State ex rel. J.E. Dunn Const. Co. v. Fairness in Const. Bd. of City of Kansas City

• Decision Date: 30 December 1997
• Docket Number: Nos. WD,s. WD
• Parties: STATE ex rel. J.E. DUNN CONSTRUCTION COMPANY, Respondent/Relator, and The City of Kansas City, Missouri, Respondent/Intervenor, v. FAIRNESS IN CONSTRUCTION BOARD OF THE CITY OF KANSAS CITY, MISSOURI, Appellant/Defendant, and DiCarlo Construction Company, Appellant/Intervenor. 53272, WD 53277.
• Court: Missouri Court of Appeals

Page 507

960 S.W.2d 507

STATE ex rel. J.E. DUNN CONSTRUCTION COMPANY, Respondent/Relator, and The City of Kansas City, Missouri, Respondent/Intervenor, v. FAIRNESS IN CONSTRUCTION BOARD OF THE CITY OF KANSAS CITY, MISSOURI, Appellant/Defendant, and DiCarlo Construction Company, Appellant/Intervenor.

Nos. WD 53272, WD 53277.

Missouri Court of Appeals,

Western District.

Dec. 30, 1997.

As Modified Jan. 27, 1998.

Appeal from the Circuit Court Of Jackson County; K. Preston Dean, Judge.

Taylor Fields, Stephen Miller, Kansas City, for Appellant.

Roy Bash, Kansas City, Dorothy Lee Campbell, Government Counsel, Kansas City, for Respondent.

HANNA, Judge.

This appeal is from the circuit court's order making absolute a preliminary writ of prohibition which ceased the continuation of a hearing before an administrative board. The writ of prohibition was issued by the Honorable K. Preston Dean at the Jackson County Circuit Court. The appellants are the administrative board, Fairness in Construction Board of the City of Kansas City, Missouri (Fairness Board) and the unsuccessful (next lowest) bidder on the project, DiCarlo Construction Company (DiCarlo). The respondents are the bidder who was awarded the contract, J.E. Dunn Construction Company (Dunn), and The City of Kansas City, Missouri (City). The Fairness Board was in the process of hearing an appeal from a City Human Relations Department determination that Dunn, who was subsequently awarded a City construction contract, had made good faith efforts to achieve the minority and women sub-contracting goals set on the project. The City construction contract was for the Terminal C parking garage project at Kansas City International Airport (K.C.I.).

The appellants claim that the circuit court erred in issuing the writ of prohibition because: (1) the circuit court's basis for issuing the writ (res judicata ) was improper; (2) the writ cannot be sustained on the ground that the Fairness Board lacked subject matter jurisdiction; (3) the circuit court issuing the writ did not have subject matter jurisdiction because Dunn failed to exhaust its administrative remedies; (4) the respondents waived their right to seek a writ of prohibition by appearing and participating in the Fairness Board hearings; and (5) the writ was an improper remedy. ¹

The Fairness Board was created in December of 1991, via a voluntary Letter Agreement between the Mayor of Kansas City and various minority groups and contractor associations, in order to "maximize participation of all components of the construction industry of Kansas City in construction contracts awarded by [the] City." The Mayor's Letter Agreement charged the Fairness Board "with the responsibility of overseeing all construction bids, and to determine if good faith efforts have been met on any given bid" with regard to minority/women subcontracting participation.

On March 7, 1996, the City Council passed § 38-84 through § 38-100 of the Code of Ordinances of Kansas City (the "Disparity Ordinance") which created a minority and women enterprise program. The Disparity Ordinance evidently re-authorized the Fairness Board to "ensure fair representation in the bidding process by socially and economically disadvantaged persons including minorities and women." Section 38-100. The Disparity Ordinance gives the Fairness Board the responsibility to "hear and decide appeals from the [H]uman [R]elations [D]epartment's determinations." Section 38-100(f).

The underlying facts are as follows. In November of 1995, the Aviation Department issued bid specifications for the Terminal C parking garage project at K.C.I. On January 9, 1996, the bids were opened by the City. Dunn was the low bidder, and DiCarlo was the second lowest bidder. The Human Relations Department of the City implements the Minority Business Enterprise (MBE) and Women Business Enterprise (WBE) program which sets goals for minority and women-owned businesses as subcontractors on city construction contracts of $20,000 or more. The Human Relations Department and the Aviation Department apparently worked with Dunn regarding the bid process and its MBE/WBE participation on the project. ² The Human Relations Department eventually approved Dunn's MBE/WBE plan on February 29, 1996.

The Aviation Department then initiated the ordinance process before the City Council for the Terminal C contract. The ordinance awarding the contract to Dunn was introduced, and then referred to the City Council's Audit and Operations Committee. The Director of the Human Relations Department prepared a memo, dated March 19, 1996, regarding Dunn's good faith efforts in connection with the pending ordinance, for the Operations Committee's review. A Docket Memo was also prepared for the Operations Committee that listed Dunn's MBE/WBE participation as verified by the Human Relations Department. The Human Relations Department recommended that the City Council approve a good faith exemption and award the contract on the Terminal C project to Dunn. The City Council unanimously approved the ordinance on March 27, 1996, and awarded the contract to Dunn. The ordinance took effect 10 days after the City Council's approval on March 31, 1996. Dunn was authorized to proceed with the project, and has done so.

Meanwhile, DiCarlo was taking actions to protest the award of the project to Dunn. DiCarlo contested the procedure by which the Human Relations Department worked with Dunn in order for Dunn to gain approval of its MBE/WBE plan. On March 13, 1996, DiCarlo filed an action in the United States District Court for the Western District of Missouri against the Aviation and Human Relations departments of the City. Dunn intervened in that action. The Honorable Scott Wright held hearings on May 16 and 17, 1996. On May 17th, Judge Wright concluded the hearings by indicating that he would be ruling in favor of the City and would dismiss the action. Later that afternoon, DiCarlo filed its Notice of Appeal with the Fairness Board from the: (1) determination and resulting recommendation of the Human Relations Department that Dunn be awarded the contract, and (2) action of the Operations Committee in recommending that the City Council award the project to Dunn. Subsequently, on May 22, 1996, Judge Wright issued his written opinion dismissing the DiCarlo federal action and enter an order granting summary judgment in favor of Dunn and the City.

The Fairness Board then held four hearings regarding the DiCarlo appeal. Counsel for Dunn had previously written the Chairman of the Fairness Board requesting permission to intervene, and it was allowed to participate in the hearings. On July 3, 1996, while the proceeding was pending, Dunn filed a verified petition for writ of prohibition with the circuit court asking for a writ prohibiting the Fairness Board from hearing DiCarlo's appeal. DiCarlo and the City filed motions to intervene, which were granted by the circuit court. After a hearing on the matter, the circuit court made its preliminary writ absolute in an order dated August 1, 1997. The basis for the writ was that the federal court dismissal order precluded DiCarlo from proceeding with its claim before the Fairness Board under the doctrine of res judicata. This appeal followed.

In the federal action, DiCarlo alleged subject matter jurisdiction under 28 U.S.C. § 1331(federal question jurisdiction) and 28 U.S.C. § 1343(a)(3)(civil rights and elective franchise). DiCarlo claimed that the actions of the City during the bid procedures violated the Due Process Clause in that it denied them a federally protected property right, which would allow a federal remedy pursuant to 42 U.S.C. § 1983. The federal court ruled that DiCarlo could not establish that it had a constitutionally protected property interest (as the second lowest bidder) because it could not demonstrate that the apparent low bidder violated the bidding procedure. ³ Since DiCarlo could not establish a property interest, the federal court held that it did not have subject matter jurisdiction.

DiCarlo also claimed an Equal Protection Clause violation by asserting that the City did not comply with its own ordinances and, as such, accorded Dunn's bid preferential treatment. The federal court, however, found that DiCarlo could not demonstrate that it was treated differently than Dunn. As such, no violation of the Equal Protection Clause occurred. The result, therefore, was that the federal court found that DiCarlo did not present any constitutional claims.

DiCarlo asked for the following relief from the federal court: (1) a temporary restraining order, injunctive relief and a permanent order enjoining the City from entering into a contract with Dunn, and (2) a declarative order commanding the City to reject Dunn's bid and consider DiCarlo's bid. Instead the federal court granted the City's and Dunn's motions and ordered the case dismissed. ⁴ After its case was dismissed in federal court, DiCarlo proceeded to the Fairness Board.

In its notice of appeal to the Fairness Board, DiCarlo asked for review of the Human Resource Department's determination and recommendation that the project be awarded to Dunn, and also of the Operations Committee's identical recommendation to the City Council. In subsequent documents, DiCarlo also requested a Fairness Board ruling that the bidding process was flawed and unfair to DiCarlo and the other bidders, and that Dunn should be made to stand by its initial MBE/WBE submission. In its Position Paper submitted to the Fairness Board, DiCarlo claimed that the City's conduct during the bidding process "violated the terms of the Bid Solicitation and City Ordinances; provided an unfair advantage to Dunn; undermined the competitive bidding process; frustrated the purpose of the MBE/WBE program; and destroyed public confidence in City government."

In ordering the writ absolute, the circuit court found that the federal court had heard evidence on the matter...