Opinion
Case No. 99-72277
January 6, 2000.
MEMORANDUM AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
I.
This is an action under 42 U.S.C. § 1983 for violation of civil rights with a pendant state claim for breach of contract. Plaintiff Fourstar Industries, Inc. (Fourstar) claims that defendant City of Detroit (City) violated its due process rights and committed a breach of contract when it rejected Fourstar's low bids on two supply contracts for packing pumps and mechanical seals, reopened the bidding process, and ultimately awarded the contract to another bidder. Now before the Court is the City's motion to dismiss for failure to state a claim, Fed.R.Civ. p. 12(b)(6), or alternatively, summary judgment under Fed.R.Civ.P. 56.
II. A.
Prior to 1996, the City had a supply contract with Southern Urethane Packing Co. (Southern Urethane) for packing pumps, valve gaskets, and other similar items for use in the City's water and sewage and public lightings departments. When the contract came up for renewal, the City decided to rebid the contract and informed Southern Urethane's Sales Manager, Mike Nickson (Nickson), of its decision. The City solicited bids through a notice placed in the August 2, 1996 Detroit Legal News and sent bid solicitation packages to those interested in bidding. Both the newspaper notice and bid package specifically stated that the City reserved the right to reject all bids. When the bids were opened on August 19, 1996, the only bid was from Fourstar, a company formed by Nickson in 1995 while he was still working for Southern Urethane. On that same day, the City also solicited bids for a contract to supply mechanical seals in the same fashion as the packing contract. Again, when the seals contract bids were opened on September 3, 1996, Fourstar, represented by Nickson, was the only bidder.
Later, on September 17, 1999, the City was informed by Christina Roehl of Southern Urethane that Southern Urethane had submitted bids for both the packing and seals contracts, which the City never received. It is unclear what role, if any, Nickson had in the preparation of bids for Southern Urethane, but it is undisputed that Nickson continued to be employed by Southern Urethane until he tendered his resignation on September 17, 1999.
In response to the events surrounding the two bids, the City decided to investigate and ultimately decided to cancel the original bids and re-bid both contracts. On January 21-22, 1997, the City re-solicited the bids for both contracts. Southern Urethane was the low bidder on both contracts, but the City awarded it only the seals contract, choosing to extend the existing packing contract with Southern Urethane for another year.
B.
The City seeks dismissal on the basis that, inter alia, Fourstar has no standing to sue, Fourstar has no property right in the contracts, the statute of frauds bars any recovery, and mandamus is inappropriate. For the reasons that follow, the City's motion will be granted.
III.
Fourstar has not demonstrated a property interest in the contracts with the City sufficient to invoke due process protection. See Board of Regents of State College v. Roth, 408 U.S. 564, 577 (1972) (stating that to have a property interest, "a person clearly must have more than an abstract need or desire.") The Court of Appeals for the Sixth Circuit has held that an entitlement is present only if the plaintiff was actually awarded the contract at any procedural stage, or local rules limited the discretion of state officials as to whom the contract could be awarded. See United of Omaha Life Ins. Co. v. Solomon, 960 F.2d 31 (6th Cir. 1992). Here, there is no such showing. At no time was Fourstar ever awarded the contract and the City expressly reserved the right to reject any and all bids, both in its public notices and its bid solicitation packages. See City Communications, Inc. v. City of Detroit, 650 F. Supp. 1570 (E.D. Mich. 1987) (rejecting plaintiffs claim of entitlement because the City of Detroit had reserved the right to reject all bids). Thus, Fourstar was aware of the possibility that none of the bids would be accepted and cannot claim an entitlement.
Further, Fourstar has offered no evidence to indicate that the City engaged in any bad faith or abused its discretion, other than the fact that the bidding was re-opened. In contrast, the City has proffered evidence indicating that it had possible concerns as to the integrity of the original bid process which would bear on its decision to award the contract to the lowestresponsible bidder. See Detroit City Code § 18-5-1, defining "lowest responsible bidder" as including a "satisfactory record of integrity, judgment, and performance." Accordingly, Fourstar had no claim of entitlement to the contracts, even as the lowest bidder.
IV.
Because the Court's decision relies on papers outside of the pleadings, the Court treats the City's motion to dismiss as a motion for summary judgment pursuant to Fed.R.Civ.P. 56. Having found that Fourstar had no property right in the supply contracts as required for a cause of action under § 1983, the Court declines to exercise supplemental jurisdiction over the remaining pendant state claims. Accordingly the Defendant's motion for summary judgment is GRANTED, Fourstar's state claims are DISMISSED WITHOUT PREJUDICE, and the case is DISMISSED.
Additionally, a writ of mandamus, as an extraordinary remedy, is inappropriate.
AVERN COHN UNITED STATES DISTRICT JUDGE
DATE: January 6, 2000