Court rules that Montgomery County resolution did not create binding contract

By Jim Boyle | May 22, 2014

A municipal body's resolution to accept a construction bid does not have the same binding characteristics as a signed, legal contract, the Pennsylvania Commonwealth Court ruled


The opinion, written by Judge Renee Cohn Jubelirer, was prompted by an appeal made by construction company Allan Myers, which claimed that the Montgomery County Commissioners entered into a binding agreement when it voted to accept his bid for roadwork in the county.

According to the opinion, in June 2011 the Montgomery County commissioners sent a request for proposals for a roadwork project. Allan Myers came back with a bid for $4 million that was accepted by the commissioners at its July 7, 2011 meeting, the board deciding that it was the lowest bid that met the project specifications. Part of the terms of the agreement required the winning bidder to procure an insurance bond for the work.

A month later, representatives of Allan Myers became aware that the Montgomery County commissioners were reconsidering the objection form one of the rejected bidders. However, the construction company felt confident that it had deal that could not be rescinded, despite not having any signed contracts, court documents say.

On Aug. 31, 2011, the Montgomery County commissioners voted to change contractors to Highway Materials, which had the lowest bid before getting rejected at the July meeting. In December, Allan Myers filed a complaint with the Montgomery County Court of Common Pleas for breach of contract, saying that the July 2011 resolution bound the commissioners to accept his bid.

The claim was rejected and subsequently brought before the Commonwealth Court, which ruled against Allan Myers. In the opinion, Jubelirer references a similar case from 1941, Crouse, Inc. v. School District of Braddock, where the school district accepted bids for plumbing and heating work on a new building. Crouse's bid was accepted by a motion during a school board meeting, but later objections by the local plumber's unions convinced the school board to rescind the offer at the next meeting.

Crouse's appealed the decision, contending that the motion accepting his bid created a binding contract because the paperwork was attached to the motion. The Commonwealth Court found in favor of the school district, however, citing the public school code requiring signed documents to support a binding contract.

The court ruled similarly in Myers' case, stating simply that there is no legal document to support a binding agreement with the Montgomery County Commissioners. However, since his bid was accepted in July, Myers began the paperwork necessary and procured the necessary performance bonds. In the case of the bonds, the Commonwealth Court did rule that he could seek damages for repayment of the insurance expense.

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