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STATE OF MINNESOTA IN COURT OF APPEALS A11-1271 Rochon Corp., Appellant, vs. City of Saint Paul, Respondent. Filed May 7, 2012 Reversed Ross, Judge Ramsey County District Court File No. 62-CV-11-97 Dean B. Thomson, Jeffrey A. Wieland, Fabyanske, Westra, Hart & Thomson, P.A., Minneapolis, Minnesota (for appellant) Sara R. Grewing, St. Paul City Attorney, Lawrence J. Hayes, Jr., Assistant City Attorney, St. Paul, Minnesota (for respondent)

Considered and decided by Ross, Presiding Judge; Peterson, Judge; and Halbrooks, Judge. SYLLABUS A prospective contractor who increases its bid on a municipal project after the public bids are opened has made a material and substantive change in its bid, such that allowing the bid violates public bidding law and renders the contractor's replacement bid invalid and the consequent contract void.

OPINION ROSS, Judge Rochon Corporation lost the municipal general-contract bidding contest to construct the Lofts at Farmer's Market for the City of St. Paul to Shaw-Lundquist Associates. When the city opened the sealed bids, Shaw-Lundquist appeared to be the clear winner. But Shaw-Lundquist discovered that it had bid $619,200 lower than it had intended due to a clerical error, and the city allowed Shaw-Lundquist to change its bid, raising it to cover not only the $619,200 error but adding $89,211 more. Still, ShawLundquist's raised bid was lower than Rochon's bid, and the city awarded ShawLundquist the contract for $8,041,411. Rochon sued for the district court to void ShawLundquist's contract with the city. The district court granted Rochon's summary judgment motion in part and denied it in part. It declared that the city had violated competitive bidding laws by permitting Shaw-Lundquist to change its bid after the bids were opened, but it held that the change was not material. It therefore declined to declare the contract void but awarded Rochon its $33,652 costs for its work preparing its bid. Rochon appeals, arguing that the district court erred by not declaring that the change was material and that the contract is void. Because Shaw-Lundquist's bid change was material, we reverse. FACTS The city of St. Paul solicited bids in November 2010 for a construction project, the Lofts at Farmer's Market. The city announced that the bid budget was $7.5 million. The bid instructions warned, "A bid may not be modified, withdrawn, or canceled by the 2

Bidder for a period of sixty (60) days following the time and date designated for the receipt of bids, and each Bidder so agrees in submitting a bid." On November 22, 2010, the city received and opened six bids at a public bid opening. The results were as follows: Bidder Shaw-Lundquist Associates, Inc. Doran Construction Sand Companies, Inc. Rochon Corporation Stahl Construction Co. Morcon Construction Co., Inc. Lump Sum Bid Amount $7,333,000.00 $8,298,000.00 $8,394,983.00 $8,725,000.00 $8,900,000.00 $9,652,568.00

Shaw-Lundquist was the lowest bidder. The city disqualified the two next closest bids-- from Doran Construction and Sand Companies--as nonresponsive because they failed to include a required form stating that they would include the participation of women- and minority-owned subcontractor businesses. The double disqualification put Rochon's bid in second place. The day after the bid opening, Shaw-Lundquist informed the city by an electronically transmitted letter that it was withdrawing its bid because it had "discovered a mathematical error in [its] bid spreadsheet." It stated that "[Shaw-Lundquist's] correct bid total should be $8,041,411." The error was a transcription mistake creating a disparity between a subcontractor's bid and Shaw-Lundquist's bid spreadsheet; instead of the

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correct amount of $688,000 for that subcontract cost, Shaw-Lundquist had mistakenly indicated only "$68,800." The mistake rendered Shaw-Lundquist's bid $619,200 lower than its bid would have been with the correct costs included. The city considered how to treat the mistake. It first decided not to hold ShawLundquist to its bid or to proceed against its bid bond. That much was not controversial. The dispute arose from the city's next action. It asked Shaw-Lundquist if it would maintain its bid if it were permitted to correct the transcription error. This seemed beneficial to the city since, even with the error corrected, the Shaw-Lundquist bid was still the lowest, with the next bid, Rochon's, higher than the project's budget. ShawLundquist agreed that it would replace its bid with one for $8,041,411. The record does not indicate the city's rationale for allowing not only the error correction but also the additional $89,211 in Shaw-Lundquist's replacement bid, but it accepted the modified bid and awarded Shaw-Lundquist the contract. Rochon, Morcon Construction Company, and Doran Construction protested the contract and demanded that the city either hold Shaw-Lundquist to its original bid or reject the bids altogether for a rebid. The city denied the request, recognizing that a delay would affect funding for the project and calculating that it could cost the city about $43,000 a month in interest. Rochon commenced this lawsuit on its own behalf and under the private attorney general statute. It moved for a temporary restraining order or for a temporary injunction. It also asked the district court to declare the challenged contract illegal and void, and to order the city to reimburse its costs incurred in preparing its bid. The district court denied 4

Rochon's motion for temporary relief. Three days later, the city authorized ShawLundquist to begin construction. Rochon moved for summary judgment on its declaratory relief claim alleging that the city had violated public procurement law by permitting Shaw-Lundquist to make a material change to its bid after the pubic opening. The district court declared that by allowing Shaw-Lundquist to modify its bid the city had violated St. Paul Ordinances Chapter 82, section 82.02 (Code of Ordinances, Part III, Title IV, Chapter 82, section 82.02) (2010), Minnesota Statutes section 471.345, subdivision 3 (2010), and its own bidding instructions. But the district court held that the change was not material because Shaw-Lundquist did not enjoy a substantial advantage over the other bidders because it was still the lowest bidder after the changes. It declined to declare the contract void. The district court awarded Rochon its bid preparation costs of $33,652. Rochon appeals. ISSUE Did the district court err by concluding that Shaw-Lundquist's change to its bid was not material and that the contract between Shaw-Lundquist and the city of St. Paul is not void? ANALYSIS Rochon appeals from the partial denial of its motion for summary judgment. Our review is de novo. On an appeal from summary judgment, we determine whether there are any genuine issues of material fact and whether the district court erroneously applied the law. Prior Lake Am. v. Mader, 642 N.W.2d 729, 735 (Minn. 2002). The parties agree 5

that no genuine issues of material facts exist, so our review is limited to whether the district court erred in its application of the law to the facts. See id. We first consider whether the change was "material" and then whether the change requires the contract to be voided. Material Change? Rochon correctly argues that the district court erred by concluding that, although the city violated competitive bidding laws, the change it allowed in Shaw-Lundquist's bid was not material because it remained the lowest nondisqualified bid. Both the Minnesota Statutes and St. Paul's ordinances required competitive bidding for the Lofts project due to the contract amount. See Minn. Stat.

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