Ralph Hodge Constr. Co. v. Brunswick Reg'l Water & Sewer H2GO ( 2022 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
2022-NCCOA-492
No. COA21-565
Filed 19 July 2022
Wilson County, No. 20-CVS-1258
RALPH HODGE CONSTRUCTION COMPANY, Plaintiff,
v.
BRUNSWICK REGIONAL WATER & SEWER H2GO, Defendant.
Appeal by Plaintiff from order entered 24 June 2021 by Judge A. Graham
Shirley in Wilson County Superior Court. Heard in the Court of Appeals 3 March
2022.
William J. Wolf for the Plaintiff-Appellant.
Ward and Smith, P.A., by Amy H. Wooten and Donalt J. Eglinton, for the
Defendant-Appellee.
DILLON, Judge.
¶1 This case concerns whether the successful bidder on a government contract
may recover its security deposit when it untimely withdraws its bid.
I. Background
¶2 Defendant is a government agency that solicited bids for the construction of a
public water supply and treatment system. The procedure for bidding on public
contract is found in N.C. Gen. Stat. § 143-129 (2020). Under this procedure, bidders
RALPH HODGE CONSTR. CO. V. BRUNSWICK REG’L WATER & SEWER H2GO
2022-NCCOA-492
Opinion of the Court
are required to submit a deposit, usually five percent (5%) of their bid. See id. § 143-
129(b). Plaintiff bid on the project, depositing the required security deposit of
$254,241.62, equal to 5% of its bid.
¶3 On 16 July 2020, the “opening of bids” for the project occurred. Plaintiff was
the lowest bidder on the project by nearly $900,000. Subsequently, Plaintiff,
requested to withdraw its bid and receive a refund of the deposit.
¶4 The procedure for withdrawing a bid is found in N.C. Gen. Stat. § 143-129.1,
which states that a “request to withdraw must be made in writing . . . but not later
than 72 hours after the opening of bids, or for a longer period as may be specified in
the instructions to bidders provided prior to the opening of bids.” N.C. Gen. Stat. §
143-129.1 (emphasis added). Plaintiff, though, did not make its request to withdraw
its bid until 24 July 2020, over a week after the bids were opened.
¶5 Plaintiff requested a hearing regarding its request to withdraw its bid and for
the return of its bid deposit. After a hearing on the matter, Defendant issued a
written ruling denying Plaintiff’s request to withdraw its bid, based in part on the
untimeliness of the request.
¶6 Plaintiff commenced this action seeking a declaratory judgment as to the rights
and legal obligations of the parties concerning its request to withdraw. Both parties
moved for summary judgment. After a hearing on the matter, the trial court entered
summary judgment in favor of Defendant.
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¶7 Plaintiff timely appealed.
II. Standard of Review
¶8 “Summary judgment is appropriate when ‘there is no genuine issue as to any
material fact’ and ‘any party is entitled to a judgment as a matter of law.’ ” Builders
Mut. Ins. Co. v. North Main Constr., Ltd., 361 N.C. 85, 88, 637 S.E.2d 528, 530 (2006)
(citing N.C. Gen. Stat. § 1A-1, Rule 56(c)). Our Court reviews the trial court's order
allowing summary judgment de novo. Id. at 88, 637 S.E.2d at 530.
III. Analysis
¶9 Plaintiff initially sought the protections provided by Section 143-129.1, which
allows a bidder in certain circumstances to withdraw its bid after the bids have been
opened without forfeiting its deposit. Judge Shirley, though, affirmed in his summary
judgment order the decision of Defendant that Plaintiff’s deposit was forfeited. On
appeal, Plaintiff additionally argues that neither Defendant nor Judge Shirley had
jurisdiction to consider the matter at all, since Plaintiff failed to make its request
within 72 hours after the bids were opened. For the reasoning below, we conclude
that Judge Shirley ruled correctly and affirm his summary judgment order.
¶ 10 In 1933, our General Assembly enacted Section 143-129 to require certain
public contracts to be open to bidding. Our Supreme Court has stated the purpose of
Section 143-129
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is to prevent favoritism, corruption, fraud, and imposition
in the awarding of public contracts by giving notice to
prospective bidders and thus assuring competition which
in turn guarantees fair play and reasonable prices in
contracts involving the expenditure of a substantial
amount of public money.
Mullen v. Louisburg, 225 N.C. 53, 58-59, 33 S.E.2d 484, 487 (1945). To ensure a
competitive bidding process, our General Assembly also required that [n]o contract
to which G.S. 143-129 applies . . . shall be awarded . . . unless at least three
competitive bids have been received[.]” N.C. Gen. Stat. § 143-132.
¶ 11 Section 143-129 provides that a bid cannot be submitted unless it meets certain
requirements. Under the statute, bids must be accompanied by a deposit (or bond)
equal to 5% of the bid amount, sealed when made, and opened together at a specified
time and place. That same section also contemplates that the entity who sought the
bids will review all bids at some point after they are opened and “shall award the
contract to the lowest responsible bidder or bidders.” Id. at § 143-129(b) (emphasis
added). That is, the lowest bidder is not necessarily entitled to an award of the
contract, as the entity may take into consideration “quality, performance and the time
specified in the proposals for the performance of the contract.” Id. Section 143-129(b)
provides that the successful bidder forfeits its 5% deposit if it “fails to execute the
contract within 10 days after the award[.]” All unsuccessful bidders receive a refund
of their deposit.
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¶ 12 Any bidder has typically been allowed to withdraw its bid prior to the opening
of the sealed bids without forfeiting its deposit. Prior to 1977, bidders could withdraw
their bid after the opening of the bids unless the request for bids by the public agency
included a provision to the contrary. Compare Elliott Bldg. v. Greensboro, 190 N.C.
501, 130 S.E.200 (1925) (“This is an action at law to recover the money deposited, and
after acceptance this cannot be done.”) with Muirhead v. Durham, 1 N.C. App. 181,
160 S.E.2d 542 (1968) (invitation for bids provided that “no bid shall be withdrawn
for a period of thirty days subsequent to the opening of bids”).
¶ 13 However, in 1977, our General Assembly created a statutory right for a bidder
to withdraw its bid without forfeiting its deposit in narrow circumstances, by enacting
N.C. Gen. Stat. § 143-129.1.
¶ 14 On appeal, Plaintiff suggests that it was not entitled to withdraw its bid at all
after three days; that, therefore, neither Defendant nor the trial court could treat its
bid as withdrawn; and that since Defendant did not award the contract to Plaintiff,
Plaintiff was entitled to a refund of its deposit as a non-winning bidder under Section
143-129. We disagree.
¶ 15 Based on the language in Section 143-129.1, we conclude that a bidder may
still withdraw its bid from consideration after the 72-hour period and prior to the
award of the contract but that said bidder forfeits its deposit, even if it could be shown
that the bidder would not have been the successful bidder. Forfeiture of its deposit
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is the price the bidder pays for being allowed to remove its bid from consideration.
That is, the deposit of a withdrawing bidder is forfeited unless the bidder meets the
requirements of Section 143-129.1.
¶ 16 The first sentence of Section 143-129.1 assumes the general rule to be that a
bidder withdrawing its bid after the bids are opened but prior to the awarding of the
contract forfeits its deposit. However, the Section provides an exception to that rule:
A public agency may allow a bidder submitting a bid
pursuant to G.S. 143-129 . . . to withdraw his bid from
consideration after the bid opening without forfeiture of his
bid security if . . . .
N.C. Gen. Stat. § 143-129.1.
¶ 17 Section 143-129.1 establishes a procedure by which a bidder can seek a
withdrawal of its bid without forfeiting its deposit, but states that a denial by the
agency (and reviewing court) to this relief “shall have the same effect as if an award
had been made to the bidder and a refusal by the bidder to accept had been made[.]”
That is, under the plain language of the statute, it is not a defense to the forfeiture
that the bidder would not have been the successful bidder. Rather, the language of
the statute suggests that a bidder loses its deposit if it withdraws its bid from
consideration by the public agency when the agency reviews all bids. Section 143-
129.1 expressly states that “[i]f it is finally determined that the bidder did not have
RALPH HODGE CONSTR. CO. V. BRUNSWICK REG’L WATER & SEWER H2GO
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the right to withdraw his bid pursuant to the provisions of this section, the bidder’s
security shall be forfeited.”
¶ 18 We do not agree with Plaintiff’s interpretation that the statutory language
prevents a bidder from withdrawing its bid before acceptance after 72 hours of the
opening of the bids. Rather, the language simply suggests that said bidder cannot
avail itself of the new statutory right to a refund of the deposit where the withdrawal
is not requested within the 72-hour period. There is nothing in the language of
Section 143-129.1 which prevents an agency to hold a hearing on a request to
withdraw even if made after the 72-hour deadline to consider the request. Indeed,
the Section states that “[i]f a bidder files a request to withdraw his bid, the agency
shall promptly hold a hearing thereon[.]”
IV. Conclusion
¶ 19 Plaintiff was allowed to withdraw its bid after the opening of the bids but
before the contract had been awarded. Plaintiff chose to exercise its right to withdraw
its bid and not have its bid considered. However, since the evidence conclusively
establishes that Plaintiff’s withdrawal did not comply with the requirements of
Section 143-129.1, we hold Judge Shirley correctly ruled, as a matter of law, that
Defendant was entitled to summary judgment.
AFFIRMED.
Judges HAMPSON and WOOD concur.