*1 summary judgment affirmed, tion for is and the order of the circuit granting court Bank One’s motion summary judgment is reversed. part Affirmed in part. and reversed in HARTMAN, P.J., HOURIHANE, J., concur. al.,
BEST BUS JOINT VENTURE Plaintiffs-Appellants, et THE v. BOARD OF al., EDUCATION OF THE CITY OF Defendants-Appellees CHICAGO et (Alltown Service, Inc., al., Bus et Defendants-Appellees). Intervenors and (5th Division)
First District No. 1 — 96—2927 Opinion May filed 1997.
HOFFMAN, J., concurring. specially Schwartz, Chicago, appellants. for
Lee J. of Harman, Cari, Jr., Buckley, all Joseph and Theodore E. of John P. A. Harris, Chicago, appellees. Ungaretti of for & opinion of the court: JUSTICE SOUTH delivered (Best Transit, Bus), Plaintiffs, Laidlaw Bus Joint Venture Best (Willett), Bus Ser- (Laidlaw), Co. Robinson Inc. Willett Motor Coach Latino, (Robinson), (Express), Express, Latino vice, Express Inc. Inc. (B&B) (Latino), challenged the Board of Educa- Inc. and B&B Coach Board’s) (the of bus contracts Chicago’s award City tion of the sought permanent years and through 1998-99 school the 1996-97 of a 2% local application the Board’s injunctive relief. At issue was (2% LBP) Bus; pref- a of such to Best preference business erence; award of bus contracts. and the Board’s ap- I, sought compelling the Board plaintiffs
In an order count would actu- entity claimed upon plaintiffs 2% LBP based ply the partici- (Willett), entity which rather than ally provide service (Laidlaw). alternative, II, plaintiffs in count In the pated in the bid VII, claimed plaintiffs LBP. In count sought to invalidate the 2% error, amount- "palpable action must be reversed that the Board’s VIII, claimed plaintiffs In ing fraud.” count to constructive protection. equal and process Board Rule 5.5 violates due the start of before only three weeks complaint Plaintiffs filed a hearing and a injunction, They sought preliminary a year. the school 16, 12, 1996. Both 14 and August was held the trial court (RR) affirmative raised the and codefendant RR Joint Venture estoppel. defense of parties The stipulations. into a number parties
The entered agreed authenticity also of a number of stipu- documents. The lations and documents are as follows. January 5.5,
On adopted the Board establishing $10,000. 2% LBP for contracts over 5.5, Pursuant to Board Rule company following must meet the requirements four in order to (1) qualify for the 2% LBP: be authorized to do doing business and (2) (3) Chicago; business in City Chicago; be located in the have the (4) majority regular of its Chicago; full-time work force in and be subject City Chicago taxes. 1996,
In March the Board let out for provision bid contracts for school bus services for through years, the 1996-97 1998-99 school bid number 96—130050. The prospective Board notified bidders of the period pre-bid meeting bid 12, a letter dated March All 1996. plaintiffs and present preliminary defendants at the injunction hear- ing received the letter. specifications Bid were made available to the public on March 1996. pre-bid
The meeting was held on Representa- March 1996. all plaintiffs tives from of the present defendants at the prelimi- nary injunction hearing 21, 1996, pre-bid attended the March meet- ing.
A list of revisions and previous additions from the contract was made public by available to the the time pre-bid meeting. The list of revisions and page additions noted the 2% LBP on 9 of the *3 contract. The terms and conditions of the LBP were described 2% 21, 1996, during the March pre-bid meeting and were set forth on page 9 of bid number 96—130050. The terms and conditions of the 2% LBP prepared were set forth in the bid proposed and on behalf of Best Bus. provide
Best Bus submitted a to transport bid services to students Bus, for the Board. Laidlaw awas member of Best but Willett was company not. Laidlaw was not a local bidding speci- as defined in the Board, applied by fications. As qualified the Best Bus was not as local under Board Rule 5.5 and the specifications majority bids because the and, therefore, of Laidlaw’s employees Chicago work outside the ma- jority employees in venturers the venture also work Chicago. outside meeting July
At the of the Board on the bus service Although contracts were awarded. Best Bus was the lowest bidder for buses, considered, type I LBP when 2% was RR became the low bidder for these buses and received the award. Minor, Chicago
Diane purchasing public chief officer in the school system, purchasing testified that when chief she became the Board’s use, brought knowledge regarding city’s ap- officer she with her bidding competitive LBP with a 2% in its plication experience of and knowledge and those benefits apply she wished to process, and a 2% LBP had been Minor testified that purchasing to for the Board. lowest bidder city evaluating in who was the by used LBP an the 2% had procurement experience, in of contracts. In her it compete to because impact ability on the of local businesses compet- in playing with a more level field provided local businesses fixed costs operating that had lower or ing with suburban businesses Chicago. being City outside the as a result of located city study quantify undertake a to Minor testified that did doing were associated with the allotted extra costs that it determined balancing at the 2% amount as a city business in the and it arrived by the factor. She believed that the 2% LBP was a success as used city, the Board. and it was her intent to obtain the same success for experience, companies In Minor’s the 2% LBP allowed local to bid cases, successfully eventually, actually some bid lower than companies. nonlocal upon knowledge working Minor relied that she had from city. any with the 2% LBP while She did not hold employed public hearings prior presenting it to the Board. The Board did commentary, make the rule public available for but Minor did not any public commentary recall on the rule. The Board was familiar requirements purpose of Rule 5.5 and its intended at the presented time the Board voted on it. Rule was 5.5 passed unanimously. requirements
Minor testified that the four of the 2% LBP were designed improve indirectly improving education the local com- Companies City Chicago pay munities. in the real estate located go support public system directly taxes that school in terms of go city Employment monies that to education. residents would fed, lead to children who are better clothed and housed and such chil- dren are better students. familiar with and its members in
Minor first became Best Bus July reviewing reports while all Board submitted for recom- She familiar with the mendation of the award of bus contracts. was provision agreement of the Best Bus Joint Venture that stated that may assign agree- responsibilities Laidlaw and duties under the assignment by any ment. She asked her staff whether it was aware of event, any In she point. Laidlaw. Minor’s staff was unsure at that *4 assignment because the bid docu- provision considered irrelevant presented ments that had and the in the bid showed she information a Best Bus Joint bidding partner Laidlaw as the and member of the bidding member of agreed Venture. that if had been the She Willett Laidlaw, qualified rather than Best have for the Best Bus Bus would 2% LBP. regard assignment gen-
Minor testified with page 7 of specifications requires any assignee eral conditions on the bid rights assignment under the contract file written notice of that any the Board of Education. She testified that she did not receive assignment written notice of the from Best Bus Venture or Joint general pro- Laidlaw. Minor testified that conditions of the bid also delegation performance prior hibit without written consent of the provided Board. She testified that the Board never written consent to perform. either Best Bus or Laidlaw to allow Willett The Best Bus bid a submission indicated that Laidlaw was venture, that, member of the not Willett. Minor indicated if Best Bus had called and told her that documents contained member, actually mistake and that Willett was she would have evaluating been unable to consider that information the bid. She required was to evaluate the bids based on the information submitted by July in the bid. Prior to the lawsuit filed Best Bus on no Laidlaw, challenged one from Willett or Best Bus of the They only challenged 2% LBP. whether or not it should be applied Best Bus. DuPrey, Chicago
Francisco director of student services of the Education, assignment Board of testified that the of bus routes takes approximately four to six weeks. The bureau of student services did routing process pending not run an alternative based on the lawsuit away ability complete would because this have taken from routing process. initial 50,000
DuPrey transports approximately testified that the Board manipulating design students and that data in order to routes is a allowed, process. preliminary injunction cumbersome If the were transportation go begin would have to back and bureau student one, including process day inspecting from the Best Bus buses. He did not believe this could be done before school started since the August already inspections through bureau had scheduled the end of hearing. at time Grant, purchasing,
McNair director of the bureau of testified that administering 2% LBP he was for contracts including explained specifications, bid adopted the Board. He 5.5, meeting, pre-bid meeting. pre-bid March 21 After the at the Hudson, recognized whom he approached Grant was Clifton okay him if would be representing Willett. Hudson asked Best Bus just new rule. Grant told him to make sure that he submit- under this supplying the documents emphasis ted all the documents. Grant’s *5 joint or not Hudson’s the Board to evaluate whether was to enable ' promise that he would not venture was a local business. Grant stated that he did be a local business and Hudson that he would considered opinion that Best Bus would not indicate to Hudson that it was his identify to which business. He stated that Hudson did not be local inquiring about company referring, he was did not tell him he was Laidlaw, would be locality not tell Grant that Laidlaw the of did a member of Best Bus. Hudson until the middle
Grant did not have further contact with Laid- he additional information on July, requested of at which time eligibility business. He called Hudson law to determine its local manager as the because Hudson was identified on the bid document provide disclosure- of Best Bus Joint Venture. Grant asked Hudson report, a Dun & Bradstreet of-ownership requested forms. The Board 80,000 major- employees which indicated that Laidlaw had with the ity City Chicago. of its work force located outside the of regular parties
The Board did not as a matter of course allow delegate performance any obligations wholly under contracts to prior owned subsidiaries without written consent of the Board. The assignment entity issue of an previously to another had never impacted question there an whether would be award based on the 2% LBP apply prior because Rule 5.5 did not to those contracts. Hudson, president
Clifton Company, of Willett Motor Coach testified that Best Bus Joint had with the Venture contracts purchase before and after the of Willett Laidlaw. He believed that joint previously joint ventures showed Laidlaw as one of the merger venture partners subsequent to the and that contract docu- might assign ments indicated at those times that Laidlaw or would cases, performance assignment to Willett. In each of those an was made, writing, given but it was not done in and no notice was to the assignment. Board of the actual fact of Hudson testified that objected providing Board never to Willett services on behalf of Laid- though occurring. law even it knew that was spoke pre-bid meeting. . Hudson with Grant after March 21 He asked whether Willett would be considered local. He did not tell joint Grant that was not a Willett bidder under venture. At the Grant, time he spoke the bid had not been submitted. Hudson admitted that after Grant him that be considered told Willett would local, joint Best Bus venture submitted its bid with Laidlaw as joint agreement member. He also admitted that the 1996 venture did anywhere doing not indicate that the bus service for Willett would be Laidlaw. Hudson,
According requested Best Bus submitted the material that it was local. Best Bus did by the Board order to demonstrate challenge during pre-bid meeting, the 2% LBP not bids, during analysis during the Board’s of the or the Board’s meet- ing voting public prior convened to hear comment on the bids challenge the awards. Hudson stated that Best Bus did not the valid- ity get the 2% LBP it until Best Bus was informed would not preference. benefits of the president
Rachel Hubka is the and owner of Rachel’s as well as operating composed the chief officer for RR. RR is of two member bus (Rachel’s) companies, Company Rachel’s Bus and Reliable Bus (Reliable). Company Rachel’s is certified as a "Women’s Business (WBE). Enterprise” purpose comply The venture is to minority participation goals with the set the Board for affirmative action. adoption
Both Rachel’s and Reliable were aware of the Board’s *6 qualified the 2% LBP had determined that RR for 2% LBP .and at the time RR submitted its bid. Hubka testified that Rachel’s met business, qualifications the Board’s for a local is au- because Rachel’s City Chicago, thorized to do business in the has offices and bus fa- Chicago, Chicago, cilities in has a license to do has all its business part-time employees working City Chicago, full- and in the and pays imposed by City Chicago. the head tax bids, reviewing
After the schedule of the various Hubka deter- that LBP mined RR was entitled to the 2% and that Best Bus was LBP, the 2% RR be not entitled to and determined that would application buses based on its bid and the of the 2% LBP. awarded steps in reliance the fact that the She took certain Board would awards, renewing 2% LBP in apply the its determination of such as companies. leases with various bus When the Board notified RR of its buses, type prepare I expended award of she monies to the buses for upcoming year. school during year Rachel’s revenues the 1995-96 school amounted to million, than 1% came or vehicles of which less from routes $4.5 by public other than those awarded the Board. Other than the school bid, year three-year under the Rachel’s has one of a routes awarded nonpublic left with the Board for six school routes. Those contract keep are not Rachel’s in business without routes alone sufficient routes, public the Board’s school and Rachel’s would not be able nonpublic continue to service the school routes without the award routes, Rachel’s public public school routes. Without the school drivers, its leases would lose all of its would not be able maintain property and would be forced to terminate its on the vehicles or part-time and staff. full-time Ellis, Reliable, that Reli- president
Edmond and owner of testified subsidiary relationship any other parent able does not have or manager, company. He is also RR’s administrative day-to-day relationships contact and with the Board. Reliable qualifications met the Board’s for a local business. In reliance on the expectation integrity that the Board would honor the of the bid and steps LBP that apply accordingly, the 2% Reliable took the same year, Hubka testified its buses for the school but prepare about step submitting with the its for emission test- additional vehicles ing. during year
Reliable’s revenues the 1995-96 school amounted to million, approximately percent of which 1% to 2% came from $10 routes or other than those awarded the Board. Without vehicles routes, public school Reliable would have to close one of its two facilities, only keep would be able to between 10 to 12 of its 50 full- employees only time keep part- would be able to 130 of its 325 employees. time
The trial court denied Best Bus’ motion under count I. The trial court found that Best Bus was not a local business defined and, therefore, 5.5 not entitled to a 2% LBP. The trial court found Laidlaw, Willett, that party agree- not was the to the venture ment. II, VIII,
As to counts VII the trial court found that Best Bus was estopped challenging from of the 2% LBP.
Despite ruling estopping asserting Best from Bus the invalid- 5.5, ity of Rule the trial constitutionality court did rule on the rejected allegation statute. The court Best Bus’ LBP 2% violated the interstate commerce clause of the United States Consti- However, accepted allegation tution. the trial court Best Bus’ LBP 2% is unconstitutional statutory because the Board lacks authorization.
The portion opinion ruling Board moved to reconsider that constitutionality on the of Rule 5.5. The Board’s motion was denied. findings. Plaintiffs moved trial plaintiffs’ to reconsider the court’s The motion was denied. preference.
We now address the of local business requires The Illinois School Code that certain contracts be (West responsible awarded to the lowest bidder. 105 ILCS 5/34 —21.3 1994). purposes The requiring public engage competi bodies to in bidding favoritism, tive competition, guard against are to invite improvidence, extravagance, corruption fraud and and to secure the best work supplies price practicable. Compass or at the lowest Health Education, 746, 751, Care v. App. Plans 246 Ill. 3d 617 778 6, (1992); Ill. Express, City Chicago, Inc. v. 235 N.E.2d 9 O’Hare (1992). 202, 208, 846, competi 850-51 While the
App. 3d 601 N.E.2d automatically bidding compel tive statute does not the Board to (S.N. solely of lowest cost Co. v. award a contract on the basis Nielsen 40, (1980); Comm’n, 44 Building Public 81 Ill. 2d 410 N.E.2d House, Tazewell, 159, County 163 Ill. Court Street Steak 165, Inc. v. 2d 781, (1994)), specify it does that the contracts be 643 N.E.2d responsible bidder” after due advertisement. awarded to the "lowest (West 1994). body public specifies 105 ILCS It is the that 5/10 —20.21 which it and the the terms of the contract for solicits bids criteria "responsible that bidders must meet in order to be considered a bid Health, Thus, App. der.” 246 Ill. 3d at 9. Compass N.E.2d at public body possesses great the law is clear that a in discretion determining responsibility the lowest bidder. Financial ability perform only are not the relevant A factors. contract bidder, may higher public a "where in be awarded to this is done interest, granted discretionary power in the exercise of under the laws, fraud, favoritism, unfair dealing, or and where there is without McQuillin a sound and reasonable basis for the award as made.” 10 (3d 1966). 29.73a, Municipal Corporations at 407 ed. § enumerated powers granted by has the Il The Board certain legislature. Specifically linois stated in the School Code is that "the *** powers may all that requisite board shall also exercise other be a proper development public or for the maintenance and school *** system, provisions other Article not inconsistent this (West 1994). apply to all school districts.” 105 ILCS which 5/34—18 empowers "approve programs poli This section also the Board to providing transportation services to 105 ILCS cies for students.” 18(8) (West 1994). 5/34 — range powers implement possesses
While the Board broad education, policies relating powers expressly it is limited to those granted by that "school districts law. The Illinois Constitution states *** VII, only powers granted by have law.” Ill. Const. art. shall §8. nothing in argues The Board that there is the School Code including a when prohibits preference the Board from local factor determining responsible bidder. We think that the who is the lowest anything in the Code appropriate question is whether there is School give treatment to local busi- preferential that allows the Board to nesses. reading
A and the record before this court of the School Code nothing expressly authorizes the Board to create lo presents 6.1, which authorizes school preference. Section cal business 29—
779
contracts,
transportation
provide any
boards to enter into
does not
Also,
20.21,
authority
bidding.
for
in
which
preferences
section 10—
awarding
upon
enumerates
of all contracts based
the lowest
bidder,
grant authority
prefer
does not
to create a local
ence. The
appears
designed
Board’s Rule 5.5
to be
to favor local busi
ness. As this court stated in Cardinal Glass Co. v. Board
Educa
Community
289,
tion Mendota
Consolidated School District No.
442, 448,
(1983),
favoritism,
App.
Ill.
3d
nowWe address whether Best Bus estopped challeng is from ing validity of the 2% LBP. 24, 1996,
On January 5.5, adopted establishing 2% preference $10,000. local business for contracts pre-bid over A meeting was held on March representative at which time a venture, from each member of joint along with Hudson from Wil- lett, inwas attendance. pre-bid meeting, Prior to the a list of revi- sions and additions from previous containing contract the addi- tion of the 2% LBP was public. made available to the The terms and conditions of the 2% LBP were described McNair Grant at the pre-bid meeting, and those same terms and conditions are set forth in the Best Bus bid.
Every Bus, Willett, member of Best along with was aware of the 2% LBP pre-bid March meeting. Plaintiffs were aware that local, Laidlaw yet was not nothing Laidlaw did at point this to chal- lenge fact, preference. Hudson, 2% In president Willett, asked Grant if company his okay would be under the new rule. He testified that he inquiring Laidlaw, was Willett, about the status of not since Laidlaw could not be rate, considered local any under Rule 5.5. At we do not accept argument Best Bus’ that it relied upon the assurances and, therefore, of Grant thought qualify it would aas local company. Best Bus knew submitting before its bid that it did not qualify Laidlaw, local yet business because of it still submitted a bid with Laidlaw, Laidlaw listed as one of the venturers. when Board, requested by the submitted documents without questioning the validity of the 2% only LBP. It July was late when the awards were made and Best Bus type was not awarded the I buses plaintiffs sought to invalidate the 2% LBP. City In Wyoming Comm’n, Liquor v. Illinois Control 48 Ill. 404,
App. 3d (1977), 362 N.E.2d 1082-83 the court held that within a invalidity of an ordinance fails to assert the party "a who asserting if estopped from so passage[ ] after its is reasonable time diligence lack of due party’s from that the failure resulted changed position in reliance on the substantially his opponent has other vendors and The Board had contracted with ordinance.” year by the school the time Best developed prepare routes to bus obliga- 2% LBP. RR had incurred challenged the Bus *9 grant relief to being awarded the contract. To tions in reliance on schedules; rescinding rerouting a of buses and Best Bus would mean that, receiving in other vendors reliance current contracts with award, expended money in their buses and drivers and prepared the vendors; costs; and rein- awarding new buses to new other related spection of buses. LBP, Bus, 2% now can attempting to benefit from the
Best after beneficiary authority when not a challenge to the Board’s not seek Ambrose, 21 Ill. 2d 173 N.E.2d new Cochennet v. the 454, rule. (1961) may be ("right validity of a statute question to the 456 *** which an intention to by any course of conduct shows waived statute”). this validity the of the While any question waive as to invalid, that Best Bus is that the 2% LBP is we find court has ruled it validity this statute because challenging the estopped from the ordinance before receive the benefits of waited until it did not contesting it. 2% LBP is invalid and that the
Since we have determined invalidity, we asserting the ordinance’s estopped from Best Bus is remaining issues. not address the will affirmed. judgment of the circuit court is
Accordingly, Affirmed.
HARTMAN, P.J., concurs. HOFFMAN, concurring: specially
JUSTICE I in case. by majority this result reached I concur with the disagreement my with col- however, register my specially, write grounds. procedural leagues substantive and on both Bus) (Best Bus Joint Venture finding that Best The trial court’s the Board of by 5.5 of entity as defined a local business was not (Board) amply supported is City Chicago of the Education resulted in the venture participation record. Laidlaw Transit’s being force full-time work regular majority in a of Best Bus’s the trial court Chicago. Consequently, City outside of employed I of their under count requested relief plaintiffs denied the properly complaint. amended
781 right waived the Best Bus has majority agree I of, authority promulgate, constitutionality or Board’s challenge the (LBP) and the forth in Rule 5.5 preference set the 2% local business bidding pro By in the Board’s subject participating specifications. bid seeking avail itself of the benefits Rule 5.5 and cess under prefer constitutionality of such questioning LBP 2% without it, right to waived its power to enact Best Bus ence or the Board’s statutory or the LBP on either challenge of Rule 5.5 and Automo v. State Farm Mutual grounds. See Calabrese constitutional (1989). The Co., 215 App. 3d 543 N.E.2d bile Insurance 187 Ill. court, therefore, injunctive relief properly plaintiffs denied the trial II, complaint. their amended under counts VII and VIII of reasons, above, I concur only for those For the reasons stated majority in the result reached in this case. estopped Bus was to raise
Substantively,
agree
I cannot
that Best
is a
Equitable estoppel
Board’s LBP.
invalidity
of Rule 5.5 or the
asserting rights against
preclude
party
that acts to
from
doctrine
faith,
voluntary
who,
good
upon
party’s
another
relied
conduct,
change
thereby
posi
led to
representations or
and was
Maywood,
App.
259 Ill.
Village
tion for the worse. Trochelman v.
Bank,
(1994);
Exchange
v.
National
3d
631 N.E.2d
Stoller
*10
(1990).
Nothing
in this
App.
Ill.
3d
Lastly,
majority
I believe that the
should have
having
LBP. Once
dressing
of Rule 5.5 and the Board’s
entity
under
qualify
found that Best Bus did not
local business
rule
right
challenge
either the
Rule 5.5 and that it had waived the
Particularly
LBP, nothing
stated.
or the
more need have been
findings. Constitu
troubling
majority’s
me are the
constitutional
can
when the issue before
court
questions
tional
should be avoided
Court, 331
grounds.
Army Municipal
v.
be decided on other
Rescue
(1947);
549, 568-69,
U.S.
91 L. Ed.
67 S. Ct.
(1993).
Mitchell,
344, 356,