Rice v. Scott County School Dist.

• Decision Date: 04 August 1988
• Docket Number: No. 72A01-8801-CV-00010,72A01-8801-CV-00010
• Citation: 526 N.E.2d 1193
• Parties: 48 Ed. Law Rep. 643 Lewis RICE, Appellant-Plaintiff, v. SCOTT COUNTY SCHOOL DISTRICT, Appellee-Defendant.
• Court: Indiana Appellate Court

Page 1193

526 N.E.2d 1193

48 Ed. Law Rep. 643

Lewis RICE, Appellant-Plaintiff, v. SCOTT COUNTY SCHOOL DISTRICT, Appellee-Defendant.

No. 72A01-8801-CV-00010.

Court of Appeals of Indiana First District.

Aug. 4, 1988.

David A. McCullough, New Albany, B. Hume Morris, Ray & Morris, Louisville, Ky., for appellant-plaintiff.

Mark D. Gerth, Kightlinger & Gray, Indianapolis, for appellee-defendant.

ROBERTSON, Judge.

Lewis Rice appeals a summary judgment ruling in favor of the defendant-appellee, Scott County School District.

We affirm.

Rice initiated this action alleging in a two-count complaint that in early February, 1985, the School District published notice that it would accept bids for certain bus routes including the Johnson and Lexington shuttle routes. Rice averred that the School District's transportation director and a second employee of the School District told him on two separate occasions that bids would not be accepted on the Johnson and Lexington shuttle routes despite information to the contrary in the bid notice and attached specifications.

Rice discovered when the bids were opened and read that others had submitted bids on the Johnson and Lexington shuttle routes and he sought permission to submit a bid on the Johnson routes. The school board refused to reopen the bidding and proceeded to award contracts. Rice alleged that the actions of the School District in awarding contracts on the shuttle routes after it knew Rice and others were given erroneous information was arbitrary, capricious and an abuse of discretion. ¹

In count I, Rice sought an injunction prohibiting the enforcement of the contracts and in count II, he alleged that he had relied upon the intentional representations made by the School District's officials, that he had been damaged by his reliance and would suffer lost income by not having received one of the shuttle bus contracts. The School District moved to dismiss count II of the complaint, arguing that Rice failed to give notice of his tort claim as required by the Indiana Tort Claims Act, IND. CODE 34-4-16.5-7. The trial court granted the motion and no error was raised from this ruling. Instead, Rice amended his complaint adding two new counts, and withdrew his request for injunctive relief.

Rice averred in count III that the School District's legal notice and oral representations upon which he had relied created a "unilateral, quasi or implied contract" which the School District breached by failing to accept or consider Rice's bid. Rice averred in count IV that he was "denied procedural due process by the defendant which failed to afford plaintiff an opportunity to bid upon the aforesaid bus and shuttle routes" and that "the deprivation of [his] constitutionally protected rights of procedural due process have damaged him in the sum ... representing lost income."

The School District moved for summary judgment. It argued with respect to count III that no contract had been formed, and that Rice's sole remedy for a violation of his federal constitutional rights was an action based upon the civil rights statute, 42 U.S.C. Sec. 1983. In the alternative, the School District argued that Rice's constitutional claim sounded in tort and was barred by the Indiana Tort Claims Act.

Rice states two issues for review in this appeal.

1. Did the trial court err in granting the School District's motion for summary judgment in that plaintiff had a valid cause of action for denial of due process?

2. Did the trial court err in concluding that Rice's suit was barred by his failure to comply with the notice provisions of the Indiana Tort Claims Act?

On appeal from a grant of summary judgment, this court applies the same standard of review as does the trial court. Matter of Estate of Belanger (1982), Ind.App., 433 N.E.2d 39, 42, trans. denied. We determine whether any genuine issue of material fact exists and whether the law was correctly applied. Smith v. P and B Corp. (1979), 179 Ind.App. 693, 695, 386 N.E.2d 1232, 1234, trans. denied. In determining whether a genuine issue of material fact exists, we accept as true all facts set forth by the non-moving party and resolve all doubts against the movant. Barnd v. Borst (1982), Ind.App., 431 N.E.2d 161, 165, trans. denied; English Coal Co., Inc. v. Durcholz (1981), Ind.App., 422 N.E.2d 302, 303, trans. denied. Only where there is no dispute as to the material facts or the inferences to be drawn therefrom, and the moving party is entitled to summary judgment as a matter of law, may the court grant such a motion.

I.

The parties devote their argument on Rice's constitutional claim to the question whether the federal damages remedy provided by 42 U.S.C. Sec. 1983 is the sole means of bringing, in an Indiana state court, a federal constitutional claim alleging a violation of civil rights. We need not consider in this appeal whether a remedy is available in Indiana directly under the federal constitution since it is apparent that in either case, whether pursuant to 42 U.S.C. Sec. 1983 or directly under the Constitution, in order for his fourth count to survive, Rice must still have demonstrated a violation of the underlying constitutional right; that is, he must have shown a deprivation of property without due process of law. See Daniels v. Williams (1986), 474 U.S. 327, 106 S.Ct. 662, 88 L.Ed.2d 662. Inasmuch as the Fourteenth Amendment places procedural constraints only on the actions of government which work a deprivation of interests enjoying the stature of "liberty" or "property" within the meaning of the due process clause, Memphis Light, Gas & Water Division v. Craft (1978), 436 U.S. 1, 10, 98 S.Ct. 1554, 1560, 56 L.Ed.2d 30, the first step of our analysis is to identify a property or liberty interest entitled to due process protection. Brock v. Roadway Express, Inc. (1987), 481 U.S. 252, 107 S.Ct. 1740, 1746, 95 L.Ed.2d 239.

As we read Rice's argument, he claims to enjoy a protected property interest in either a contract for both the Johnson bus and shuttle routes or in the School District's "own procedures for the letting of transportation and fleet contracts." See appellant's brief, p. 7. He argues that his "de facto interest" was derived from the general statutory duties of the School District and created by an implied contract. He does not contend in this appeal that he possesses a cognizable liberty interest.

We start from the premise that there can be no protected property interest in adherence to established procedure. The categories of substance and procedure are distinct. Cleveland Board of Education v. Loudermill (1985), 470 U.S. 532, 542, 105 S.Ct. 1487, 1493, 84 L.Ed.2d 494. "Property" cannot be defined by the procedures provided for its deprivation any more than can life or liberty. Id. Hence, procedural rules which impose limitations on the exercise of discretion by decision-makers are not themselves "property" interests, see e.g. Brock v. Roadway Express, Inc. (1987), 481 U.S. 252, 107 S.Ct. 1740, 1746, n. 2, 95 L.Ed.2d 239 and the mere failure to follow applicable rules or procedures does not, without more, amount to a due process violation.

However, a protected interest may be found in the benefit whose enjoyment is sought to be regulated by the procedure. The Fourteenth Amendment safeguards "the security of interests that a person has already acquired in certain benefits." ² Board of Regents of State Colleges v. Roth (1972), 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548. To have a property interest in a benefit, a person must have a legitimate claim of entitlement to it, derived from statute, legal rule or mutually explicit understanding and stemming from a source independent of the Constitution such as state law. Id. at 578, 92 S.Ct. at 2709; Perry v. Sindermann (1972), 408 U.S. 593, 602, 92 S.Ct. 2694, 2700, 33 L.Ed.2d 570. A mere unilateral expectation or an abstract need is not a property interest entitled to protection. Id.; Webb's Fabulous Pharmacies v. Beckwith (1980), 449 U.S. 155, 162, 101 S.Ct. 446, 451, 66 L.Ed.2d 358.

No Indiana state court, to our knowledge, has recognized the existence of a constitutionally-protected property interest in a government contract sought by a disappointed bidder. However, a number of federal courts have considered the issue. ³

Were we to apply any of the tests expounded by the federal courts, we would still be bound to conclude that the facts offered in Rice's deposition establish nothing more than a unilateral expectation or abstract desire on Rice's part.

IND. CODE 20-9.1-2-9 provides that when a transportation or fleet contract is let by a school corporation, it shall be awarded to the lowest responsible bidder. Rice does not allege or present facts establishing that he would have ultimately been entitled to a particular shuttle route. He does not show that he would have been the lowest bidder had he been permitted to bid. Neither does he demonstrate that he was a responsible bidder who complied fully with the School District's specifications and met the requisite standards established by statute. See I.C. 20-9.1-3-1 et seq. There is thus nothing in the record to discern Rice from any of the others who possessed an interest in obtaining a shuttle contract, and no basis for concluding that Rice's desire for a contract had matured into a legitimate claim of entitlement to one.

Similarly, there is no evidence that Rice acquired a legitimate claim of entitlement by virtue of a mutually explicit understanding. ⁴ Rice's deposition establishes Rice was led to believe that no shuttle contracts would be awarded at that time, not that he would be one of those to receive one. Furthermore, there is no evidence whatsoever of any words or acts on the part of the School Board which might have fostered such an informal and implicit understanding.

In sum, Rice did not possess a cognizable property interest within the meaning of the Fourteenth Amendment. Accordingly, ...