Opinion
No. 547097
June 4, 2003
MEMORANDUM OF DECISION RE POST-APPEAL ISSUES
In this case, the plaintiff company had submitted a bid on a five-year contract to transport the school children of Hartford. The plaintiff was not awarded the contract which was to run from September 1998 for a five-year period; the contract was awarded to another company, Laidlaw. As a result of this, the plaintiff filed a complaint in several counts on July 8, 1998. On August 7, 1998, another judge denied the plaintiff's motion for a temporary restraining order. This motion could perhaps properly be described as a motion for a temporary injunction; it did not merely request that some status quo be maintained until injunctive relief could be litigated, it sought to prevent the defendant from awarding the contract to any company other than the plaintiff or permitting any other company to perform work on the contract. The motion was filed in August, school was set to begin within a few weeks, the children had to be transported by someone — if the only entity left to do that, by definition, was the plaintiff then success on that motion for the plaintiff would have required the city to award the contract to the plaintiff or cancel the school year.
The case was not tried to the jury until the end of September 2000. The jury returned a verdict in favor of the plaintiff on the anti-trust claim. The court granted the motion to set aside the verdict on February 21, 2001 and also held that Laidlaw was a necessary party as to any further proceedings. The court set aside the verdict in large part relying on Brunoli v. Town of Branford, 247 Conn. 407 (1999), but also concluded that the $500,000 verdict "must be set aside for failure to prove damages to a reasonable certainty so that the jury verdict was based on sheer speculation."
The court will now discuss the specific requests for permanent injunctive relief.
The amended complaint sought monetary damages and permanent injunctive relief; the latter request was as follows:
C. A permanent injunction retraining the defendant from entering into a contract with any bidder or other party other than the plaintiff for school bus transportation.
D. A permanent injunction restraining the defendant from permitting any party to perform work under the contract for the project.
Between September 1998 when the contract began and the start of trial the plaintiff did not press for permanent injunctive relief requesting the court to allow it to take over the contract. On October 23, 2000, after the damage verdict, the plaintiff filed a "Memorandum of Law in Support of a Claim for Injunctive Relief" in which it requested the court to "order that the defendant award the plaintiff a five (5) year contract commencing either in January of 2001 or at the commencement of the school year in 2001 whichever is in the best interest of the Hartford school children." To its memorandum, the plaintiff "attache(d) its business plan that it intende(d) to execute if awarded the contract." On November 13, 2001, the plaintiff filed a "Motion for Permanent Injunction" which asked that "the court award it the contract for which it was the low bidder in 1998." To this motion was attached the October 23, 2000 memorandum On December 20, 2001, "a Joint Motion for Stay" was filed wherein the parties stipulated to the staying of proceedings on the plaintiff's motion for a permanent injunction. As to this motion, the defendant raised the issue of mootness and regarding this the stipulation read as follows:
The parties further stipulate that the stay will be effective pending the decision by the Connecticut Supreme Court relating to the appeal of the issues briefed in AC No. 21705.
The parties further stipulate that as part of this stay, they have agreed to freeze the status quo as of December 2001, with respect to the Defendants' claim of mootness. In other words, the Defendants claim that the Plaintiff's motion for permanent injunction is moot since the City of Hartford awarded a five-year school bus contract in August 1998. The parties stipulate that this issue will be frozen as it exists in December 2001, which is over three years since the award of the contract to Laidlaw.
The Defendants claim that the Plaintiff's motion is moot, but even if it is not moot, the Plaintiff is only entitled to approximately 1.5 years of the balance of the contract. In this stipulation, the parties agree that the Plaintiff is not further prejudiced by agreeing to this stay with respect to the mootness issue. At a subsequent point in time when the mootness issue is before the Court, the parties agree that the Court may consider that issue as though there was still eighteen months remaining in the term of the contract.
On December 31, 2002, the Supreme Court dismissed the plaintiff's appeal from this court's action in setting aside the verdict holding that this court had not rendered a final judgment susceptible to appeal because two issues remained undecided, one of which was the plaintiff's claim for permanent injunctive relief, and the other, the alleged violation of the City's municipal code. In response to the decision, this court set a hearing date to address the issues remaining in the case. The plaintiff, on March 21, 2003, filed a "Memorandum of Law Regarding Case Status and Post Appeal Issues."
In the final count of the amended complaint, the plaintiff alleged a section of the municipal code was illegal and actions taken thereunder were ultra vires since § 7-148w (c) of the Connecticut General Statutes does not authorize the provisions of the municipal code.
In its brief on post-appeal issues, the plaintiff did not address the merits of this claim but said that under the case law the defendant has impliedly ratified the Laidlaw contract and may be estopped from denying its validity. Thus, the plaintiff's claims that the contract should be set aside as ultra vires may beyond remediation at this stage in that no effective, practical and fair relief can be granted to the plaintiff with respect to this count. The court considers this issue to be abandoned.
The plaintiff takes the position that given the factual and procedural posture of this case "the only fair remedy . . . would be for the court to enter a mandatory injunction and write a new contract between the parties;" in fact "the only fair remedy would be the awarding of a prospective five (5) year contract to (the Plaintiff company) on a cost plus ten percent (10%) profit basis." The court will discuss how the plaintiff arrives at that position and then decide what should be done.
Counsel for the plaintiff first describes the two recognized forms of injunctive relief and says "Prohibitory injunctive relief directs the defendant not to do a certain thing . . . mandatory injunctive relief commands a defendant to do some positive act, or in certain circumstances, restrains the defendant from permitting a previous wrongful act to continue thus compelling (the defendant) to undo it" (citing Black's Law Dictionary).
The plaintiff first argues that any claim for permanent injunctive relief by means of a prohibitory injunction would be "moot," "nonjustifiable" and "ineffectual" since the original contract between the defendant city and Laidlaw is almost completed running out at the end of the 2003 school year. In Karis v. Alexandra Realty Corp., 179 Conn. 390, 402 (1980), the court said: "The extraordinary nature of injunctive relief requires that the harm complained of is occurring or will occur if the injunction is not granted." But as the plaintiff points out, the harm of securing and being able to carry out the terms of the original five-year 1998 contract has already occurred here — for all practical purposes the term of that contract has run its course.
The plaintiff argues and the court agrees that prohibitory injunctive relief would be completely ineffectual — what relief court be given? It is the end of May, the contract would only run into June 2003 — should the court enjoin Laidlaw from completing the few weeks left on the contract and allow the plaintiff to complete it if it can? That would be the type of impracticality equity courts should not get involved in and would provide no remedy for the plaintiff.
The plaintiff then maintains that because of the foregoing factual realities it is entitled to a mandatory injunction. In what it describes as appropriate injunctive relief the plaintiff argues the court should employ "well-recognized jurisprudence" and order that a " prospective, five (5) year contract be awarded to the plaintiff on a cost plus ten percent (10%) basis." (Emphasis by the court.) The plaintiff refers to a specific performance case as applicable to the present situation before the court, Robert v. Lawrence Associates, Inc., 178 Conn. 1 (1979), where the court says at pp. 18-19
Applications for specific performance of agreements to sell land are addressed to the discretion of the court which must determine upon the facts and under the circumstances whether the contract is fair, reasonable, on good consideration, free from fraud, surprise or mistake and made according to the requirements of the law. As a general rule, equity, in deciding whether to grant specific performance in enforcing a contract, will consider the fairness of an agreement in accordance with the circumstances as they existed at the time of the execution of the contract even though the property contracted to be sold becomes considerably more valuable at the time performance is due.
The court will now attempt to discuss the merits of the plaintiff's position. First, the defendant has raised a question about the authority to issue a mandatory injunction in this case. The defendant argues that this particular relief was never asked for in the complaint. It is also true that there was never an amendment to the complaint requesting such relief after the temporary restraining order was denied and Laidlaw began performance on the contract. But that the plaintiff was seeking mandatory injunctive relief was no secret to the litigants. On October 23, 2000, the plaintiff filed a brief requesting such relief for the remainder of the contract. (Also see December 2001 stipulation.)
Even though mandatory relief was not requested in the complaint that would not necessarily prevent the court, jurisdictionally, from granting such relief if it were to be deemed appropriate. In Crowell v. Palmer, 134 Conn. 502 (1948), there was, in effect, a claim for mandatory relief — that the defendant company in drawing up overtime work lists not exclude the names of nonunion workers in violation of the collective bargaining agreement. The Crowell court said: "it is true that none of the specific prayers for injunctive relief are adapted to the accomplishment of the result sought, prevention of further discrimination in making out the lists, but the court, if satisfied upon a full hearing that the plaintiffs should have relief might permit, or even direct, an amendment to the prayers for relief to accomplish that end." Id., 512. The court will deal with the plaintiff's request for mandatory relief on the merits.
The question still remains as to whether mandatory injunctive relief should be granted in this particular case. Does a court have power, generally speaking to order such relief? And if it does, is the type of relief requested here an appropriate form of that relief or, more to the point, an appropriate subject of injunctive relief in the first place?
Historically, it has been said that courts should be reluctant to grant mandatory injunctions. For example, in Herbert v. Smythe, 155 Conn. 78, 85 (1967), the court said "Relief by way of mandatory injunction is an extraordinary remedy and should only be granted under compelling circumstances." An Am.Jur. article recognizes that equity courts have power to issue prohibitory and mandatory injunctions but the latter "are nonetheless disfavored as a harsh remedy and are used only with caution and in compelling circumstances." 42 Am.Jur.2d, § 5 at p. 560, cf "Injunctions," 43 CJS § 8 at p. 755. Dobbs, in his Law of Remedies, 2d Ed., Vol. 1 at § 2.9 pp. 224-25, as usual dismisses a linguistic analysis and says the so-called "intrusion or difficulties" presented by mandatory injunctions "usually result, if at all, only because of the injunction's content rather than its mandatory form." In an explanatory footnote he says: "For example, courts have long resisted orders compelling construction of buildings on the ground that such orders might commit too many judicial resources or require judges to behave too much like managers . . . But the equally mandatory decree that requires only a conveyance of Blackacre is commonplace . . ." (Fn 12, pp. 224-25.)
More recently, Appellate Courts in our state have had no problem with the concept of issuing mandatory injunctions where appropriate. As earlier discussed in the case of Crowell v. Palmer, 134 Conn. 502, 512 (1948), the court held the trial court erred in denying injunctive relief on an erroneous conclusion that the plaintiffs failed to exhaust their remedies under the Federal Railway Labor Act. The court held certain non-union workers had a right to seek injunctive relief against the New York, New Haven and Hartford Relief and the union for failure to honor the terms of the collective bargaining agreement giving them rights to overtime work. Any injunction would of necessity have been mandatory — it would have required the defendants to comply with the terms of an ongoing agreement. Similarly, in Harvey v. Daddona, 29 Conn. App. 369 (1992), it was held that the trial court did not abuse its discretion in issuing a mandatory injunction. There, the parties had entered into a separation agreement incorporated into a divorce decree. The trial court determined the defendant under the agreement had an obligation to pay expenses regardless of cost. The trial court ordered damages for past failures to pay and enjoined the defendant from refusing to pay in the future. Id., 377-78. In Stamford v. Kovac, 228 Conn. 95 (1999), the court decided that trial courts even had authority to issue mandatory injunctions in advance of a final adjudication of the parties' rights citing federal and state authority. Id., 100-02. One of the cases cited involved a private anti-trust action where the federal court issued a mandatory injunction compelling the parties to continue their ongoing business relationship (basis of suit was that defendant manufacturer refused to continue to sell products to plaintiff on same terms as it sold to other purchasers), Bergen Drug Co., Inc. v. Parke, Davis Co., 307 F.2d 725, 726, 728-29 (Ca 3, 1962).
Certainly our courts can issue mandatory injunctions, but the foregoing discussion of the Connecticut cases indicates why the mandatory injunctive relief the plaintiff requests is inappropriate in this case. Mandatory relief is appropriate to enforce an existing obligation or right under a contract, divorce decree or any right arising out of the application of substantive common law. But in the general commentaries previously cited, the court could find no case where injunctive relief was being used as a mechanism to redress a past wrong. In fact, at § 2 of the 42A Am.Jur.2d article at pp. 553-54, the following observation is made: "Injunctive relief is generally not intended to redress or punish for past wrongs. Coercive in nature, injunctive relief is meant to restrain motion and to enforce in action. To obtain injunctive relief based on past injury, the plaintiff must show a real and immediate threat that the injury will continue or be repeated. Accordingly, rights already lost and wrongs already perpetrated cannot be corrected by injunction."
In fact, the jury found in favor of the plaintiff under the state anti-trust act. That act has a section providing for injunctive relief, § 35-34. In relevant part, that section says injunctive relief may be sought "against threatened loss or damage to (a litigant's) property or business by any violation of this chapter." The statute merely reflects the historical ambit of traditional injunctive relief. It can protect against ongoing and/or future loss when an existing violation is shown, it is not a remedy for past financial injury.
The claimed wrong here, as the plaintiff must concede, is the failure to award a 1998 five-year contract to the plaintiff. No matter how the plaintiff characterizes its present request for relief, and despite its equity label, in effect it is a skillful attempt to have the court award damages to the plaintiff for what is claimed to be a past wrong — the injunction seeks a five-year contract at cost plus ten percent (10%) profit over the life of the new court-ordered five-year contract.
The relief requested by the plaintiff would stand Brunoli v. Town of Branford, 247 Conn. 407 (1999), on its head. If the plaintiff's position is accepted as correct for the purposes of discussion, we would have a situation where the citizens of Hartford have been improperly subjected to a five-year contract that should have gone to the plaintiff five years ago. And what is the proposed solution? In an attempt to compensate the plaintiff for the lost profits of the first five-year contract — a concept Brunoli certainly does not endorse — the court is now being asked to mandate a new five-year contract running to the plaintiff. And what would be the result of all this — the court would in effect deprive the municipality, for a new five-year period, of the right to take advantage of those benefits thought to accrue to cities because of the operation of municipal bidding statutes. By diktat, the court would be abrogating the city ordinances requiring competitive bidding.
In addition to these conceptual problems, the defendant city's brief ably sets forth the practical problems the court would face in "creating" or monitoring such a contract at pp. 13-15 of its April 1, 2003 brief:
How would "cost" be determined? What safeguards would be incorporated into the contract to ensure the "costs" are appropriately determined and measured over the life of the contract? On what basis would the Court determine that a ten percent profit was appropriate? Have market forces in place since 1998 changed the industry standard for expected profit? Would Plaintiff actually have earned a ten percent profit if it had performed the contract? Why should Plaintiff be insulated from the risk that it might not earn a ten percent profit as it allegedly expected? How can Hartford's ability to predict its future cost of school bus transportation services be protected?
How would Hartford's changing operational needs for school bus transportation be taken into account? What if Hartford increased or decreased or changed the number of runs or the configuration of bus runs? What if Hartford chooses to require different transportation technology or equipment? What if Hartford specifies a different schedule for services?
What if Hartford is able to secure future school bus services from a different vendor for a smaller cost? What if another vendor can provide a higher quality of service than can the plaintiff? What about the rights of innocent school bus transportation vendors who played no role in any alleged wrongdoing to pursue Hartford's business?
Would the Court's decisions on any of these points be subject to appeal? What standards would the Court of Appeals use to judge the trial court's judgments? What if it makes sense to adjust the contract after a few years? Would the Court have jurisdiction to order change? Could the parties negotiate changes without the Court's approval?
And as far as that goes who is to say that a five-year contract is in the interest of the people of Hartford. Would the city have the right now to now consider a three- or four-year contract? Is that option off the table because otherwise the plaintiff cannot be fully compensated for losing the first contract without getting a cost plus 10% profit five-year contract? Except in cases of invidious discrimination that doctrine still holds which states that "courts will act with extreme caution where the granting of injunctive relief will result in embarrassment to the operations of government." CEUI v. CSEA, 183 Conn. 235, 249 (1981); Wood v. Wilton, 156 Conn. 304, 310 (1968).
Furthermore, it would be inappropriate to order mandatory injunctive relief in a situation where the practical problems it presents could have been avoided by following the Brunoli remedy of trying to secure injunctive relief as to the contract which it is claimed was improperly awarded in the first place.
Here in the summer of 1998, a motion for a temporary restraining order was filed by the plaintiff, a hearing was held and another judge of this court denied the relief requested which really sounded in injunctive relief. No formal motion for permanent injunctive relief was made until the end of October 2000, after the jury verdict awarding money damages, when the plaintiff filed a "Memorandum of Law in Support of Claim for Injunctive Relief." At any time before trial such relief could have been requested. Plaintiff argued quite persuasively at the hearing on the issue now before the court that when the temporary restraining order was argued in 1998 before the contract became operative, he did not have sufficient time to develop the facts which came out at trial and which, from his perspective, would have entitled the plaintiff to relief. But the trial did not commence for over two years; well before that date expedited discovery could have been ordered. The evidence the plaintiff considered vital to the success at trial came from a relatively small number of people and records. Nor can the plaintiff claim any such pretrial request for injunctive relief would have been ineffective and pointless once the contract had begun to operate in Laidlaw's favor in September 1998. In the previously referred to October 23, 2000 memorandum, the plaintiff requested the court order that the "defendant award the plaintiff a five (5) year contract commencing either in January of 2001 or at the commencement of the school year in 2001, whichever is in the best interest of the Hartford school children."
Injunctive intervention before trial would have been much more feasible because at least the court would have been operating within the terms of a cost and route schedule already worked out and calculated and made known to prospective bidders in the summer of 1998 so that rational bids could be made by the various bus company. If the plaintiff had prevailed at such an injunction hearing, the court could simply have ordered the contract to be carried out by the plaintiff who had already made its bid based on known and indicated cost factors.
The complexities raised by Brunoli are perhaps underlined by this discussion. In other words, as the plaintiff points out in an unrelated section of its brief it has been held that "Where the contract is one which the municipality had the power to make (although unauthorized) it is possible for a court to hold that the municipality has, by taking the benefit of the contract, ratified it or estopped itself from claiming it was not executed according to law." Bridgeport Brass Co. v. Drew, 102 Conn. 206, 215 (1925). Could that mean here that once Laidlaw began performance under the contract it could not be denied its benefits so if the plaintiff were granted injunctive relief the city would have to pay the plaintiff for work remaining under the contract and also Laidlaw? Perhaps the answer would be that Laidlaw could only be reimbursed for work already done and not for the prospective loss of profits for performance under the remaining contract term and the plaintiff would only be entitled to complete the contract and not be able to make a claim for loss of profits it would have earned up to the time Laidlaw was removed from the job.
After the verdict was returned awarding the plaintiff substantial monetary damages injunctive relief was not pursued — a concern was what effect such a pursuit would have on the monetary award. But none of that belies the fact that permanent injunctive relief could have been sought before a trial at which damages were sought.
It is no doubt true, however, that implementation of Brunoli can present difficulties. Many of these municipal contracts apparently are awarded for multiple years and the bidding process ends shortly before the contract is awarded and even quite soon before the contract goes into effect. Effectively securing injunctive relief can present problems even for a very able counsel like the lawyer for the plaintiff in this case. In the appropriate case perhaps appeals should be allowed from the denial of motions for temporary injunction before the contract begins or expedited discovery should be allowed to permit appealable permanent mandatory injunction hearings as soon as possible after the commencement of the contract.
The latter course was not taken here so that any difficulties that might be presented to enforcing rights under Brunoli are not operative, therefore, that case's strictures against damages and the award of a mandatory injunction which is only substitute for a more direct monetary claim should not be allowed.
The court denies the request for mandatory injunctive relief.
Apparently some courts under a Brunoli type regime barring damage awards but permitting injunctive relief allow the unsuccessful bidder who should have been awarded the contract at least the right to recover the cost of preparing the bid against the municipal authority. Cf Paul Sardella Construction Co, Inc. v. Braintree Housing Authority, 329 N.E.2d 762, 767 (Mass.App.Ct., 1975). Also it has been held that "An unsuccessful bidder may challenge the legality of the authority's action by way of injunction or declaratory relief or mandamus for example, but he may not recover for lost profit damages from the authority. Even so . . . he (she/it) is not prevented from pursuing a tort action and damages against individual defendants" (in this case public officials). Conway Corp. v. Construction Engineers, 782 S.W.2d 36, 41 (Ark., 1989); see generally The Law of Municipal Corporations, 3d Ed. McQuillin, Vol. 10, §§ 29.83-29.89, pp. 537-55.
Corradino, J.