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George W. Kennedy Constr. v. Chicago





Appeal from the Circuit Court of Cook County; the Hon. Albert Green, Judge, presiding.


The plaintiff, George W. Kennedy Construction Company (hereinafter Kennedy), appeals from the trial court's order denying its motion for summary judgment and granting a motion for summary judgment to the defendants city of Chicago and William Spicer, the city's purchasing agent (hereinafter the city) and Reliable Contracting & Equipment Company and Abbott Contractors, Inc., a joint venture (hereinafter Reliable). In its ruling the trial court found that Kennedy's bid to construct a 48-inch water main project was unresponsive in that it contained a material variance as a result of Kennedy's failure to properly execute a signature sheet within the bid proposal.

On December 21, 1984, the city formally advertised in the Chicago Tribune for construction bids on two separate water main projects, a 60-inch water main and a 48-inch water main. Both Kennedy and Reliable submitted bids on each of the two projects. On January 11, 1985, the city opened the sealed bids. Kennedy was thereafter notified by the city that it was the lowest responsible bidder on the 60-inch project and that it would be awarded that contract pursuant to section 8-10-3 of the Illinois Municipal code (Ill. Rev. Stat. 1983, ch. 24, par. 8-10-3), which provides that "all purchase orders or contracts * * * involving amounts in excess of $10,000, made by or on behalf of any such municipality, shall be let by free and open competetive [sic] bidding after advertisement, to the lowest responsible bidder." The contract for the 60-inch project is not at issue in the instant appeal.

Kennedy was also the lowest responsible bidder on the 48-inch project. The bid package submitted by Kennedy for this project was comprised of multiple sections of documents, all of which were part of the uniform contract prepared and issued by the city. Various designated sections provided information regarding the advertisement for bids, the requirements and instructions to the bidders and the general conditions for the bid. There was also a section that listed the special conditions required for the project and a "Proposal and Acceptance" section that set forth the bidder's proposed terms for the project, the signature page for the bidder and the page to be utilized by the city were it to accept the bidder's offer. On its cover page, the bid package directed that "BIDS TO BE EXECUTED IN TRIPLICATE."

The most significant component of the bid package for purpose of this appeal was the "Proposal and Acceptance" section. This section states generally that "[t]he undersigned proposes to construct [a 48-inch water main] as required by this Contract, to perform everything required to be performed and to provide and furnish all the labor, materials, tools, equipment, expendable and otherwise, and all accessories and transportation services necessary to perform and complete, in a workmanlike manner, and within the specified time the work required, all in accordance with the Contract documents at the Contract unit prices." Following this opening portion of the proposal, there are additional provisions concerning time of completion, liquidated damages and specific prices for items. Next, there are a number of other pages setting forth specific contract terms, such as: minority business participation, uncompleted work and disclosure of ownership interests. The proposal concludes with three alternative signature pages; one if made by an individual, another if made by a partnership and the third, applicable to the instant case, is for a proposal made by a corporation. This third signature page, the corporate signature page, is entitled "To Be Executed By A Corporation." Finally, following the three "signature sheets" is a blank "Acceptance" page to be executed by the city.

Specifically, the corporate signature page has a line for the corporate name. The blank beneath it requests the president's signature and is preceded by the printed word, "By." A parenthetical clause beneath these blanks directs that "[i]n the event that this bid is executed by other than the President, attach hereto a certified copy of that section Corporate By-laws or other authorization by the Corporation which permits the person to execute the offer for the corporation." Next, is a line for attestation by the corporate secretary.

The various schedules and affidavits contained in the "Proposal and Acceptance" section set forth proposed contract terms and were all signed by people other than Kennedy's president. Specifically, there was an affidavit signed by Kennedy's secretary regarding Kennedy's uncompleted contracts and outstanding bids. There was also an affidavit signed by the vice-president of the Minority Business Enterprise (MBE) setting forth particular business data regarding that firm and a letter of intent, executed by the vice-president, indicating that firm's commitment to serve as subcontractor. In conjunction thereto was an affidavit executed by Kennedy's secretary attesting to the information provided by the MBE and acknowledging Kennedy's intent to serve as the MBE's general contractor. Kennedy's secretary also executed a disclosure of ownership interests form.

In a separate section of the bid package, the section listing the special conditions for the project, were two pages executed by Kennedy's secretary. One was the status report on the MBE's payments and the second an affidavit regarding Kennedy's commitment to hire Chicago residents as employees. Also included in the bid package was a "Bid or Proposal Bond" executed by Kennedy's secretary.

For the purpose of this appeal, the critical page is the corporate signature page in the "Proposal and Acceptance" section of the bid package. This is the contested portion of the contract, because, although it contains the corporate name and address and it was attested to by the corporate secretary, it was not in fact executed by the president or by anyone "other than the president" that attached a "certified copy of that section of the corporate by-laws or other authorization by the corporation which permits that person to execute the offer for the corporation."

On January 16, 1985, five days after the bid opening, an employee for the city's purchasing department contacted Kennedy. Whereafter, George W. Kennedy, Kennedy's president, met with the city and signed the corporate signature page of Kennedy's "Proposal and Acceptance" section. On February 28, 1985, the city then informed Kennedy that its bid on the 48-inch project was not responsive because it was not properly signed at the time it was submitted and formally opened and therefore Kennedy would not be awarded the contract.

On March 11, 1985, Kennedy filed a complaint for declaratory relief, injunctive relief, mandamus and certiorari, a motion for temporary restraining order and a motion for preliminary and permanent injunction, ultimately seeking to be awarded the contract for the 48-inch project. The trial court entered a temporary restraining order on April 3, 1985, prohibiting the city from awarding the contract for the 48-inch project.

On April 8, 1985, following arguments on motions for summary judgment filed by all the parties, the trial court found that Kennedy's bid was not fully responsive. The judge stated that although the rejection of Kennedy's bid will "cost the taxpayers additional money, I cannot upset the bidding process that has been placed in effect. To permit this contract to be acknowledged with a signature five days later opens Pandora's box to all sorts of games."

Consequently, the trial court dissolved the previously entered temporary restraining order, denied Kennedy's motion for preliminary and permanent injunction, denied Kennedy's motion for summary judgment and granted the defendants' motions for summary judgment. The court also denied Kennedy's motion to stay the judgment pending appeal.

On April 10, 1985, Kennedy filed notice of appeal from the trial court's order of April 8, 1985. Contemporaneously, the city formally accepted ...

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