Mason v. City of Augusta

• Decision Date: 02 August 2007
• Docket Number: Docket: Ken-06-498.
• Citation: 2007 ME 101,927 A.2d 1146
• Parties: James P. MASON et al. v. CITY OF AUGUSTA et al.
• Court: Maine Supreme Court

927 A.2d 1146

2007 ME 101

James P. MASON et al. v. CITY OF AUGUSTA et al.

Docket: Ken-06-498.

Supreme Judicial Court of Maine.

Submitted On Briefs: May 2, 2007.

Decided: August 2, 2007.

James P. Mason, William P. Johnson, Augusta, for plaintiffs.

Stephen E.F. Langsdorf, Esq., Preti Flaherty Beliveau & Pachios LLP, (for City of Augusta), Jotham D. Pierce Jr. Esq., Pierce Atwood LLP, Portland, (for Cony, LLC), for defendants.

Panel: SAUFLEY, C.J., and CLIFFORD, ALEXANDER, LEVY, SILVER, and MEAD, JJ.

SAUFLEY, C.J.

[¶ 1] James P. Mason and William P. Johnson appeal from a judgment entered in the Superior Court (Kennebec County, Marden, J.) dismissing their complaint for declaratory and injunctive relief, in which they alleged that the City of Augusta's purchase and sale agreement with Cony, LLC, for the sale of property occupied by Cony High School was void and unenforceable. Reviewing the stipulated facts, we agree with the court that Mason and Johnson have failed to establish any legal impediment to the City's entry into the conditional purchase and sale agreement. Because we disagree, however, with the court's conclusion that it lacked subject matter jurisdiction, we vacate the judgment and remand the matter for the court to enter judgment in favor of the City.

I. BACKGROUND

[¶ 2] The following facts are not in dispute. In June 2004, the City of Augusta and Cony, LLC, executed a purchase and sale agreement. The agreement provided for a purchase price of $1.5 million for "approximately 6 acres" of land to include the Cony High School building but not the adjacent Flat Iron building. The agreement contained, as an attachment, a diagram roughly depicting the proposed property lines. The entire agreement was conditioned on the City's compliance with all requirements for the closure of Cony High School on the parcel in accordance with 20-A M.R.S. §§ 4101-4104 (chapter 202) (2006). The agreement provided that, if the City was unable to close the school pursuant to chapter 202, the City would return the deposit to the LLC and all other obligations would cease. The agreement also afforded the City the right to appraise the property and provided several options if the appraisal indicated a fair market value of 105% or more of the contracted purchase price, including the adjustment of the purchase price; the procurement of a second appraisal to be averaged with the first; and the option of the City to reject the original terms if the LLC refused to adjust the price, at which point the deposit would be returned and the contract terminated.

[¶ 3] The dispute before us arises from the events that led up to the execution of this purchase and sale agreement. After Joseph F. Boulos expressed interest in purchasing and redeveloping the former Cony High School property in May 2003, the city manager authorized a survey of the Cony High School property in December at a cost of $4,999 without requesting bids. The city manager also issued a request for proposals for appraisal services. Because none of the four candidates that submitted proposals expressed an ability to complete an appraisal before the City's deadline, however, no appraisal was done.

[¶ 4] At a meeting of the City Council on December 22, 2003, the Council reviewed a draft request for proposals and authorized the city manager to solicit proposals for redevelopment of the property. Mason and Johnson do not contest that this meeting was properly publicized.

[¶ 5] An ad hoc committee composed of three City Council members was directed to screen the proposals. There is no record of this ad hoc committee's formal charge or duties, and the public was not provided notice of its meetings.

[¶ 6] The request for proposals, which was published in three newspapers, stated:

The City of Augusta is inviting developers to submit proposals for the redevelopment of the newer portion of Cony High School. The facility sits on approximately 6-acres of land and is located in the heart of the City's eastside. The historic Cony High School building known as the `Flat Iron' is not part of this RFP. The City will accept proposals that include reasonable reuse concepts that are compatible with the area (e.g. residential, office, retail). For a detailed package, please contact Michael A. Duguay at (207)626-2336. Proposals will be due in the Office of the City Manager, City of Augusta, 16 Cony Street, Augusta, Maine 04330 by 4:30 p.m., Wednesday, January 28, 2004.

(Emphasis in original.)

[¶ 7] Joseph F. Boulos and Partners was the only entity to submit a redevelopment proposal. The proposal was made on behalf of "Joseph F. Boulos and Partners and/or designee." The proposal provided that "[a] single-purpose entity [would] be established for the purposes of this development, the principals of which [would] include Joseph F. Boulos, Gregory W Boulos, Daniel M. Greenstein, and C. Anthony McDonald." Cony, LLC, was the entity ultimately established for this purpose.

[¶ 8] On March 1, 2004, the City Council authorized the city manager to execute a purchase and sale agreement with Boulos for roughly six acres of the Cony High School site,

consistent with the terms and conditions contained in a Request for Proposals issued by the City of Augusta, with appropriate additional terms and conditions that the City Manager, upon consultation with the Mayor and Council, shall deem proper, and with the understanding that no final transfer of ownership of said property shall occur until all reviews and approvals required of the Augusta Planning Board and Augusta City Council related to site development have been accomplished.

Mason and Johnson do not contest that the City Council adequately publicized the regular public meeting at which the Council granted the city manager the authority to contract with Boulos.

[¶ 9] Only after executing the purchase and sale agreement did Cony, LLC, file its articles of organization, in July 2004. Cony, LLC, and the City executed amendments to the purchase and sale agreement on July 12, 2004, and September 27, 2004.

[¶ 10] In August 2004, without employing a bidding process, the City contracted for planning and design services related to the development of the Cony High School site. The planning and design contractor agreed to work for a maximum of twenty hours per month at a rate of $100 per hour.

[¶ 11] James P. Mason, William P. Johnson, and Helen Nasberg—citizens and taxpayers in the City—filed a complaint for injunctive and declaratory relief against the City, the Augusta Board of Education, and Cony, LLC, in the Superior Court in May 2005, before any of the statutory school closing requirements could be met, and before any property had been transferred. They sought a judgment declaring the purchase and sale agreement null and void, and enjoining the enforcement of the agreement because the City failed to (1) meet statutory school closing requirements; (2) obtain an appraisal; (3) seek bids competitively for professional surveying and consultant services; (4) describe the property in the City Council's order to request proposals; (5) give public notice of the ad hoc committee's meetings; (6) provide adequate time for interested parties to participate in the request for proposals process; or (7) notify the Augusta Conservation Commission of the potential sale. They also alleged that the City favored the LLC with preferential treatment, and they moved for a preliminary injunction.

[¶ 12] The LLC and the City, of which the Board of Education is a subdivision, filed answers and affirmative defenses, including the defense of failure to state a claim upon which relief may be granted. After conferring with counsel, the court ordered that the parties file a stipulated record by August 1, 2005. Mason, Johnson, and Nasberg filed an extensive statement of stipulated facts, after which Cony, LLC, and the City jointly filed a statement of facts that was consistent with most of the facts reported by Mason, Johnson, and Nasberg. The City successfully moved to supplement the record to include affidavits to establish its asserted facts.

[¶ 13] After hearing oral arguments in November 2005, the court entered a judgment on May 26, 2006, denying the motion for a preliminary injunction and dismissing the complaint "for lack of jurisdiction over the subject matter." The court reasoned that the contract was an option conditioned upon events that had not yet been completed. Specifically, the new school was not yet complete, and the City had not yet obtained control over the premises. The court concluded that no legal authority requires an appraisal, a specific written legal description of the property, a competitive bid for survey or planning consultant services, or review by the Conservation Commission to establish a valid contract. The court also concluded that there was no evidence that the ad hoc committee's conduct had not been fully disclosed and dealt with by the City Council as it met its obligations in reviewing the contract and authorizing the city manager to execute it. Ultimately, the court concluded that, "[i]n its present form, the contract is simply a promise by two parties to perform if certain events take place in the future. There has been no harm."

[¶ 14] The court did note, however, that as the City goes forward, 20-A M.R.S. § 4102(4)(B) will provide an opportunity for citizens to petition the Board of Education to challenge the school closing, and the Board will still be required to cast the necessary votes in public proceedings. The court did not find any legal defects that would void the contract, however, and stated:

The court must separate the legal questions from the political question. A determination by this court that the City has not violated a legal condition in entering into this contract does not resolve any political questions that might arise from the procedure. In accordance with our Constitution, this court will not and cannot...