McNa Insurance Company v. Dept of Technology Management and Budget ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
MCNA INSURANCE COMPANY, doing FOR PUBLICATION
business as MCNA DENTAL, January 15, 2019
9:10 a.m.
Petitioner-Appellee,
v No. 342646
Ingham Circuit Court
DEPARTMENT OF TECHNOLOGY, LC No. 18-000034-AA
MANAGEMENT AND BUDGET,
Respondent-Appellant.
Before: BOONSTRA, P.J., and SAWYER and TUKEL, JJ.
SAWYER, J.
This case presents the question whether a disappointed bidder on the awarding of a public
contract has standing to file an appeal in the circuit court. We hold that it does not and reverse
the circuit court, remanding the matter to the court to enter an order dismissing petitioner’s claim
of appeal.
Respondent issued a request for proposal (RFP) for two state contracts, and possibly a
third regional contract, to provide dental services under the Healthy Kids Dental Program.
Petitioner and four other entities submitted proposals. Respondent issued a “Recommendation of
Award” (“recommendation”) indicating that it intended to award the statewide contracts to Blue
Cross and Blue Shield of Michigan (“BCBSM”) and Delta Dental. Petitioner filed a protest,
arguing that improper deductions were made in scoring its proposal, that BCBSM and Delta
Dental were non-responsible bidders, and that respondent improperly allowed BCBSM to amend
its proposal after the deadline for submission had passed. With respect to the scoring issue,
respondent agreed that the scoring needed to be adjusted, but that the adjustment did not affect
the outcome of the award recommendation.
In response to the revised recommendation, petitioner filed a claim of appeal in circuit
court under MCL 600.631, alleging that the process and revised recommendation violated
Michigan law, resulted in material injustice, and was arbitrary and capricious. Respondent
moved to dismiss, arguing that a disappointed bidder lacked standing to challenge a public bid
process and that the circuit court lacked jurisdiction because the Michigan Constitution only
grants the circuit court jurisdiction to review final decisions of administrative agencies acting in
a judicial or quasi-judicial capacity and affecting private rights or licenses.
After expressing its criticism of how the bidding process is handled, rather than ruling on
the motions to dismiss, the trial court adjourned the hearing and directed respondent to submit an
affidavit explaining why BCBSM was permitted to change its bid and to allow petitioner to
depose the affiant because the court “want[s] the media to know how I feel. Because I will do it
again.” Respondent filed an application for leave to appeal in this Court from the trial court’s
order. This Court peremptorily reversed and vacated the order, and remanded for entry of an
order dismissing petitioner’s claim of appeal in the circuit court.1 Petitioner filed an application
for leave to appeal to the Supreme Court which, in lieu of granting leave, vacated this Court’s
order and remanded for plenary consideration.2 On plenary consideration, we again reverse the
trial court and direct it to enter an order dismissing petitioner’s appeal.
We review a trial court’s decision regarding standing de novo. Dep’t of Social Services v
Baayoun, 204 Mich. App. 170, 173; 514 NW2d 522 (1994). Our analysis starts with this Court’s
decision in Groves v Dep’t of Corrections.3 In Groves, the plaintiffs challenged the process by
which the state had awarded a contract for the installation of telephone systems at correctional
facilities. Similar to the case at bar, the plaintiffs, disappointed bidders, argued that the winning
bidder was improperly allowed to change its proposal after the deadline had passed.4 This Court
rejected the plaintiffs’ challenge, noting that “Michigan jurisprudence has never recognized that
a disappointed bidder . . . has the right to challenge the bidding process.”5 The Court went on to
observe that “[l]itigation aimed at second-guessing the exercise of discretion by the appropriate
public officials in awarding a public contract will not further the public interest, it will only add
uncertainty, delay, and expense to fulfilling the contract.”6 The Court further stated that an
action to review the bidding process is limited to cases where there is evidence of fraud,
illegality, or abuse and then such an action can only be brought by the appropriate public
official.7 Such restriction was necessary because “[o]pening the floodgates of litigation to every
disappointed bidder that believes it has been aggrieved by the bidding process would serve the
1
MCNA Ins Co v Dep’t of Technology, Mgt & Budget, unpublished order entered March 12,
2018 (Docket No. 342646).
2
MCNA Ins Co v Dep’t of Technology, Mgt & Budget, 502 Mich. 881; 913 NW2d 653 (2018).
3
295 Mich. App. 1; 811 NW2d 563 (2011).
4
Id. at 4.
5
Id. at 5.
6
Id. at 7.
7
Id.
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interests of neither the government nor the citizen-taxpayers that the bidding process is designed
to advance.”8
Petitioner endeavors to distinguish Groves on the basis that it, and other similar cases
cited by respondent, involved parties who sought to invoke the power of the circuit court by
bringing a separate action to challenge the procurement decision instead of bringing an appeal to
the circuit court under MCL 600.631 as petitioner did. MCL 600.631 provides as follows:
An appeal shall lie from any order, decision, or opinion of any state board,
commission, or agency, authorized under the laws of this state to promulgate rules
from which an appeal or other judicial review has not otherwise been provided for
by law, to the circuit court of the county of which the appellant is a resident or to
the circuit court of Ingham county, which court shall have and exercise
jurisdiction with respect thereto as in nonjury cases. Such appeals shall be made
in accordance with the rules of the supreme court.
MCR 7.103(A)(3) provides that there is an appeal by right “by an aggrieved party” from “a final
order or decision of an agency from which an appeal of right to the circuit court is provided by
law.”
In Federated Ins Co v Oakland Co Rd Comm,9 the Supreme Court discussed the
similarity between issues of standing and being an aggrieved party for purposes of appeal:
As we indicated in Nat’l Wildlife Federation v Cleveland Cliffs Iron Co,
471 Mich. 608, 612; 684 NW2d 800 (2004), citing Lee v Macomb Co Bd of
Comm’rs, 464 Mich. 726, 734; 629 NW2d 900 (2001), standing refers to the right
of a party plaintiff initially to invoke the power of the court to adjudicate a
claimed injury in fact. In such a situation it is usually the case that the defendant,
by contrast, has no injury in fact but is compelled to become a party by the
plaintiff’s filing of a lawsuit. In appeals, however, a similar interest is vindicated
by the requirement that the party seeking appellate relief be an “aggrieved party”
under MCR 7.203(A) and our case law. This Court has previously stated, “To be
aggrieved, one must have some interest of a pecuniary nature in the outcome of
the case, and not a mere possibility arising from some unknown and future
contingency.” In re Estate of Trankla, 321 Mich. 478, 482; 32 NW2d 715 (1948),
citing In re Estate of Matt Miller, 274 Mich. 190, 194; 264 N.W. 338 (1936). An
aggrieved party is not one who is merely disappointed over a certain result.
Rather, to have standing on appeal, a litigant must have suffered a concrete and
particularized injury, as would a party plaintiff initially invoking the court’s
power. The only difference is a litigant on appeal must demonstrate an injury
8
Id. at 8.
9
475 Mich. 286, 290-292; 715 NW2d 846 (2006).
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arising from either the actions of the trial court or the appellate court judgment
rather than an injury arising from the underlying facts of the case.
This Court’s observation in Groves that a disappointed bidder does not have standing to
challenge the bidding process10 is equally applicable in the appellate context. That is, because
petitioner had no expectancy to be awarded the contract, it cannot demonstrate an injury arising
from the failure to be awarded the contract. Therefore, petitioner is not an aggrieved party and
has no standing to bring an appeal in the circuit court.
For these reasons, we conclude that the circuit court should have granted respondent’s
motion to dismiss based upon a lack of standing. In light of this conclusion, we need not address
respondent’s alternate argument that the circuit court exceeded the scope of review and abused
its discretion by ordering respondent to produce an affidavit.
Reversed and remanded to the circuit court for entry of an order dismissing petitioner’s
appeal. We do not retain jurisdiction. Respondent may tax costs.
/s/ David H. Sawyer
/s/ Mark T. Boonstra
/s/ Jonathan Tukel
10
Groves, 295 Mich. App. at 5.
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