Demien Construction Co. v. O'Fallon Fire Protection District

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 14-3857
___________________________
Demien Construction Co.
lllllllllllllllllllll Plaintiff - Appellant
v.
O’Fallon Fire Protection District
lllllllllllllllllllll Defendant - Appellee
____________
Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
____________
Submitted: September 23, 2015
Filed: February 1, 2016
____________
Before RILEY, Chief Judge, BYE and BENTON, Circuit Judges.
____________
RILEY, Chief Judge.
Demien Construction Co. (Demien) appeals from the dismissal of its complaint
against the O’Fallon Fire Protection District (District). See Fed. R. Civ. P. 12(b)(6).
Challenging the District’s decision not to hire Demien for a construction project,
Demien alleges the District violated Demien’s constitutional rights in the bidding
process. With jurisdiction under 28 U.S.C. § 1291, we affirm the judgment of the
district court.1
I. BACKGROUND
In the spring of 2014, the District, a subdivision of the state of Missouri,
solicited bids for the construction of a new firehouse. According to Demien, a
representative from the District called Demien’s president and asked the company to
submit a bid for the general work on the firehouse.
The District provided bidders with an invitation to bid and instructions to bid,
which Demien attached to its amended complaint as exhibits.2 The instructions to bid
declare that the “Owner reserves right to reject any and all proposals when such
rejection is in the interest of Owner.” Under the heading AWARD OF CONTRACT,
the instructions explain:
It is the intent of the Owner to award a contract to the lowest responsible
bidder provided the bid has been submitted in accordance with all
requirements of the bidding documents . . . . The Owner reserves right,
however, to award Contract in his best interest, and, therefore, reserves
right to select a Bidder other than the lowest.
The instructions also informed the bidders that the most recent printing of the
Recommended Guide for Competitive Bidding Procedures and Contract Awards for
Building Construction, published by the American Institute of Architects, (AIA
1
The Honorable John A. Ross, United States District Judge for the Eastern
District of Missouri.
2
Because under Federal Rule of Civil Procedure 10(c) “a written instrument
that is an exhibit to a pleading is a part of the pleading for all purposes,” our ruling
“on a motion to dismiss under Rule 12(b)(6) may consider materials attached to the
complaint.” Abels v. Farmers Commodities Corp., 259 F.3d 910, 921 (8th Cir. 2001).
-2-
guide) would “guide all bidding.” According to the AIA guide, “[t]he contract should
be awarded to the lowest responsible bidder.” The AIA guide additionally states,
“The owner, by provisions in the instructions to bidders . . . typically retains the right
to reject any and all bids,” so long as rejection is not “used as a subterfuge.”
On May 27, 2014, the District awarded the contract to another general
contractor that had submitted a higher bid than Demien’s. Demien contends it
“submitted the lowest responsible bid” for the contract and “met all requirements for
submitting a bid,” thus it should have been awarded the contract. Demien suggests
the District must have awarded the contract based on “surmise, guesswork, or gut
feeling.”
Demien sued the District under 42 U.S.C. § 1983, alleging the District violated
Demien’s Fourteenth Amendment due process rights under the U.S. Constitution.
Demien also claimed the District violated its First Amendment rights, Missouri
Statutes section 321.220(4),3 and the Missouri Constitution. The District moved to
dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief could
be granted, arguing, among other things, Demien lacked standing to pursue both the
federal constitutional claims and the state law claims and did not possess a legitimate
claim of entitlement to the contract. The district court decided Demien lacked
standing, but also concluded Demien failed to state a claim under the Fourteenth
Amendment Due Process Clause and abandoned any claim under the First
Amendment. The district court declined to exercise supplemental jurisdiction over
the state law claims, see 28 U.S.C. § 1367(c)(3), and dismissed those claims without
prejudice. Demien appeals only the dismissal of the Fourteenth Amendment and First
Amendment claims.
3
This statute provides that fire protection districts shall be able to enter into
contracts and that “a notice shall be published for bids on all construction or purchase
contracts for work or material or both” when the contract “involve[s] an expense of
ten thousand dollars or more.” Mo. Rev. Stat. § 321.220(4).
-3-
II. DISCUSSION
A. Article III Standing
In light of the district court’s holding, we first must address standing. See U.S.
Const. art. III, § 2, cl. 1; Iowa League of Cities v. EPA, 711 F.3d 844, 869 (8th Cir.
2013). If Demien does not have Article III standing to sue the District, “we have no
subject matter jurisdiction over the suit.” Id. We review the existence of subject
matter jurisdiction de novo. See ABF Freight Sys., Inc. v. Int’l Bhd. of Teamsters,
645 F.3d 954, 958 (8th Cir. 2011). The basic requirements of Article III standing, the
“‘irreducible constitutional minimum,’” are that a plaintiff must demonstrate: (1) “‘an
injury in fact,’” that is “‘concrete and actual or imminent,’” (2) that the injury be
“‘fairly traceable’” to the “‘conduct of the defendant,’” and (3) “‘a likelihood that the
requested relief will redress the alleged injury.’” Miller v. Redwood Toxicology
Lab., Inc., 688 F.3d 928, 933-34 (quoting Steel Co. v. Citizens for a Better Env’t, 523
U.S. 83, 102-03 (1998)). We have no problem concluding Demien has standing
under Article III. See Metro. Express Servs., Inc. v. City of Kansas City, 23 F.3d
1367, 1369-70 (8th Cir. 1994); cf. Wilcox Elec., Inc. v. FAA, 119 F.3d 724, 728 (8th
Cir. 1997); Mideast Sys. & China Civil Constr. Saipan Joint Venture, Inc. v. Hodel,
792 F.2d 1172, 1176 (D.C. Cir. 1986).
Although it did not specifically mention Article III, the district court concluded
Demien “has not met its burden to establish standing to challenge the award of the
contract at issue.” The parties, following the district court, address standing by
discussing the application of our analysis in Metropolitan Express Services, Inc. v.
City of Kansas City, which also dealt with unsuccessful bidders trying to challenge
the allegedly unfair award of a government contract. See Metro., 23 F.3d at 1368-69.4
4
Although it does not affect our decision, we note a panel of the Missouri Court
of Appeals, Eastern District, has concluded Metropolitan was wrongly decided.
Byrne & Jones Enters., Inc. v. Monroe City R-1 Sch. Dist., No. ED 101588, 2014 WL
5847596, at *5 (Mo. Ct. App. Nov. 12, 2014). In Byrne & Jones, the Missouri court
disagreed with decisions from the Western and Southern Districts of the Missouri
-4-
But that analysis addressed standing under Missouri state law, not Article III.5 Id. at
1370. Because this is a federal question case with Article III standing, and is not a
diversity case like Metropolitan, we need not consider whether Demien would have
standing to sue under Missouri state law.
B. Motion to Dismiss
Deciding Demien has satisfied Article III standing, we now consider whether
Demien has stated a cause of action under § 1983 based on violations of the
Fourteenth Amendment and the First Amendment as incorporated under the
Fourteenth. See Fed. R. Civ. P. 12(b)(6).
1. Standard of Review
We review de novo whether a complaint states a cause of action. See, e.g.,
Packard v. Darveau, 759 F.3d 897, 900 (8th Cir. 2014). Federal Rule of Civil
Procedure 8(a)(2) requires a claim for relief to contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” To survive a Rule 12(b)(6)
motion to dismiss, the “complaint must contain sufficient factual matter” that “allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Under our review,
we must “‘accept[] as true all factual allegations,’” but we are “‘not bound to accept
Court of Appeals, both of which have relied on Metropolitan to determine an
unsuccessful bidder has standing under Missouri law to challenge the award of a
contract under certain circumstances. See id. at *5-6; Brannum v. City of Poplar
Bluff, 439 S.W.3d 825, 830 (Mo. Ct. App. 2014); Pub. Commc’n Servs., Inc. v.
Simmons, 409 S.W.3d 538, 546-47 (Mo. Ct. App. 2013). In February 2015, Byrne
& Jones was transferred to the Missouri Supreme Court.
5
In Metropolitan we noted neither the district court nor the parties had
discussed Article III standing but, without further discussion, summarily concluded
we were “satisfied that Metropolitan had standing under Article III.” Metro., 23 F.3d
at 1370.
-5-
as true a legal conclusion couched as a factual allegation.’” Carton v. Gen. Motors
Acceptance Corp., 611 F.3d 451, 454 (8th Cir. 2010) (quoting McAdams v. McCord,
584 F.3d 1111, 1113 (8th Cir. 2009)).
2. First Amendment
In its response to the District’s motion to dismiss, Demien did not address the
District’s argument that Demien failed to state a claim under the First Amendment,
and so the district court concluded Demien abandoned its First Amendment claims.
Because we agree Demien has abandoned its claims under the First Amendment by
failing to argue them before the district court, we need not consider Demien’s First
Amendment arguments on appeal. See Joseph v. Allen, 712 F.3d 1222, 1226 (8th Cir.
2013) (failing to oppose an issue before the district court results in waiver of the issue
on appeal). We also observe Demien has not made any specific allegation on appeal
regarding how the District violated Demien’s First Amendment rights.
3. Fourteenth Amendment Due Process Clause
To state a claim under the Fourteenth Amendment Due Process Clause, Demien
must have alleged it was deprived of a protected interest without due process of law.
See, e.g., Barnes v. City of Omaha, 574 F.3d 1003, 1005-06 (8th Cir. 2009).
Protected interests under the Due Process Clause are those to which a person holds
a “legitimate claim of entitlement,” and stem from “independent source[s] such as
state law.” Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972).
Unless Demien can demonstrate it held a valid property interest under Missouri
law in the subject contract, we must affirm the district court’s dismissal of Demien’s
Fourteenth Amendment claim. See L & H Sanitation, Inc. v. Lake City Sanitation,
Inc., 769 F.2d 517, 524 (8th Cir. 1985) (holding “the district court did not err in
dismissing appellants’ § 1983 claim challenging the city’s allegedly arbitrary award
of the contract for failure to state a claim because [none of the plaintiffs] had a
protected property interest under [state] law”). “Under Missouri law an unsuccessful
-6-
bidder on a construction project has no property right in the contract.” Hanten v. Sch.
Dist. of Riverview Gardens, 183 F.3d 799, 808 (8th Cir. 1999); see also State ex rel.
Mid-Mo. Limestone, Inc. v. County of Callaway, 962 S.W.2d 438, 441 (Mo. Ct. App.
1998). “[W]here a public body reserves the right to reject any and all bids,” a rejected
bidder has “no vested interest or property right” in the contract. La Mar Constr. Co.
v. Holt Cty., R-II Sch. Dist., 542 S.W.2d 568, 570 (Mo. Ct. App. 1976). Here, the
District’s invitation to bid clearly advised “[t]he [District] . . . reserves right to select
a Bidder other than the lowest” and “reserves right to reject any and all proposals.”
No rejected bidder gained a property right in the award of the contract. See id.; cf.
Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) (stating “a benefit is not
a protected entitlement if government officials may grant or deny it in their
discretion”).
Demien accuses the district court of ignoring Metropolitan, Public
Communications Services, Inc. v. Simmons, 409 S.W.3d 538 (Mo. Ct. App. 2013),
and State ex rel. Mid-Missouri Limestone, cases Demien contends “establish the right
of an unsuccessful bidder to bring suit if the award of the bid was done unfairly.”
While these cases demonstrate an unsuccessful bidder may have standing under
Missouri law to challenge the award of a contract, none grant a property right to the
lowest bidder, and, furthermore, “[s]tanding to bring a state court claim of deprivation
of property rights does not establish a protected property interest,” Kim Constr. Co.
v. Bd. of Trustees of Mundelein, 14 F.3d 1243, 1249 (7th Cir. 1994). See also
Metro., 23 F.3d at 1371; Simmons, 409 S.W.3d at 546; State ex rel. Mid-Mo.
Limestone, 962 S.W.2d at 441 (declaring “unsuccessful bidders” do not have
“private, pecuniary interests which the law will recognize and enforce”).
Finally, we are unpersuaded by Demien’s attempts to create a binding
obligation from language in the AIA guide and the invitation to bid. Because the AIA
guide said the contract “should” be awarded to the lowest bidder, Demien argues the
-7-
District was obligated to award the contract to Demien. As the District suggests, the
invitation and AIA guide merely state the District may accept the lowest bid, “but
. . . doesn’t need to.” Demien tries to find ambiguity in the AIA guide and the
invitation to bid, maintaining principles of contract law demand we construe any
ambiguity against the District. But rules of contractual interpretation are inapplicable
here because Demien and the District never entered into a contract. See State ex rel.
Johnson v. Sevier, 98 S.W.2d 677, 679 (Mo. 1936) (determining an advertisement
soliciting bids to a public project “‘was not an offer of a contract, but an offer to
receive proposals for a contract’” (quoting Anderson v. Bd. of Pub. Sch., 27 S.W.
610, 612 (Mo. 1894))).
In sum, Demien failed to allege the District deprived Demien of any
entitlement, and so it failed to state a claim under the Fourteenth Amendment Due
Process Clause.
III. CONCLUSION
For the foregoing reasons, we affirm the district court’s dismissal of Demien’s
complaint.
______________________________
-8-