MIAMI-DADE CTY. SCHOOL BOARD v. J. Ruiz School Bus Service, Inc.

• Decision Date: 19 May 2004
• Docket Number: No. 3D03-246.,3D03-246.
• Citation: 874 So.2d 59
• Parties: MIAMI-DADE COUNTY SCHOOL BOARD, Appellant, v. J. RUIZ SCHOOL BUS SERVICE, INC. and A. Oliveros Transportation, Inc., Appellees.
• Court: Florida District Court of Appeals

874 So.2d 59

MIAMI-DADE COUNTY SCHOOL BOARD, Appellant, v. J. RUIZ SCHOOL BUS SERVICE, INC. and A. Oliveros Transportation, Inc., Appellees.

No. 3D03-246.

District Court of Appeal of Florida, Third District.

May 19, 2004.

Clyne & Self and Reginald J. Clyne; Shirlyon J. McWhorter and Marcy E. Abitz, for appellant.

Marlow, Connell, Valerius, Abrams, Adler, Newman & Lewis and Jose I. Valdes, for appellees.

Before LEVY, GREEN, and FLETCHER, JJ.

GREEN, J.

The Miami-Dade County School Board ("School Board") appeals from a final judgment awarding lost profits and prejudgment interest to the appellees, J. Ruiz School Bus Services, Inc. ("Ruiz") and A. Oliveros Transportation, Inc. ("Oliveros"), for the School Board's unlawful disqualification of the appellees' competitive bids. We reverse as we conclude that such awards are non-recoverable in this case.

The undisputed facts show that during the summer of 1999, the School Board elicited bids from private bus companies for some of its school routes for the 1999-2000 school year, renewable by agreement for two additional one-year periods. Twenty-one vendors, including appellees, Ruiz and Oliveros, responded to the School Board's invitation to bid. The bids submitted by the appellees were the lowest for two of the routes. However, four bids, including those of the appellees, were rejected by the School Board as non-responsive because they failed to include the required Florida Division of Unemployment Compensation Employer's Quarterly Report Form UCT-6, showing current employees and payroll amount. Thereafter, the School Board awarded the routes to the next lowest bidders who had submitted the prescribed UCT-6 forms.

The appellees timely filed their respective notices of protest, challenging the School Board's actions, with the State of Florida, Division of Administrative Hearings. Rather than abating or suspending the award process pending the outcome of the protest proceedings,¹ the School Board entered into contracts with the second lowest bidders for the two bus routes.

Following a hearing, the administrative law judge ("ALJ") found that, although the appellees failed to submit the required UCT-6 forms, the majority of the other bidders had submitted UCT-6 forms that were incomplete, in conflict with other submitted forms, incorrectly filled out, and/or out of date. The ALJ further found that the appellees' failure to submit the UCT-6 forms was a minor irregularity, not a material deviation from the bid specifications, because it did not affect the price of the bids, give the appellees a competitive advantage over other bidders, or give the School Board any reason to doubt the appellees' ability to fulfill their contracts. Moreover, the ALJ found that by accepting deficient UCT-6 forms from other bidders, the School Board had waived deviations regarding these forms from the bid requirements, and thus the School Board's failure to award contracts to the appellees, as the lowest bidders, was clearly erroneous, contrary to competition, arbitrary and capricious.

Based upon these findings, the ALJ found that the appellees were entitled to the award of the two routes for which they were the low bidders. The ALJ noted, however, that since the School Board had already awarded the contracts in question, and since a final order in this proceeding would not be entered until two months before the expiration of the 1999-2000 school year, the relief the appellees sought was unavailable. The appellees, alternatively, requested that they be awarded damages in the amount of their bids, but the ALJ concluded that this relief would be more appropriately sought in the circuit court. The ALJ awarded the appellees the two bus routes for the remaining twenty days of the 1999-2000 school year.

Appellees then filed the complaint below, against the School Board, seeking damages for lost income and profits for the period of time in which they were wrongly denied the bus route contracts. The School Board filed a motion to dismiss on grounds that an unsuccessful bidder to a public contract had no cause of action against a public entity for the recovery of loss profits. It cited City of Cape Coral v. Water Services of America, Inc., 567 So.2d 510, 514 (Fla. 2d DCA 1990); and William A. Berbusse, Jr., Inc. v. North Broward Hospital District, 117 So.2d 550, 552 (Fla. 2d DCA 1960) in support of its motion. The trial court denied the motion, finding that appellees' complaint stated a cause of action for lost profits because the School Board's actions were found to be "arbitrary and capricious," unlike the cases relied upon by the School Board.

The parties stipulated that Ruiz had sustained $17,117.81 and Oliveros $15,384.00 in lost profits for the 160 days that they had been denied the bus routes.² The trial court entered its final judgment pursuant to the stipulation and awarded the appellees lost profits and prejudgment interest. This appeal followed.

Florida's competitive bid statutes were enacted for the benefit and protection of the public in that they are intended to ensure that the public receives the lowest and best price for goods and services and that public contracts are not awarded in an arbitrary and capricious manner. See City of Sweetwater v. Solo Constr. Corp., 823 So.2d 798, 801 (Fla. 3d DCA 2002)

. Accordingly, public contracts must be awarded to effectuate this intent. Id. The bid statutes create reciprocal benefits and responsibilities for the bidder and the public authority:

Florida's competitive bid statutes ... create a system by which goods or services required by public authorities may be acquired at the lowest possible cost. The system confers upon both the contractor and the public authority reciprocal benefits, and confers upon them reciprocal obligations. The bidder is assured fair consideration of his offer, and is guaranteed the contract if his is the lowest and best bid received. The principal benefit to the public authority is the opportunity of purchasing the goods and services required of it at the best price obtainable. Under this system, the public authority may not arbitrarily or capriciously discriminate between bidders, or make the bid based upon personal preference.

Id. (citing Marriott Corp. v. Metro. Dade County, 383 So.2d 662, 665 (Fla. 3d DCA 1980) (quoting Hotel China & Glassware Co. v. Bd. of Pub. Instruction, 130 So.2d 78, 81 (Fla. 1st DCA 1961))).

Here, the School Board did not challenge the finding that it acted arbitrarily and capriciously when it failed to award the contracts to the appellees as the lowest bidders. That said, the question becomes whether the appellees are nevertheless entitled to a recoupment of their lost profits for the time period in which they were wrongfully denied the contracts if equitable relief may no longer be available.³ The Administrative Procedure Act (the "Act"), under which the appellees' bid protests were heard, grants a reviewing court the authority to order such ancillary relief as it finds necessary to redress the effects of wrongfully taken or withheld official action. See § 120.68(6)(a) 2., Fla. Stat. (1999). Neither the Act nor Florida case law, however, has ever countenanced an award of lost profits to an unsuccessful bidder. See Hoon v. Pate Constr. Co., Inc., 607 So.2d 423, 432 (Fla. 4th DCA 1992)

; City of Cape Coral,

567 So.2d at 514; Berbusse,

117 So.2d at 552.

The trial court based its lost profits award on dicta found in the City of Cape Coral case. There, the Second District, affirmed a previous holding that lost profits were not recoverable against a public entity. City of Cape Coral,567 So.2d at 514. The court added that this was particularly true "in the absence of arbitrary, capricious, dishonest, illegal, fraudulent or oppressive misconduct." Id. (emphasis added). It is this added dicta which the appellees have seized upon as support for their claims of lost profits. We conclude, however, that this dicta was not meant to imply that lost profits are a proper measure of damages where there has been a finding of arbitrary, capricious, dishonest, illegal, fraudulent, or oppressive misconduct by the public entity.⁴

To date, no other Florida court has expressly addressed the issue of whether lost profits are recoverable by a bidder who was wrongfully denied a public contract. A survey of decisions from other states, however, shows that the overwhelming weight of authority is against allowing an award of lost profits to unsuccessful bidders of public contracts. See, e.g., Kajima/Ray Wilson v. Los Angeles County Metro. Transp. Auth., 23 Cal.4th 305, 96 Cal.Rptr.2d 747, 1 P.3d 63, 70 (2000)

.⁵ The courts reason that competitive bidding statutes were enacted for the benefit of taxpayers and that the general public does not benefit from allowing a disappointed bidder to recover lost profits. Id. These courts hold that permitting the recovery of lost profits "unduly punishes the tax-paying public" and provides an unfair windfall to unsuccessful bidders for work they did not perform and risks they did not incur. Id. See also Lawrence Brunoli, Inc. v. Town of Branford, 247 Conn. 407, 722 A.2d 271, 275 (1999) ("[A]n unsuccessful bidder does not have standing to seek money damages. To conclude otherwise would run counter to the sound and established purpose of protecting the public interest that underlies the municipal bidding statutes."); Court St. Steak House, Inc. v. County of Tazewell, 163 Ill.2d 159, 205 Ill.Dec. 490, 643 N.E.2d 781, 786 (1994) (quoting Beaver Glass & Mirror Co. v. Bd. of Ed. Of Rockford School Dist., 59 Ill. App.3d 880, 17 Ill.Dec. 378, 376 N.E.2d 377, 380 (1978)) ("If the statute were held to create such a remedy [i.e., lost profits], then taxpayers, whom the statute was designed to protect, would be injured twice whenever the school board failed to award a contract to the lowest responsible bidder: the first time, through the unjustified additional expenditure of...