Warrenton lawsuit entangles city, excavating company

Published 2:44 am Saturday, August 2, 2025

An excavating company has filed a lawsuit for injunctive relief against the City of Warrenton, citing illegal contracting and violation of free speech laws in a complaint filed Monday in Clatsop County Circuit Court.

Lyda Excavating, owned by Michael Lyda, alleged in the lawsuit that the city “violated Oregon competitive bidding law when it arbitrarily and capriciously rejected Lyda’s bid on the Iredale Culvert Replacement Project … and otherwise determined that Lyda was not responsible.

“This is the first time Lyda has ever been determined to be not responsible in connection with a bid on public works in nearly 20 years of public contracting.”

City staff declined to comment on the pending litigation.

In or about May 2025, the complaint read, the city advertised an invitation for contractors to bid on “Iredale Project Phase 2,” an initiative to replace the remaining sections of the Iredale storm drainage and pipe structures that had not been replaced in the original project.

In accordance with Oregon law and the Warrenton City Charter, projects exceeding $5,000 must be awarded to the “lowest responsible bidder for the contract and shall be done in accordance with plans and specifications approved by the commission.”

Lyda’s bid was $707,965, the lowest of three competing bids. But the contract was instead awarded to Big River Excavation, with a bid of $841,240.

In the notice of intent to award, the City asserted that only “2 of the bids were submitted by responsible bidders.”

In part, it was alleged that the rejection was based on issues with email communication regarding another bid Lyda made on the Hammond Transmission Waterline project. Like with the Iredale Project, Lyda was prequalified to bid on the initiative.

But unlike the Iredale Project, the Hammond Project solicitation allegedly did not require any specific DBE (Disadvantaged Business Enterprise) utilization and contracting goals; just good faith efforts for solicitation.
Despite Lyda again being the lowest bidder at $1.9 million, North Cascade won the contract with an initial bid of $2.2 million.

The city allegedly separately informed Lyda that it had reviewed the company’s bid and email communication and considered Lyda’s bid nonresponsive for “insufficient documentation of good faith efforts for solicitation and proposed utilization/contracting with (Disadvantaged Business Enterprises).” According to the complaint, The City did not express any concern regarding Michael Lyda’s professionalism.

Lyda then protested against the notice of intent to award North Cascade with the contract, asserting that the City “had applied unstated evaluation
criteria by requiring a DBE checklist form that was not listed in the solicitation as a required bid form and not otherwise referenced during the pre-bid meeting.”

“In an abundance of caution, Lyda provided a completed DBE checklist form (substantively identical to North Cascade’s submission) and email records reflecting pre-bid outreach efforts to DBEs (Gonzales Boring … and D & H Flagging Inc.).” the complaint read.

The protest was denied. City staff allegedly said they had previously reached out to Lyda seeking clarification on the bid — specifically requesting information regarding Lyda’s attempt to comply with DBE requirements and a project file that might indicate compliance — but that Lyda’s response was not adequate.

The city then allegedly demanded that unless Lyda agreed not to bid on the Iredale Project Phase 2 and refrain from bidding on further public projects with the City for three years, the City would file a complaint with the Oregon CCB (Construction Contractors Board) and/or Oregon Department of Justice.

Lyda refused to withdraw the bid, and said that “the fact that specific individuals at the City may not personally like Lyda (or its principal, Mike Lyda) does not provide a basis to violate the law. It also does not provide a basis to wrongfully pressure Lyda into withdrawing its bid under threat of
malicious prosecution.”

On July 15, the city formally rejected Lyda’s bid, claiming that Lyda lacked a “satisfactory record of integrity,” one of the grounds for rejecting the lowest bidder under Oregon law. The contracting agency, according to statute, may consider, among other things, whether the bidder has previous criminal convictions for “offenses related to obtaining or attempting to obtain a contract or subcontract or in connection with the bidder’s performance of a contract or subcontract.”

But the decision also allegedly relied on “informal” surveys of other unnamed municipalities that had undisclosed problems with Lyda Excavating. Specifically, the City allegedly explained other municipalities had been surveyed, and that “no fewer than four stated that they have had problems working with Lyda and would prefer to never work with Lyda again.”

The City also allegedly accused Lyda of “spurious litigation,” noting that Lyda had protested the award on the Hammond Project and had unsuccessfully attempted to sue the City of Seaside in 2023.

In response, Lyda alleged that the City’s “underlying procurement conduct was anti-competitive, biased, and lacked a rational basis.”

Lyda has sued the city for violation of public contracting statutes and violation of federal and Oregon free speech rights.

“The City’s decision was based on Lyda’s earlier protest, unrelated lawsuit, and Lyda’s and Michael Lyda’s expressed concerns with the City’s implementation of DBE requirements,” the complaint read. “Lyda and Michael Lyda are entitled to exercise their right to free speech, and each of these activities represent protected speech.”

Lyda’s claims for relief include an injunction preventing the City from entering into a contract with Big River Excavating for the Iredale Project, bid preparation costs not to exceed $50,000, and recovery of attorney fees.

Lastly, he asked that the City be mandated to prepare a judgement admitting wrongdoing and award the contract for the Iredale Project to Lyda.