Opinion
No. C0-96-2278.
Filed July 15, 1997.
Appeal from the District Court, Hennepin County, File No. 9613178.
James H. Gilbert, Konstandinos Nicklow, Meshbesher Spence, Ltd., (for Appellant)
Frank R. Berman, Frank R. Berman, P.A., (for Appellant)
Michael O. Freeman, Hennepin County Attorney, Deonne Parker, John J. March, Assistant County Attorneys, (for Respondent County of Hennepin)
David E. Flotten, Courey, Kosanda Zimmer, P.A., (for Respondent A D Recycling)
Considered and decided by Short, Presiding Judge, Lansing, Judge, and Klaphake, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
An unsuccessful public contract bidder appeals the denial of a temporary injunction seeking to halt performance of the contract. Because the district court did not abuse its discretion in denying injunctive relief, we affirm.
FACTS
Hennepin County solicited bids in 1996 for a contract to purchase and recycle ferrous material from its waste incinerator, the Hennepin Energy Resource Company (HERC). Appellant American Iron Supply Co., Inc. (AIS) responded to the county's invitation for bids and was initially the sole bidder. Because of the lack of competition, the county circulated a second invitation and received bids from two companies: AIS submitted a bid for $199,500 and Alliance Steel Service Co. (Alliance) submitted a bid for $270,750. The county awarded the contract to Alliance. Alliance employs a sub-contractor, A D Recycling Inc. (A D), to remove residual ash from the ferrous material before it is recycled.
AIS filed suit alleging that Alliance could not comply with the terms and conditions of the contract or with federal state and local regulations and that its failure to comply would result in environmental contamination. With its complaint AIS filed a motion for a temporary restraining order (TRO) requesting the court to declare the contract null and void, enjoin further performance under the contract, and grant AIS access to Alliance's facility for inspection. The disctrict court denied the motion, and AIS now appeals.
DECISION
The sole issue on appeal from an order denying a motion for a temporary restraining order is whether the trial court clearly abused its discretion. M.G.M. Liquor Warehouse Int'l v. Forslund , 371 N.W.2d 75, 77 (Minn.App. 1985). The district court's findings underlying its decision on injunctive relief may not be set aside unless clearly erroneous. LaValle v. Kulkay , 277 N.W.2d 400, 402 (Minn. 1979). The reviewing court considers the facts in a light most favorable to the prevailing party. Hvamstad v. City of Rochester , 276 N.W.2d 632, 633 (Minn. 1979).
In determining whether to grant a temporary injunction, the court considers: (1) the "nature and background of the relationship between the parties" prior to the dispute; (2) the comparative harm to the plaintiff and defendant; (3) the likelihood that the moving party will prevail on the merits; (4) any public policy considerations triggered by the factual situation; and (5) the administrative burden of judicial supervision or enforcement of the temporary order. Dahlberg Bros., Inc. v. Ford Motor Co. , 272 Minn. 264, 274-75, 137 N.W.2d 314, 321 (1965). The district court determined that consideration of these factors weighed against granting a TRO under these circumstances, and we affirm that evaluation.
First, the nature of the relationship between the parties is relevant to a TRO decision because it affects the parties' reasonable expectations, id. at 276, 137 N.W.2d at 322, and because one of the purposes of a temporary injunction is to preserve the status quo. Pacific Equip. Irrigation, Inc. v. Toro Co. , 519 N.W.2d 911, 915 (Minn.App. 1994), review denied (Minn. Sept. 16, 1994).
For a period from 1993 to 1994, AIS held a contract with Hennepin County to recycle ferrous material. But immediately prior to the time when the ds were solicited in the fall of 1996, the contract was held by Great Western Recycling Industries, Inc. Thus AIS's previous contractual relationship with the county had already been terminated, leaving no expectation for a continuing relationship. Moreover, Hennepin County has consistently contracted with private industries for the removal and recycling of ferrous material. Granting the TRO would disrupt the status quo by terminating such a contract and leaving the county without a purchaser for the recyclable iron.
The second consideration is "the harm to be suffered by plaintiff if the temporary restraint is denied as compared to that inflicted on defendant if the injunction issues pending trial." Dahlberg , 272 Minn. at 274-75, 137 N.W.2d at 321. The party seeking a restraining order must show that it has an inadequate remedy at law and would suffer "irreparable harm." Cherne Indus., Inc. v. Grounds Assocs., Inc. , 278 N.W.2d 81, 92 (Minn. 1979).
AIS asserts that its legal remedy is inadequate because the damages available to a party challenging a public contract are limited to the costs of preparing the unsuccessful bid. Aggrieved bidders cannot recover lost profits. See Minn. Stat. § 471.345, subd. 14 (1996); Telephone Assocs. v. St. Louis County Bd. , 364 N.W.2d 378, 382-83 (Minn. 1985). AIS further contends that it is irreparably harmed by the lost opportunity to participate in a fair bidding process, even if, under a separate procedure, it had not been awarded the contract. See United Techs. Communications Co. v. Washington County Bd ., 624 F. Supp. 185, 188 (D.Minn. 1985) ("the loss of the chance to participate in a fair bidding process raises a significant threat of irreparable injury to the plaintiff").
But "lost opportunity" does not present an irreparable harm in this context. United Techs. involved the one-time installation of a telephone system, but the HERC contract is ongoing over a period of three years. If AIS is ultimately successful, it will have the opportunity to compete in a fair bidding process. The harm potentially suffered by Hennepin County if the TRO is issued is comparatively greater. The county potentially would be without a contractor who could handle the ferrous material. As a result, the county would lose profits from the sale of the material and incur expenses for storage and disposal. A comparison of the relative harm to the parties weighs against granting the TRO.
Third, if a party is likely to prevail on the merits of its claim, that possibility weighs in favor of granting the party a temporary injunction. But even when the district court makes a finding that the moving party is likely to prevail, that factor alone does not compel the district court to issue a TRO. See Pacific Equip. , 519 N.W.2d at 918 (holding that district court's finding that plaintiff is more likely than not to prevail at trial does not require district court to grant temporary injunction). The Dahlberg factors are considered in their entirety. Id.
To succeed on the merits, AIS would have to show that there was a "material variance" in the terms of the contract resulting in "a substantial advantage or benefit not enjoyed by other bidders." Coller v. City of St. Paul , 223 Minn. 376, 385, 26 N.W.2d 835, 840 (Minn. 1947).
AIS advances four reasons that it is likely to succeed on the merits: (1) the special terms in the invitation for bids contained ambiguous language; (2) the county used a subjective process to decide whether the sole bid should be accepted; (3) the contract was offered to a nonexistent entity; and (4) Alliance cannot comply with the terms of the contract or with state regulations. We address each of these arguments separately.
First, the alleged ambiguity relates to whether Alliance, because it subcontracts with A D, fails to meet the terms of the contract, which require ash removal at the "contractor's site." The district court found that the reference to "contractor's site" could include a site owned, leased, borrowed, or purchased by the contractor, and therefore Alliance was not in violation of the terms. We believe the district court's construction of the language was reasonable. And even if AIS could demonstrate that the terms require Alliance to perform its obligations under the contract on land that it owns, AIS has not demonstrated that it was disadvantaged by any ambiguity or that the language created the potential for wrongdoing. See Gale v. City of St. Paul , 255 Minn. 108, 114-15, 96 N.W.2d 377, 381 (Minn. 1959) (finding ambiguity and uncertainty in bid specifications objectionable because they afforded "the potential of wrongdoing").
Second, AIS submits that the procedure used to reject its initial bid when it was the sole bidder was "subjective." But AIS did not challenge the initial bidding process in its complaint and did not present this argument to the district court. The district court specifically found that the issue of impermissible subjectivity was not raised. Issues not pleaded or raised in the district court may not be raised on appeal. Schatz v. Davis , 354 N.W.2d 522, 524 (Minn.App. 1984).
Third, AIS also asserts that Hennepin County entered into a contract with a nonexistent entity because Alliance's name was improperly recorded on the contract documents as "Alliance Steel Service" or "Alliance Steel Service and Brokerage Company" rather than "Alliance Steel Service Co." We disagree. A minor technical misnomer does not invalidate a contract. See Lenning v. Retail Merchants Mut. Fire Ins. Co. , 129 Minn. 66, 68, 151 N.W. 425, 426 (1915).
Finally, in its most meritorious argument, AIS asserts that Alliance is not able to comply with environmental regulations governing solid waste combustor ash; specifically, Minnesota Rule 7035.0700, subp. 6, which requires ash to "be stored in a manner which minimizes the emission of fugitive dust and escape of liquid."
Resolution of AIS's claim based on Alliance's ability to meet the requirements of state regulations involves disputed fact issues and interpretation of state rules. AIS has a colorable claim on this issue. But because we review the evidence in a light most favorable to the party prevailing below and may not overturn the district court's determinations unless clearly erroneous, the viability of the factually disputed claim is not sufficient to justify reversal. Even if we would conclude differently from the district court on the likelihood that AIS will prevail on the merits, that factor alone would not compel issuance of the TRO under these circumstances. See Pacific Equip. , 519 N.W.2d at 918.
The fourth Dahlberg factor permits public policy, under certain circumstances, to weigh in favor of granting a TRO. Dahlberg , 272 Minn. at 275, 137 N.W.2d at 321-22. But AIS has failed to show that the public good is served by granting the TRO. In fact, there is no evidence that failure to grant the TRO will result in environmental damage. The Minnesota Pollution Control Agency has determined that the ash is nonhazardous. And, as determined by the district court, the public interest in encouraging waste recycling and obtaining municipal income from the sale of waste products counsels against granting the TRO.
Because the district court found that the other four Dahlberg factors weighed against issuing the injunction, the court was not required to consider the administrative burden of judicial enforcement of a temporary order.
In sum, taking all five Dahlberg factors into consideration, we conclude that the district court did not abuse its discretion in denying AIS's request for a temporary restraining order.
Finally, Hennepin County moved on appeal to supplement the record with an additional affidavit from James Craig, an HERC administrator. We need not consider Craig's affidavit to resolve the issues before us, and we therefore decline to supplement the record. See Minn.R.Civ.App.P. 110.01 (record on appeal is generally limited to the papers and documents filed with the trial court); Plowman v. Copeland, Buhl Co., Ltd., 261 N.W.2d 581, 584 (Minn. 1977) (limited exception for evidence that is "conclusive" and "uncontroverted").
Affirmed.