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Van-Go Transportation, Inc. v. Sampson County

Court of Appeals of North Carolina

August 1, 2017

VAN-GO TRANSPORTATION, INC., Plaintiff,
v.
SAMPSON COUNTY, SAMPSON COUNTY BOARD OF COMMISSIONERS and ENROUTE TRANSPORTATION SERVICES, INC., Defendants.

          Heard in the Court of Appeals 9 February 2017

         Appeal by plaintiff from order entered 12 May 2016 by Judge Gale M. Adams in Sampson County Superior Court No. 15 CVS 688

          The Charleston Group, by R. Jonathan Charleston, Jose A. Coker, and Quintin D. Byrd, for plaintiff-appellant.

          Daughtry Woodard Lawrence & Starling, by W. Joel Starling, Jr., for defendant-appellee Sampson County.

          Crossley McIntosh Collier Hanley & Edes, PLLC, by Norwood P. Blanchard, III, for defendant-appellee EnRoute Transportation Services, Inc.

          DAVIS, Judge.

         This appeal requires us to once again examine the issue of when a defendant is entitled to recover on an injunction bond previously posted by the plaintiff after the plaintiff voluntarily dismisses the lawsuit. Plaintiff Van-Go Transportation, Inc. ("Van-Go") appeals from the trial court's order awarding damages to Sampson County (the "County") and EnRoute Transportation Services, Inc. ("EnRoute") (collectively "Defendants"). Because we conclude that the trial court properly ruled that Van-Go's voluntary dismissal was equivalent to an admission that it wrongfully enjoined Defendants, we affirm.

         Factual and Procedural Background

         From 1997 until 2013, the County contracted with EnRoute for the transportation of area Medicaid patients to and from appointments for medical services. During the period from July 2013 to June 2015, the County contracted with Van-Go to provide these transportation services. In February 2015, the County issued a Request for Proposals ("RFP") seeking bids from vendors to provide these services for the period between July 2015 and June 2017.

         Among other requirements, the RFP instructed each bidder to (1) identify its insurer and show that it possessed a certain amount of insurance coverage; and (2) state the fixed cost per mile that it would charge the County for provision of the transportation services. Van-Go and EnRoute each submitted proposals that the County deemed timely and responsive to the RFP.

         Van-Go's bid identified its insurer and level of coverage and stated that its fixed cost per mile of service was $1.74. EnRoute's proposal did not identify its insurance carrier but stated that it would obtain the required insurance coverage if awarded the contract. In addition, it stated that its cost per mile of service was $1.54 "[p]lus a fuel surcharge of $.01 per mile for each $.05 increase over $3.95 per gallon (based on average daily price at Go Gas-Clinton)." On 6 April 2015, the Sampson County Board of Commissioners voted to award the Medicaid transportation services contract (the "Contract") to EnRoute based upon the terms specified in its bid.

         On 29 June 2015, Van-Go filed its initial complaint against Defendants in which it requested monetary damages and injunctive relief for alleged violations of N.C. Gen. Stat. § 143-129 (which governs the procedure for awarding public contracts); 5 C.F.R. §§ 2635.101 and 2635.702 (which address conflicts of interest in contracts involving federal monies); and the due process clauses of the federal and state constitutions. These claims were premised upon Van-Go's contentions that the Contract should not have been awarded to EnRoute because (1) EnRoute's proposal was not responsive to the RFP in that it both failed to demonstrate that EnRoute had procured the required insurance coverage and did not provide a fixed cost per mile; and (2) a conflict of interest existed between the owners of EnRoute and the Director of the Sampson County Department of Social Services, who participated in the County's consideration of the bids.

         The complaint included a request for a temporary restraining order ("TRO") pursuant to Rule 65 of the North Carolina Rules of Civil Procedure to enjoin EnRoute from performing under the Contract and to allow Van-Go to extend its then-existing contract with the County by continuing to provide transportation services at the cost-per-mile rate of $1.85 as specified in that agreement. A TRO hearing was held in Sampson County Superior Court on 29 June 2015 after which Judge W. Allen Cobb, Jr. issued a TRO granting Van-Go its requested relief pending the outcome of a preliminary injunction hearing. The TRO further directed Van-Go to post an injunction bond in the amount of $25, 000.

         Defendants subsequently filed a motion to dissolve the TRO on 13 July 2015. Following a hearing, Judge Charles H. Henry issued an order on 20 July 2015 denying Van-Go's request for a preliminary injunction and granting Defendants' motion to dissolve the TRO. In its order, the court determined that Van-Go had not shown a likelihood of success on the merits because, inter alia, (1) EnRoute's bid substantially conformed to the specifications of the RFP; and (2) Van-Go failed to show that a conflict of interest had tainted the bidding process.

         Following the entry of this order, Defendants removed the case to the United States District Court for the Eastern District of North Carolina based upon the federal questions presented in Van-Go's complaint. Van-Go subsequently filed an amended complaint that did not contain any claims arising under federal law. Based upon the lack of a federal question in the amended complaint, the federal court granted Van-Go's motion to remand the case to Sampson County Superior Court on 29 July 2015.

         On 17 August 2015, EnRoute filed a motion to dismiss Van-Go's amended complaint in Sampson County Superior Court. On 10 December 2015 - while EnRoute's motion to dismiss was pending - Van-Go filed a voluntary dismissal of its lawsuit without prejudice pursuant to Rule 41 of the North Carolina Rules of Civil Procedure. Van-Go subsequently filed a motion on 1 February 2016 requesting the release of the $25, 000 injunction bond it had posted in connection with the TRO. On 4 February 2016, EnRoute submitted an objection to Van-Go's motion along with a motion of its own seeking an award of damages in the full amount of the bond on the ground that EnRoute had been wrongfully enjoined. On 18 March 2016, the County filed a similar motion.

         A hearing was held before the Honorable Gale M. Adams on 21 March 2016. Judge Adams issued an order on 12 May 2016 denying Van-Go's motion for release of the bond and awarding Defendants the proceeds of the bond. In its order, the trial court allocated $15, 993.57 of the $25, 000 to EnRoute and $9, 006.43 to the County. Van-Go filed a timely notice of appeal from this order.

         Analysis

         Van-Go raises several issues on appeal. First, it asserts that the $25, 000 injunction bond should have been released to Van-Go. Alternatively, it asserts that even if EnRoute was entitled to recover some portion of the bond, EnRoute failed to provide sufficient evidence of the damages it had incurred so as to warrant the trial court's award of $15, 993.57. Finally, Van-Go argues that the trial court erred in awarding any amount of damages to the County because all monies at issue belonged to the State rather than the County.

         I. Determination that Defendants Were Wrongfully Enjoined

         Pursuant to Rule 65(c), a party who obtains a TRO or preliminary injunction must post a security bond. See N.C. R. Civ. P. 65(c) (providing that, with limited exceptions, "[n]o restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the judge deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained."). In reviewing a trial court's judgment concerning the disposition of an injunction bond, "[w]e consider whether the trial court's findings of fact and conclusions of law are sufficient to support the judgment." Allen Indus., Inc. v. Kluttz, __ N.C.App. __, __788 S.E.2d 208, 209 (2016).

         In its 12 May 2016 order, the trial court made the following findings of fact in determining that Van-Go was not entitled to the return of its $25, 000 injunction bond:

26. On December 10, 2015, [Van-Go] filed a Notice of Voluntary Dismissal without prejudice pursuant to Rule 41(a) of the North Carolina Rules of Civil Procedure. The Notice of Dismissal was unconditional, in that it was not stipulated as pursuant to Rule 41(a)(1)(ii) of the North Carolina Rules of Civil Procedure.
30. The Court finds that, as a result of the TRO entered on June 29, 2015, the County and Enroute were restrained from performing under the Contract, which would have taken effect on ...

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