Opinion
No. CA880487.
August 14, 1989. Rehearing Denied October 18, 1989. Writ Granted January 5, 1990.
APPEAL FROM TWENTY-THIRD JUDICIAL DISTRICT COURT, PARISH OF ASCENSION, STATE OF LOUISIANA, HONORABLE JOHN L. PEYTAVIN, J.
Walton J. Barnes, Baton Rouge, for plaintiff-appellant, Airline Const. Co.
Murphy Foster, III, Baton Rouge, for defendant-appellee, Ascension Parish School Bd.
Before COVINGTON, C.J., and LOTTINGER and FOIL, JJ.
This appeal arises from a judgment sustaining the peremptory exception raising the objection of no cause of action in a suit brought by plaintiff, Airline Construction Company, Inc. (hereinafter referred to as Airline), for damages against defendant, the Ascension Parish School Board (hereinafter referred to as School Board) for violating the public bid law, La.R.S. 38:2211 et seq.
FACTS
At dispute is a contract awarded July 26, 1986, by the School Board to Picou Construction Company after the Board advertised and received bids for the completion of the Galvez Primary School project. Airline does not dispute that Picou was the lowest bidder, but contends that its bid was not in accordance with the specifications of the School Board that stated that any prequalified bids would be rejected. Airline argues that Picou qualified its bid by stating its subcontractors would undertake the work at the quoted price only if existing monies owed to them were paid before they entered into a new subcontract with Picou. Airline contends that it was the next lowest bidder, that it had bid according to the contract plans and specifications as advertised, and that its bid was not pre-qualified.
The contract called for Picou to commence work on or before August 4, 1986, and to complete the work on or before December 29, 1986. The board authorized a change order allowing an additional 95 days for completion. On March 12, 1987, Airline filed suit to recover $313,200.00 in lost profits it claims it would have made had it received the contract. The School Board filed the peremptory exception raising the objection of no cause of action, on the basis that Airline's exclusive remedy was injunctive relief pursuant to La.R.S. 38:2220.
La.R.S. 38:2220 provides: A. Any purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void. B. The district attorney in whose district a violation of this Part occurs, the attorney general or any interested party possessed a right of action to bring suit for appropriate injunctive relief in the district court to nullify a contract entered into in violation of this Part. C. Where a judgment of nullity is rendered in any action brought by a district attorney or by the attorney general pursuant to Subsection B of this Section the district court may award a civil penalty not in excess of fifty thousand dollars against each offending member of the governing authority of the public entity who authorized the violation.
TRIAL COURT
Oral arguments on the exception were heard November 9, 1987, by which time the trial court determined the contract had been substantially completed. In written reasons for judgment, the court noted it was "faced with the prospect of seeing the board pay the entire contract price to Picou Brothers Construction Company and pay an additional $313,200.00 profit to Airline Construction Company, Inc. whose only work towards the project would have been to submit a bid and file suit for damages." The court then relied on Bristol Steel and Iron Works, Inc. v. State, Department of Transportation and Development, 507 So.2d 1233 (La. 1987) to maintain the board's peremptory exception raising the objection of no cause of action. In Bristol, the Louisiana Supreme Court held that injunctive relief was not available to the low bidder when the construction of the project was over 90 percent complete.
ASSIGNMENTS OF ERROR
Airline appeals, alleging the trial court erred:
1) In finding that plaintiff's petition did not state a cause of action;
2) In holding that the only relief available to a wronged "low bidder" on a Public Works contract, where the statutory bidding requirements have been violated, was that of injunctive relief;
3) In concluding that to allow plaintiff the right to recovery for the School Board's violation of the Public Bid Law would subject the defendant to "double liability"; and
4) In considering matters which were not properly before the court on an exception of no cause of action.
ASSIGNMENTS OF ERROR NOS. 1 AND 2
The threshold issue is whether a low bidder can seek damages without seeking injunctive relief?
In support of the trial court's decision, the School Board basically argues that La.R.S. 38:2220 establishes injunctive relief as the exclusive remedy. Additionally, the School Board argues that injunctive relief and damages are mutually exclusive, that is, you cannot recover both at the same time.
La.R.S. 38:2220 was enacted by Act 103 of 1977, and amended by Act 795 of 1979. Subsection A of 2220, the null and void provision, has always been a part of the public contract law, first enacted by Act 73 of 1926. The injunctive relief provision, Subsection B, however, was not added until 1979. Nevertheless, the courts have usually allowed such relief.
We do not read into the injunctive relief provision of the statute any intention on the part of the legislature to limit the relief available. If the legislature had so intended to limit the relief available, it could have very easily done so. We are bolstered in this interpretation (1) by the failure of the legislature to provide a time period within which to seek injunctive relief, and (2) the enactment of Act 795 of 1979.
In the absence of a time period within which to seek injunctive relief, an aggrieved party could file suit at any time after the awarding of the contract, even after the completion thereof. Yet, we realize the reluctance on the part of the courts to enjoin a contract that has been partially completed, much less substantially completed. See Bristol Steel. As noted by Justice Lemmon in his concurring opinion in Bristol, a problem occurs in public construction contract cases because of the lag time which exists between the time suit is filed, a hearing is held in the trial court, and the ultimate resolution at the appellate level. This time lag can cause a court to ultimately deny injunctive relief because of substantial completion, and yet, under the School Board's theory, the aggrieved party would be without a remedy.
Additionally, we are convinced that Act 795 of 1979 was enacted partially in response to Haughton Elevator Division v. State, Division of Administration, 367 So.2d 1161 (La. 1979). Haughton was decided on January 29, 1979, with a rehearing denied on March 5, 1979.
In Haughton, plaintiff was the low bidder on an elevator service contract, but was disqualified by defendant as not responsible. The Supreme Court fashioned certain procedural safeguards before a low bidder can be disqualified as not responsible. Additionally, and in conclusion, the Supreme Court determined that inasmuch as injunctive relief might not be an adequate remedy, plaintiff might amend its petition to claim damages. Act 795 incorporated the procedural safeguards fashioned by the Supreme Court. However, in expressly providing for injunctive relief, the legislature either failed or refused to limit the remedy to injunctive relief, thus allowing damages as an available remedy to aggrieved parties.
Therefore, we conclude the trial court was in error in maintaining the peremptory exception raising the objection of no cause of action.
ASSIGNMENTS OF ERROR NOS. 3 AND 4
Airline argues further that the trial court erred in considering evidence when it noted that the project was substantially complete by the time that plaintiff filed suit. The trial court obtained this fact from the School Board's reply memorandum. We agree with Airline. La. Code Civ.P. art. 931, Paragraph 3 states: "[n]o evidence may be introduced at any time to support or controvert the objection that the petition fails to state a cause of action."
Airline also complains that the trial court erred in concluding the School Board would have to pay twice if it ordered the Board to pay damages to Airline inasmuch as the Board has already paid Picou Construction Company for the work done on the project.
La.Civ. Code art. 2033 provides: "[a]n absolutely null contract . . . is deemed never to have existed. The parties must be restored to the situation that existed before the contract was made. If it is impossible or impracticable to make restoration in kind, it may be made through an award of damages." The second paragraph of the above code article further provides that "a performance rendered under a contract that is absolutely null because its object or its cause is illicit or immoral may not be recovered by a party who knew or should have known of the defect that makes the contract null."
In cases similar to the one before us, the courts have usually applied the principles of equity so as to prevent unjust enrichment. In Coleman v. Bossier City, 305 So.2d 444 (La. 1974), the Louisiana Supreme Court held that where, although a contract was null and void as being in violation of the public bid law, the developers were entitled to recover actual cost of materials, services, labor, etc., because there was no actual fraud and the parties had acted in good faith. This approach was recognized in Comment (d) to La.Civ. Code art. 2033, enacted in 1984, which the Comments state, did not change the law.
Accordingly, for the above and foregoing reasons, the judgment of the trial court sustaining defendant's exception raising the objection of no cause of action and dismissing plaintiff's claim is therefore reversed, and this cause is remanded to the district court for further proceedings consistent with this opinion. Costs of this appeal are taxed to defendant, the Ascension Parish School Board in the amount of $283.00.
REVERSED AND REMANDED.
FOIL, J., concurs and assigns reasons.
COVINGTON, J., concurs for the reasons assigned by FOIL, J.
The issue in this case is whether an aggrieved bidder on a public works project is barred from seeking monetary relief against a public entity alleged to have violated the Public Contracts Law. We hold injunctive relief is not the exclusive remedy through which an aggrieved bidder may seek redress for violations of the Public Contracts Law, and reverse the action of the trial court in dismissing the suit on that basis.
FACTS
Airline Construction Company, Inc. (Airline), plaintiff, filed the instant lawsuit on March 12, 1987, claiming defendant, the Ascension Parish School Board (School Board) violated the Public Contracts Law in awarding a contract to another bidder. The petition set forth the following allegations: The School Board advertised for bids for the construction of the Galvez Primary School and stated in its specifications that any pre-qualified bids would be rejected. On July 15, 1986, the School Board improperly awarded the contract to Picou Brothers Construction Company (Picou), which had pre-qualified its bid. Therefore, Airline claimed, it was entitled to the contract as the lowest responsible bidder under the Public Contracts Law, and demanded the amount of $313,200.00 for lost profits and other emoluments it would have been entitled to had the contract been awarded to it. There is no mention in Airline's petition of the status of construction on the project at the time the suit was filed.
The School Board filed a peremptory exception of no cause of action. In a memorandum in support of the exception, the School Board argued that plaintiff failed to allege any facts in support of its claim that Picou pre-qualified its bid. The School Board further contended that an aggrieved bidder is barred under the Public Contracts Law from seeking monetary relief, and asserted injunctive relief is the exclusive remedy by which the bidder may seek redress against a public entity charged with violating the law. In a reply memorandum, the School Board argued that Airline failed to timely assert its claim, thus allowing the project to progress to near completion prior to instituting the present suit, and as a result, it may be condemned to pay the contract price twice. The School Board then claimed that even if Airline had a cause of action for damages, it should be estopped from asserting the claim by the application of the doctrine of equitable estoppel. Airline replied, charging that it was inappropriate to assert the affirmative defense of estoppel in an exception of no cause of action, which would require a full hearing on the merits to determine whether the elements were present under the facts of this case.
The trial court heard oral argument on the exception of no cause of action on November 9, 1987. The parties conceded on that date that the project was complete. The trial court referred to the School Board's claim that the project was substantially complete when the lawsuit was filed, and apparently ruled that because Airline had no right to injunctive relief at that point in time, it had no remedy against the School Board for the alleged violations of the Public Contracts Law. In so ruling, the court expressed concern that the School Board may have to pay the entire contract price twice, and surmised this was the result the Supreme Court sought to avoid in Bristol Steel and Iron Works, Inc. v. State, Department of Transportation and Development, 507 So.2d 1233 (La. 1987). In that case, the Supreme Court ruled that an injunction was improperly issued where construction of a public project was over 90% complete, or "substantially complete." The Court concluded injunctive relief was not available to an aggrieved bidder who had not shown irreparable injury, and pointed out that a court could not enjoin a "fait accompli."
Airline took this appeal, contending that the trial court erred in ruling that its sole remedy was injunctive relief, and arguing that the trial court improperly considered evidence outside of its petition in ruling on the exception of no cause of action.
DISCUSSION
In assessing the propriety of the trial court's action in granting the exception of no cause of action in this case, we note that the purpose of the exception is to determine the legal sufficiency of the petition. Essentially, the exception questions whether the law affords any remedy to the plaintiff under the allegations of the petition. The exception is triable on the face of the petition and any attached documents, and no evidence may be introduced in support of or to controvert the exception. All well-pleaded facts are accepted as true and any doubts must be resolved in favor of sufficiency of the petition. La. Code Civ.Pro. art. 931; See also Darville v. Texaco, Inc., 447 So.2d 473 (La. 1984); Bryant v. Middlebrooks, 486 So.2d 188 (La.App. 1st Cir. 1986); Quality Manufacturing Co., Inc. v. Direct Factory Stores, Inc., 451 So.2d 1335 (La.App. 1st Cir. 1984). Airline's pleading contends the School Board awarded a contract to another bidder in violation of the Public Contracts Law, and claims it should have been awarded the contract as the "lowest responsible bidder." Airline further contends it is entitled to monetary damages resulting from the wrongful award of the contract. Accepting as true Airline's claims the School Board violated the Public Contracts Law in awarding the contract to Picou Construction Company, and was obligated under the law to award the contract to Airline, we must decide whether Airline is precluded under Louisiana law from seeking monetary relief for the violation.
The Public Contracts Law requires that certain public work be advertised and let by contract to the "lowest responsible bidder" who bid according to the contract, plans and specifications as advertised. La.R.S. 38:2212(A)(1)(a). The Public Contracts Law further provides that ". . . any contract entered into for the construction of public works, contrary to the provision of this Part shall be null and void." La.R.S. 38:2220(A). The statute authorizes "any interested party" who possesses a right of action "to bring suit for appropriate injunctive relief in the district court to nullify a contract entered into in violation of this Part." La.R.S. 38:2220(B). Finally, La.R.S. 38:2220(C) authorizes the imposition of a civil penalty against each of the members of the governing authority of the public entity who authorized the violation in an action brought by the district attorney or attorney general. We find nothing in La.R.S. 38:2220 indicative of an intent on the part of the legislature to bar an aggrieved bidder from seeking monetary damages against a public entity for failing to comply with the Public Contracts Law.
The proposition that an aggrieved bidder may seek damages against a public entity for violations of the Public Contracts Law was expressed by the Louisiana Supreme Court in Haughton Elevator Division v. State, Division of Administration, 367 So.2d 1161 (La. 1979). In that case, the low bidder on a public project, which had been disqualified by a public entity, sued to enjoin the letting of the contract to other bidders. The Court ruled the bidder had been improperly disqualified. In addressing the relief to be afforded, the Court expressed concern over the events which transpired because of the time lapse which occurred between the filing of the initial injunction suit and the Court's determination that the act had been violated. The Court surmised that even though the bidder's original petition had only requested an injunction, the petition could be supplemented to claim damages from the awarding authority for wrongfully awarding the contract to another bidder, citing La.Civ. Code arts. 1934 and 2315. Id. at 1169, n. 8.
For the current codal articles pertaining to damages for breach of contract, see La.Civ. Code arts. 1944, et seq.
Recently, this Court cited Haughton Elevator Division for the proposition that an aggrieved bidder may be entitled to monetary damages against a public entity for its failure to comply with the Public Bid Law. In Jensen Construction Company v. Department of Transportation and Development, 542 So.2d 168 (La.App. 1st Cir. 1989), we noted that the jurisprudence reflects the principle that an aggrieved bidder's right to appropriate relief may be affected by the passage of time rather than extinguished by events subsequent to the filing of the initial suit charging the violation, such as the completion of the challenged project.
We believe these cases recognize that it would be unfair to establish a rule under which aggrieved bidders would in all instances be barred from obtaining monetary damages for violations of the Public Contracts Law. The inequities of such a ruling are particularly telling in situations wherein an aggrieved bidder files an injunction suit prior to or immediately in response to an alleged wrongful award of a contract, but due to the lapse of time before a determination on the merits can be made, the project is near completion. The bidder in reality may no longer enjoin the project. It would be unfair to rule that the bidder in this scenario would not be entitled to some relief, perhaps in the form of monetary damages.
The difficulty in this case lies in the fact that Airline waited a substantial period of time following the award of the contract before instituting the suit, when obviously the construction was well underway. Indeed, the trial court noted that the School Board may be faced with paying the contract price twice. However, the possible inequities in this case occasioned by the delay are more appropriately addressed through means other than an exception of no cause of action. An exception of no cause of action is not the proper procedural vehicle to address the timelessness of Airline's suit. See Bryant v. Middlebrooks, 486 So.2d at 189.