No. 2--00--0825

February 08, 2001

_____________________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

_____________________________________________________________________________________

JUSTICE BOWMAN delivered the opinion of the court:

Plaintiff, Joseph J. Henderson & Son, Inc. (Henderson), bringsthis interlocutory appeal from the trial court's order denyingHenderson's motion for a preliminary injunction. We havejurisdiction over this matter pursuant to Supreme Court Rule 307(a)(Official Reports Advance Sheet No. 16 (August 9, 2000), R. 307(a),eff. July 6, 2000), which provides that a party may appeal as ofright an order refusing an injunction. Henderson contends that thetrial court abused its discretion in denying Henderson's motion fora preliminary injunction. We affirm.

In its verified complaint, Henderson alleged that it submittedthe lowest bid to the City of Crystal Lake (City) for a project toimprove one of the City's waste water treatment plants. Instead ofawarding the bid to Henderson, the City awarded it to the onlyother bidder, Seagren/Shales, Inc. (Seagren). Henderson bidapproximately $13.9 million on the project, and Seagren bid almost$14.2 million. The city council rejected Henderson's bid becauseof concerns that Henderson's business relationship with asubsidiary of the project's supervising engineer, Baxter & Woodman,Inc. (Baxter), would create the appearance of impropriety. Henderson's complaint sought declaratory and injunctive relief anda writ of mandamus directing defendants to award the contract toHenderson.

Initially, the trial court denied Henderson's motion for apreliminary injunction because it determined that Henderson wasunlikely to succeed on the merits. The trial court decided that,because Henderson did not allege fraud in the award of the contractto its competitor, it did not have grounds for relief. The courtfurther concluded that it did not have the authority to decidewhether the City's exercise of its discretion was reasonable. Henderson appealed, and we vacated the trial court's decision.Joseph J. Henderson & Son, Inc. v. City of Crystal Lake, 2--00--0273 (2000) (unpublished order under Supreme Court Rule 23)(Henderson I). We remanded the cause for a hearing and a specificfinding as to whether the City's conduct was the result of unfairdealing, favoritism, or a similar type of arbitrary conduct.

Upon remand, the trial court conducted a hearing and heardtestimony from several witnesses. The following testimony isrelevant to the issue before us.

Darryl Gavle, the president and chief executive officer ofBaxter, testified that Baxter had served as a consulting engineerfor the City for over 50 years. In the 1950s, the City adopted anordinance naming Baxter as its consulting engineer. Baxter haddesigned the original waste water treatment plant as well as theexpansion of the plant that was the subject of the contract atissue. Baxter had also supervised the bidding process and preparedthe notice and instructions to the bidders. After the bids wereopened, Gavle informed the City by letter that, in Baxter'sopinion, both Henderson and Seagren were responsible and qualifiedto complete the project. Baxter recommended that the City considerawarding the contract to Henderson if the City found both biddersto be responsible.

Gavle further testified that Baxter owned 79% of a limitedliability corporation named B&W Design/Build L.L.C. (B&W). Beginning in 1997 or 1998 and continuing through the present, B&Wcontracted with Henderson to provide design and constructionsupervision services on numerous projects. Gavle testified thatall of B&W's profits for 1999 came from work B&W had done jointlywith Henderson.

Aaron Shepley, the City's mayor, testified that he and thecity council were worried that the relationship between Hendersonand B&W would create an appearance of impropriety. Shepley furthertestified that it would have been impractical for the City to hirea different supervising engineer because of Baxter's familiaritywith the waste water treatment plant. Also, it would have beencostly to bring a different supervising engineer up to speedregarding the details of the plant and Baxter's design for theimprovements.

At the close of Henderson's presentation of evidence,defendants moved for a directed finding. The trial court concludedthat the City's award of the contract to Seagren was not based onfavoritism, unfair dealing, fraud, or any other arbitrary conduct.Consequently, the court granted defendants' motion for a directedfinding and denied Henderson's motion for a preliminary injunction. Henderson now appeals the denial of its motion for a preliminaryinjunction.

To succeed on a motion for a preliminary injunction, themoving party must plead and prove each of the following elements:a clear right or interest in need of protection, irreparable harmif the injunction is not granted, the lack of an adequate remedy atlaw, and the likelihood of success on the merits. North Pole Corp.v. Village of East Dundee, 263 Ill. App. 3d 327, 334 (1994). Inaddition, the trial court must determine whether the balance ofhardships to the parties supports a grant of preliminary injunctiverelief. North Pole, 263 Ill. App. 3d at 334. The decision togrant or deny a preliminary injunction lies within the sounddiscretion of the trial court, and we will not disturb the trialcourt's decision absent a clear abuse of discretion. Desnick v.Department of Professional Regulation, 171 Ill. 2d 510, 516 (1996).

Here, the trial court focused only on the likelihood ofHenderson's success on the merits. On this issue, plaintiff neededto show only that it raised a fair question as to the existence of plaintiff's right and that the court should preserve the status quountil the case can be decided on its merits. Buzz Barton &Associates, Inc. v. Giannone, 108 Ill. 2d 373, 382 (1985). Here,the court found that Henderson was unlikely to succeed on themerits because there was no unfair dealing, favoritism, orarbitrary conduct on the City's part in deeming Seagren the lowestresponsible bidder. We hold that the trial court did not abuse itsdiscretion in denying Henderson's request for a preliminaryinjunction. Henderson did not demonstrate a sufficient likelihoodof success on the merits.

The bidding statute at issue in this case provides that inmunicipalities of less than 500,000, except as otherwise provided,any work or other public improvement that costs more than $10,000and is paid for in whole or in part by special assessment orspecial taxation shall be constructed pursuant to a contract let tothe lowest responsible bidder after advertising for bids in themanner prescribed by ordinance. 65 ILCS 5/8--9--1 (West 1998).Unlike some competitive bidding statutes, section 8--9--1 does notset forth any factors for municipalities to consider whendetermining the lowest responsible bidder.

Henderson contends that the appearance of impropriety was notan appropriate factor for the City to consider when determining whowas the lowest responsible bidder. Henderson relies on DoylePlumbing & Heating Co. v. Board of Education, Quincy Public SchoolDistrict No. 172, 291 Ill. App. 3d 221 (1997), for the propositionthat a public body's actions in rejecting the lowest bid may beconsidered unfair even if the public body articulated a good reasonfor its action.

In Doyle, a board of education did not award a contract to thelowest bidder because of the travel time between the lowestbidder's office and the project site. The bidding statute at issuein Doyle stated that in determining the lowest responsible bidderthe board of education could consider, among other things, "qualityand serviceability" (105 ILCS 5/10--20.21 (West 1994)). The courtanalyzed whether the "serviceability" consideration encompassed acontractor's response time for providing maintenance when thecontract at issue did not require maintenance and there was noresponse time requirement in the bid specifications. The courtheld that the term "serviceability" referred to the "usefulness ordurability of the supplies, materials or work," and not to thebidder's ability to provide service. Doyle, 291 Ill. App. 3d at227. In reaching its conclusion, the court noted that interpreting"serviceability" to mean the ability to provide maintenance wouldpromote favoritism and stifle competition because a local bidderwould always have an advantage over an out-of-town bidder. Doyle,291 Ill. App. 3d at 227.

We find Doyle inapplicable to the case before us. The holdingis based on the court's interpretation of the term"serviceability," which is not a part of the bidding statuterelevant to this case. Further, we do not find that the City'sreason for naming Seagren as the lowest responsible bidder, namely,the desire to avoid the appearance of impropriety, has the effectof giving an advantage to any particular bidder.

Defendants cite to S. N. Nielsen Co. v. Public Building Comm'n 81 Ill. 2d 290 (1980), as supportive of the City's discretion indetermining the lowest responsible bidder. In Nielsen, the courtconsidered whether a contractor's commitment to affirmative actionwas relevant to whether the contractor was responsible. The courtdiscussed the definition of "responsible," noting that the term hasbeen interpreted to mean "financially responsible and able todischarge one's obligations 'in accordance with what may beexpected or demanded under the terms of the contract.' " Nielsen,81 Ill. 2d at 299, quoting People ex rel. Peterson v. Omen, 290Ill. 59, 67 (1919). In support of its holding that a contractor'semployment of minorities was something that may be expected ordemanded under the terms of the contract, the court noted:

"Financial responsibility and the ability to perform thecontract are *** not the only relevant factors, and the factthat a contractor submits the lowest bid will notautomatically require that the contract be awarded to thatcontractor. As McQuillen states in his treatise on municipalcorporations, 'In proper circumstances a contract may beawarded to one who is not the lowest bidder, where this isdone in the public interest, in the exercise of discretionarypower granted under the laws, without fraud, unfair dealing,or favoritism, and where there is a sound and reasonable basisfor the award as made.' " Nielsen, 81 Ill. 2d at 299, quoting10 E. McQuillen, Municipal Corporations