Orion Technical Resources, LLC v. Los Alamos National Security, LLC

I attest to the accuracy and
integrity of this document
New Mexico Compilation
Commission, Santa Fe, NM
'00'04- 10:48:42 2012.09.27
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2012-NMCA-097Filing Date: August 6, 2012
Docket No. 30,928
ORION TECHNICAL RESOURCES, LLC,
Plaintiff-Appellant,
v.
LOS ALAMOS NATIONAL SECURITY, LLC and
COMPA INDUSTRIES, INC.,
Defendant-Appellees.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Beatrice J. Brickhouse, District Judge
Freedman Boyd Hollander Goldberg Ives & Duncan, P.A.
David Freedman
David H. Urias
Albuquerque, NM
for Appellant
Carolyn Callaway, P.C.
Carolyn Callaway
Albuquerque, NM
Allegra A. Hanson, P.C.
Allegra A. Hanson
Albuquerque, NM
Miller Stratvert P.A.
Richard L. Alvidrez
Albuquerque, NM
for Appellee COMPA Industries, Inc.
Stelzner, Winter, Warburton, Flores, Sanchez & Dawes, P.A.
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Luis G. Stelzner
Robert P. Warburton
Sara N. Sanchez
for Appellee Los Alamos National Security, LLC
OPINION
VANZI, Judge.
{1} Plaintiff Orion Technical Resources, LLC (Orion) appeals from the district court’s
order dismissing its claim for breach of implied contract against Defendant Los Alamos
National Security, LLC (LANS) and for denying its motion for injunctive relief against
LANS and Defendant COMPA Industries, Inc. (COMPA) (collectively, Defendants). We
address two issues on appeal: (1) whether an implied-in-fact contract can ever exist between
a disappointed bidder and the solicitor of bids in the private procurement process and (2)
whether the district court erred when it concluded as a matter of law that injunctive relief is
never available to a disappointed bidder. Here, Orion filed a complaint alleging that there
was an implied-in-fact contract between it and LANS that arose within the context of
LANS’s solicitation for bids. Specifically, Orion alleged that the implied-in-fact contract
required LANS to follow certain procedures in evaluating the proposals of the prospective
bidders and selecting the winner of the subcontract. We first hold that a disappointed bidder
is not barred as a matter of law from bringing a claim based on an implied-in-fact contract
in the context of the private solicitation process, and we reverse the district court on that
issue. In addition, although we conclude that the district court properly denied Orion’s
request for injunctive relief, we reverse its decision that injunctive relief is never available
to a disappointed bidder under any circumstances. Finally, because we conclude that
expectancy damages can be a possible remedy in this type of case, we reverse the district
court’s ruling that Orion’s only available remedy is limited to reliance damages.
BACKGROUND
{2} LANS is the management and operating contractor at the Los Alamos National
Laboratory (LANL). In 2007, LANS issued a request for proposals (RFP) for a subcontract
to provide vendor management and staff augmentation services (service contract) to LANL.
Orion and COMPA were two of the three companies that submitted bids and were selected
as finalists. After providing their best and final offers, LANS awarded the contract to
COMPA.
{3} Shortly after COMPA executed the service contract with LANS, Orion filed a
complaint for injunctive relief and damages claiming that LANS breached an implied-in-fact
contract with Orion that arose out of the RFP bid selection process. The twenty-three-page
complaint set out detailed factual allegations regarding the process by which LANS solicited
and selected bids for the service contract. For example, it alleged that
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[p]ursuant to LANS’s [RFP], Source Selection Plan[,] and custom and norms
for [management and operations] procurements, LANS was obligated to
ensure that the bid selection process followed basic principles of fairness and
competition. LANS violated its obligation to ORION to conduct a fair and
competitive procurement process by failing to follow[] its own RFP,
including the Source Selection Plan, its Procurement Policies and
Procedures, and the well-established customs and norms for [management
and operations] procurement bids.
The complaint also alleged that LANS assured bidders that the solicitation process would
be fair, competitive, and negotiated; that LANS deviated from the selection process and
criteria set out in its RFP and Source Selection plan by engaging in discussions with only
one bidder and awarding the service contract to a bidder that did not meet the requirements
of the RFP; and that LANS failed to follow “well-established customs and norms in
procurement and acquisition practices that are necessary for a full, open and competitive
process.” In these ways, Orion claimed that LANS breached the alleged implied-in-fact
contract that required LANS to give fair consideration to Orion and to strictly comply with
the representations it made in its RFP and Source Selection Plan.
{4} Based on the allegations in the complaint, Orion filed a motion for preliminary
injunction and an application for a temporary restraining order requesting that the district
court restrain and permanently enjoin LANS and COMPA from proceeding with the
performance of the service contract, order LANS to reimburse Orion for the cost of
preparing the bid, award Orion other costs, damages, and attorney fees, and provide any
other relief deemed appropriate. The district court initially granted Orion’s application for
a temporary restraining order and prohibited Defendants from continuing to process any
transition-related documentation for current employees of Orion until Orion’s motion for a
preliminary injunction was heard. Thereafter, in a memorandum opinion and order dated
June 29, 2009, the district court vacated the temporary restraining order and denied Orion’s
motion for a preliminary injunction. At this point, COMPA had already begun to transition
to full operation on the service contract and expected to start full performance within days
of the district court’s order.
{5} In March 2010, LANS filed a motion for judgment on the pleadings for failure to
state a claim under Rule 1-012(C) NMRA. LANS argued that Orion’s claim for breach of
implied-in-fact contract required dismissal because New Mexico does not recognize that
cause of action in the private procurement context. LANS filed a separate motion for
judgment on the pleadings on Orion’s request for permanent injunctive relief, arguing that,
because the service contract had already been awarded, an injunction would not remedy
improper conduct but would only serve to punish LANS. COMPA filed a similar motion
pursuant to Rule 1-056 NMRA and asked the district court to grant partial summary
judgment to COMPA on Orion’s request for injunctive relief. The district court granted both
of LANS’s Rule 1-012(C) motions and COMPA’s Rule 1-056 motion. Orion timely
appealed.
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DISCUSSION
{6} In this appeal, we first address whether an implied-in-fact contract may arise between
parties in the private bid solicitation and selection process. Because we answer that question
in the affirmative, we then discuss whether injunctive relief is ever available to a
disappointed bidder if the solicitor of bids breaches such an implied-in-fact contract.
Although we conclude that injunctive relief may be appropriate under certain circumstances,
it is not available to Orion under this set of facts. However, the district court erred when it
limited recovery to reliance damages incurred by a bidder based upon the preparation and
submission of its bid.
An Implied-In-Fact Contract May Exist in the Private Procurement Context
{7} Orion argues that the district court erred in finding that an implied-in-fact contract
to follow certain procedures in evaluating and selecting bids can never exist between private
companies in the bidding and procurement context. Here, the district court ruled that the
only time an implied contract can be found in the procurement process is when a
governmental entity is soliciting bids. The court reasoned that in the public procurement
context, there are statutes governing the bid selection process that may give rise to an
implied contract. Those statutes specifically provide that public entities will consider all
bids fairly and equitably. Private solicitors of bids, on the other hand, are not bound by such
statutes. Orion counters that even where no such statutes control, if a non-governmental
solicitor of bids makes specific representations regarding the processes by which a contract
will be awarded and a bidder reasonably relies on those representations in deciding to bid,
an implied-in-fact contract can arise between the parties. For the reasons that follow, we
agree with Orion.
{8} Our review of a district court’s grant of a motion for judgment on the pleadings is de
novo. Glaser v. LeBus, 2012-NMSC-012, ¶ 8, 276 P.3d 959. “A motion to dismiss on the
pleadings . . . is similar to a motion to dismiss for failure to state a claim upon which relief
can be granted[.]” Shovelin v. Cent. N.M. Elec. Coop., Inc., 115 N.M. 293, 302, 850 P.2d
996, 1005 (1993). Where, as here, the district court considered matters contained solely
within the pleadings, a judgment on the pleadings is treated as a motion to dismiss. Glaser,
2012-NMSC-012, ¶ 8; see Rule 1-012(B)(6). “[A] motion to dismiss for failure to state a
claim upon which relief can be granted tests the legal sufficiency of the complaint.”
Shovelin, 115 N.M. at 302, 850 P.2d at 1005. “In reviewing a district court’s decision to
dismiss for failure to state a claim, we accept all well-pleaded factual allegations in the
complaint as true and resolve all doubts in favor of sufficiency of the complaint.” Glaser,
2012-NMSC-012, ¶ 8 (internal quotation marks and citation omitted). The motion “should
be granted only when it appears that the plaintiff is not entitled to recover under any facts
provable under the complaint.” Id. (internal quotation marks and citation omitted). “[A]
motion to dismiss for failure to state a claim is granted infrequently.” Shovelin, 115 N.M.
at 302, 850 P.2d at 1005 (internal quotation marks and citation omitted).
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{9} In its complaint, Orion alleges that there was an implied-in-fact contract between it
and LANS. The distinction between an express and implied contract involves “no difference
in legal effect, but lies merely in the mode of manifesting assent.” Restatement (Second) of
Contracts § 4 cmt. a (1981). Implied-in-fact contracts are “founded upon a meeting of
minds, which, although not embodied in an express contract, is inferred . . . from conduct
of the parties showing, in the light of the surrounding circumstances, their tacit
understanding.” Hercules, Inc. v. United States, 516 U.S. 417, 424 (1996) (internal
quotation marks and citation omitted); see also 1 Williston on Contracts § 1:5 (4th ed. 2012)
(“[I]ntention to make a promise may be manifested in language or by implication from other
circumstances, including the parties’ course of dealing or course of performance, or a usage
of trade.”). An implied-in-fact contract is “based on the parties’ mutual assent as manifested
by their conduct.” Garcia v. Middle Rio Grande Conservancy Dist., 1996-NMSC-029, ¶ 15
n.1, 121 N.M. 728, 918 P.2d 7 (internal quotation marks and citation omitted).
{10} We have previously said that “[e]vidence of custom or course of conduct between
the parties may give rise to a contract implied in fact.” Sanchez v. Martinez, 99 N.M. 66, 70,
653 P.2d 897, 901 (Ct. App. 1982). Our courts will also look to “written representations[,]
. . . oral representations, . . . the conduct of the parties, or . . . a combination of
representations and conduct” to determine whether an implied-in-fact contract exists.
Garcia, 1996-NMSC-029, ¶ 10 (internal quotation marks and citation omitted); see Beggs
v. City of Portales, 2009-NMSC-023, ¶ 17, 146 N.M. 372, 210 P.3d 798; Kestenbaum v.
Pennzoil Co., 108 N.M. 20, 24, 766 P.2d 280, 284 (1988). Whether an implied-in-fact
contract arises from the representations of the parties is dependent on whether the
representations create a reasonable expectation of contractual rights. Garcia, 1996-NMSC-
029, ¶ 11; Ruegsegger v. Bd. of Regents of W. N.M. Univ., 2007-NMCA-030, ¶ 24, 141 N.M.
306, 154 P.3d 681. “The reasonableness of expectations is measured by just how definite,
specific, or explicit . . . the representation or conduct relied upon” has been. Hartbarger v.
Frank Paxton Co., 115 N.M. 665, 672, 857 P.2d 776, 783 (1993). Accordingly, our courts
have recognized an action based on an implied-in-fact contract in a number of different
contexts. For example, we have considered whether certain conduct and facts gave rise to
an implied-in-fact employment contract sufficient to overcome the presumption of at-will
employment. See Garcia, 1996-NMSC-029, ¶¶ 10-11; Hartbarger, 115 N.M. at 672, 857
P.2d at 783; Kestenbaum, 108 N.M. at 22-23, 766 P.2d at 282-83; Newberry v. Allied Stores,
Inc., 108 N.M. 424, 426-27, 773 P.2d 1231, 1233-34 (1989); Lukoski v. Sandia Indian Mgmt.
Co., 106 N.M. 664, 666-67, 748 P.2d 507, 509-10 (1988); Sanchez v. The New Mexican, 106
N.M. 76, 78, 738 P.2d 1321, 1324 (1987). This Court relied on the approach used in
employment cases to determine whether a student successfully stated a claim for breach of
an implied contract against a post-secondary educational institution based on the
representations contained in a student handbook. Ruegsegger, 2007-NMCA-030, ¶¶ 22-24,
36. In other circumstances, ranging from an alleged promise to procure fire insurance, to a
title company’s failure to disperse escrow funds, to a dispute over whether an individual was
hired by a company, our courts have considered claims based on implied-in-fact contracts.
See Gordon v. N.M. Title Co., 77 N.M. 217, 218, 421 P.2d 433, 433-34 (1966); Roan v. D.
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W. Falls, Inc., 72 N.M. 464, 466-67, 384 P.2d 896, 898 (1963); Sanchez, 99 N.M. at 68, 653
P.2d at 899.
{11} Here, the parties disagree about whether an implied-in-fact contract can exist in the
private bid solicitation and selection process. Their dispute centers on our Supreme Court’s
decision in Planning & Design Solutions v. City of Santa Fe, 118 N.M. 707, 714-15, 885
P.2d 628, 635-36 (1994), in which the Court held that by issuing an RFP, the city impliedly
promised to abide by the governing statutes in evaluating the bids and therefore to consider
all bids fairly and equitably. Agreeing with LANS’s interpretation of Planning & Design,
the district court found that the only time a disappointed bidder can have a viable claim
based on an implied contract is when a governmental body solicited the bids. Orion
contends that nothing in Planning & Design precludes a claim for breach of an implied-in-
fact contract arising out of a private procurement process.
{12} In Planning & Design, the city issued a RFP that listed four weighted criteria that the
city would apply in evaluating the bids. Id. at 709, 885 P.2d at 630. Under the laws
governing the public procurement process, the city was required to apply the criteria set out
in the RFP—and no others—in evaluating the proposals. Id. at 711, 885 P.2d at 632.
However, in selecting the winning bid, the city relied on a fifth criterion that was not
included in the RFP. Id. The plaintiff, a disappointed bidder, sued the city for violations of
the Procurement Code and the city’s own purchasing regulations. Id. at 709, 885 P.2d at
630. The district court in that case ruled that because the disappointed bidder did not have
a formal contract with the city, the city could not be liable for breach of contract. Id.{13} Our Supreme Court disagreed and concluded that although there was no formal
contract between the parties, an implied contract could be found in the bid solicitation
process. Id. at 714, 716, 885 P.2d at 635, 637. The Court recognized that, generally, “[a]
request for bids ‘is not an offer but a request for offers’ and bidders are making offers when
they submit bids.” Id. at 714, 885 P.2d at 635 (quoting Restatement (Second) of Contracts
§ 28 cmt. c (1981)). Accordingly, no contract generally occurs until acceptance of a bid by
the soliciting party. Id. However, because the Procurement Code required the city to treat
all bids fairly and equitably and because other statutes required the city to consider only
those criteria listed in its RFP, the Court reasoned that by issuing the RFP, the city had made
an implied promise to abide by these statutory requirements. Id. at 713-14, 885 P.2d 634-35.
The plaintiff had relied on the promise as a guarantee that any award would be based only
on the criteria set out in the RFP and changed its position accordingly. Id. at 714-15, 885
P.2d at 635-36. Had the promise been different, the plaintiff might have chosen not to bid
at all. Id. at 715, 885 P.2d at 636. The Court’s conclusion was consistent with the rule in
other jurisdictions that recognize that “it is an implied condition of every invitation for bids
issued by a public contracting authority that each bid submitted pursuant to the invitation
will be fairly considered in accordance with all applicable statutes.” Paul Sardella Constr.
Co. v. Braintree Hous. Auth., 329 N.E.2d 762, 767 (Mass. App. Ct. 1975), aff’d, 356 N.E.2d
249 (Mass. 1976).
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{14} In our view, Planning & Design does not stand for the proposition that an implied-in-
fact contract, as a matter of law, can never exist between two parties in the private
procurement context. The Supreme Court did not address this question. Instead, it
addressed only the question whether an implied contract existed in the public procurement
context. Although the promise to consider all bids fairly, which is implied in the public
procurement context, is based on statute and thus cannot automatically be implied in private
bid solicitations, the absence of statutory obligations does not foreclose the possibility that
an implied-in-fact contract may arise between parties in the private procurement context
based on their own representations, course of conduct, and other factors that have been held
to give rise to an implied-in-fact contract.
{15} At least one other jurisdiction has recognized a cause of action based on an implied
contract in the private bid solicitation and selection process. In New England Insulation Co.
v. General Dynamics Corp., 522 N.E.2d 997, 998 (Mass. App. Ct. 1988), a company
soliciting bids made representations in its solicitation that the bids submitted would remain
in a locked file only to be opened after the closing date. The plaintiff’s bid was unsealed
early, and the information it contained was shared with the plaintiff’s competitor, who was
ultimately awarded the contract. Id. at 998-99. The plaintiff brought suit against the
company, alleging that it relied on the solicitor’s representations in deciding to bid. Id. As
is the case here, the defendant company challenged the legal theory of the complaint. Id. at
999.
{16} The Massachusetts court held that the plaintiff could pursue a claim based on an
implied contract. Id. at 1000-01. The court recognized that “requests for bids are usually
nonbinding invitations for offers” and that the defendant retained the discretion to choose
with whom it would contract. Id. at 999 (alteration, internal quotation marks, and citation
omitted). However, the court reasoned that “[i]t does not necessarily follow . . . that [the
defendant] could not limit its freedom to act by making representations in its invitations to
bid which it knew or should have known would be reasonably relied upon by the plaintiff.”
Id. at 999. The court assumed without deciding that a promise to give fair consideration to
all bids could not be implied in every private request for bids. Id. at 1000. However, it
stated that this did not mean that, as a matter of law, the specific promise made by the
solicitor to the bidder could not create a binding obligation. Id. It noted that “[t]here is
surely no policy which would be served by allowing solicitors of bids in the private sector
to ignore the conditions they themselves set and ask others to rely upon.” Id. The court
reversed the district court’s grant of the defendant’s motion to dismiss and remanded for an
analysis of the facts. Id. at 1001.
{17} We are persuaded by the reasoning in New England Insulation. We recognize that
in this case, Orion alleges that LANS made specific representations regarding the bid
solicitation and selection process, which it relied upon, while in New England Insulation, the
plaintiff’s decision to bid was based on the solicitor’s specific representation that it would
keep all bids in a locked box until the closing date. Id. at 998. Although the cases are
factually distinguishable in terms of what representations were made and how the promises
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were allegedly breached, at this stage in the proceedings, the distinctions are irrelevant. For
purposes of a motion to dismiss, it is significant that the New England Insulation court
clearly recognized that the promises made by the solicitor in its requests for bids could be
legally binding. Id. at 1000-01. Consequently, we agree with the Massachusetts court that
no policy “would be served by allowing solicitors of bids in the private sector to ignore the
conditions they themselves set and ask others to rely upon.” Id. at 1000.
{18} Relying on the general principles of implied-in-fact contracts, we conclude that in
the private solicitation context, as in other contexts, an implied-in-fact contract may be found
based on the representations and conduct of the parties. We continue to recognize that the
general private sector rule regarding solicitations for bids is that “unless a contrary intention
is manifested” a request for bids “is not an offer but a request for offers[.]” Restatement
(Second) of Contracts § 28 cmt. c; Planning & Design, 118 N.M. at 714, 885 P.2d at 635.
However, as Planning & Design indicates, there are circumstances in the bid solicitation
process that may give rise an implied contract regarding the process by which a bid will be
selected. 118 N.M. at 714, 885 P.2d at 635. Thus, an implied-in-fact contract could arise
in the private procurement process if a solicitor of bids makes specific representations
regarding the processes by which it will select a bid, and a bidder reasonably relies on those
representations in deciding to bid. Id. at 715, 885 P.2d at 636. Although these promises are
not imposed by statute, that does not mean that they cannot be legally binding. See New
England Insulation, 522 N.E.2d at 1000.
{19} The employment context is analogous here. Ordinarily in New Mexico, an employee
is at will, and an employer may fire him or her for any or no reason. See Garcia, 1996-
NMSC-029, ¶ 10. However, an employer may restrict its freedom to fire at-will employees
by making specific promises that, when reasonably relied upon by the employee, give rise
in an implied-in-fact employment contract. It follows that in the private bid solicitation
context the solicitor of bids could restrict its freedom to select a contractor through any
process it chooses by making specific promises regarding the selection process on which it
would expect a bidder to reasonably rely in deciding to bid. Therefore, Orion’s claim for
breach of implied-in-fact contract is not barred as a matter of law.
{20} LANS contends that any reliance on our cases considering whether an implied-in-fact
contract exists in the employment context and other contexts is misplaced. It contends that,
aside from the public procurement case, in our other implied-in-fact contract cases, the
parties had a pre-existing relationship. We consider this is a distinction without difference.
An implied-in-fact contract is “based on [the] parties’ mutual assent as manifested by their
conduct.” Garcia, 1996-NMSC-029, ¶ 15 n.1 (internal quotation marks and citation
omitted). The parties’ pre-existing relationship is but one factor to consider in determining
whether the parties’ conduct gave rise to an implied-in-fact contract, and it is not necessarily
the determining one. Under either type of relationship, there is a presumption that no
binding agreement is generally recognized, and it is only after a unilateral extension of an
additional promise by one party that an implied-in-fact contract can potentially be created.
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{21} Further, LANS cites to the out-of-jurisdiction cases of King v. Alaska State Housing
Authority, 633 P.2d 256 (Alaska 1981), and Hoon v. Pate Construction Co., 607 So. 2d 423(Fla. Dist. Ct. App. 1992) (per curiam), as authority for the proposition that a private party
soliciting bids does not have the same obligations as a public entity. We are not persuaded
by the application of these cases to the circumstances here. In King, the Alaska Supreme
Court considered whether bidders for a government redevelopment project who alleged
improprieties in the selection process could recover under contract law. King, 633 P.2d at
258-59. Like our Supreme Court in Planning & Design, the court found “merit in the
contention that an agency, in soliciting bids, implicitly contracts to give those bids fair and
honest consideration.” King, 633 P.2d at 261. The court held that “in exchange for a
bidder’s investment of the time and resources involved in bid preparation, a government
agency must be held to an implied promise to consider bids honestly and fairly.” Id. at 263.
Nevertheless, the court stated that while this rule “recognizes that a promise of honest and
fair consideration of bids can reasonably be implied in the public contract context, . . . such
a promise cannot be implied in the private sphere.” Id. at 262. This is because private
parties do not have an obligation “to select the bid most consistent with the public interest.”
Id. While it is true that King recognized the distinction between the public and private
procurement process, the case did not address the issue of whether one party can make a
promise that will then be binding in the private procurement process.
{22} In Hoon, the Florida appellate court considered whether a district court erred in
granting a disappointed bidder relief based on breach of an implied contract in a private
solicitation. 607 So. 2d at 424-25. There, the plaintiff alleged that the solicitor of bids
promised to award a job to the lowest bidder and breached an implied contract by failing to
award it the job after it submitted the lowest bid. Id. at 425. The plaintiff asserted that there
was an implied contract that its bid would receive fair consideration. Id. at 425-26. The
appellate court disagreed. Id. at 426-27. The court recognized the general rule that in
private construction a party soliciting a bid has the freedom to accept or reject it for any
reason and agreed with the principle that “no contract is formed when a bid is made pursuant
to an invitation to bid.” Id. at 425-26. The court’s ruling relied on the fact that, although the
bid solicitation stated an intent to award the bid to the lowest bidder, it also stated the
“[o]wner reserves [the] right to reject any or all bids for whatever reason he may deem
necessary for his best interest, and to waive any or all formalities in regard to acceptance or
rejection of any bid.” Id. at 425 (internal quotation marks omitted). The court concluded
that “[t]o recognize an implied contract in a situation where the parties agree that the written
document provides that the owner may ‘reject a bid for any reason’ would be to emasculate
the effect of that provision.” Id. at 427. Thus, the court concluded that, based upon the
actual claim set out in the pleadings, the defendants were entitled to a directed verdict on the
plaintiff’s implied contract claim. Id. at 426-27.
{23} Hoon does not suggest that there can never be an implied-in-fact contract in the
private procurement process. The court simply stated the general rule that a private solicitor
of bids may contract with whomever it chooses and then determined that the defendant’s
specific reservation of the right to reject any or all bids was binding on the parties. Id. at
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426. We cannot disagree with this determination, however, it does not answer the question
before this Court: Can the solicitor of a private procurement bid create an implied-in-fact
contract if the solicitor makes sufficient promises to the bidders that limit the solicitor’s
inherent freedom to select the recipient of the contract?
{24} To the extent the court in Hoon relied on the specific provision in the written bid
solicitation to conclude that no implied contract was established, New Mexico courts have
taken a broader approach toward the determination of whether an implied-in-fact contract
exists. For example, our courts have held that an implied contract may exist between the
parties even where a writing disclaims any intention of forming a contractual obligation. See
Beggs, 2009-NMSC-023, ¶ 20; Madrid v. Vill. of Chama, 2012-NMCA-___, ¶ 15, ___ P.3d
___ (No. 30,764, May 1, 2012), cert. denied, 2012-NMCERT-006, ___ P.3d ___; West v.
Wash. Tru Solutions, LLC, 2010-NMCA-001, ¶¶ 17-18, 147 N.M. 424, 224 P.3d 651. In
determining whether an implied-in-fact contract exists, “it is not any single act, phrase or
expression, but the totality of all of these, given the circumstances and the parties’ situation
and objectives, which will control.” Kestenbaum, 108 N.M. at 26, 766 P.2d at 286. Because
Hoon stated that the rights of the parties were controlled by the written bid solicitation, it is
not clear whether a plaintiff’s cause of action based upon an implied contract could have
been recognized in Florida under another set of facts.
{25} LANS also argues that to recognize a cause of action based on an implied-in-fact
contract in the private procurement context would be an unprecedented expansion of New
Mexico law and encourage unprecedented litigation by disappointed bidders. We are not
persuaded. New Mexico recognizes implied-in-fact contracts in a variety of factual
circumstances. Certainly, our Supreme Court’s decision in Planning & Design did not open
the floodgates of litigation in the public procurement arena as that has been the only
appellate decision on the issue since 1994. We see no reason that allowing Orion to bring
its claim for breach of an implied-in-fact contract would be any different. The fact that there
have been no formal appellate opinions addressing this issue in New Mexico in the past does
not prevent Orion from seeking recovery based upon a well recognized theory of law, the
implied-in-fact contract.
{26} We hold that Orion’s claim for breach of an implied-in-fact contract may proceed.
Based on the principles of implied-in-fact contracts that are set out in New Mexico case law,
we conclude that an implied-in-fact contract can arise in the private solicitation context. We
therefore reverse the district court’s order dismissing Orion’s claims.
Injunctive Relief Is Not Available Under the Circumstances Here
{27} In its complaint, Orion requested that the district court permanently enjoin LANS and
COMPA from proceeding with the performance of the contract at issue. Both Defendants
filed motions seeking the dismissal of Orion’s claim for permanent injunctive relief. LANS
filed a motion for judgment on the pleadings pursuant to Rule 1-012(C) in which it argued
that permanent injunctive relief was never available to a disappointed bidder. COMPA filed
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a motion for partial summary judgment in which it asserted that injunctive relief was
unavailable because Orion had an adequate remedy at law. The district court granted
Defendants’ motions.
{28} Our review of the district court’s grant of LANS’s motion for judgment on the
pleadings is de novo. See Glaser, 2012-NMSC-012, ¶ 8. We also review the district court’s
grant of COMPA’s motion for partial summary judgment de novo. See Smith v. Durden,
2012-NMSC-010, ¶ 5, 276 P.3d 943. Summary judgment is appropriate when there is no
genuine issue of material fact and the moving party is entitled to judgment as a matter of
law. Id.; see Rule 1-056. Here there are no disputes of material fact; therefore, we only
consider whether summary judgment was appropriate as a matter of law.
{29} In granting Defendants’ motions, the district court concluded that injunctive relief
was never available to a disappointed bidder like Orion. The district court based its
conclusion on Planning & Design, which it understood to limit a disappointed bidder’s
remedy to reliance damages that include the expenses incurred in preparing and submitting
the bid. Orion argues that Planning & Design was decided on the facts and does not
preclude a court from granting a permanent injunction to a disappointed bidder as a matter
of law. We agree with Orion that the district court erred in concluding that injunctive relief
was never available to a disappointed bidder. However, we hold that injunctive relief is not
available under the circumstances here and, therefore, dismissal of Orion’s claim for
injunctive relief was proper. In addition, we hold that the district court’s limitation on the
available remedies in a private sector breach of implied-in-fact contract case was in error.
We first address the basis of the district court’s ruling and then discuss what remedies may
be available to Orion.
{30} Planning & Design did not establish a blanket rule that permanent injunctive relief
was never available to a disappointed bidder where the solicitor of bids has breached an
implied contract in the procurement process. There, the district court had preliminarily
enjoined the city from awarding the contract to anyone but the plaintiff. 118 N.M. at 709,
885 P.2d at 630. However, by the time the case reached our Supreme Court, the city had
rejected all bids on the project. Id. at 712, 885 P.2d at 633. Thus, in contrast to this case,
the city in Planning & Design did not award any contract under the allegedly flawed
procurement process and, therefore, there was no performance to enjoin. Thus, the Court
concluded, “under the circumstances, injunctive relief [was] pointless.” Id. at 715, 885 P.2d
at 636. Injunctive relief was simply not feasible based on the facts before the Court and,
thus, reliance damages were the appropriate remedy. Id. However, this ruling does not
preclude a district court from granting a permanent injunction under another set of facts.
See, e.g., AshBritt, Inc. v. United States, 87 Fed. Cl. 344, 378-79 (2009) (granting limited
injunctive relief in post-award bid protest where the current contracts would be left in place
while bids were reevaluated in accordance with statute and regulation); Spiniello Constr. Co.
v. Town of Manchester, 456 A.2d 1199, 1200, 1202-03 (Conn. 1983) (upholding the district
court’s grant of a permanent injunction restraining a municipality and a bidder from entering
into a public works contract where the bidding statute had been violated).
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{31} Notwithstanding that injunctive relief may be the proper remedy in this type of case,
we conclude that, under the facts of this case, injunctive relief is unavailable to Orion.
“Injunctions are harsh and drastic remedies that should issue only in extreme cases of
pressing necessity and only where there is no adequate remedy at law.” Insure N.M., LLC
v. McGonigle, 2000-NMCA-018, ¶ 7, 128 N.M. 611, 995 P.2d 1053 (alterations, internal
quotation marks, and citation omitted). An irreparable injury for which there is no adequate
remedy at law is one “which cannot be compensated or for which compensation cannot be
measured by any certain pecuniary standard.” State ex rel. State Highway & Transp. Dep’t
v. City of Sunland Park, 2000-NMCA-044, ¶ 19, 129 N.M. 151, 3 P.3d 128 (internal
quotation marks and citation omitted). Here, where COMPA has been performing on the
contract since mid-2009, the damage to COMPA outweighs any harm to Orion. More
importantly, there is also an adequate remedy at law in this case.
{32} Orion’s complaint seeks both permanent injunctive relief and money damages as
remedies for the breach of the alleged implied-in-fact contract between it and LANS. Our
case law establishes that money damages are available to a disappointed bidder who prevails
on a breach of implied contract claim in order to “compensate the bidder’s ‘interest in being
reimbursed for loss caused by reliance on the contract by being put in as good a position as
he would have been in had the contract not been made.’” Planning & Design, 118 N.M. at
715, 885 P.2d at 636 (quoting Restatement (Second) of Contracts § 344(b) (1981)). There
is no dispute that these damages can be readily calculated.
{33} Additionally, COMPA does not dispute that expectancy damages are available to
Orion in the event that it can prove that, but for LANS’s breach of the alleged implied-in-fact
contract, Orion would have been awarded the contract. Thus, to the extent Orion argues that
it would have been awarded the contract, COMPA contends that Orion may be adequately
compensated for its alleged injuries. Orion agrees that injunctive relief is not necessary if
expectancy damages are an available remedy. Although disappointed bidders in the public
procurement context are often limited by public policy or statute to the recovery of reliance
damages, these constraints are not present here. Cf. 28 U.S.C. § 1491(b)(2) (2011)
(conferring jurisdiction on the Court of Claims to “award any relief [it] considers proper,
including declaratory and injunctive relief except that any monetary relief shall be limited
to bid preparation and proposal costs” (emphasis added)); Planning & Design, 118 N.M.
at 715, 885 P.2d at 636 (joining other jurisdictions that award the expenses incurred in
preparing and submitting a bid to disappointed bidders of flawed public procurements); State
Mech. Contractors, Inc. v. Vill. of Pleasant Hill, 477 N.E.2d 509, 511 (Ill. App. Ct. 1985)
(explaining that the public purpose is not served by requiring the taxpayer to pay the contract
price to the bidder awarded the contract and profits that a disappointed bidder would have
realized if it had been awarded the contract). Accordingly, we see no reason that a
disappointed bidder in a private solicitation could not pursue a claim for expectation
damages. See Restatement (Second) of Contracts § 347 (1981) (discussing the general
measure of damages). Money damages are available to Orion in this case, and Orion has not
alleged any facts nor made any argument to persuade us that money damages would not
compensate it for the alleged injury here. We affirm the district court’s dismissal of Orion’s
12
claim for injunctive relief. We hold that the appropriate remedy in this type of case is not
limited to reliance damages and may include expectation damages.
CONCLUSION
{34} For the reasons set forth above, we reverse the district court’s order dismissing
Orion’s claim for breach of implied contract and dismissal of its complaint with prejudice.
We affirm the district court’s order denying Orion’s motion for injunctive relief. However,
we reverse the district court’s ruling limiting the nature of damages available to Orion.
{35} IT IS SO ORDERED.
____________________________________
LINDA M. VANZI, Judge
WE CONCUR:
____________________________________
MICHAEL E. VIGIL, Judge
____________________________________
TIMOTHY L. GARCIA, Judge
Topic Index for Orion Technical Resources, LLC v. Los Alamos Natl. Security, LLC, No.
30,928
APPEAL AND ERROR
Preservation of Issues for Appeal
Standard of Review
CIVIL PROCEDURE
Judgment on the Pleadings
CONTRACT
Bid
Breach
Implied Contract
Public Policy
EMPLOYMENT LAW
Employment at Will
JUDGMENT
Judgment on the Pleadings
13
REMEDIES
Injunctions
Measure of Damages
14