Wiseman Constr. Co. v. Maynard C. Smith Constr. Co.

• Decision Date: 10 November 2015
• Docket Number: No. 15–0635.,15–0635.
• Citation: 779 S.E.2d 893
• Parties: WISEMAN CONSTRUCTION COMPANY, INC., Defendant Below, Petitioner v. MAYNARD C. SMITH CONSTRUCTION COMPANY, INC., Plaintiff Below, Respondent, David Tincher, Director of the Purchasing Division of the Department of Administration; The West Virginia Lottery Commission; John C. Musgrave, Director of the West Virginia Lottery ; Jason Pizatella, Cabinet Secretary of The Department of Administration; and Robert S. Kiss, Cabinet Secretary of the Department of Revenue, Defendants Below, Respondents.
• Court: West Virginia Supreme Court

779 S.E.2d 893

WISEMAN CONSTRUCTION COMPANY, INC., Defendant Below, Petitioner

v. MAYNARD C. SMITH CONSTRUCTION COMPANY, INC., Plaintiff Below, Respondent,David Tincher, Director of the Purchasing Division of the Department of Administration; The West Virginia Lottery Commission; John C. Musgrave, Director of the West Virginia Lottery ; Jason Pizatella, Cabinet Secretary of The Department of Administration; and Robert S. Kiss, Cabinet Secretary of the Department of Revenue, Defendants Below, Respondents.

No. 15–0635.

Supreme Court of Appeals of West Virginia.

Submitted Oct. 14, 2015.

Decided Nov. 10, 2015.

James M. Cagle, Esq., Charleston, West Virginia Attorney for Petitioner, Wiseman Construction Company, Inc.

Patrick Morrisey, Esq., Attorney General, Kelli D. Talbott, Esq., Senior Deputy Attorney General, Greg S. Foster, Esq., Assistant Attorney General, Charleston, West Virginia, Attorneys for State Respondents.

John Philip Melick, Esq., Nicklaus A. Presley, Esq., Jackson Kelly PLLC, Charleston, West Virginia, Attorneys for Respondent, Maynard C. Smith Construction Company, Inc.

WORKMAN, Chief Justice:

Respondent Maynard C. Smith Construction Company, Inc. (hereinafter "MCS"), the low bidder on a government construction contract, filed suit to rescind the contract awarded to the next low bidder, Petitioner Wiseman Construction Company, Inc. (hereinafter "Wiseman"). Following an evidentiary hearing, the Circuit Court of Kanawha County, West Virginia, made detailed findings of fact and conclusions of law finding that the determination to disqualify MCS "was not rational" and "was based upon an ambiguous ‘requirement’ set forth in the bid documents that was of no consequence" to the goal of the State to ensure the work was performed by the lowest qualified responsible bidder. The circuit court granted MCS's petition for writ of mandamus and ordered that the contract be awarded to MCS. Wiseman appealed.

The question before this Court is whether the public officials with the Purchasing Division of the Department of Administration and the Lottery Commission (hereinafter collectively the "Agency")¹ exercised reasonable discretion in determining Wiseman was the lowest qualified responsible bidder on the project. For the reasons that follow, we find the Agency did not, and we affirm the judgment of the circuit court.

I. FACTUAL AND PROCEDURAL HISTORY

The Agency initiated the competitive bidding process to procure construction work on the Lottery's existing headquarters in Charleston, West Virginia. The Agency's instructions to bidders stated that "Bidders shall use complete sets of Bidding documents in preparing Bids." Six companies submitted bids on the approved bid form. MCS submitted the lowest bid at $7,630,800. Wiseman's bid was second-lowest at $7,786,000. The Agency initially recommended that the project be awarded to MCS; by letter dated March 10, 2015, the Agency informed MCS that it was "the apparent successful bidder" on the contract.²

On March 19, 2015, Wiseman e-mailed the Agency and requested that MCS's bid be disqualified because MCS did not submit a "qualification statement" as set forth in the bid documents; bidders were directed to include at least three references from other projects consisting of door replacement and other related construction operations similar to those required on the project.³ The bid documents erroneously provided that "[t]he Proposal Form includes a section in which the references should be listed." However, neither "Section I" nor "Section II" of the Agency's bid form included a section in which the references could be listed. Furthermore, no information concerning references was among the specified "Required Documents" or was otherwise addressed in the Agency's published requests for bids. Nevertheless, three of the six bidders (including Wiseman) submitted references on documents which were not part of the mandatory bid form.⁴ The three other bidders (including MCS) submitted their proposals on the bid form without attaching any documentation concerning references.

After receiving Wiseman's protest, employees of the Lottery Commission reviewed the bidding documents and consulted with employees of the Purchasing Division. The employees believed they did not have the discretion to waive the qualification statement; they determined it was a mandatory requirement because the directions provided that bidders "shall include" a list of references on the proposal form. Ultimately, Respondent David Tincher, the Director of Purchasing, awarded the contract to Wiseman after disqualifying MCS for failure to include the references. MCS protested this decision and Mr. Tincher denied the protest without a hearing on April 21, 2015.

On April 22, 2015, MCS filed a petition for writ of mandamus and complaint for declaratory and injunctive relief. At the April 30, 2015, hearing before the circuit court, the Agency called two witnesses, Mr. Tincher and Danielle Boyd, the Lottery's general counsel. Mr. Tincher testified that the Agency did not believe it had the authority to waive the qualification statement: "We felt like our hands were tied." Ms. Boyd testified that the Agency never contacted the references provided by Wiseman. She stated the architect on the project had experience working with both MCS and Wiseman and felt they were qualified bidders. The witnesses could not explain who specifically requested that the bidders list references or why references were requested for this project.

By order entered June 22, 2015, the circuit court granted MCS's petition for writ of mandamus and ordered the Agency to award the contract to MCS. The circuit court found that the Agency's decision to disqualify MCS's bid was not "rational" because the requirement that bidders submit references was ambiguous and served no purpose. The circuit court cited West Virginia Code of State Rules § 148–1–46 (2015), which permits the Purchasing Director to "[w]aive minor irregularities in bids or specifications when the Director determines such action to be appropriate[.]" The circuit court concluded, in part, that

[i]t is fundamentally unfair for State agencies to pit qualified, sophisticated well-established businesses against one another to argue about the purpose of language in bid documents that no one in charge can explain where the language came from or why it was there or how vendors were supposed to furnish it, and even upon review of the bids, was never utilized or relied upon. It is indeed this conduct that is shocking to the conscience of the [c]ourt.

Wiseman timely appealed this order.

II. STANDARD OF REVIEW

We are asked to review the circuit court's order granting MCS's petition for writ of mandamus. As a preliminary matter, we note that a disappointed bidder has standing to judicially challenge the award of a public contract to another bidder. In syllabus point one of State ex rel. E.D.S. Fed. Corp. v. Ginsberg, 163 W.Va. 647, 259 S.E.2d 618 (1979), this Court held:

An unsuccessful bidder, who has been unlawfully deprived of a contract by agency action under the State purchasing statutes, W.Va.Code, 5A–3–1 et seq., has standing to prosecute an action in mandamus to require that the contract be awarded to him or for an injunction to enjoin violation of the requirement that contracts be awarded to the lowest responsible bidder. Syllabus pt. 2 of Pioneer Co. v. Hutchinson, , 220 S.E.2d 894 (1975) is overruled.

On appeal, our standard of review is de novo. In syllabus point one of Harrison County Commission v. Harrison County Assessor, 222 W.Va. 25, 658 S.E.2d 555 (2008), this Court held: "A de novo standard of review applies to a circuit court's decision to grant or deny a writ of mandamus." Under this standard, " ‘we consider de novo whether the legal prerequisites for mandamus relief are present.’ " McComas v. Bd. of Educ. of Fayette Cty., 197 W.Va. 188, 193, 475 S.E.2d 280, 285 (1996) (quoting State ex rel. Cooper v. Caperton, 196 W.Va. 208, 214, 470 S.E.2d 162, 168 (1996) ). Therefore, we take note that

" ‘[m]andamus lies to require the discharge by a public officer of a nondiscretionary duty.’ Point 3 Syllabus, State ex rel. Greenbrier County Airport Authority v. Hanna, 151 W.Va. 479[, 153 S.E.2d 284 (1967) ]." Syllabus point 1, State ex rel. West Virginia Housing Development Fund v. Copenhaver, 153 W.Va. 636, 171 S.E.2d 545 (1969).

Syl. Pt. 1, State ex rel. Williams v. Dep't of Military Affairs, 212 W.Va. 407, 573 S.E.2d 1 (2002). With these principles in mind, we consider the merits of the parties' arguments.

III. DISCUSSION

Wiseman seeks our reversal of the circuit court's order granting MCS's petition for writ of mandamus and directing the Agency to award the contract to MCS. Wiseman argues that the circuit court misapplied the standard of review articulated in Ginsberg and instead substituted its judgment for that of the Agency's. MCS responds that the circuit court exercised its proper authority to correct the "irrational" disqualification of MCS and saved more than a hundred thousand dollars of scarce public funds.

The Agency filed a summary response and conceded that the request for proposals used to solicit bids for the project contained a number of errors and those errors created confusion among the bidders. Although it argued below that it had no discretion to waive the qualification statement, the Agency has retreated from that position; it stated in its brief before this Court that it exercised appropriate discretion by not waiving that requirement. During oral argument, the Agency explained that it did not appeal the circuit court's ruling, not because it agreed with the ruling, but because it needed to commence the renovation project immediately. The Agency acknowledged "the taxpayers of the State of West Virginia are best served" by allowing the circuit court's order to stand.⁵

This case involves two questions. We first address whether the Agency had the discretion to waive the qualification...