Modern Continental Const. Co., Inc. v. City of Lowell

• Decision Date: 14 May 1984
• Citation: Modern Continental Const. Co., Inc. v. City of Lowell, 465 N.E.2d 1173, 391 Mass. 829 (Mass. 1984)
• Parties: The MODERN CONTINENTAL CONSTRUCTION CO., INC. v. CITY OF LOWELL et al. 1
• Court: Supreme Judicial Court of Massachusetts

Page 1173

465 N.E.2d 1173

391 Mass. 829

The MODERN CONTINENTAL CONSTRUCTION CO., INC. v. CITY OF LOWELL et al. ¹

Supreme Judicial Court of Massachusetts Suffolk.

Argued Jan. 13, 1984.

Decided May 14, 1984.

John J. Spignesi, Boston (Thomas E. Sweeney, Asst. City Sol., with him), for defendants.

Charles E. Schaub, Jr., Boston, for plaintiff.

Stephen E. Cotton, Boston, for Inspector General, amicus curiae, submitted a brief.

Sally A. Corwin, Boston, for Associated Subcontractors of Massachusetts, amicus curiae, submitted a brief.

John P. Davey and Ellen C. Davey, Boston, for Utility Contractors Ass'n of New England, amicus curiae, submitted a brief.

Before HENNESSEY, C.J., and ABRAMS, NOLAN, LYNCH and O'CONNOR, JJ.

NOLAN, Justice.

The city of Lowell (Lowell) and P. Gioioso & Sons, Inc. (Gioioso), sought relief in the Appeals Court, pursuant to the first paragraph of G.L. c. 231, § 118, from a preliminary injunction issued by a Superior Court judge in an action by The Modern Continental Construction Co., Inc. (Modern Continental). The preliminary injunction restrains Lowell from awarding a contract to Gioioso or any other party for the construction of a regional and municipal interceptor ² until the project is rebid in accordance with the requirements of G.L. c. 149, §§ 44A-44H. A single justice of the Appeals Court refused to order that the injunction be dissolved. However, because he considered the injunction as essentially dispositive of the merits of the action, and because important questions of law were raised, he directed that the appeal pursuant to the second paragraph of G.L. c. 231, § 118, be expedited. We transferred the case to this court on our own motion. We perceive no error in the order enjoining Lowell, and remand the case to the Superior Court for further proceedings consistent with this opinion. ³

1. Factual background and prior proceedings. In the summer of 1983, Lowell invited bids for the interceptor project. The project will require construction of approximately two and one-half miles of sewer pipeline and two pumping stations. One prefabricated pumping station will be situated below ground. The other, the Beaver Brook station, combines a subterranean diversion structure with a pumping station constructed on top of it. The Beaver Brook station is the subject of the present controversy. Both of the pumping stations will contain equipment and are intended to be fully automated. The Beaver Brook station will also include certain amenities, such as telephones and a rest room.

The city's advertisements concerning the project stated that Lowell would proceed "in strict accordance" with G.L. c. 149, §§ 44A-44L, and other applicable laws. ⁴ The "Information for Bidders" section of the advertisement stated further that bidding would proceed in accordance with G.L. c. 149, §§ 44A-44L, ⁵ and G.L. c. 30, § 39M. ⁶ Filed subbids were required only as to the Beaver Brook pumping station. In all other respects, the bidding and award procedure followed the requirements of G.L. c. 30, § 39M.

At the bid opening, Gioioso was the apparent low bidder and Modern Continental the third lowest among the bids submitted. Modern Continental then protested that the project in its entirety should have been offered for bids under G.L. c. 149, §§ 44A-44H, that bidder prequalification was required, that the bids must be rejected and the project rebid in accordance with G.L. c. 149, §§ 44A-44H. Following a hearing before Lowell officials affording the three lowest bidders an opportunity to present oral and written statements, Lowell rejected Modern Continental's contentions and affirmed its plan to award the contract to Gioioso. Modern Continental then submitted its protest to the Department of Labor and Industries (department), ⁷ which conducted an informal conference attended by Lowell, Modern Continental, Gioioso, and other interested parties.

The department issued an administrative decision stating that, because Lowell had offered for bids the project as a whole, it "had no choice under the law but to bid pursuant to Chapter 149, Section 44A-H." The department reasoned that the Beaver Brook pumping station was a "building" within the ordinary meaning of that word, and as a "building" which costs more than $5,000, it would be subject to G.L. c. 149, §§ 44A-44H. The public works aspect of the project was not controlling. The department saw no limitation within G.L. c. 149, §§ 44A-44H, to contracts "solely for the construction of a public building." The department rejected Gioioso's argument that the dominant purpose of the contract, whether primarily for public buildings or public works, should control which statute applies. The department offered Lowell two bidding options. First, Lowell might offer for bids the entire project under G.L. c. 149, §§ 44A-44H. Alternatively, Lowell might split the project into separate public building and public work components, using the respective procedures of G.L. c. 149, §§ 44A-44H, for the "building" part of the project and G.L. c. 30, § 39M, for the "public works" component. The department ordered Lowell to reject all bids and to rebid the project in conformity with the options offered by the department.

The following week, Lowell notified the department in writing of its intent to award the interceptor project contract to Gioioso. Modern Continental then commenced this action for declaratory and injunctive relief seeking an injunction to order Lowell to refrain from awarding the contract until the project was rebid under G.L. c. 149, §§ 44A-44H. In affidavits submitted to the Superior Court, Lowell opposed Modern Continental's request for preliminary relief by stating that the delay caused by rebidding would cost an additional $25,000, require additional legal, engineering, and administrative efforts for which Lowell could not seek State or Federal reimbursement, require Lowell to bear the difference in cost between the original bids and the resubmitted bids, and subject the city to fines owing to delay in implementing pollution control measures. Further, Lowell represented that the division and other State agencies had advised the city that G.L. c. 149, §§ 44A-44H, were inapplicable to the project. ⁸ Lowell's consulting engineers stated that subbids for Beaver Brook were recommended to Lowell only to enhance competition. The engineers had telephoned the division prior to Lowell's advertisement for bids, and were told bidder prequalification was not required. The consulting engineers cited the existence of serious health hazards posed by Lowell's river pollution problems, a delay of six months before commencing the project if rebidding were required, and enhanced nonreimbursable costs as reasons for not requiring rebidding. Furthermore, the engineers noted they had reviewed Gioioso's qualifications after the bid opening, and based on that review had recommended to Lowell that Gioioso receive the contract award. Gioioso's affidavit averred that it had made significant expenditures in bidding and in anticipation of commencing the project, that delays caused by rebidding would mean the project could not be undertaken until the following spring, that inflation would raise the contract price by ten per cent, that Gioioso had not been subject to prequalification on other sewer pipeline and pumping station projects, and that it previously had been prequalified by Lowell.

The judge granted Modern Continental's request for a preliminary injunction without opinion or findings, and this appeal ensued. On appeal, Lowell and Gioioso press the following arguments: first, that Modern Continental lacks standing to request injunctive relief; second, that Modern Continental is estopped from requesting injunctive relief; third, that Modern Continental makes no showing of irreparable harm sufficient to obtain injunctive relief; fourth, that Modern Continental's contention that the project is subject to G.L. c. 149 is without merit; and fifth, that if G.L. c. 149 applies, deviations from its requirements were minor and do not require rejection of all bids.

2. Standing. Lowell and Gioioso argue that Modern Continental lacks standing to pursue the instant action because Modern Continental has failed to allege irreparable harm as a result of Lowell's awarding the contract to Gioioso. The defendants confuse the issue of standing with the requirement of demonstrating irreparable harm in obtaining preliminary injunctive relief. It is well established that parties challenging compliance with the bidding procedures set forth in G.L. c. 149, §§ 44A-44H, need not meet rigid "but for" standing requirements by asserting that if there had been compliance with the statute, they certainly would have been awarded the contract. The challenging party need show only that it possessed the potential to obtain the award. The right to consideration in the event the apparent low bidder is rejected is the interest protected by the flexible standing requirements of G.L. c. 149, §§ 44A-44H. Quincy Ornamental Iron Works, Inc. v. Findlen, 353 Mass. 85, 87-88, 228 N.E.2d 453 (1967). If the situation were otherwise, the important role played by individual bidders in securing compliance with the bidding statutes and legislative policy objectives would be diminished. ⁹

3. Estoppel. The defendants cite Modern Continental's failure to question Lowell regarding the applicability of prequalification procedures before the bid opening as requiring the application of the doctrine of estoppel to Modern Continental's case. The defendants assert that Modern Continental was obliged to notify Lowell during the bidding period of its belief that prequalification was necessary. This argument falls wide of the mark for two reasons. First, as the awarding authority, Lowell is charged with compliance with the bidding statutes; Lowell itself advertised that its procedures would comply with G.L. c. 149, §§ 44A-44H. There...