again passed upon the constitutionality of § 34--241(B). As against the contention that the statute violated the equal protection provisions (Amendment Fourteen) and the Commerce Clause (Art. 1, § 8) of the United States Constitution, we said: 'We continue to follow the holding in Schrey.'

Section 34--241(B), enacted in 1933 by the Eleventh Legislature of the State, was introduced originally as part of House Bill 37. It became part of Chapter 12 of the Session Laws of 1933. House Bill 37, as introduced, amended certain sections of the Revised Code of 1928 and added certain new sections. The title of the Act before later amendments as it relates to the problem here then provided:

'* * * THAT RESIDENT CONTRACTORS PAYING TAXES ON A PLANT WITHIN THE STATE, OR THE EQUIVALENT THEREOF, FOR TWO YEARS IMMEDIATELY PRIOR TO THE AWARDING OF THE CONTRACT SHALL BE GIVEN THE PREFERENCE IN AWARDING THE CONTRACT TO THE EXTENT OF TEN PERCENT; * * *.'

The original emergency clause was in this language:

'Section 9. WHEREAS, many residents of the state of Arizona are without employment and many contractors and producers and dealers within the state of Arizona are without work, or without a market for their products, and non-resident contractors bring into the state non-resident employees to remain and become a burden on the public after their contracts are completed, and many resident contractors, producers and dealers are unable to pay their taxes, and the provisions of this act will tend to relieve such unemployment, to prevent the increase of the unemployed, and to aid in the collection of taxes, the immediate operation of this act is required to preserve the public peace, health and safety, and said act is hereby declared an emergency measure and shall take effect immediately upon its passage in the manner provided by law.' See House Bills, 1933, Part 1, House of Representatives, State Library and Archives.

The title of the Act as finally adopted provided:

'AN ACT

AMENDING SECS. 1350 to 1353, BOTH INCLUSIVE, OF THE REVISED CODE OF 1928, * * * THE ADDITION OF FIVE NEW SECTIONS RELATING TO QUALIFICATIONS OF EMPLOYEES, AND PROHIBITING EMPLOYMENT OF NONRESIDENTS TO QUALIFICATIONS OF CONTRACTORS, AND GIVING PREFERENCE TO RESIDENT TAX PAYING CONTRACTORS, * * *.' Legislature of 1933, Regular Session, Ch. 12 (Emphasis added).

From the foregoing it is clear that the preference given by the statute to contractors who paid state and county taxes was intended to give an advantage to residents over nonresident contractors.

That this was the understanding of the individual legislators is confirmed by the statement of John J. Phillips, Representative from Maricopa County, who said on the House floor:

'I am for Arizona labor on all contract work of the state or any part thereof. But I am not in favor of paying a bonus to Arizona contractors when the outside contractors have to pay the same wage and have the same pro rata of Arizona labor and the difference of cost is made up by the Arizona taxpayers.' Journal of the House, Eleventh Legislature of the State of Arizona, 1933, at 184.

In interpreting a statute, the fundamental role to which all others are subordinate is that the court shall ascertain and give effect to the intent of the legislature. Arnold Construction Co. v. Arizona Board of Regents, 109 Ariz. 495, 512 P.2d 1229 (1973). We do not find any suggestion that A.R.S. § 34--241(B) was intended to or was considered as creating a classification upon which a preference between resident taxpaying contractors might be based.

The creation of such a classification would endanger the constitutionality of the enactment. Art. 4, Part 2, § 13 of the Arizona...