Wall Recycling, LLC v. Wake Cnty.

2022-NCCOA-896

WALL RECYCLING, LLC, Plaintiff, v. WAKE COUNTY and TT&E IRON &METAL, INC., Defendants

No. COA22-181

Court of Appeals of North Carolina

December 20, 2022

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

Heard in the Court of Appeals 5 October 2022.

Appeal by plaintiff from judgment entered 29 October 2021 by Judge G. Bryan Collins, Jr., in Wake County, No. 20 CVS 5190 Superior Court.

Morningstar Law Group, by William J. Brian, Jr., Jeffrey L Roether, and Matthew J. Limoli, for plaintiff-appellant.

Wake County Attorney's Office, by Senior Deputy County Attorney Roger A. Askew, Deputy County Attorney Kenneth R Murphy, III, and Deputy County Attorney Claire Hunter Duff for defendant-appellee Wake County.

Howard, Stallings, From, Atkins, Angell &Davis, P.A., by Kenneth C. Haywood and Joseph H. Stallings, for defendant-appellee TT&E Iron &Metal, Inc.

DIETZ Judge.

¶ 1 This case concerns Wake County's contract for discarded scrap metal from its residents-things such as pots and pans, empty paint cans, and large appliances. Wake County collects these items at county recycling facilities. Private recycling companies will pay substantial sums to retrieve this scrap metal and resell it to smelters and other businesses.

¶ 2 In April 2019, Wake County released a request for proposal seeking bids "for the payment for scrap metal and white goods collected" at the county's facilities. The proposal required bidders to provide a price per ton that they would pay for the scrap metal, with that price factoring in "all costs associated with the scrap metal collection," such as providing the recycling containers for the facilities and removing the containers once they are full.

¶ 3 By statute, when a county sells property through a sealed bidding process like the one used here, the county must select the highest responsible bidder. After the county awarded the contract in this case, Wall Recycling, an unsuccessful bidder, sought a declaratory judgment that the county failed to comply with the statutory procedure for selecting the highest responsible bidder. The trial court granted summary judgment in favor of Wake County and the successful bidder. This appeal followed.

¶ 4 As explained below, there are genuine issues of material fact concerning whether the scrap metal is county property, and genuine issues of material fact concerning various aspects of the bidding process. We therefore reverse the trial court's entry of summary judgment and remand for further proceedings.

Facts and Procedural History

¶ 5 Plaintiff Wall Recycling is a recycling company with operations throughout North Carolina. The company buys, processes, and resells scrap metal. Defendant TT&E Iron &Metal operates a similar business and is a market competitor of Wall Recycling.

¶ 6 As a service to its residents, Wake County collects scrap metal at designated facilities throughout the county. This includes household items such as pots and pans, metal containers such as empty paint cans, and larger items such as household appliances and machinery. This scrap metal has commercial value because, once separated and processed, it can be sold to smelters and other businesses for further processing and reuse.

¶ 7 Wake County contracts with a private recycling business to collect the scrap metal from its collection locations. Because the scrap metal is valuable, this private business will pay substantial sums to Wake County for the metal.

¶ 8 Since 2015, the county has contracted with TT&E. From 2015 to 2019, TT&E paid around $4 million to Wake County for the scrap metal.

¶ 9 In April 2019, Wake County released a request for proposal seeking bids "for the payment for scrap metal and white goods collected" at the county's facilities. The request for proposal stated that the county "desires revenue for recyclable materials" and sought to maximize "the earnings associated with the recycling of scrap metal." The proposal also included services related to the scrap metal collection, such as managing and removing the containers at the county's facilities where residents deposit their scrap. The proposal required bidders to provide a price per ton that they would pay for the scrap metal, with that price factoring in "all costs associated with the scrap metal collection" set out in the proposal.

¶ 10 The proposal also committed the county to award the contract through a multi factor review procedure. It stated that the county would use a "forced choice matrix spreadsheet" to rank the evaluation criteria and each bidder's "level of excellence" on the criteria to determine a numerical score for each bidder. Before 2019, the county had repeatedly ranked price as the most important criterion for awarding the contract.

¶ 11 Throughout 2019, three companies responded to the proposal. Wall Recycling offered the county the highest price-nearly $10 per ton more than that offered by TT&E. Typically, when evaluating proposals, Wake County uses the matrix spreadsheet to have the evaluation committee rank the relative importance of the evaluation criteria before reviewing any of the proposals. The county uses this reviewing practice to prevent committee members from manipulating the criteria rankings to achieve a desired outcome.

¶ 12 Before the May 2019 meeting regarding the proposal, however, the evaluation committee members already had reviewed the three competing proposals. During this meeting, the committee ranked price as the fourth most important criterion. The committee then gave TT&E a higher score than Wall Recycling in two of the three criteria that it ranked as more important than price.

¶ 13 The county entered into the contract with TT&E and Wall Recycling objected. In July 2019, Wall Recycling met with county officials to discuss its objections and asked the county to reevaluate the proposal responses or, alternatively, issue a new request for proposals. The county refused. In April 2020, Wall Recycling learned that the county was extending the contract with TT&E and would not be issuing a new request for proposal.

¶ 14 Wall Recycling then filed this action seeking a declaration that, under a series of statutes concerning county contracts, Wake County was required to award the contract to the highest responsible bidder. The company also asserted a number of related statutory and constitutional claims.

¶ 15 TT&E and Wake County both moved to dismiss for failure to state a claim. The trial court denied the motions. After discovery, Wall Recycling moved for summary judgment and the county moved for cross-summary judgment. The trial court entered an order granting the county's motion, denying Wall Recycling's motion, and entering judgment dismissing Wall Recycling's claims. Wall Recycling appealed.

Analysis

¶ 16 The central issue in this appeal is whether the contract that Wake County awarded to TT&E is subject to statutory provisions that prioritize the highest contract bidder. The trial court's summary judgment order, by implication, concluded that these statutory provisions did not apply, leading to dismissal of all of Wall Recycling's claims.

¶ 17 This Court reviews a trial court's entry of summary judgment de novo. Virginia Elec. &Power Co. v. Tillett, 80 N.C.App. 383, 385, 343 S.E.2d 188, 191 (1986). On appeal, we determine whether the forecast of evidence in the trial record creates any genuine issues of material fact or whether the matter can be resolved by the court as a matter of law. Oliver v. Roberts, 49 N.C.App. 311, 314, 271 S.E.2d 399, 401 (1980).

¶ 18 By law, a county must "dispose of any real or personal property belonging to it according to the procedures prescribed in Chapter 160A, Article 12." N.C. Gen. Stat. § 153A-176. Chapter 160A, Article 12 provides that a county may dispose of its property in five ways: (1) private negotiation and sale; (2) advertisement for sealed bids; (3) negotiated offer, advertisement, and upset bid; (4) public auction; or (5) exchange. Id. § 160A-266. The option relevant here-advertisement for sealed bids- must be "done in the manner prescribed by law for the purchase of property." Id. § 160A-268 (emphasis added).

¶ 19 The "manner prescribed by law for the purchase of property" is a series of criteria contained in N.C. Gen. Stat. § 143-129(b), which states that a purchase contract "shall" be awarded to "the lowest responsible bidder or bidders, taking into consideration quality, performance and the time specified . . . for the performance of the contract." A "responsible bidder" is one that has the "skill, judgment and integrity necessary to the faithful performance of the contract, as well as sufficient financial resources and ability." Kinsey Contracting Co., Inc. v. City of Fayetteville, 106 N.C.App. 383, 385, 416 S.E.2d 607, 609 (1992).

¶ 20 By its plain terms, Section 143-129 requires the contract to be awarded to the lowest bidder. This makes sense when addressing the purchase of property. But when addressing the sale of property, it would be absurd to require counties to select the lowest bidder. See State v. Beck, 359 N.C. 611, 614, 614 S.E.2d 274, 277 (2005); Puett v. Gaston Cty., 19 N.C.App. 231, 235, 198 S.E.2d 440, 442 (1973). Thus, when applying this statute to the sale of county property, Section 160A-268 requires the contract to be awarded to the highest responsible bidder, taking into consideration quality, performance, and the time specified.

¶ 21 Having set out this statutory criteria, we reach the critical question in this appeal: is the...