SE/Z CONST. v. Idaho State University

• Decision Date: 12 April 2004
• Docket Number: No. 28649.,28649.
• Citation: 140 Idaho 8,89 P.3d 848
• Parties: SE/Z CONSTRUCTION, L.L.C., an Idaho limited liability company, and Steven W. Zambarano, individually and on behalf of all other taxpayers of the State of Idaho, Plaintiffs-Appellants, v. IDAHO STATE UNIVERSITY, a body politic and corporate, The State of Idaho, Department of Administration, acting by and through the Division of Public Works, Defendants-Respondents, and Harris Brothers Construction Co., Inc., an Idaho corporation, Intervenor-Respondent.
• Court: Idaho Supreme Court

89 P.3d 848

140 Idaho 8

SE/Z CONSTRUCTION, L.L.C., an Idaho limited liability company, and Steven W. Zambarano, individually and on behalf of all other taxpayers of the State of Idaho, Plaintiffs-Appellants, v. IDAHO STATE UNIVERSITY, a body politic and corporate, The State of Idaho, Department of Administration, acting by and through the Division of Public Works, Defendants-Respondents, and Harris Brothers Construction Co., Inc., an Idaho corporation, Intervenor-Respondent.

No. 28649.

Supreme Court of Idaho, Boise, March 2004 Term.

April 12, 2004.

Holden, Kidwell, Hahn & Crapo, Idaho Falls, for appellants. Dale W. Storer argued.

Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent, State of Idaho. Brian B. Benjamin argued.

Merrill & Merrill, Pocatello, for respondent, Idaho State University. Dave R. Gallafent argued.

Lowell N. Hawkes, Pocatello, for respondent, Harris Brother's Construction Company, Inc.

OPINION ON REHEARING

KIDWELL, Justice.

Idaho State University (ISU) and the Department of Public Works (DPW) (collectively referred to as "the State") solicited bids for renovation of the Physical Science Building at ISU. SE/Z Construction, L.L.C. (SE/Z) and Harris Brothers Construction, Inc. (Harris), among others, bid the project. The State determined that Harris was the low responsible bidder. SE/Z and its owner/member, Steven W. Zombarano (Zombarano) (referred to collectively as SE/Z unless otherwise indicated), disputed this determination and filed suit seeking to enjoin the State from awarding the contract to Harris and praying for damages. The district court determined that the State correctly found that Harris was the low responsible bidder. SE/Z timely filed an appeal and this Court affirmed the judgment of the district court. SE/Z subsequently filed a petition for rehearing. On rehearing, we affirm the judgment of the district court.

I. FACTS AND PROCEDURAL BACKGROUND

In January 2001, the State solicited bids for renovation of the Physical Science Building at ISU. The bid documents requested that each contractor submit a base bid, prices for five alternates, and individual "unit prices" for two "classroom package" audio-visual systems, referred to in the bidding documents as classroom packages Nos. 2 and 3. The bid documents stated that the State would determine the low bidder "on the basis of the sum of the Base Bid and Alternates accepted."

The State opened the bids on March 6, 2001. Harris' base bid, plus the five alternates, totaled $1,099,974. SE/Z's bid for the same items totaled $1,094,999, $4,975 less than Harris'. Harris' unit prices for classroom packages Nos. 2 and 3 were, respectively, $16,500 and $12,700. SE/Z's unit prices for classroom packages Nos. 2 and 3 were, respectively, $16,895 and $13,324. Harris' unit price for classroom package No. 2 was $395 less than SE/Z's and Harris' unit price on classroom package No. 3 was $534 less than SE/Z's.

The bidding documents discussed at least ten rooms in which classroom packages Nos. 2 and 3 might be installed, but the bidding documents did not specify in which, if any, of the rooms the State would actually elect to install the classroom packages.

After the bids were opened, but before determining which bidder was the low responsible bidder, the State considered how many of the classroom packages it could purchase. Based on the unit prices and budget considerations, ISU decided to purchase fourteen audio-visual equipment packages, two classroom packages No. 2 and twelve classroom packages No. 3. Additionally, the State decided that the project budget would allow purchase of all five bid alternates.

To determine which bidder was the low responsible bidder, the State totaled the bidders' base bids, the five bid alternates, and the price of the desired classroom packages. Based on this calculation, Harris' bid totaled $1,313,774 and SE/Z's bid totaled $1,317,726. The State determined that Harris was the low bidder.

On March 16, 2001, the State notified SE/Z of its determination that Harris was the low bidder. On March 19, 2001, SE/Z sent a letter to the State protesting the award of the contract to Harris. The letter alleged the State incorrectly considered the unit prices for the classroom packages when determining the low bid. SE/Z contended that only the base bid and five bid alternates could be considered in determining the low bidder.

On April 12, 2001, SE/Z filed a complaint alleging that the State incorrectly determined Harris to be the low responsible bidder. The complaint prayed that the court enjoin the State from awarding the contract to Harris or from initiating work on the project. The complaint also sought damages. On April 24, 2001, SE/Z filed an application for a preliminary injunction and temporary restraining order. On May 1, 2001, SE/Z filed an amended complaint, adding a claim for damages resulting from bid preparation, a taxpayer suit, and a claim pursuant to 42 U.S.C. § 1983. On May 15, 2001, the parties stipulated to the essential facts underlying the matter. The district court issued an order denying SE/Z's application for preliminary injunction on June 20, 2001.

On February 15, 2002, the parties stipulated to submitting the matter to the court for decision based upon "the documents admitted into evidence, the testimony presented at hearing on Plaintiffs' Application for Preliminary Injunction conducted on May 15, 2001, and the stipulation of the parties filed herein." The stipulation also waived the rights of the parties to present any further evidence. On May 30, 2002, the district court entered a judgment which stated that "the Court finds that the [state] acted reasonably and legally under the bidding statutes in awarding the contract to Harris Brothers, and no rights of the Plaintiffs were infringed by the process in which the bid proposals were evaluated...." SE/Z timely appealed. On appeal, this Court affirmed the judgment of the district court. SE/Z timely filed a petition for rehearing.

II. STANDARD OF REVIEW

This Court freely reviews matters of law. Martel v. Bulotti, 138 Idaho 451, 453, 65 P.3d 192, 194 (2003) (citing Polk v. Larrabee, 135 Idaho 303, 308, 17 P.3d 247, 252 (2000)). Interpreting contracts, determining a statute's meaning, and applying law to undisputed facts all constitute matters of law. See Id. This Court also exercises free review over constitutional issues. Hamilton ex rel. Hamilton v. Reeder Flying Serv., 135 Idaho 568, 569, 21 P.3d 890, 893 (2001) (citing Struhs v. Prot. Tech.'s, Inc., 133 Idaho 715, 722, 992 P.2d 164, 171 (1999)).

III. ANALYSIS

A. The State Properly Determined That Harris Was The Low Responsible Bidder Based On The Terms Of The Bidding Documents.

Bid documents should be read and construed using common principles of contract interpretation. Parks v. City of Pocatello, 91 Idaho 241, 244, 419 P.2d 683, 686 (1966) (citations omitted). When reading contract documents, this Court's primary goal is to ascertain the intent of the parties. Boel v. Stewart Title Guar. Co., 137 Idaho 9, 13, 43 P.3d 768, 772 (2002) (citations omitted). If possible, this Court should ascertain the intent of the parties from the words of the document at issue. Id. Where the parties' intent cannot be understood from the language employed in the writing, intent becomes a question of fact to be determined in light of extrinsic evidence. Opportunity, L.L.C. v. Ossewarde, 136 Idaho 602, 607, 38 P.3d 1258, 1263 (2002).

A thorough reading of the bid documents as a whole shows that the State intended that the determination of the low responsible bidder would account for the unit prices for the total number of classroom packages that ISU determined it could purchase post-bidding. The bid proposal states that the prices proposed were "to cover all expenses incurred in performing the work under the Contract Documents, of which this proposal is a part." The bid documents stated that some classroom packages were "included in the base bid in designated locations, however [the State] wishes to obtain unit prices in order to add them to classrooms indicated in § 16772, Paragraph 2.2.0 should funds be available." The bid documents as a whole show that the State wanted to purchase a number of classroom packages concurrent with the other products and services sought in the base bid and alternates.

Although contradicted by testimony of Harris Construction Inc.'s owner, SE/Z argues that a variety of contract terms show that the State did not intend to consider the price of purchasing classroom packages when determining the low responsible bidder. SE/Z notes that the bidding documents define "unit price" and "alternates" separately. Then, the bid documents state that "[t]he [State] shall have the right to accept Alternates in any order or combination ..., and to determine the low bidder on the basis of the sum of the base bid and alternates accepted." SE/Z argues that the unambiguous language of the contract showed that the State only intended to consider the base bid and alternates when determining the low bidder. This argument is appealing when specific clauses are removed from the context of the bid documents as a whole. However, to accept the reading of the bid documents SE/Z now urges—the State could not consider the classroom packages in determining the low bidder—one must accept that the State did not necessarily intend the low responsible bidder to be the bidder who could provide, at the lowest cost, the services and materials sought in the bid documents. Such a conclusion is unreasonable and shows that the reading of the bid documents urged by SE/Z is also unreasonable. Therefore, based on the bidding documents, the State correctly determined Harris was the low bidder.

B. The Plans And Specifications In The Bidding Documents Do Not Violate I.C. §§ 67-2309 and 67-5711C.

Where statutes are unambiguous, the clearly expressed intent of the legislative body must be given...