Mcna Ins. Co. v. Dep't of Tech.

• Decision Date: 15 January 2019
• Docket Number: No. 342646,342646
• Citation: 929 N.W.2d 817,326 Mich.App. 740
• Parties: MCNA INSURANCE COMPANY, doing business as MCNA Dental, Petitioner-Appellee, v. DEPARTMENT OF TECHNOLOGY, MANAGEMENT AND BUDGET, Respondent-Appellant.
• Court: Court of Appeal of Michigan — District of US

326 Mich.App. 740

929 N.W.2d 817

MCNA INSURANCE COMPANY, doing business as MCNA Dental, Petitioner-Appellee,

v.DEPARTMENT OF TECHNOLOGY, MANAGEMENT AND BUDGET, Respondent-Appellant.

No. 342646

Court of Appeals of Michigan.

Submitted January 8, 2019, at Lansing

Decided January 15, 2019, at 9:10 a.m.

Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and Kyla L. Barranco, Christina M. Grossi, and Jessica McGivney, Assistant Attorneys General, for the Department of Technology, Management and Budget.

Miller Canfield Paddock and Stone, PLC (by Clifford W. Taylor, Scott R. Eldridge, Lansing, and Lara Kapalla-Bondi, Detroit) for MCNA Insurance Company.

Before: Boonstra, P.J., and Sawyer and Tukel, JJ.

Sawyer, J.

This case presents the question whether a disappointed bidder on the award of a public contract has standing to file an appeal in the circuit court. We hold that it does not and reverse the circuit court, remanding the matter to that court to enter an order dismissing petitioner’s claim of appeal.

Respondent issued a request for proposal (RFP) for two state contracts, and possibly a third regional contract, to provide dental services under the Healthy Kids Dental Program. Petitioner and four other entities submitted proposals. Respondent issued a "Recommendation of Award" (recommendation) indicating that it intended to award the statewide contracts to Blue Cross and Blue Shield of Michigan (BCBSM) and Delta Dental. Petitioner filed a protest, arguing that improper deductions were made in scoring its proposal, that BCBSM and Delta Dental were nonresponsible bidders, and that respondent improperly allowed BCBSM to amend its proposal after the deadline for submission had passed. With respect to the scoring issue, respondent agreed that the scoring needed to be adjusted but indicated that the adjustment did not affect the outcome of the award recommendation.

In response to the revised recommendation, petitioner filed a claim of appeal in the Ingham Circuit Court under MCL 600.631, alleging that the process and revised recommendation violated Michigan law, resulted in material injustice, and were arbitrary and capricious. Respondent moved to dismiss, arguing that a disappointed bidder lacked standing to challenge a public bid process and that the circuit court lacked jurisdiction because the Michigan Constitution only grants the circuit court jurisdiction to review final decisions of administrative agencies acting in a judicial or quasi-judicial capacity and affecting private rights or licenses.

After expressing its criticism of how the bidding process is handled, rather than ruling on the motions to dismiss, the trial court adjourned the hearing and directed respondent to submit an affidavit explaining why BCBSM was permitted to change its bid and to allow petitioner to depose the affiant because the court "want[s] the media to know how I feel. Because I will do it again." Respondent filed an application for leave to appeal in this Court from the trial court’s order. This Court peremptorily reversed and vacated the order and remanded for entry of an order dismissing petitioner’s claim of appeal in the circuit court.¹ Petitioner filed an application for leave to appeal in the Supreme Court, which, in lieu of granting leave, vacated this Court’s order and remanded for plenary consideration.² On plenary consideration, we again reverse the trial court and direct it to enter an order dismissing petitioner’s appeal.

We review a trial court’s decision regarding standing de novo. Dep’t of Social Services v. Baayoun , 204 Mich. App. 170, 173, 514 N.W.2d 522 (1994). Our analysis starts with this Court’s decision in Groves v. Dep’t of Corrections .³ In Groves , the plaintiffs challenged the process by which the state had awarded a contract for the installation of telephone systems at correctional facilities. Similar to the case at bar, the plaintiffs, disappointed bidders, argued that the winning bidder was improperly allowed to change its proposal after the deadline had passed.⁴ This Court rejected the plaintiffs’ challenge, noting that "Michigan jurisprudence has never recognized that a disappointed bidder ... has the right to challenge the bidding process."⁵ The Court went on to observe that "[l]itigation aimed at second-guessing the exercise of discretion by the appropriate public officials in awarding a public contract will not further the public interest; it will only add uncertainty, delay, and expense to fulfilling the contract."⁶ The Court further stated that an action to review the bidding process is limited to cases where there is evidence of fraud, illegality, or abuse and then such an action can only be brought by the appropriate public official.⁷ Such restriction was necessary because "[o]pening the floodgates of litigation to every disappointed bidder that believes it has been aggrieved by the bidding process would serve the interests of neither the government nor the citizen-taxpayers that the bidding process is designed to advance."⁸

Petitioner endeavors to distinguish Groves , and similar cases cited by respondent, on the basis that Groves involved parties who sought to invoke the power of the circuit court by bringing a separate action to challenge the procurement decision instead of bringing an appeal in the circuit court under MCL 600.631 as petitioner did. MCL 600.631 provides as follows:

An appeal shall lie from any order, decision, or opinion of any state board, commission, or agency, authorized under the laws of this state to promulgate rules from which an appeal or other judicial review has not otherwise been provided for by law, to the circuit court of the county of which the appellant is a resident or to the circuit court of Ingham county, which court shall have and exercise jurisdiction with respect thereto as in nonjury cases. Such appeals shall be made in accordance with the rules of the supreme court.

MCR 7.103(A)(3) provides that there is an appeal by right "by an aggrieved party" from "a final order or decision of an agency from which an appeal of right to the circuit court is provided by law."

In Federated Ins. Co. v. Oakland Co. Rd. Comm. ,⁹ the Supreme Court discussed the similarity between issues of standing and being an aggrieved party for purposes of appeal:

As we indicated in Nat’l Wildlife Federation v. Cleveland Cliffs Iron Co., 471 Mich. 608, 612, 684 N.W.2d 800 (2004), citing Lee v. Macomb Co. Bd. of Comm’rs, 464 Mich. 726, 734, 629 N.W.2d 900 (2001), standing refers to the right of a party plaintiff initially to invoke the power of the court to adjudicate a claimed injury

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