Opinion
No. A04-1052.
Filed December 21, 2004.
Appeal from the District Court, St. Louis County, File No. CX-03-600231.
Michael G. Taylor, Robert L. Smith, Leonard, Street and Deinard, Professional Association, (for appellant).
Eric D. Hylden, Nicole Weinand, Reyelts Leighton Bateman Hylden Sturdevant, Ltd., (for respondent Krech, Ojard Associates, Inc.).
Morgan A. Godfrey, Michael T. Johnson, Johnson Condon, P.A., (for respondent Independent School District No. 704).
Considered and decided by Toussaint, Chief Judge, Presiding; Shumaker, Judge; and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant challenges summary judgment, arguing that the district court erred (a) in holding that Minn. Stat. § 471.35 (2002) does not provide for a private cause of action; (b) in holding that section 471.35 does not apply to skylights that were installed as part of a project; and (c) in failing to recognize that an architecture firm owes a duty to a potential supplier under common law and statute. By notices of review, respondent architecture firm challenges the denial of its motion for summary judgment on the claim of tortious interference with prospective business relationships, and respondent school district claims it is not vicariously liable for architecture firm's negligence and that it enjoyed vicarious official immunity from claims of negligence by architecture firm. We affirm.
FACTS
Respondent Independent School District No. 704 (District) hired respondent Krech, Ojard Associates, P.A. (Krech), an architecture firm, to draft and design specifications for a construction project. After the specifications were released for bidding, the District and Krech issued Addendum No. 2, which added a bid alternate for two skylights in the school gymnasium. Addendum No. 2 specified the manufacturer and type of skylight to be supplied and installed. When appellant Major Industries, Inc., learned about the skylight addendum, it contacted Krech to obtain approval for its skylights as a substitute for those specified in the addendum. Following a meeting, Krech listed appellant as an approved manufacturer in Addendum No. 3.
Appellant submitted a proposal for supplying the skylights for the project to St. Germain's Glass Co. But after St. Germain's was awarded the contract to supply and install the glass for the project, Krech informed St. Germain's that appellant's skylights could not be used, even though appellant was listed as an approved manufacturer in the specifications. Krech told St. Germain's that appellant's products were not equal to those of the competitor specified in Addendum No. 2, and that shop drawings that included appellant's skylights would not be approved. St. Germain's used the competitor's skylights, which cost approximately $4,000 more than appellant's products.
Appellant filed suit, claiming violation of Minn. Stat. § 471.35 (2002) and negligence against Krech and the District, and claiming tortious interference with prospective business relationship against Krech. Following discovery, all parties moved for summary judgment. The district court granted summary judgment for Krech and the District on the statutory and negligence claims, but the court denied Krech's motion for summary judgment on the tortious interference claim, finding that genuine issues of material fact existed as to whether Krech's interference was justified. Appellant now challenges summary judgment on the statutory and negligence claims, and Krech challenges the district court's denial of its motion for summary judgment on the tortious interference claim.
DECISION
On appeal from summary judgment or a denial of summary judgment, appellate courts ask two questions: (1) whether any genuine issues of material fact exist and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
1. Cause of Action under Minn. Stat. § 471.35 (2002)
Appellant argues that the district court erred in applying the law by determining that Minn. Stat. § 471.35 does not provide for a private cause of action. Statutory interpretation is a question of law that is reviewed de novo. Homart Dev. Co. v. County of Hennepin, 538 N.W.2d 907, 911 (Minn. 1995).
"A statute does not give rise to a civil cause of action unless the language of the statute is explicit or it can be determined by clear implication." Valtakis v. Putnam, 504 N.W.2d 264, 266 (Minn.App. 1993). Principles of judicial restraint prevent courts from creating new statutory causes of action that did not exist at common law and are not created by express statutory terms or implication. Bruegger v. Faribault County Sheriff's Dep't, 497 N.W.2d 260, 262 (Minn. 1993). Under Minn. Stat. § 471.35, "[w]hen any county, city, town, or school district calls for bids for the purchase of supplies or equipment, specifications shall not be so prepared as to exclude all but one type or kind but shall include competitive supplies and equipment." Appellant argues that although no civil cause of action is explicitly provided for in the statute, a civil cause of action for the violation of section 471.35 is clearly implied.
When determining whether a statute implies a private cause of action, we consider the following factors:
(1) whether the appellants belong to a specific class of persons for whose benefit the statute was enacted; (2) whether the legislature indicated an intent to create or deny a private remedy; and (3) whether inferring a private remedy would be consistent with the underlying purpose of the legislation.
Alliance for Metro. Stability v. Metro. Council, 671 N.W.2d 905, 916 (Minn.App. 2003) (citing Flour Exch. Bldg. Corp. v. State, 524 N.W.2d 496, 499 (Minn.App. 1994), review denied (Minn. Feb. 14, 1995)). Generally, courts are reluctant to imply a private cause of action. Buck v. Freeman, 619 N.W.2d 793, 797 (Minn.App. 2000), review denied (Minn. Feb. 21, 2001).
Under the first Cort factor, appellant argues that it falls within the class the legislature intended to benefit as a competitive supplier of a product for a public project. Competitive bidding laws were "designed to promote honesty, economy, and aboveboard dealing and guard against fraud, favoritism, extravagance, and improvidence." Queen City Const., Inc. v. City of Rochester, 604 N.W.2d 368, 376 (Minn.App. 1999) (quotation omitted), review denied (Minn. Mar. 14, 2000). But the purpose of competitive bidding laws is to ensure that the taxpayers receive the best bargain for the least money. Byrd v. Indep. Sch. Dist. No. 194, 495 N.W.2d 226, 232 (Minn.App. 1993), review denied (Minn. Apr. 20, 1993). Indirect beneficiaries of a statute are not "the class for whose benefit the statute was enacted." Flour Exch., 524 N.W.2d at 499. Because any benefit received by appellant under section 471.35 was indirect, appellant does not belong to the class for whose benefit the statute was enacted.
The second Cort factor requires the court to determine whether the legislature intended to create or deny a remedy. Flour Exch., 524 N.W.2d at 499. Appellant argues that there is no indication that the legislature intended to deny a remedy. But the legislature provided for a criminal remedy for municipalities that violate Minn. Stat. § 471.35; such a violation is a gross misdemeanor. Minn. Stat. § 471.37 (2002). "[W]hen the legislature creates a remedial scheme for enforcement, as it did here, it indicates intent to exclude private enforcement." Alliance for Metro. Stability v. Metro. Council, 671 N.W.2d 905, 916 (Minn.App. 2003). Appellant argues that a private cause of action is the only adequate remedy to enforce section 471.35 because prosecutors will not likely pursue charges for violations of the statute. But appellant provides no support for this assertion. Therefore, it appears that the legislature did not intend to create, but intended to deny, a remedy.
Under the third Cort factor, appellant argues that a private cause of action is completely consistent with the purpose of section 471.35 by promoting competition in the provision of building supplies and equipment. But, again, competitive bidding laws were designed to benefit the taxpayers by ensuring that they receive the best bargain for the least money. Byrd, 495 N.W.2d at 232. If appellant is able to recover damages for a violation of section 471.35, the taxpayers would not only have to pay for the District's project, but also have to pay for damages recovered in a resulting lawsuit. See Tel. Assocs., Inc. v. St. Louis County Bd., 364 N.W.2d 378, 382 (Minn. 1985) (following McQuillan on municipal corporations to suggest that damages are not appropriate relief when municipalities fail to grant contract to lowest bidder because public must first bear added expenditure on the awarded contract and then on the recovery of lost profits to the aggrieved low bidder). Therefore, a private cause of action under section 471.35 would lead to a result contrary to the purpose of the competitive bidding statutes. Because section 471.35 does not provide for a private cause of action by either express terms or implication, we conclude that the district court properly granted summary judgment for the District and Krech on this issue.
Appellant challenges the district court's determination that, even if Minn. Stat. § 471.35 (2002) provides for a private cause of action, the statute did not apply to the skylight specifications. In its notice of review, the District requested review as to whether section 471.35 would permit the recovery of damages. Because we conclude that section 471.35 does not provide for a private cause of action, we need not address this issue.
2. Duty
Appellant argues that the district court erroneously granted summary judgment on its negligence claim by determining that Krech did not owe appellant a duty capable of supporting the claim. The basic elements of a negligence claim are (1) the existence of a duty, (2) breach of the duty, (3) injury proximately caused by the breach, and (4) damages. Schweich v. Ziegler, Inc., 463 N.W.2d 722, 729 (Minn. 1990). A negligence claim fails in the absence of a legal duty. Gilbertson v. Leininger, 599 N.W.2d 127, 130 (Minn. 1999). Whether a duty exists is a question of law that is reviewed de novo. Larson v. Larson, 373 N.W.2d 287, 289 (Minn. 1985).
Appellant argues that the district court's determination contradicts this court's holding in Waldor Pump Equip. Co. v. Orr-Schelen-Mayeron Assocs. Inc., 386 N.W.2d 375 (Minn.App. 1986). In Waldor Pump, this court determined that architects and other professionals owe a duty of reasonable skill and judgment "to those who foreseeably relied on its professional services." Id. at 377 (finding that subcontractors who were bound by specifications prepared by an architect could foreseeably be harmed by negligent drafting or interpretation of the specifications). But Waldor Pump involved a hired subcontractor who had to provide more expensive supplies during the course of the project. See id. at 376 (noting that subcontractor was bound to follow specifications). Here, appellant was not bound to follow the specifications prepared by Krech because no contract yet existed. In addition, there is no evidence that appellant changed its position as a result of the specifications; appellant does not allege that it had already manufactured the skylights for the District's project prior to the rejection or that it passed up on other work in order to supply the skylights for the District's project. Therefore, Waldor Pump is distinguishable and the district court properly refused to extend its holding here.
Appellant also argues that Krech owed a statutory duty under section 471.35. But a violation of a statute does not always establish negligence. Johnson v. Farmers Merchants State Bank, 320 N.W.2d 892, 897 (Minn. 1982).
[A] violation of a legislative enactment can be evidence of negligence if (1) the intent of the statute is to protect a class of which plaintiff is a member, but only if (2) the plaintiff's injury involves an invasion of the particular interest protected by the statute, (3) was caused by the particular hazard or form of harm against which the enactment was designed to give protection and (4) it was proximately caused by its violation.
Id. As discussed in detail above, the purpose of section 471.35 was to provide taxpayers with the best bargain for their dollars by requiring competitive bidding for the purchase of supplies and equipment. See Byrd, 495 N.W.2d at 232 (intended beneficiary of competitive bidding statutes is the public taxpayers). Appellant asserted the negligence claim as a potential supplier for a subcontractor and not as a public taxpayer; therefore, appellant does not fall within the class of persons that the legislature intended to protect in section 471.35.
Because Krech did not owe appellant a duty under Waldor Pump or section 471.35, we conclude that the district court properly granted summary judgment on the negligence claim.
In its notice of review, the District also requested review as to whether the District could be vicariously liable for Krech's negligence when Krech was not the District's agent, and whether the District enjoyed vicarious official immunity on the negligence claim. Because appellant's negligence claim fails for lack of a duty, we do not address these issues.
3. Tortious interference
By notice of review, Krech challenges the district court's denial of its motion for summary judgment on appellant's claim of tortious interference with a prospective business relationship. The district court determined that genuine issues of material fact existed as to whether Krech was justified in preventing the glass subcontractor from using appellant's product. No genuine issue of material fact exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)).
Tortious interference with prospective contractual relations involves a showing that the defendant "intentionally and improperly interfere[d] with another's prospective contractual relation" and requires that the defendant (1) induced or otherwise caused a third person not to enter into or continue the prospective relation, or (2) prevented the other from acquiring or continuing the prospective relation. United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 633 (Minn. 1982) (quoting Restatement (Second) of Torts § 766B (1979)). Interference without legal justification is improper. Nordling v. N. States Power Co., 478 N.W.2d 498, 506 (Minn. 1991). The question of whether interference is justified is generally an issue of fact, and the test is whether the conduct was reasonable under the circumstances. Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994).
The district court determined that the following material facts were in dispute:
(1) whether or not the Major Industries product met the specification; (2) whether or not Krech requested that Major Industries submit additional information regarding their product; (3) whether or not [the project architect] told St. Germain's that he would not approve the Major Industries product, even if they did show that they met the specifications; (4) whether or not [the project architect] told [appellant] that he wanted [a competitor's] skylights used and [another competitor] to do the job.
Krech argues that it is undisputed that the specification required a 15-year warranty and that neither appellant nor St. Germain's notified Krech that appellant's product would include a 15-year warranty. But appellant presented evidence that its price quote to St. Germain's included a 15-year warranty. The project architect testified that because he did not receive additional information from appellant or St. Germain's, that Krech was going to go with the competitor's skylights based on the information that he had. But appellant also presented evidence that the project architect simply wanted the competitor's skylights, regardless of whether appellant's skylights met the specification requirements. Because each of these factual disputes raise credibility issues, the district court properly determined that summary judgment was precluded. See DLH, 566 N.W.2d at 70(district court may not make assessments of witness credibility on summary judgment).