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decided: June 28, 1984.


No. 63 W.D. Appeal Docket 1983, Appeal From The Order of the Commonwealth Court of Pennsylvania, dated May 3, 1983, at No. 2763 C.D. 1982, affirming the Order of the Court of Common Pleas of Allegheny County, Pennsylvania, dated October 28, 1982 at No. GD-82-20172, Nix, C.j., and Larsen, Flaherty, McDermott and Zappala, JJ. McDermott, J., filed a Dissenting Opinion which Nix, C.j., joins. Hutchinson and Papadakos, JJ., did not participate in the consideration or decision of this case.

Author: Larsen

[ 505 Pa. Page 266]


In 1977, Children's Hospital of Pittsburgh (Children's), a private non-profit charitable corporation initiated an extensive construction and renovation project. The plans included the erection of a new main hospital facility. In 1979, Children's proceeded to implement the renovation project by entering into a Construction Management Agreement with Mellon-Stuart Company, a private business corporation.

Under the terms of the agreement, Mellon-Stuart obligated itself to perform all construction management services including, inter alia, the solicitation of bids, the development of bidder interest, the receiving and evaluation of competitive bids for all trade contracts, and the entering into trade contracts with various trade contractors and material suppliers. Further, the agreement stipulated that no contract for trade services or supplies could be made by Mellon-Stuart without the prior approval of Children's. Additionally, when the actual construction phase of the project started, Mellon-Stuart was required to provide all necessary construction site supervisory and administrative services for complete construction within the budget and time schedule. The agreement further provided that Mellon-Stuart would complete the entire construction project for a guaranteed maximum price.*fn1

The guaranteed maximum price provisions meant that if the actual cost of completing the project was less than the maximum price, then Children's would pay Mellon-Stuart only the actual cost. If, however, the actual cost exceeded the maximum price, Mellon-Stuart would be solely liable for the excess. In no event would Children's be liable for any costs over and above the guaranteed maximum price.

[ 505 Pa. Page 267]

Financing of the renovation project was to be accomplished in large part by the sale of Hospital Revenue Bonds, Series W, issued through the Allegheny County Hospital Development Authority (Authority). The Authority is a "body politic and corporate" existing under the laws of Pennsylvania pursuant to the Municipality Authorities Act of 1945.*fn2 It was created in 1971 to provide funds through the issuance of bonds and notes to assist non-profit hospitals in Allegheny County to finance hospital construction.

Under the financing arrangements established for the project, the Authority issued Series W bonds pursuant to a trust agreement between the Authority and Mellon Bank, N.A. as trustee.*fn3 A lease was entered into between the Authority and Children's under which Children's leased the hospital premises to the Authority. The terms of the lease called for the Authority to pay a lump sum fixed rental for the premises equal to the net proceeds realized from the issuance and sale of the Series W bonds. Simultaneous with the execution of the lease, a sublease was executed by the Authority and Children's under which the Authority sublet the premises back to Children's. The sublease is a general obligation of Children's, and as rent Children's agreed to make payments to the Authority in the full amount necessary to pay the principal, interest and premiums, if any, on the Series W bonds. Further, the Authority and the trustee, Mellon Bank, N.A. executed an indenture in

[ 505 Pa. Page 268]

    which the Authority assigned all of its right, title and interest in and to the sublease to the trustee and pledged to the trustee the receipts and revenues payable to the Authority under the sublease.

Pursuant to its obligations under the Construction Management Agreement, Mellon-Stuart proceeded to solicit bids from qualified trade contractors so that the construction project could be accomplished in the most economical manner. For the electrical portion of the job, Mellon-Stuart privately solicited bids from seven electrical contractors and received bids from six. Appellant Jaden Electric Division of the Fairfield Company (Jaden), not being one of contractors solicited, sought to obtain a set of the bidding documents for the electrical construction contract so that it could submit a bid. Mellon-Stuart refused to furnish Jaden with the appropriate documents indicating that it did not wish to entertain a bid from Jaden.*fn4

Jaden and Leo J. Willman*fn5 filed suit in equity against Children's, Mellon-Stuart and the Authority seeking, inter alia, an injunction enjoining defendants from opening bids or awarding or executing any contracts for the construction project, along with an Order directing that Jaden be provided with all bidding documents, and permitting Jaden to submit a bid for the electrical construction work.

The trial court denied appellants' petition for a preliminary injunction ruling that the defendants were not required to employ public competitive bidding for the letting

[ 505 Pa. Page 269]

    of contracts in the Children's project and thus, Jaden was properly denied the privilege of submitting a bid. The Commonwealth Court affirmed the trial court's order.*fn6 We granted appellants' petition for allowance of appeal.

The standard of review on appeal from the grant or denial of a preliminary injunction has been repeatedly stated:

As a preliminary consideration, we recognize that on an appeal from the grant or denial of a preliminary injunction, we do not inquire into the merits of the controversy, but only examine the record to determine if there were any apparently reasonable grounds for the action of the court below. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the Chancellor. Intraworld Inc. v. Girard Trust Bank, 461 Pa. 343, 336 A.2d 316 (1975); Credit Alliance Corp. v. Philadelphia Minit-Man Car Wash Corp., 450 Pa. 367, 301 A.2d 816 (1973); Zebra v. Pittsburgh School District, 449 Pa. 432, 296 A.2d 748 (1972). "In order to sustain a preliminary injunction, the plaintiff's right to relief must be clear, the need for relief must be immediate, and the injury must be irreparable if the injunction is not granted." Zebra v. Pittsburgh School District, 449 Pa. at 437, 296 A.2d at 750. (emphasis added). Roberts v. School District of Scranton, 462 Pa. 464, 469, 341 A.2d 475, 478 (1975). (emphasis added).

Bell v. Thornburgh, 491 Pa. 263, 420 A.2d 443 (1980); also: Ezy Parks v. Larson, 499 Pa. 615, 454 A.2d 928 (1982); Shenango Valley Osteopathic Hospital v. Dept. of Health, 499 Pa. 39, 451 A.2d 434 (1982); Singzon v. Dept. of Public Welfare, 496 Pa. 8, 436 A.2d 125 (1981). Our task then is to scan the record to determine if the denial of appellants' request for a preliminary injunction was based upon apparently reasonable grounds.

[ 505 Pa. Page 270]

The appellants argue that open competitive bidding is mandated by the Municipality Authorities Act for all construction projects which involve an Authority. It is asserted that the defendants' refusal to accept a bid ...

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