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Hemphill Construction Co., Inc. v. City of Clarksdale, Mississippi

Supreme Court of Mississippi, En Banc

August 16, 2018

HEMPHILL CONSTRUCTION COMPANY, INC.
v.
CITY OF CLARKSDALE, MISSISSIPPI

          DATE OF JUDGMENT: 11/28/2016

          COAHOMA COUNTY CIRCUIT COURT HON. LINDA F. COLEMAN JUDGE

          TRIAL COURT ATTORNEYS: CHRISTOPHER SOLOP CURTIS D. BOSCHERT LYNN PATTON THOMPSON KIMBERLY TAFT PURDIE

          ATTORNEYS FOR APPELLANT: CHRISTOPHER SOLOP, LYNN PATTON THOMPSON

          ATTORNEY FOR APPELLEE: CURTIS D. BOSCHERT

          RANDOLPH, PRESIDING JUSTICE

         ¶1. The City of Clarksdale ("City") solicited sealed bids for a public construction project. The City received sealed bids from Landmark Construction Company, GCI ("Landmark"), and Hemphill Construction Company, Inc. ("Hemphill"). When unsealed, both bids exceeded the project's allocated funds by more than ten percent. Rather than rebidding the contract, the City conditionally awarded a contract to Landmark, dependent upon the City's obtaining additional public funds to match Landmark's bid. The City's actions were not provided for in the public bidding laws. Accordingly, we reverse the judgment of the Coahoma County Circuit Court and remand the case to the trial court.

         FACTS AND PROCEDURAL HISTORY

         ¶2. In February 2015, the City issued an Advertisement for Bids for the 2014 Community Development Block Grant ("CDBG") Wastewater Improvements - Contract #1 (Equipment and Controls). The Advertisement called for the City to receive written, sealed bids at the Clarksdale Public Utilities Commission ("CPU") up to and until 1:30 p.m. on May 27, 2015, at which time any bids would be opened publicly and would be considered by the City at the next meeting of the Board of Mayor and Commissioners of the City.

         ¶3. The sealed bids were opened on May 27, 2015, and the Certified Tabulation of Bids revealed Landmark's lump-sum bid was $924, 527 and Hemphill's lump-sum bid was $953, 800.

         ¶4. Twelve days later, the City held a meeting. The June 8, 2015, minutes of the City reflect that Bill Coker, the City's grant consultant on the project, presented the Certified Tabulation of Bids, which showed that Landmark's bid, combined with the lowest bid on Contract 2: Solid Waste-Denali Water Solutions, LLC- exceeded the project budget by more than ten percent, specifically, $216, 182.[1] Coker advised the City that the Mississippi Development Authority would consider increasing CDBG funds by $75, 000, and that the Clarksdale Public Utilities Commission ("CPU") would increase its matching funds by an additional $141, 182. Coker recommended that the City accept the lowest bids for each Contract, contingent upon the funding increase. The City then accepted Coker's recommendation and decided to award Contract # 1 conditionally to Landmark, dependent upon the aforementioned increased funding. The minutes of the City reflect that there had been no consideration of the City's statutory authority to accept either bid.

         ¶5. On June 19, Hemphill protested the award to Landmark. The City responded to Hemphill on July 9, stating that the City disputed Hemphill's claims, and advised that the contract had been awarded to Landmark.

         ¶6. On July 13, Coker informed the City that the additional CDBG and CPU funding had been acquired. The City then granted the Mayor permission to execute the Mississippi Development Authority Modification on Wastewater Treatment Plant Contract, which modified the budget by increasing it to $216, 182. That same day, the City authorized the Mayor to execute a Notice of Award to Landmark.

         ¶7. Hemphill filed a Bill of Exceptions in the Circuit Court of Coahoma County pursuant to Mississippi Code Section 11-51-75 (Rev. 2012), appealing the City's July 13 decision to award the contract to Landmark. Hemphill argued, inter alia, [2] that the City had violated Mississippi Code Section 31-7-13 by awarding the contract to Landmark, because the bids submitted exceeded the allocated funds by more than ten percent. Mississippi Code Section 31-7-13(d)(iv) provides that: if the lowest and best bid is not more than ten percent (10%) above the amount of funds allocated for a public construction or renovation project, then the agency or governing authority shall be permitted to negotiate with the lowest bidder in order to enter into a contract for an amount not to exceed the funds allocated. Miss. Code Ann. § 31-7-13(d)(iv) (Supp. 2017) (emphasis added). Hemphill argued that the City had violated this statute by securing additional funding after the bids were opened because the bids were more than ten percent of the total budget, and, therefore, the City could not negotiate or enter into a contract with Landmark. Hemphill also argued that, even though there is no precise caselaw addressing Section 31-7-13, there are Attorney General public-bidding opinions advising municipalities that they are prohibited from securing additional funds after bids have been opened to negotiate or enter into a contract with a bidder whose bid exceeds the project funds by more than ten percent. See Op. Miss. Att'y Gen. 2012-00195 (April 20, 2012); Op. Miss. Att'y Gen. 98-0764 (Dec. 23, 1998). Finally, Hemphill argued that the City's decision to award the contract to Landmark was arbitrary and capricious.

         ¶8. After a hearing, the circuit court held that the City's award of the project to Landmark did not violate state law, finding that:

[t]he purpose of [Mississippi Code Section] 31-7-13(d)(iv) is to allow a governmental entity to negotiate with the lowest bidder to bring the bid within the amount of funds allocated. In this case Clarksdale did not negotiate with Landmark. Clarksdale obtained additional funds from the MDA and the CPUC to meet the lowest bid. The bid laws do not prohibit this, accordingly, Clarksdale's actions were not improper.
. . .
From a policy perspective, the State Legislature has left the decision on when to rebid construction projects with the local governing authorities. [Mississippi Code Section] 31-7-13 does not prohibit Clarksdale from obtaining or allocating additional funds to meet the lowest bid and since it does not, Clarksdale's award of the Contract to Landmark was not improper.

         ¶9. It is from this Order that Hemphill appeals. Hemphill requests that this Court reverse ...


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