EL PASO COMMUNITY PARTNERS v. SUNRISE JOINT VENTURE

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Court of Appeals of Texas,Austin.

EL PASO COMMUNITY PARTNERS, Appellant, v. B & G/SUNRISE JOINT VENTURE;  The California Sierra Group Corp.;  Garry P. Mauro, Individually and in his capacity as former Commissioner of General Land Office;  William F. Warnick, Individually and in his capacity as member of State Land Board;  C. Louis Renaud, Individually and in his capacity as member of State Land Board;  and David Dewhurst, in his capacity as Commissioner of the General Land Office, Appellees

No. 03–99–00488–CV.

-- July 27, 2000

Before Chief Justice ABOUSSIE, Justices KIDD and B.A. SMITH. Jan Soifer, Locke, Liddell & Sapp, LLP, Austin, for Appellant. Harrel L. Davis III, Krafsur, Gordon, Mott, Davis & Woody, El Paso, for B&G/Sunrise. Roy Q. Minton, Minton, Burton, Foster & Collins, P.C., Austin, for Mauro, et al.

Appellant El Paso Community Partners filed suit against appellees 1 seeking, among other things, that the district court declare void a purchase contract for the sale of state lands between B & G/Sunrise Joint Venture (B & G) and the State of Texas.   Appellant alleged that a material and substantial variance between the State's bid specifications and the contract awarded rendered the contract void or invalid.   Concluding that appellant lacked standing to challenge the validity of the contract, the district court granted appellees' plea to the jurisdiction and motion to dismiss the cause with prejudice.   We will affirm.

BACKGROUND

Although this case turns solely on a question of law, we will summarize the facts to provide context.   The State of Texas Permanent School Fund owned over 4,000 acres of land in eastern El Paso County.   The School Land Board, acting through the General Land Office and its then-Commissioner Garry Mauro, decided to sell the property via a competitive bid process.

Appellant was one of four entities that met qualifications and submitted a purchase bid under the option method.   The bid solicitation provided that a “bid must include a firm contract amount and other material terms.   Other elements of the contract will be subject to negotiation.”  (Emphasis added.)   Appellant bid $66,704,966.   Appellee B & G bid $67,055,000.   The School Land Board, acting through appellees Mauro, William F. Warnick, and C. Louis Renaud, selected B & G as the winning bidder.   After further negotiations, B & G and the State signed a contract on August 28, 1998.

In November 1998, appellant filed suit alleging that the contract “deviated materially” from the bid solicitation.   B & G filed special exceptions, which the trial court granted.   Appellant amended its allegations and in its third amended petition sought declarations that:  (1) Mauro lacked authority to sign the contract;  (2) Warnick and Renaud were acting outside the scope of their authority in consenting to Mauro's signing of the contract;  (3) Mauro's successor, appellee David Dewhurst, lacked authority to continue to negotiate the contract;  (4) B & G's bid was invalid and deemed rejected;  and (5) the contract and deeds executed thereunder were void.   Appellant did not allege fraud, collusion, or irregularities in the solicitation or bidding process.

Appellees filed a plea to the jurisdiction and a motion to dismiss with prejudice.   In its order dismissing appellant's suit, the district court stated, “The Court finds that Plaintiff El Paso Community Partners does not have standing to seek the voiding of the contract, at issue in this suit․”  After the trial court denied its motion for new trial, appellant brought this appeal.

DISCUSSION

In its sole issue, El Paso Community Partners contends that the contract entered into between the State and B & G is materially different than that for which bids were solicited and that under these circumstances, appellant, as a qualified bidder, has standing to challenge the validity of the contract entered into between the State and the highest bidder.

 Standing is an element of a court's subject matter jurisdiction.   See Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 444–45 (Tex.1993).   The plaintiff has the burden of alleging facts that affirmatively demonstrate a court's jurisdiction to hear a cause.   See id. at 446.   A plea to the jurisdiction challenges a trial court's authority to hear a case by alleging that the factual allegations in the plaintiff's pleadings, when taken as true, fail to invoke the trial court's jurisdiction.   See Bybee v. Fireman's Fund Ins. Co., 160 Tex. 429, 331 S.W.2d 910, 917 (1960);  Firemen's Ins. Co. v. Board of Regents of the Univ. of Tex. Sys., 909 S.W.2d 540, 541 (Tex.App.—Austin 1995, writ denied).   Dismissing a cause of action based on a plea to the jurisdiction is proper only when incurable jurisdictional defects are shown on the face of plaintiff's pleadings.   See Curbo v. State, 998 S.W.2d 337, 341 (Tex.App.—Austin 1999, no pet.);   Flowers v. Lavaca County Appraisal Dist., 766 S.W.2d 825, 827 (Tex.App.—Corpus Christi 1989, writ denied).

 Because the question of standing is a legal question, we review de novo a trial court's ruling on a plea to the jurisdiction.   See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex.1998);  Board of Regents, 909 S.W.2d at 542.   In reviewing a trial court order dismissing a cause based on a plea to the jurisdiction, we “construe the pleadings in favor of the plaintiff and look to the pleader's intent.”  Texas Air Control Bd., 852 S.W.2d at 446;  Pearce v. City of Round Rock, 992 S.W.2d 668, 671 (Tex.App.—Austin 1999, pet. denied).

 As a general rule, to demonstrate standing a party must allege some interest peculiar to it individually and not as a member of the general public.   See Hunt v. Bass, 664 S.W.2d 323, 324 (Tex.1984);  Lake Medina Conservation Soc., Inc./Bexar–Medina Atascosa Counties WCID No. 1 v. Texas Natural Resource Conservation Comm'n, 980 S.W.2d 511, 515 (Tex.App.—Austin 1998, pet. denied).   Specifically, a plaintiff has standing to sue if:  (1) the plaintiff has sustained, or is immediately in danger of sustaining, some direct injury as a result of the complained-of wrongful act;  (2) there is a direct relationship between the alleged injury and the claim to be adjudicated;  (3) the plaintiff has a personal stake in the controversy;  (4) the challenged action has caused the plaintiff some injury in fact, either economic, recreational, environmental, or otherwise;  or (5) the plaintiff is an appropriate party to assert the public interest in the matter as well as the plaintiff's own interest.   See Lake Medina, 980 S.W.2d at 515–16;  Billy B., Inc. v. Board of Trustees, 717 S.W.2d 156, 158 (Tex.App.—Houston [1st Dist.] 1986, no writ);  Housing Auth. v. State ex rel. Velasquez, 539 S.W.2d 911, 913–14 (Tex.Civ.App.—Corpus Christi 1976, writ ref'd n.r.e.).   An exception to this general rule allows “a taxpaying citizen to maintain an action in a court of equity to enjoin public officials from expending public funds under a contract that is void or illegal.”  Osborne v. Keith, 142 Tex. 262, 177 S.W.2d 198, 200 (1944);  see Texas State Employees Union/C.W.A. Local 6184 v. Texas Workforce Comm'n, 16 S.W.3d 61, 68 (Tex.App.—Austin 2000, no pet.).   This exception is limited to instances in which the contract is illegal or void and not merely voidable at the option of the public official.   See Osborne, 177 S.W.2d at 200.

Taxpayer Standing to Enjoin Performance of Void or Illegal Contract

 Appellant's petition sought declarations that the State's agents were acting without authority and that the contract was void because it did not contain a final takedown schedule as the bid specifications required.2  Appellant contended that the State's signing the contract was therefore illegal and that the contract was void under the terms of the solicitation.   We first examine the relevant sections of the solicitation to determine whether appellant can meet the requirements for standing under the exception discussed in Osborne v. Keith.   See id.

Appellant argues that because the contract did not contain a takedown schedule, appellees failed to reach a final agreement as required by the solicitation and that the contract was therefore void according to the terms of the solicitation.   Taking as true appellant's factual allegations that the takedown schedule did not comply with the terms of the solicitation, we look to see whether the terms of the solicitation prohibited the parties from continuing to negotiate if they failed to reach an agreement by a certain date.

Appellant quotes two sections of the solicitation to support its position that the parties were required to reach a final agreement by a certain date.   One section provides:

The winning Bidder shall have 45 days, beginning on the date of the bid award, to agree with the State on the language of the final purchase or option Contract.   The SLB, at its option, may extend this period of time.   If no contract has been finalized by the end of that period the State may reject the bid and keep the Property or dispose of the Property in any lawful manner.

The solicitation finally states:

If the winning Bidder and the State fail to negotiate a contract in the time-frame required, then $25,000 of the Earnest Money on deposit shall be forfeited to the State;  and the Property may be re-bid at a later date or otherwise disposed of in accordance with applicable law.

 Appellant did not allege that the solicitation was ambiguous.   Therefore, we construe the solicitation, as we would any other document, according to its plain meaning.   See Northern Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 606 (Tex.1998) (interpreting contract according to its plain meaning).

The first quoted paragraph guarantees the winning bidder at least forty-five days in which to negotiate an agreement and provides that the State at its discretion may grant the winning bidder more time.   It does not limit the number or length of extensions that the State may grant.   The last quoted paragraph provides that if the State and B & G failed to reach an agreement, $25,000 of B & G's earnest money would be forfeited.   Nothing in the terms of the solicitation requires that the contract be finalized by a certain date or that failure to meet that deadline deprived the State's agents of authority to continue negotiating with B & G. The language regarding the State's options upon failure to reach an agreement permits—but does not require—the State to reject the bid and keep the property or dispose of it in some other manner.   These facts do not render the contract void.   Because appellant's petition did not allege facts showing a void contract or that the State's agents were acting illegally or beyond their authority, we conclude that appellant failed to allege facts bringing it within the exception discussed in Osborne.

Public Interest Standing and Injury from Complained–Of Wrong

Appellant also contends that it has standing to challenge the contract both on the grounds of a public interest and its own injury.   Appellant contends that it has a particular interest by virtue of its being a qualified bidder and that it was injured by “the loss of the right to have an opportunity to obtain the property.”   We disagree that appellant has any interest of its own to assert or that appellant's injury, if any, arose from the complained-of wrong.

 Appellant claims its status as a “qualified bidder” gives it an interest in whether the ultimate winning bidder's contract complies with the terms of the solicitation.   Appellant bases this argument, in part, on its claim of a reliance interest based on its expenditure of time and money in preparing and submitting its bid.   But the terms of the solicitation preclude appellant from making a reliance claim.   The solicitation provides in underlined, bold, capital letters:  “BY ITS PARTICIPATION IN THIS BID PROCESS, EACH ENTITY ․ ASSUMES THE RISK THAT IT WILL EXPEND TIME, MONEY AND EFFORT IN THIS PROCESS WITHOUT OBTAINING ANY INTEREST IN THE BID PROPERTY AS A RESULT.”   (Emphasis added.) 3

Appellant's status as a participating qualified bidder did give appellant a particular interest in assuring that bids were made and evaluated fairly and according to the terms set forth in the solicitation.4  But appellant's petition did not allege any irregularities in the solicitation, bidding, or bid selection, nor did appellant contend that B & G submitted the highest and best bid because appellees engaged in fraud or collusion.   If the State were required to repeat the bid process, appellant would have no special status and would be required to qualify and submit a bid just as any other contender.

As for the contract itself, generally someone who is not a party to an agreement has no interest in the terms of that contract.   See Imco Oil & Gas v. Mitchell Energy Corp., 911 S.W.2d 916, 920 (Tex.App.—Fort Worth 1995, no writ) (non-party had no right to enforce contract terms).   Appellant's bid was an offer to enter into a contract, which the State could accept or reject.   See Sedona Contracting, Inc. v. Ford, Powell & Carson, Inc., 995 S.W.2d 192, 197 (Tex.App.—San Antonio 1999, pet. denied);  Urban Elec. Services, Inc. v. Brownwood Indep. Sch. Dist., 852 S.W.2d 676, 678 (Tex.App.—Eastland 1993, no writ);  Wright v. Interfirst Bank Tyler, N.A., 746 S.W.2d 874, 876 (Tex.App.—Tyler 1988, no writ).   Once rejected, an offeror has no further rights regarding any subsequent contract the offeree may enter.   See Imco, 911 S.W.2d at 920.

Here the bid solicitation stated that the bid process was subject to certain statutory requirements.   These statutes—cited by appellant in its petition—limited the School Land Board's discretion in accepting or rejecting bids.   Section 32.109 of the Natural Resources Code requires that “[f]or each tract offered for sale, lease, or commitment to a contract, the board must accept the best bid that meets the minimum requirements set by the board or by law or reject all bids.”  Tex. Nat. Res.Code Ann, § 32.109 (West Supp.2000) (emphasis added).  Section 51.051 of the Natural Resources Code mandates that all sales of Permanent School Fund land “shall be made by or under the direction of the school land board to the applicant who submits the highest bid for the land․”  Id. § 51.051 (West 1978) (emphasis added).

 In its petition, appellant did not allege that B & G's bid failed to meet minimum requirements at the time it was submitted or that it lacked a firm contract amount or other material terms as required by the bid solicitation.   Appellant does not refute that B & G submitted the “best bid that [met] the minimum requirements” or that B & G was the “applicant who submit[ted] the highest bid,” nor does appellant claim that its bid was higher, better, or unfairly rejected.   Once appellant's bid was rejected, its interest ceased.   Thus, any “injury” appellant sustained from “the loss of the right to have an opportunity to obtain the property” occurred at the time its bid was rejected and not as a result of alleged disparities between the terms of the contract and the terms of the solicitation.

 Appellant argues that unsuccessful bidders are in the best position to police whether state contracts comply with the terms of their solicitations and that if unsuccessful bidders are not allowed to bring these claims, no private party would have standing to complain.   While such a prudential argument, if true, might be persuasive, it fails to overcome established jurisprudence that requires a party to allege an interest unique to it in order to bring suit.5

CONCLUSION

Because appellant's bid was rejected and appellant's petition did not implicate the fairness or propriety of the solicitation or bidding process, appellant's petition failed to allege an injury resulting from the complained-of wrong or an interest in the subject contract as anything other than a member of the general public.   Thus, appellant has failed to satisfy the requirement of pleading facts that allege standing so as to invoke the trial court's jurisdiction.   We overrule appellant's sole issue and affirm the order of dismissal.

FOOTNOTES

1.   In its third amended original petition, appellant named as defendants B & G/Sunrise Joint Venture;  the California Sierra Group Corporation;  Garry Mauro individually and in his capacity as former Commissioner of the General Land Office;  William F. Warnick individually and in his capacity as a member of the State Land Board;  C. Louis Renaud individually and in his capacity as a member of the State Land Board;  and David Dewhurst in his capacity as Commissioner of the General Land Office.   We will refer to the trial court defendants collectively as appellees.

2.   The solicitation provides for the parties' negotiating a price/payment formula and states that “[t]he initial takedown schedule shall address minimum size, frequency, and proposed takedown sequence for the property.”   The contract indicates that a preliminary takedown schedule is attached as “Schedule 5 and the Master Plan.” Schedule 5 sets out the payment amount for each year of the twenty year contract but does not specify which land will be transferred each year.   According to the contract, the master plan was submitted for State approval as a condition of the initial takedown and indicates B & G's development plan for the property.   By the contract's terms, the parties agreed to refine the takedown schedule and master plan by December 31, 1998.

3.   We find that appellant's reliance on cases involving associational standing is misplaced.   See, e.g., Texas Highway Comm'n v. Texas Assoc. of Steel Importers, Inc., 372 S.W.2d 525, 530–31 (Tex.1963);  Texas Indus. Traffic League v. R.R. Comm'n, 628 S.W.2d 187, 204–05 (Tex.App.—Austin), rev'd, 633 S.W.2d 821 (Tex.1982), overruled, Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex.1993).   Associations such as the Texas Association of Steel Importers and the Industrial Traffic League exist to further the interests of their members, whereas appellant is a private entity that champions no interest other than its own pecuniary gain.

4.   At oral argument, appellant contended that its status as a “qualified bidder” gave it an interest in the entire “bid process,” which the solicitation defines as a five-part process beginning with qualification of bidders and ending with performance of the contract.   Although we are of the opinion that appellant's argument would lead to the unworkable result that appellant could challenge this twenty-year contract in the nineteenth year of performance, we need not address this issue because the record contains no indication that appellant made such an argument in the trial court.   See Tex.R.App. P. 33.1.

5.   We note that a successful bidder, as a party with a particular interest in the contract, may be able to bring suit if the contract entered into does not correspond to the contract for which the party submitted a bid.   See, e.g., City of Crockett v. Murdock, 440 S.W.2d 864, 867 (Tex.Civ.App.—Tyler 1969, writ ref'd n.r.e.);  Cotter v. Casteel, 37 S.W. 791, 793–94 (Tex.Civ.App.—Galveston 1896, writ ref'd).

MARILYN ABOUSSIE, Chief Justice.

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