Monarch Constr. v. Ohio School Facilities, 02AP-635.

• Decision Date: 19 November 2002
• Docket Number: No. 02AP-635.,No. 02AP-636.,02AP-635.,02AP-636.
• Citation: 779 N.E.2d 844,2002 Ohio 6281,150 Ohio App.3d 134
• Parties: MONARCH CONSTRUCTION COMPANY et al., Appellees, v. OHIO SCHOOL FACILITIES COMMISSION et al., Appellants. Monarch Construction Company et al., Appellees, v. Ohio School Facilities Commission et al., Appellees; Tri-Village School District and Peterson Construction Company, Appellants.
• Court: Ohio Court of Appeals

779 N.E.2d 844

150 Ohio App.3d 134

2002 Ohio 6281

MONARCH CONSTRUCTION COMPANY et al., Appellees, v. OHIO SCHOOL FACILITIES COMMISSION et al., Appellants.

Monarch Construction Company et al., Appellees, v. Ohio School Facilities Commission et al., Appellees; Tri-Village School District and Peterson Construction Company, Appellants.

No. 02AP-635.

No. 02AP-636.

Court of Appeals of Ohio, Tenth District, Franklin County.

Decided November 19, 2002.

COPYRIGHT MATERIAL OMITTED

Schottenstein, Zox & Dunn, Roger L. Sabo and Patrick A. Devine, Columbus, for Monarch Construction Company.

Betty D. Montgomery, Attorney General, Michael R. Gladman and Dan Belville, Assistant Attorneys General, for Ohio School Facilities Commission.

Bricker & Eckler, Jack Rosati Jr. and Sylvia Lynn Gillis, Columbus, for Tri-Village School District.

Kegler, Brown, Hill & Ritter, Donald W. Gregory and Christopher J. Weber, Dublin, for Peterson Construction Company.

Richard J. Dickinson, Westerville, for amicus curiae Ohio School Boards Association.

PER CURIAM.

{¶ 1} Defendants-appellants, Tri-Village Local School District ("Tri-Village"), the Ohio School Facilities Commission ("OSFC"), and Peterson Construction Company ("Peterson"), appeal from a judgment of the Franklin County Court of Common Pleas that (1) found that Tri-Village and OSFC abused their discretion in rejecting the bid of plaintiff-appellee, Monarch Construction Company ("Monarch"), (2) enjoined any payments to Peterson, and (3) ordered that the contract at issue either be awarded to Monarch or be re-bid. Because the trial court erred in concluding that Tri-Village and OSFC abused their discretion in rejecting Monarch's bid, we reverse.

{¶ 2} In 2000, Tri-Village applied for a grant under OSFC's Exceptional Needs Program to fund the renovation and expansion of their kindergarten through twelfth grade building. The program provides financial assistance to school districts for school building repair and construction based on need and the condition of school facilities. The grant ultimately was awarded and OSFC agreed to fund 60 percent of the cost of a new facility for Tri-Village's project. At an election held on November 7, 2000, the voters in Darke County, Ohio, where the school is located, approved a bond issue to help pay for the work. Once Tri-Village secured the money for the project, OSFC entered into a written Project Agreement with Tri-Village pursuant to R.C. 3318.08 for the construction, including renovations and additions to both the middle and high schools to house kindergarten through twelfth grades.

{¶ 3} Tri-Village then advertised for and received construction bids for the project, and it selected Fanning/Howey Associates, Inc. as the architect for the project. According to the project agreement, OSFC was required to select a construction manager for the project, and it chose Turner Construction ("Turner").

{¶ 4} In February 2002, Tri-Village advertised for bids on the general trades package, the subject of this action, as well as the electrical, plumbing, and HVAC packages on the project. The bids were opened on March 5, 2002. At that time, Monarch was the apparent low bidder for the general trades package, and Peterson was the apparent second low bidder. Pursuant to Section 2.6.4 of the construction manager agreement, Turner investigated the responsibility of bidders in order to make a written recommendation from the construction manager and the project architect to Tri-Village concerning the award of the construction contracts.

{¶ 5} Ultimately, Turner recommended that Tri-Village determine that Monarch was not a responsible bidder for the project. Thereafter, Dr. Lucian Szlizewski, the superintendent for Tri-Village, telephoned Phil Satterfield, the superintendent of the Paint Valley School District ("Paint Valley"), to corroborate the information Denny Humbel, Turner's project executive, had relayed to him concerning Monarch's poor performance of its contract for Paint Valley's school construction project. Dr. Szlizewski prepared a memo for Tri-Village, outlining the information from Satterfield and his discussions with Turner, and recommended that Tri-Village determine that Monarch was not the lowest responsible bidder. Tri-Village agreed. Monarch protested the determination.

{¶ 6} In response to Monarch's protest, a protest meeting was held on April 3, 2002. Humbel presented the information he gathered in his investigation. Dr. Szlizewski indicated that he personally felt a site visit was extremely important, noting that the school project was very important in their community and that it was the only school to be built in the foreseeable future. He further stated that he considered the opinion of another superintendent to be very relevant in his decision-making process. While Dr. Szlizewski acknowledged that he did not have to follow Turner's recommendation that Monarch was not responsible, he also indicated that he had faith in Humbel's ability to make a good recommendation. Tom Butler, the president of Monarch, had the opportunity to provide a detailed history of his company, including the number of projects it had performed, the amount of business the company did each year, Monarch's explanation for the unfavorable reports of its work at Paint Valley, and the views of various contractors it had worked with on other school projects.

{¶ 7} Following the protest meeting, Turner again recommended that Monarch be found not to be responsible, and Tri-Village agreed. Tri-Village sent Monarch a letter informing it that the contract would not be awarded to it because Monarch had been found not to be responsible. In a letter dated April 10, 2002, that was signed by Randall Fischer, the executive director of OSFC, OSFC approved the decision of Tri-Village to reject Monarch and award the contract to Peterson.

{¶ 8} In response, Monarch filed an action in the Franklin County Court of Common Pleas against Tri-Village and OSFC challenging Monarch's rejection and the award to Peterson of the general trades contract for the Tri-Village project. Monarch subsequently amended its complaint and added Peterson as an additional defendant. The complaint sought a declaration that the actions of Tri-Village and OSFC in rejecting Monarch and awarding the contract to Peterson were contrary to law, and it further requested an injunction to prevent the award of the contract and any payments to Peterson for work done on the project. The trial court issued a temporary restraining order on April 17, 2002.

{¶ 9} The trial court consolidated the hearing on the application for preliminary injunction with the trial on the merits. At the trial, evidence was presented concerning Monarch's poor performance on the project at Paint Valley. Witnesses for Monarch presented testimony identifying reasons for the poor performance that did not relate directly to Monarch.

{¶ 10} In addition, the trial court heard evidence concerning OSFC and the failure of its members to individually vote on and approve Tri-Village's contract with Peterson. Instead, the three members of OSFC had delegated their voting authority to OSFC's executive director. Based on that evidence, Monarch contended that the voting members of OSFC illegally had delegated their authority to vote on and approve not only the Tri-Village contract, but any and all contracts of the OSFC.

{¶ 11} The trial court concluded that (1) Tri-Village had abused its discretion in finding that Monarch was not a responsible bidder, and (2) OSFC had acted illegally because the voting members of OSFC had never voted to approve the contract awarded to Peterson. As a result of those determinations, the trial court enjoined Tri-Village from awarding the contract to Peterson, concluding that the contract had to be awarded to Monarch or be re-bid. Monarch Constr. Co. v. Ohio School Facilities Comm., 118 Ohio Misc.2d 248, 2002-Ohio-2955, 771 N.E.2d 902, and 118 Ohio Misc.2d 296, 2002-Ohio-2957, 771 N.E.2d 941. Appellants timely appeal. Tri-Village assigns the following errors:

{¶ 12} "First Assignment of Error: The trial court erred by failing to find that Monarch was estopped from arguing that Mr. Fischer lacked authority to execute legal contracts when Monarch admitted at trial that it was continuing to seek and accept payments under contracts approved and executed under identical circumstances.

{¶ 13} "Second Assignment of Error: The trial court erred by foreclosing questioning of counsel regarding the estoppel/unclean hands issue, leading counsel to believe such questioning was unnecessary because the court would find the approval authority issue a mere error of law and not an abuse of discretion, and then proceeding to find against defendant-appellants on that issue without addressing the estoppel/unclean hands defense.

{¶ 14} "Third Assignment of Error: The trial court erred by making findings of fact and conclusions of law on issues that were not properly raised at trial, thus denying appellants notice and an opportunity to be heard on such issues.

{¶ 15} "Fourth Assignment of Error: The trial court erred when it found that Executive Director Randall Fischer lacked authorization to approve the contract award to Peterson or, alternatively, the trial court's finding, if correct, has been cured and, therefore, rendered moot.

{¶ 16} "Fifth Assignment of Error: The trial court erred by holding that Monarch was not given adequate notice of the reasons for the findings of non-responsibility and an adequate bid protest meeting.

{¶ 17} "Sixth Assignment of Error: The trial court erred by improperly substituting its judgment for that of the statutorily authorized decision-makers.

{¶ 18} "Seventh Assignment of Error: The trial court erred in holding that the perceived problems with the construction manager's review invalidated the non-responsibility determined when there was no finding of bad faith and when those perceived problems...