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Date: 05-13-2021
Case Style:
Lathan Construction, LLC v. Webster Parish School Board an Incorporated Body Through Johnnye Kennon, in Her Official Capacity as President; and Johnny Rowland, in His Official Capacity as Superintendent
Case Number: 53,873-CA
Judge: Jefferson Rowe Thompson
Court: COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA
Plaintiff's Attorney:
Defendant's Attorney:
Description:
Shreveport LA - Public Works attorney represented LATHAN CONSTRUCTION, LLC with an injunctive relief claim
On May 9, 2019, the Webster Parish School Board (“School Board”)
opened bids for a public works project entitled “Phase I-Webster Parish
Achievement Center Asbestos Abatement/Demolition, Phase II-Minden
High School Former Natatorium Building-Demolition” (the “Project”). The
advertisement for bids submitted by the School Board provided that “[b]ids
shall be accepted from contractors who are licensed under La. R.S. 37:2150-
2192. Asbestos Abatement shall be completed by a licensed Asbestos
Abatement Contractor with the appropriate classification and licensing for
asbestos removal by the State of Louisiana.”
Three companies submitted bids on the Project, and Lathan
Construction (“Lathan”) submitted the lowest bid of $178,000. The next
lowest bid was submitted by Gill Industries, (“Gill”), Ltd. in the amount of 2
$208,000. On June 3, 2019, the School Board rejected Lathan’s bid as
nonresponsive because Latham did not possess the required asbestos
abatement license and awarded the contract instead to Gill. On June 4,
2019, the School Board notified Lathan that its bid had been rejected. On
June 10, 2019, Lathan submitted a letter to the School Board, objecting to
the rejection of its bid and requesting a hearing. On June 14, 2019, the
School Board’s counsel wrote a letter to Lathan, detailing the reasons for the
rejection of the bid and explaining that no hearing was required because
Lathan was rejected as a nonresponsive bidder.
On July 1, 2019, the School Board and Gill executed the contract on
the Project. On July 11, 2019, 37 days after notice of its rejected bid, Lathan
filed its petition with the trial court, seeking: (1) injunctive relief to prevent
the award of a public works contract to Gill; (2) declaratory relief to name
Lathan as the lowest bidder; and (3) a writ of mandamus ordering the School
Board to issue the contract to Lathan. By the time Lathan filed the petition,
Gill had completed Phase I of the Project and had begun Phase II. The
petition did not include an order to set a hearing in the matter.
On August 5, 2019, the School Board filed a dilatory exception of
improper service of process and improper use of summary proceedings, a
peremptory exception of prescription, or alternatively, a motion for summary
judgment. The School Board’s exceptions included an order to set the
matter for hearing. The hearing was ultimately held on February 18, 2020,
after three requests for a continuance made by Lathan were granted. By the
date of the hearing, the work on the Project had been fully completed. 3
After the hearing, the trial court held that Lathan’s bid was
nonresponsive to the bid documents because Lathan did not carry the
required asbestos abatement license, and thus, Lathan was not entitled to the
award of the contract. The court further stated that, even in the event the bid
was compliant, Lathan’s claim was untimely because Lathan failed to seek
injunctive relief until “approximately 37 days subsequent to having actual
notice of the rejection of the bid and 10 days after the execution of the
contract with Gill.” The trial court’s judgment was signed on August 5,
2020, and Lathan’s claims were dismissed. This appeal followed.
STANDARD OF REVIEW
At a hearing on a peremptory exception of prescription pleaded prior
to trial, evidence may be introduced to support or controvert the exception.
La. C.C.P. art. 931. If evidence is introduced at the hearing on the
peremptory exception of prescription, the district court’s findings of fact are
reviewed under the manifest error standard of review. Stobart v. State,
Through DOTD, 617 So. 2d 880, 882 (La. 1993). In the absence of
evidence, an exception of prescription must be decided on the facts alleged
in the petition, with all of the allegations accepted as true. Cichirillo v.
Avondale Indus., Inc., 04-2894 (La. 11/29/05), 917 So. 2d 424, 428.
DISCUSSION
Latham asserts one assignment of error, namely:
Assignment of Error: The trial court erred in granting Appellee’s
Exception of Prescription.
This case is governed by the provisions of the Louisiana Public Bid
Law, La. R.S. 38:2211, et seq. Louisiana’s Public Bid Law is a prohibitory
law founded on public policy. Broadmoor, LLC v. Ernest N. Morial New 4
Orleans Exhibition Hall Auth., 04-0211 (La. 3/18/04), 867 So. 2d 651, 656.
The legislature has specifically prescribed the conditions upon which it will
permit public work to be done on its behalf or on behalf of its political
subdivisions, and the statute was enacted in the interest of the taxpaying
citizens to protect them against contracts of public officials entered into
because of favoritism and involving exorbitant and extortionate prices. Id.
A political entity has no authority to take any action which is inconsistent
with the Public Bid Law. Id.
La. R.S. 38:2220 provides an opportunity for an aggrieved bidder to
file suit for violations of the public bid laws.
1
To be entitled to the rights
and privileges afforded in the Public Bid Law, there must be a qualifying bid
submitted. Nonresponsive bidders are not permitted to seek enforcement of
Public Bid Law, as they have failed to meet the threshold requirement of
submitting a responsive bid. Those seeking to enforce the rights and
protections of the Public Bid Law must act in a timely manner. It is the
timeliness of the actions of Lathan that are at issue in this matter.
1 La. R.S. 38:2220 states:
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 may bring suit in the district court through summary
proceeding to enjoin the award of a contract or to seek other appropriate injunctive relief
to prevent the award of a contract which would be in violation of this Part, or through
ordinary proceeding to seek appropriate remedy 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.5
The seminal case on the timeliness of actions brought pursuant to La.
R.S. 38:2220 is Airline Constr. Co., Inc. v. Ascension Parish Sch. Bd., 568
So. 2d 1029 (La. 1990). The Louisiana Supreme Court held that “an
unsuccessful bidder on a public contract who wishes to obtain relief because
of the rejection of its bid must seek injunctive relief at a time when the
grounds for attacking the wrongful award of the contract were known or
knowable to the bidder and when corrective action as a practical matter
could be taken by the public body.” Id. at 1035. “If an aggrieved bidder
does not timely file a suit for injunction, he has waived any right he may
have to claim damages against the public body or the successful bidder.” Id.
The court found that “[a]n unsuccessful bidder should not be allowed to sit
on its knowledge of the violation and claim damages after the public body
can no longer as a practical matter correct any errors in letting the contract.”
Id. at 1034-35. Specifically, regarding the timeliness of actions, the court
stated:
The timeliness of a suit for injunction depends on the facts and
circumstances of the particular case, including, among other
things, the knowledge possessed by the attacking bidder
concerning the wrongful award of the contract, the point in time
the bidder acquired this knowledge, the point in time the public
body became indebted to the successful bidder, and the time
period between the awarding of the illegal contract and the
completion of construction.
Id. at 1035.
Relying on the Louisiana Supreme Court’s holding in Airline, the
court in Ramelli Group LLC v. City of New Orleans, 08-0354 (La. App. 4
Cir. 10/22/08), 997 So. 2d 612, writ denied, 08-2773 (La. 2/6/09), 999 So.
2d 779, affirmed the trial court’s grant of an exception of prescription in
favor of the public body, where the aggrieved bidder was untimely in filing 6
suit. The Ramelli court rejected the bidder’s argument that its suit was not
untimely because the legislature did not establish an explicit prescriptive
period for actions brought under La. R.S. 38:2220. Id. at 619-20. Louisiana
courts have found both the exception of no cause of action and the exception
of prescription appropriate peremptory exceptions to determine the
timeliness of an aggrieved bidder’s suit under La. R.S. 38:2220. See Airline
Constr. Co., Inc., supra; Ramelli, supra; Gilchrist Constr. Co., LLC v. East
Feliciana Parish Police Jury, 12-1307 (La. App. 1 Cir. 7/11/13), 122 So. 3d
35; Executone Sys. Co. of La., Inc. v. Jefferson Parish Hosp. Serv. Dist. No.
2, 15-569 (La. App. 5 Cir. 2/14/16), 186 So. 3d 1210, writ denied, 16-0569
(La. 5/13/16), 191 So. 3d 1059.
Pursuant to this jurisprudence, the trial court granted the School
Board’s exception of prescription, finding Lathan’s petition to be untimely
and its bid to be nonresponsive. Lathan argues that the trial court erred in
finding that its petition was untimely. Lathan contends that it had the lowest
bid on the project, that it was entitled to a hearing by the School Board, and
that it filed the petition in a timely manner, especially considering that La.
R.S. 38:2220 does not include a specific prescriptive period.
It is undisputed that on June 4, 2019, Lathan was informed that its bid
was rejected. Lathan responded on June 10, 2019, by requesting a hearing.
On June 14, 2019, detailed correspondence was sent from the School Board
to Lathan, describing how its bid was rejected as nonresponsive because it
did not hold the proper license to complete the work. Lathan did not file its
lawsuit until July 11, 2019, ten days after the bid contract was signed by the
School Board and Gill and 37 days after it received notice of its disqualified 7
bid. Lathan has not provided good cause as to why it failed to file suit for
injunctive relief immediately after finding out that its bid had been rejected
as nonresponsive or when it was advised Gill had been awarded the contract.
By the time Lathan filed suit, work on the Project had already begun and
Phase 1 of the Project had been completed. By the time the hearing was
heard by the trial court, after repeated motions to continue by Latham, the
Project had been completed in its entirety. As provided by the Louisiana
Supreme Court in Airline Constr. Co., Inc., supra, timeliness considerations
are fact specific. We find no error in the trial court’s determination that
Lathan was untimely in seeking injunctive relief.
Lathan Not Entitled to Hearing Under Public Bid Law
Lathan argues that it was entitled to injunctive relief and damages
because it was denied the hearing it requested, which was a violation of its
due process rights. When a public entity uses public funds to purchase
materials or supplies in a manner that is contrary to the provisions of the
Public Bid Law, the contract is null and void. La. R.S. 38:2220(A); see
Louisiana Associated Gen. Contractors, Inc. v. Calcasieu Parish Sch. Bd.,
586 So. 2d 1354, 1362 (La. 1991). The failure to award the contract to the
lowest responsive and responsible bidder is a violation of the Public Bid
Law. Ray Anding Const., Inc. v. Monroe City Sch. Bd., 38,228 (La. App. 2
Cir. 3/5/04), 867 So. 2d 1005, 1007. A public entity is required to award a
public contract to the lowest “responsible” bidder, but this does not mean
that the public entity is required to accept the lowest monetary bid.
Louisiana Associated Gen. Contractors, Inc., supra.8
A bidder’s right to due process hinges on whether the bidder has a
vested property interest in the contract, and a nonresponsive bidder has no
such property right. Procedural due process is required only when a bidder
acquires an actual property right to the contract. Haughton Elevator Div. v.
State, Through Div. of Admin., 367 So. 2d 1161 (La. 1979). A
nonresponsive bidder does not have a protected interest in being awarded the
contract and is not entitled to a hearing. Sys. Plus, Inc. v. East Jefferson
Gen. Hosp., 94-83 (La. App. 5 Cir. 5/31/94), 638 So. 2d 404; Triad Res. &
Sys. Holdings, Inc. v. Parish of Lafourche, 577 So. 2d 86 (La. App. 1 Cir.
1990), writ denied, 578 So. 2d 914 (La. 1991).
The trial court determined that Lathan was a nonresponsive bidder
because it did not have the appropriate asbestos abatement license required
by the bidding documents. Lathan has not challenged the trial court’s
finding that it was nonresponsive. As described above, a nonresponsive
bidder does not have a protected interest in the contract. As such, Lathan’s
argument that it had a due process right to a hearing is without merit.
Outcome: Considering the foregoing, the judgment granting the School Board’s exception of prescription is affirmed.
Plaintiff's Experts:
Defendant's Experts:
Comments: