State, Division of Administration, Office of Facility Planning & Control v. Infinity Surety Agency, L.L.C.
2011 La. LEXIS 1119
La.2011Background
- State sues for damages and forfeiture of bid bond related to Bayou Segnette State Park project; bid package required 5% bid security with bonds from an approved surety; Joint Venture bid was lowest but bond from Infinity Surety allegedly failed to meet statutory requirements; State alleges misrepresentations by Joint Venture and Infinity Surety and seeks damages including rebid costs and price difference.
- Joint Venture awarded contract despite allegedly noncompliant bonds; State attempted to cure and extend time, then forfeited bid bond while rebid occurred.
- Petition claims breach of contract, intentional misrepresentation, and negligent misrepresentation based on bid form and representations about surety qualifications.
- Lower courts sustained peremptory exceptions of no cause of action, ruling bid was nonresponsive and liquidated damages could not be recovered; state appealed.
- Court granted writ to assess sufficiency of petition; de novo review held petition states a cause of action under public bid law; reversed and remanded.
- Dissent by Justice Knoll argues petition fails to allege a contractual forfeit claim because noncompliant bid should have voided bid under public bid law; cites waiver principles.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the petition state a cause of action under the public bid law? | State asserts contract-based claim and misrepresentation theories. | Joint Venture/Infinity argue bid nonresponsive; no enforceable contract; bid law not waived. | Petition states a cognizable contract-based claim under the public bid law. |
| Are intentional misrepresentation and negligent misrepresentation pleaded adequately? | Facts show intent to defraud and reliance by the State. | Defendants argue no misrepresentation under the bid process; reliance insufficient. | Petition plausibly alleges intentional and negligent misrepresentation. |
| Can the State recover liquidated damages for nonexecution of contract and defective bond based on the bid form? | Bid form created a liquidated damages mechanism for breach. | Award should be voided for noncompliance; bid bond invalid; no damages. | Questions of contract formation and bond validity are for trial; not bar to action on the face of petition. |
Key Cases Cited
- Ramey v. DeCaire, 869 So.2d 114 (La. 2004) (de novo review on no-cause-of-action exception; sufficiency of petition judged against pleaded facts)
- Everything on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d 1234 (La. 1993) (defines cause of action and sufficiency of pleading in Louisiana)
- City of New Orleans v. Board of Com’rs of Orleans Levee Dist., 640 So.2d 237 (La. 1994) (no-cause-of-action standard; burden on movant to show lack of legal right to relief)
- Hamp’s Constr. v. City of New Orleans, 924 So.2d 104 (La. 2006) (public bid-law requirements cannot be waived; nonconforming bid may render bid void)
- Broadmoor, L.L.C. v. Ernest N. Morial New Orleans Exhibition Hall Auth., 867 So.2d 651 (La. 2004) (nonconforming bid must be rejected as non-responsive)