KJN LLC v. Town of Hamden et al. (2010)

MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO STRIKE

(1)

In this matter the defendants have filed a motion to strike the first and second counts of the plaintiff's complaint.   The complaint alleges it is a Limited Liability Company engaged in the business of roofing repair.   The relevant common allegations to the two counts are that in October 2009 one of the individual defendants, all of whom are town officials, invited the plaintiff to submit a bid for roofing work in a town firehouse.   A bid was submitted in the amount of $30,500 and it is then alleged that one or more of the defendant town officials “sought to award the bid to a higher bidder before the Hamden Town Council.”   At the end of October 2009 the council in fact awarded the job to a higher bidder who had bid $36,000.

The First count further alleges that “in seeking to award the bid to the higher bidder” the defendants “violated the Hamden Code of Ordinances Title III, Chapter 36, Section 12 and Connecticut General Statutes Section 7-148v and Section 35-24 of the Connecticut General Statutes.”

The defendants are alleged to have failed to comply with the town's ordinances because (a) they failed to follow the code with respect to purchases in excess of $2,000 (b) failed to award the contract to the low bidder (c) failed to secure sealed bids (d) steered the work to the higher bidder (e) steered the work to a preferred contractor and (f) failed to act pursuant to § 7-148v of the general statutes “in securing sealed bids for projects in excess of $7,500.”

The Third count which is also the object of the motion to strike repeats the foregoing factual allegations and then claims the defendant violated § 7-148v of the general statutes “in that they allowed the bidding on expenditures in excess of $7,500 to go forward without the use of the sealed bid process.”

Both counts assert that as a result of the various violations mentioned “the plaintiff has suffered harm in the way of loss of work and profit.”   The prayer for relief demands “(1) fair, just and reasonable compensatory damages. (2) punitive damages ․” as to these counts.

It should also be noted that paragraphs of the complaint refer to each town official and his relationship to the bidding process and the award of bids.   Each one of these paragraphs asserts that the particular town official “is entitled to indemnification from the Town of Hamden under Section 7-101a of the Connecticut General Statutes.”   In the plaintiff's brief opposing the motion to strike it is argued that “one or more of the (individual) co-defendants engaged in a conspiracy to award the bid to the higher bidder.”

Section 7-101a provides that there shall be indemnification of any town employee by a town for financial loss and expense resulting to the employee from a legal action prompted by the employee's negligence or alleged infringement of a person's civil rights.   Subsection (b) with some limitations provides for indemnification for a legal action successfully asserting that the employee acted in a way that was wanton, malicious, willful or ulta vives.   In any event as noted the complaint, in each count, asserts the individual town employee defendant, is entitled to indemnification under the statute.

(2)

The defendants rely on the leading case of Lawrence Brunoli, Inc. v. Town of Branford, 247 Conn. 407 (1999) in support of their motion to strike.   Although titled a “motion to strike” what is really involved here is a motion to dismiss in that both of the counts seek money damages for “loss of work and profits for violation of ordinances and a statute governing municipal bidding.”   Basically, Brunoli held that a trial court, faced with a claim by an unsuccessful bidder against a municipality, lacks subject matter jurisdiction to consider a damage claim;  that is, where a municipality has engaged in fraud, corruption, or favoritism in the bidding process, an unsuccessful bidder has standing under municipal building statutes only to bring an action for injunctive relief.

The reason for this position is set forth in Brunoli where at page 414 the court said:  “if, however, an unsuccessful bidder is permitted to assert a claim for money damages, rather than injunctive relief against awarding the contract to the successful bidder, the taxpayers of the municipality would be subject to paying once to have the work performed by the successful bidder, and if the unsuccessful bidder were successful, again for damages above and beyond the cost of the project.   Such extra costs clearly are not in the public interest.”

Inotherwords as early as 1956 the court in Austin v. Housing Authority, 143 Conn. 338 said “that lowest responsible bidder statutes are enacted solely for the benefit of the public and in no sense create any rights in those who submit bids.”   Or to put it more succinctly municipal competitive bidding laws are enacted “to secure the best product at the lowest price and to benefit the taxpayers, not the bidders ․” John S. Brennan Construction Corp. v. Shelton, 187 Conn. 695, 702 (1982), Spinello Construction Co. v. Manchester, 189 Conn. 539, 543 (1983).

State statutes like § 7-148v requiring sealed bids are aimed at securing the integrity of the municipal bidding process and cannot be interpreted as providing rights beyond injunctive relief to bidders who claim a violation of municipal bidding ordinances.

Clearly the counts against the town must be dismissed.

(2)

The plaintiff argues however, that even if the action against the town is dismissed the counts, as directed at the individual defendants who acted as agents of the town, should not be dismissed.   But, as noted, complaint itself alleges that § 7-101a applies as to each of these defendants so that a recovery against them would have to be borne by the town through statutory indemnification.   The plaintiff's response to this is to say that “These officers and employees by their egregious behavior bear the burden of the payment of damages to the plaintiff.   Whether or not such damages are ultimately paid by the town is of little or no legal consequence,” page 4 of plaintiff's memorandum.   Furthermore, he notes that Brunoli itself involved an action against only the town.

The court does not accept the plaintiff's position, however, Brunoli was decided in 1999.  Section 7-101a was enacted into law in 1980 as to subsection(a).   Subsection (b) was added to the statute in 1980.   The court was certainly aware of the statutory scheme when it set forth its reasoning as to why money damages would not be awarded against a town in these situations where a violation of the bidding laws is claimed.

Where indemnification is provided for, Brunoli 's reasons for denying a damage action against a municipality where a town, which can only act through its agents, violated state law and local bidding ordinances, should apply so as to bar such an action against town officers.   Such an action would also raise the costs of projects and the difficulty of budgeting for them and subvert the goal of the achieving best product for the lowest price which the bidding statutes were enacted to accomplish.

Two comments made by the Brunoli court in disallowing a damage action against a town for violation of bidding ordinances are applicable when the propriety of damage actions against town officials is considered who operate under a state statutory scheme permitting indemnification.   At 247 Conn. p. 413 the court quoted from an earlier case to the effect that “we must strike the proper balance between fulfilling the purposes of the competitive bidding statutes preventing frequent litigation that might result in extensive delay in the commencement and completion of government projects to the detriment of the public.”   At pages 414-15 the court said:  “Further, a municipality must know, in advance of awarding a contract, what the ultimate costs of the project will be.   If an unsuccessful bidder were able to eschew a claim for injunctive relief and assert a claim for damages the municipality would not know with certainty what these costs are until the limitations period for such a claim for damages has passed.”

Given a state statutory scheme providing for indemnification, as the complaint asserts, permitting damage actions against town officials, for alleged actions violative of the bidding ordinances, the same concerns would be raised as just mentioned in Brunoli -even more so since several officials could be subjected to suit in these cases and a town would have to await the resolution of each case before it could determine the ultimate cost of a project can be calculated, given indemnification obligations.

The first and second count are stricken as they are not legally sufficient and/or the plaintiff has no standing to pursue them since the court has no subject matter jurisdiction.

Corradino, J.T.R.

Corradino, Thomas J., J.T.R.