Coyne-Delany Co. v. Capital Development Board

717 F.2d 385 (7th Cir. 1983)

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Nature of the Case

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Facts

Prisoners filed a suit complaining about living conditions. A decree was entered by the court that required the prison to fix all the plumbing fixtures. The State’s Capital Development Board (D) got on the project, and Coyne-Delany (P) was eventually subcontracted to supply the flush valves. The valves were installed, and they malfunctioned. A redesigned valve was shipped and installed, and that too malfunctioned. The prison authorities then asked the prime to designate another valve subcontractor; that was done, and Sloan Company was selected. Bids were received for the second phase of the contract but two days before they were to be opened; P sued D under 42 USC 1983 and got a temporary restraining order to stop D from opening the bids. D asked P to put up a $50,000 bond, but the judge only required a $5,000 bond under the belief that the order would only be in effect for a week. At the preliminary injunction hearing, that judge issued the injunction but refused to increase the bond. The basis of P’s suit under state law (Polyvend) was that it had been deprived of a property right without due process of law when the prime was required to use Sloan merely because prison authorities had unreasonably determined that the valves were defective. The judge who issued the preliminary injunction determined that P was likely to prevail on the merits particularly because D was unwilling to let an impartial expert determine whether its valves were of proper quality. The appeals court reversed the preliminary injunction (Polyvend had been reversed soon after the preliminary injunction had been issued). When D opened the bids on February 22, 1980, that were submitted in May 1979, the original prime, Naal was the lower bidder, but its bid had lapsed, and D had to solicit new bids. The new bids were opened May 9, 1980, and Naal’s new bid was $56,000 higher, but it again was the low bidder. D them moved for damages against P of $56,000 because the preliminary injunction was wrongly issued. The judge refused to award either costs or damages; the court must weigh all the equitable factors, including if the case was filed in good faith or is frivolous. The judge ruled that the parties stipulated that the case was filed without malice and the judge ruled that the case was not frivolous. Ds appealed.