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Bodine Electric of Champaign v. City of Champaign

May 27, 1999

BODINE ELECTRIC OF CHAMPAIGN, A DIVISION OF RATHJE ENTERPRISES, INC., A DELAWARE CORPORATION, PLAINTIFF-APPELLANT,
v.
THE CITY OF CHAMPAIGN, AN ILLINOIS MUNICIPAL CORPORATION, AND POTTER ELECTRIC SERVICES, INC., A CORPORATION, DEFENDANTS-APPELLEES.



Appeal from Circuit Court of Champaign County No. 98CH185 Honorable George S. Miller, Judge Presiding

The opinion of the court was delivered by: Justice Myerscough

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Plaintiff, Bodine Electric of Champaign (Bodine), brought an action for declaratory judgment against the City of Champaign (City) to determine whether the submission of a 5% bid bond, rather than the required 10%, was a material variance that the City could not waive or an immaterial variance that the City had the discretion to waive. The trial court found for defendant City and denied the declaratory judgment, holding that plaintiff's bid bond of 5% was a material variance that could not be waived by the City. The trial court also dismissed plaintiff's remaining count for injunctive relief against the City and the next lowest bidder, defendant, Potter Electric Services, Inc. (Potter Electric), as well as plaintiff's breach of contract complaint for money damages against the City, holding that the counts were rendered moot by its declaratory judgment ruling. Plaintiff appeals the trial court's denial of declaratory relief and the dismissal of its counts for injunctive relief and money damages. We affirm.

I. BACKGROUND

The City is a home rule municipality located in Illinois. In August 1998, the City issued a request for bids, with bidding instructions, for the Champaign police facility expansion project. Bid item No. 15 included the installation of electrical and security systems, with an estimated budget range of $1,250,000 to $1,500,000.

A 10% bid bond was a condition under both the project's bid packet instructions and city ordinance. The bid packet stated that the bid bond would serve as a security deposit that would be forfeited as liquidated damages if the bidder refused to enter into a contract after its bid is selected.

The request for bids also included the following language:

"The Owner [City] reserves the right to reject any and all Bids and waive any informalities in the Bidding. The Owner [City] is not obligated to accept the lowest or any other bid, and may waive an informality in any proposal and award work in any manner in which it determines the interest of the City will be served. The City will use the criteria listed in Section 12.5.37 of the Champaign Municipal Code, 1985, as amended, and any other criteria which may be included in the Contract Documents to select the lowest, responsible bidder." (Brackets in original)

Although the City reserved this right to reject any and all bids or waive informalities, the record does not reflect, nor do the parties assert, that the City has exercised that right.

When the City opened the bids, it discovered that the plaintiff, Bodine, had submitted the lowest bid on item 15 in the amount of $998,000. However, Bodine submitted only a 5% ($49,900) bid bond, rather than the required 10% ($98,800). Therefore, even though Bodine's bid on item 15 was $245,000 less than the lowest figure for the City's budgeted range, and $78,000 less than the next lowest bidder, it was not in compliance with the bid packet instructions and the city ordinance. The next lowest bidder was Potter Electric, which bid $1,083,000, and included the required 10% bid bond.

On September 23, 1998, five days after the bids were opened, Bodine tendered a 10% bid bond. On that same date, the City's police expansion team met to discuss whether to accept or reject bid bonds submitted with less than the required 10%. The meeting minutes specifically alleged potential adverse ramifications of accepting insufficient bid bonds, including:

"1. Future bidders would not have any reason to submit the required 10% bid bond if a lower amount or 5% was accepted."

"2. Contractors could take more risks with their bids, meaning they could submit lower bids, with littler [sic] or no bid bond. They [contractors [(brackets in original)]] could determine if they are the low bidder and then provide the bond. The contractor[,] if after submitting a bid that is too low, could then withdraw from the bid process with a smaller, little or not [sic] penalty. The City would not want to set such precedence [sic], where less than the required 10% bid bonds were to be submitted."

"3. Future bids and bond requirements would be suspect in that any amount could be submitted. It would become difficult to require a 10% bid bond."

The meeting minutes also suggest that the City's attorney would notify Bodine's attorney that Bodine had until September 25, 1998, to find case law demonstrating that the 5% bid bond ...


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