Joseph J. Henderson and Son, Inc. v. The City of Crystal Lake

Citation: 318 Ill. App. 3d 880Docket: 2-00-0825 Rel

Court: Appellate Court of Illinois; February 8, 2001; Illinois; State Appellate Court

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Joseph J. Henderson and Son, Inc. filed an interlocutory appeal against the City of Crystal Lake and its officials after the trial court denied its motion for a preliminary injunction concerning a contract for wastewater treatment plant improvements. Henderson, which submitted the lowest bid of approximately $13.9 million, contended that the City wrongfully awarded the contract to Seagren/Shales, Inc., which bid nearly $14.2 million. The City rejected Henderson's bid due to concerns that its business relationship with B&W Design/Build L.L.C., a subsidiary of the supervising engineer Baxter & Woodman, Inc., might create an appearance of impropriety.

The trial court initially denied Henderson's motion, finding it unlikely to succeed on the merits since there was no allegation of fraud in the bidding process. Upon appeal, the decision was vacated, and the case was remanded for a hearing on whether the City's actions were arbitrary or favored one bidder over another. During the remand, testimony revealed that Baxter, which had a long-standing relationship with the City and supervised the bidding process, recommended considering Henderson's bid if both bidders were deemed responsible. However, concerns were raised about the close financial ties between Henderson and B&W, particularly that B&W's profits came primarily from work with Henderson, which contributed to the City's apprehension regarding potential impropriety.

Shepley testified that hiring a different supervising engineer was impractical due to Baxter's familiarity with the wastewater treatment plant, and transitioning another engineer would be costly. The trial court found that the City's awarding of the contract to Seagren was free from favoritism or fraud and granted the defendants' motion for a directed finding, denying Henderson's request for a preliminary injunction. Henderson's appeal hinges on its ability to demonstrate the necessity for the injunction by proving four elements: a clear right needing protection, irreparable harm without the injunction, lack of an adequate legal remedy, and likelihood of success on the merits. The court evaluated the likelihood of success, determining that Henderson was unlikely to prevail as there was no evidence of unfair dealing or favoritism in awarding the contract to Seagren as the lowest responsible bidder. The court concluded that it did not abuse its discretion in denying the injunction, as Henderson failed to show a sufficient likelihood of success. The relevant bidding statute mandates that municipalities award contracts to the lowest responsible bidder without specifying criteria for determining that status. Henderson argued that the City's consideration of the appearance of impropriety was inappropriate, citing Doyle Plumbing & Heating Co. v. Board of Education, which addresses the potential unfairness in rejecting the lowest bid despite a stated rationale.

The bidding statute in question allows a board of education to consider quality and serviceability when determining the lowest responsible bidder. The court in Doyle clarified that 'serviceability' pertains to the usefulness or durability of supplies and not the contractor's responsiveness for maintenance, especially since maintenance was not stipulated in the contract or bid specifications. The court found that interpreting 'serviceability' as responsiveness could lead to favoritism towards local bidders over out-of-town ones. 

In the current case, Doyle's holding does not apply because the interpretation of 'serviceability' is not relevant to the statute in question. The city's rationale for selecting Seagren as the lowest responsible bidder—aiming to avoid any appearance of impropriety—does not unfairly advantage any specific bidder. The defendants referenced S. N. Nielsen Co. v. Public Building Comm'n, which discussed the broader definition of 'responsible' beyond just financial capability, indicating that other factors, including a contractor’s commitment to affirmative action, are relevant. The court acknowledged that awarding a contract to someone other than the lowest bidder can be justified in the public interest if done without fraud or favoritism.

The trial court's finding that the city's decision to award the contract to Seagren was within its discretionary power and served the public interest was supported by uncontroverted evidence. Henderson’s business relationship with B&W and Baxter’s ownership stake in B&W did not demonstrate any unfairness or favoritism in the city's decision-making process. Henderson failed to provide evidence of fraud or arbitrary conduct, leading to the affirmation of the trial court's order denying Henderson's motion for a preliminary injunction. The court also reiterated that prior comments in Henderson I do not bind the current decision regarding the city's conduct.