Opinion
No. CV 106015417
June 29, 2011
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#125)
On November 12, 2010, the plaintiff, SDE Interchange Joint Venture, filed a four-count amended complaint against the defendant, State of Connecticut Commissioner of Transportation. Only Count Four remains. The operative complaint alleges that on or about October 13, 2010, the defendant accepted a bid from OG Industries, Inc. (OG) and other co-venturers of OG for the State of Connecticut Department of Transportation's (DOT) project for the reconstruction of the I-91 and I-95 Interchange, in violation of General Statutes § 31-57b. The plaintiff further alleges that the defendant improperly accepted OG's bid notwithstanding the fact that OG had received 139 willful and/or serious violations by the United States Occupational Health and Safety Administration (OSHA) which the plaintiff claims to be outstanding, unresolved and unabated.
The court granted the defendant's Motion to Dismiss Counts 1 through 3 on December 21, 2010.
The plaintiff argues that General Statutes § 31-57b prohibits the defendant from awarding the construction contract to OG and/or any entity in which OG maintains an ownership interest. Count Four of the amended complaint, the last surviving claim, seeks a declaratory judgment order construing the provisions of General Statutes § 31-57b as a bar to the award of the contract to OG and/or any entity in which OG maintains an ownership interest.
On February 7, 2011, the defendant filed a second motion to dismiss addressing the last remaining count of the plaintiff's amended complaint, arguing that the plaintiff failed to exhaust its administrative remedies because it did not seek a declaratory ruling from the State of Connecticut's Department of Labor (DOL) as to its interpretation of General Statutes § 31-57b. On February 17, 2011, the plaintiff filed an objection to the motion to dismiss arguing that the court properly has subject matter jurisdiction over Count Four because it was not required to exhaust any administrative remedies and even if it were, the plaintiff's action is excepted from the exhaustion of remedies doctrine. The court heard oral argument on March 10, 2011. For reasons more fully set forth herein, this court denies the Motion to Dismiss.
The defendant contends that this action should be dismissed because the plaintiff did not exhaust its administrative remedies by seeking a declaratory ruling on the interpretation of General Statutes § 31-57b from the DOL. Additionally, the defendant argues that the plaintiff cannot meet the narrowly drawn exceptions to the exhaustion of administrative remedies doctrine, in that the plaintiff cannot prove futility because the plaintiff had ample time to seek a declaratory ruling from the DOL; and the DOL would have been required to act prior to the bid opening or the execution of the contract. Therefore, the defendant claims that this court lacks subject matter jurisdiction, and accordingly must grant its motion to dismiss.
The plaintiff counters that its action cannot be barred by the exhaustion of administrative remedies doctrine because the defendant, as the bidding and awarding authority, provides no regulatory or statutory appeal processes to obtain the requested relief. According to the plaintiff, the decision to reject a bid or to award a contract is not a contested case under the Uniform Administrative Procedures Act (UAPA) and, therefore, it does not permit a challenge to an agency decision by way of an administrative appeal. The plaintiff contends that the defendant's agency (the DOT), not the DOL, is the agency responsible for enforcing General Statutes § 31-57b under the specific facts of this case and the DOT provides only an informal bid protest procedure. Alternatively, the plaintiff argues that the futility exception to the exhaustion of administrative remedies doctrine applies in this case.
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Bacon Construction Co. v. Dept. of Public Works, 294 Conn. 695, 706, 987 A.2d 348 (2010). "A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Wilcox v. Webster Ins., Inc., 294 Conn. 206, 213, 982 A.2d 1053 (2009). "Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction." St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003).
"Under [the exhaustion of administrative remedies doctrine], a trial court lacks subject matter jurisdiction over an action that seeks a remedy that could be provided through an administrative proceeding, unless and until that remedy has been sought in the administrative forum . . . In the absence of exhaustion of that remedy, the action must be dismissed." (Internal quotation marks omitted.) Garcia v. Hartford, 292 Conn. 334, 339, 972 A.2d 706 (2009).
"[I]t is the burden of the party who seeks the exercise of jurisdiction in his favor . . . clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute . . . It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Citations omitted; internal quotation marks omitted.) Wilcox v. Webster Ins., Inc., supra, 294 Conn. 213-14.
The plaintiff is correct in its assertion that General Statutes § 31-57b does not explicitly provide for an administrative remedy with regard the impact of a violation of subparts (1) and (2), the sections for which the plaintiff seeks a declaratory ruling. Nor does it clearly express any legislative intent to bypass the exhaustion requirements. This court concludes that, given the specific language in the statute and in related legislation, it is reasonable to infer that exhaustion of administrative remedies is required.
Our Supreme Court has held that a party seeking a declaratory judgment concerning the interpretation of a statute is required first to pursue the administrative remedy of seeking a declaratory ruling from the applicable agency under the UAPA. See Connecticut Life Health Ins. Guaranty Ass'n. v. Jackson, 173 Conn. 352, 357, 377 A.2d 1099 (1977); see also Connecticut Mobile Home Ass'n., Inc. v. Jensen's, Inc., 178 Conn. 586, 588, 424 A.2d 285 (1979) (plaintiffs were required to seek a declaratory judgment from the real estate commissioner concerning the validity of lease terms under General Statutes § 21-82 before bringing declaratory action in the Superior Court). In Connecticut Life Health Ins. Guaranty Ass'n. v. Jackson, supra, 173 Conn. 352, the plaintiff brought an action for a declaratory judgment in the Superior Court seeking an interpretation of an insurance statute which did not include an explicit provision requiring resort to administrative remedies. Connecticut Life Health Ins. Guaranty Ass'n. v. Jackson, supra, 173 Conn. 353.
The parties disputed the proper interpretation of then-General Statutes § 38-308(j), which has since been transferred, providing: "The contractual obligations of the impaired insurer for which the association (CLHIGA) becomes or may become liable shall be as great as but no greater than the contractual obligations of the impaired insurer would have been in the absence of an impairment unless such obligations are reduced as permitted by subsection (d) of this section but the association shall have no liability with respect to any portion of a covered policy to the extent that the death benefit coverage on any one life exceeds an aggregate of twenty-five thousand dollars, or to the extent that any benefit under a covered policy other than life insurance exceeds an aggregate of twenty-five thousand dollars." (Internal quotation marks omitted.) Connecticut Life Health Ins. Guaranty Ass'n. v. Jackson, supra, 173 Conn. 354.
"The trial court determined that the plaintiff had an administrative remedy consisting of a petition to the [agency] commissioner for a declaratory judgment ruling pursuant to General Statutes § 4-176 which could be reviewed in the [Superior Court], as provided by General Statutes . . . § 4-183." Connecticut Life Health Ins. Guaranty Ass'n. v. Jackson, supra, 355. In affirming the lower court's decision, the Supreme Court explained that "[t]here are clear indications in the Uniform Administrative Procedure Act . . . that the legislature intended that administrators issue declaratory rulings based on their interpretations of statutes . . . [A]dministrative agencies must necessarily interpret statutes which are made for their guidance. To rule otherwise would be to ignore the subtle and intricate interaction of law and fact. It is inherent in our judicial system of dispute resolution that the interpretation of statutes, like the development of the common law, grows out of the filtering of a set of facts through the law, as seen by the administrator or judge. The result of this application is a hybrid, composed in part of fact, in part of law, which by its existence contributes to the interpretation of a statute. As is recognized by our policy of declining to give advisory opinions . . . by our doctrines of standing and mootness and by our desire that even declaratory rulings be grounded in some real controversy, a statute cannot be read in a vacuum but must be illuminated by the force of concrete, everyday pressures." (Citations omitted.) Id., 356-57.
The plaintiff cites Ardmare Construction Co. v. Freedman, 191 Conn. 497, 467 A.2d 674 (1983), for the proposition that it was not required to exhaust its administrative remedies because the decision to reject a bid or to award a contract is not a contested case under the UAPA and, therefore, does not permit a challenge to the state's decision by way of an administrative appeal. The plaintiff's reliance on Ardmare Construction, however, is misplaced because the statutory language of the UAPA relied on by the court has since been amended by Public Acts 1988, Number 88-317. In Ardmare Construction, our Supreme Court held that the plaintiff, as the unsuccessful bidder, lacked standing under the UAPA to contest a contract award. Id., 506. According to the court, "an unsuccessful bidder has no standing to challenge the award of a public contract," except "where fraud, corruption or favoritism has influenced the conduct of the bidding officials or when the very object and integrity of the competitive bidding process is defeated by the conduct of municipal officials . . ." Id., 501.
By Public Acts 1988, Number 88-317, § 23, General Statutes § 4-183(a) was amended to its present form, which provides that "[a] person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision may appeal to the Superior Court as provided in this section." The amendment repealed the requirement that a party be aggrieved by "a final decision in a contested case" and substituted the requirement that a party need only be aggrieved by a "final decision." Public Act 88-317 also amended the definitions section of the UAPA, General Statutes § 4-166.
Under the amended statutory scheme, an unsuccessful bidder does have standing under the UAPA to seek a declaratory judgment from an agency. Pursuant to General Statutes § 4-176(h), an agency decision on a petition for a declaratory ruling is a final decision for purposes of appeal under General Statutes § 4-183. Accordingly, a disappointed bidder must seek redress under the UAPA before resorting to the courts.
Because the court turns to the plaintiff's futility argument, which it concludes resolves the disputed issues presented by the Motion to Dismiss, it does not address the plaintiff's contention that it cannot be required to exhaust any administrative remedies because the DOT has not adopted any formal or mandatory bid protest or appeal procedures. However, the court does note that at least one other Superior Court has rejected similar arguments. See, Patten v. Spada, Superior Court, judicial district of Litchfield, Docket No. CV 03 0090209 (September 22, 2003, Pickard, J.) ( 35 Conn. L. Rptr. 518) (The court rejected the plaintiffs' argument that because the Department of Public Safety did not issue regulations pursuant to General Statutes § 4-176, there was no administrative remedy for them to initiate and exhaust, explaining that "the absence of regulations promulgated pursuant to Section 4-176(b) does not" relieve the plaintiffs of their obligation to exhaust their administrative remedies by first petitioning the agency for a declaratory ruling.)
Based on the review of related statutes and applicable case law, it seems reasonable to conclude that the exhaustion of administrative remedies doctrine applies to a party seeking a declaratory ruling on the rights of the parties under General Statutes § 31-57b. Thus, a party should first seek a declaratory ruling from the agency responsible for General Statutes § 31-57b's administration.
The court must now determine whether an exception to the exhaustion requirement applies to excuse the plaintiff from prior recourse to the agency. The plaintiff argues that it is excepted from the exhaustion doctrine because seeking a declaratory judgment from either the defendant or the DOL would have been futile.
"It is a settled principle of administrative law that, if an adequate administrative remedy exists, it must be exhausted before the Superior Court will obtain jurisdiction to act in the matter . . . Notwithstanding the important public policy considerations underlying the exhaustion requirement, [our Supreme Court] has carved out several exceptions from the exhaustion doctrine . . . although only infrequently and only for narrowly defined purposes . . . Such narrowly defined purposes include when recourse to the . . . remedy would be futile or inadequate." (Citation omitted; internal quotation marks omitted.) Peruta v. Commissioner of Public Safety, 128 Conn.App. 777, 789 (2011).
The defendant contends that the plaintiff had ample time to seek a declaratory ruling as to the applicability of General Statutes § 31-57b. It argues that the plaintiff could have sought a declaratory ruling in August 2010, after OG was cited by OSHA as a result of the Kleen Energy plant explosion and in October 2010, either prior to the opening of bids or after the opening bids. The defendant contends that because the UAPA, General Statutes § 4-176(e), requires the agency petitioned to act within two months after receiving the petition for a declaratory ruling, if the plaintiff had petitioned at any of the aforementioned opportunities, it would have had an answer prior to the execution of the contract in December 2010.
In response, the plaintiff claims that it could not have filed for a declaratory ruling with the DOL in August 2010, when OSHA issued the violations, because the bids for the contract had not yet opened and there was no way for the plaintiff to determine whether they would suffer any harm or injury resulting from OG's inability to comply with General Statutes § 31-57b. Additionally, the plaintiff argues that it would have been futile to have filed for a declaratory ruling after the bid opened because between October 21, 2010, and November 2, 2010, the defendant and OG corresponded with each other for the specific purpose of determining the applicability of General Statutes § 31-57b. On December 3, 2010, before any hearing on the plaintiff's application for injunction or the defendant's first motion to dismiss in the present case, the defendant issued a Responsibility Determination finding that General Statutes § 31-57b did not act as a bar to an award of the contract to OG and recommending that the contract be awarded to OG. The Responsibility Determination incorporated the findings of the DOL and the Department of Administrative Services that General Statutes § 31-57b did not act as a bar to an award of the contract to OG.
On October 22, 2010, the plaintiff filed an application for an ex parte temporary injunction and the original complaint, which was subsequently amended on November 12, 2010, to include the request for a declaratory judgment. On October 26, 2010, the court issued an Order to Show Cause. An evidentiary hearing date of December 7, 2010, was established. On November 22, 2010, the defendant filed a motion to dismiss the plaintiff's amended complaint, which the court granted as to counts one, two and three, on December 21, 2010.
"It is well established that [a]n administrative remedy is futile or inadequate if the agency is without authority to grant the requested relief . . . It is futile to seek a remedy only when such action could not result in a favorable decision and invariably would result in further judicial proceedings." (Internal quotation marks omitted.) Piteau v. Board of Education, 300 Conn. 667, 684, 15 A.3d 1067 (2011). "[Our Supreme Court has] held that utilizing administrative remedies is not futile for purposes of the futility exception even when the decision maker has indicated that it will rule against the grievant." Neiman v. Yale University, 270 Conn. 244, 259, 851 A.2d 1165 (2004). "The guiding principle in determining futility is that the law does not require the doing of a useless thing." (Internal quotation marks omitted.) Santana v. Hartford, 94 Conn.App. 445, 462, 894 A.2d 307 (2006).
In a previous Memorandum of Decision, this court found the following factual time-line:
1. The due date for bids for Contract E was postponed to October 13, 2010, on which date the bids were opened.
2. On October 13, 2010, OG Joint Ventures was the apparent low bidder, with a bid price of $356,823,512.20.
3. On October 13, 2010, SDE was the apparent second low bidder, with a bid price of $377,989,999.62.
4. After opening the bids, the DOT asked the bidders to extend their bids to January 11, 2011.
5. The state awarded Contract E to OG Joint Venture on December 10, 2010.
6. The contract was executed between the State and OG Joint Venture on December 14, 2010.
As noted earlier, General Statutes § 4-176(e) requires that "[w]ithin sixty days after receipt of a petition for a declaratory ruling, an agency in writing shall: (1) Issue a ruling declaring the validity of a regulation or the applicability of the provision of the general statutes, the regulation, or the final decision in question to the specified circumstances, (2) order the matter set for specified proceedings, (3) agree to issue a declaratory ruling by a specified date, (4) decide not to issue a declaratory ruling and initiate regulation-making proceedings, under section 4-168, on the subject, or (5) decide not to issue a declaratory ruling, stating the reasons for its action."
Assuming that the plaintiff filed a motion for a declaratory ruling with DOL or DOT on October 13, 2010, the first date upon which it had notice of OG's status as the apparent low-bidder, the agency would have had two months within which to render a decision or other action regarding the motion. December 12, 2010 is the sixtieth day from October 13, 2010. December 12, 2010 is two days after the State awarded Contract E to OG. The defendant has provided no evidence upon which this court can conclude that the Agency would have acted before the 60th day, nor was the Agency legally required to do so. Therefore, this court cannot find that the plaintiff had ample time, as the movant claims, to obtain a declaratory ruling from the appropriate state agency.
Accordingly, this court concludes that there is an applicable exception to the exhaustion doctrine in this case. While there is no affirmative evidence that the State agency would have required the full sixty days to render a decision, neither is there any evidence that it would not have used this time allotted to it by statute. Therefore, this court finds it reasonable to conclude that the plaintiff was not allotted sufficient time, under the statutory scheme to obtain relief at the Administrative level.
The court does not need to address the other futility arguments advanced by the plaintiff, namely, that the agencies had rendered opinions regarding the applicability of the statute to OG, because it finds that a request by the plaintiff would have been futile on other grounds.