Teton Plumbing and Heating, Inc. v. Board of Trustees, Laramie County School Dist. No. One, 88-48

• Decision Date: 24 October 1988
• Docket Number: No. 88-48,88-48
• Citation: 763 P.2d 843
• Parties: 49 Ed. Law Rep. 1305 TETON PLUMBING AND HEATING, INC., a Wyoming corporation, Appellant (Plaintiff), v. BOARD OF TRUSTEES, LARAMIE COUNTY SCHOOL DISTRICT NUMBER ONE, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 843

763 P.2d 843

49 Ed. Law Rep. 1305

TETON PLUMBING AND HEATING, INC., a Wyoming corporation, Appellant (Plaintiff), v. BOARD OF TRUSTEES, LARAMIE COUNTY SCHOOL DISTRICT NUMBER ONE, Appellee (Defendant).

No. 88-48.

Supreme Court of Wyoming.

Oct. 24, 1988.

Don W. Riske and Stephen M. Kissinger of Law Office of Don W. Riske, Cheyenne, for appellant.

Ward A. White and Larry B. Kehl of Guy, Williams, White & Argeris, Cheyenne, for appellee.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT and MACY, JJ.

MACY, Justice.

Appellant Teton Plumbing and Heating, Inc., in an event receiving local publicity, was rejected as a subcontractor on a construction project let by appellee Board of Trustees, Laramie County School District Number One. Thereafter, appellant brought an action in district court, alleging, inter alia, a cause of action pursuant to 42 U.S.C. § 1983 for deprivation of civil rights--specifically, the right to procedural due process under the Fourteenth Amendment to the United States Constitution. The district court entered summary judgment in favor of appellee, and this appeal was taken.

We affirm.

Appellant describes the issue in this fashion:

WHETHER APPELLANT'S RIGHT TO PARTICIPATE IN CONTRACTS LET BY APPELLEE IS A PROPERTY OR LIBERTY INTEREST PROTECTED BY THE FOURTEENTH AMENDMENT TO THE CONSTITUTION OF THE UNITED STATES.

Appellee, alternatively, characterizes the appeal as presenting three issues, which it phrases as follows:

I. THE ISSUE OF AN ALLEGED DEPRIVATION OF A LIBERTY INTEREST WITHOUT DUE PROCESS SHOULD NOT BE CONSIDERED BY THE COURT AS IT HAS BEEN RAISED FOR THE FIRST TIME BY APPELLANT ON APPEAL.

II. WHETHER THE APPELLEE IS ENTITLED TO JUDGMENT AS A MATTER OF LAW ON THE APPELLANT'S ALLEGED DEPRIVATION OF A LIBERTY INTEREST WITHOUT DUE PROCESS OF LAW.

III. WHETHER THE APPELLEE IS ENTITLED TO JUDGMENT AS A MATTER OF LAW ON THE APPELLANT'S ALLEGED DEPRIVATION OF A PROPERTY INTEREST WITHOUT DUE PROCESS OF LAW.

The events leading directly to the litigation in the instant case occurred in 1986. An understanding of the issues presented, however, requires that we set out in some detail the history of appellant's business relations with appellee. Appellant was a Wyoming corporation wholly owned by Edwin Smith, which worked almost exclusively on public works projects as a plumbing subcontractor. In 1982, appellant was the plumbing subcontractor for the construction of the new Johnson Junior High School being built for Laramie County School District Number One (School District) ¹ in Cheyenne. In the course of the construction and afterwards, the School District became aware of problems regarding appellant's workmanship and materials.

Thereafter, in 1983, appellee solicited bids for the construction of the new Gilchrist Elementary School. After a successful bid and award of the contract, the general contractor notified representatives of the School District that the designated plumbing subcontractor had withdrawn and requested that appellant be substituted in its place. As a result of the previous problems with appellant, appellee refused the substitution of appellant as subcontractor on this project. This action was taken at a board meeting held August 22, 1983. Appellee's difficulties with appellant on the Gilchrist Elementary School project, however, did not end at that point. The plumbing subcontract was let to Yukon Corporation, which in turn subcontracted part of the work to Edwin Smith. When appellee attempted to reject Mr. Smith from the project, Mr. Smith claimed that appellee had no authority to take such action. The issue was submitted to arbitration, and, following a hearing, the arbitrator found in favor of appellee. The arbitrator's award included the following findings:

The School District was justified in requesting the removal of Ed Smith from the job. The District had previously rejected Teton Plumbing & Heating as a subcontractor, as it was entitled to do under the general conditions of the contract. The subcontract was then let to Yukon Corporation, who in turn gave part of the contract to Ed Smith purportedly as a sub-subcontractor. There is no question that Ed Smith and Teton Plumbing were one and the same, and it was admitted by Smith that the arrangement was made to get around the School District's rejection of his firm as a subcontractor.

After the arbitration decision, appellant, through counsel, wrote to appellee inquiring as to whether appellant would be permanently barred from obtaining further work with the School District and whether its bids would be automatically rejected. Dean Conine, the School District's assistant superintendent for business services, responded by a letter dated April 25, 1984, in which he stated in part:

In answer to the concerns expressed by Mr. Smith, it is the position of the District that Mr. Smith would be welcome to view and/or obtain copies of plans and that he would also be welcome to bid on any project. As you are well aware, the Board can reject any or all bids and were his bid the low bid and it was rejected, I would think the Board would give him an explanation.

Discussions here lead me to believe that rather than an automatic rejection, the District would require perhaps additional safeguards for a time to insure completion of a project to the District's satisfaction. Once a reestablishment of credibility has taken place, these safeguards could be relaxed.

Subsequently, in June of 1984, appellee awarded a contract for the Storey Gym remodeling to a general contractor who had listed appellant as the plumbing subcontractor. Appellant performed the plumbing work on this project. Robert Platt, the district engineer for the School District, testified in his deposition that appellant was subject to a heightened level of supervision on this project and that, even with the closer scrutiny of appellant's work, problems with appellant's workmanship were again encountered.

In the summer of 1986, appellant worked as a subcontractor on an outside sewer system project at Johnson Junior High School with the knowledge, and apparently also the approval, of the School District. Mr. Platt stated in his deposition that he did not become aware of appellant's participation in this project until after it had commenced but that he was not concerned with appellant's involvement in this instance. He stated that he believed appellant could satisfactorily perform outside utility work, as opposed to interior plumbing which requires more sophistication and expertise. The record does not indicate any problems resulting from appellant's participation in this project.

Out of this background and in this atmosphere of business relations between the parties arose the events creating the controversy and litigation in this case. In July and August 1986, appellee solicited bids for the construction of the Johnson Junior High School addition. The bids were opened on August 22, 1986, and Westates Construction Company was the low bidder. Westates listed appellant as the plumbing subcontractor.

Westates' bid was considered by appellee at a board meeting held August 25, 1986. The minutes of the meeting with respect to this bid indicate that a motion was made and seconded to accept the bid of Westates. A discussion followed in which Trustee Alfred A. Atkins stated that the plumbing subcontractor listed for the project (appellant) would not be acceptable because of problems appellee had experienced in the past with that subcontractor. Trustee Atkins then made a motion, which was seconded, to allow the architect and district engineer to negotiate for a different subcontractor. After further discussion, the original motion, as amended to allow substitution of another plumbing subcontractor, passed unanimously. The following day the Wyoming State Tribune carried an article reporting on the meeting with the headline, "School District 1 Bars Teton Plumbing." The article quoted Trustee Atkins as having said that appellant was responsible for some damage to school buildings which was irreparable and that some of the damage included " 'atrocious' installation of the heating system and 'the furnace was located in the wrong spot' and eventually had to be moved."

By letter dated October 10, 1986, appellant requested a reversal of the action taken at the August 25 board meeting and further requested a contested case hearing before the board. The superintendent of schools responded on October 23, 1986, with a letter which indirectly rejected appellant's requests and which stated that it was the present position of the School District that appellant was an acceptable contractor for outside utility work and that future bids for such work would be given the same consideration as bids from other contractors, but that appellant was not acceptable for interior plumbing work. Edwin Smith stated in an affidavit that, subsequent to this board action and the attendant publicity, appellant's business fortunes had rapidly declined, culminating in the liquidation of its assets and the discontinuation of business.

This action was commenced on November 4, 1986, when appellant filed its "APPLICATION FOR WRIT OF MANDAMUS AND COMPLAINT FOR DAMAGES" in the district court. In this complaint, appellant alleged, inter alia, a denial of procedural due process under the United States and Wyoming Constitutions and requested that the court direct appellee to provide a contested case hearing. Appellant also alleged causes of action, apparently founded on tort theories, relating to lost profits, damage to business reputation, and intentional, reckless, and malicious disregard for appellant's constitutional rights. Appellee answered with a general denial and asserted as an affirmative defense the failure to state a claim upon which relief could be granted. With leave of the district court, appellant filed an amended complaint on May 8, 1987, adding as an additional cause of action a...