Rivera v. Guerrero

Rivera v. Guerrero, 4 N.M.I. 79 (1993) Vicente N. Rivera, for himself and as president of Investment Group International (I.G.I.), Taiwan Harbour Engineering Construction Company, Ltd., Chi Yung Enterprises Company, Ltd., Kuo’s Construction Company, Ltd., and Chi Man Enterprises Company, Ltd., doing business as Taiwan Marine Group, Plaintiffs/Appellants, v. Jesus M. Guerrero, Chairman, Commonwealth Ports Authority, and Samsung Engineering and Construction Company, Defendants/Appellees. Appeal No. 93-015 Civil Action No. 93-0157 December 22, 1993 Argued and Subm itted October 8, 1993 Counsel for appellants Vicente N. Rivera and Taiwan M arine Group: Reynaldo Yana, Saipan. Counsel for appellee J.M . Guerrero: Stephen Nutting, Saipan. Counsel for appellee Samsung Engineering & Construction Com pany: Douglas Cushnie, Saipan. BEFORE: DELA CRUZ, Chief Justice, and VILLAGOM EZ and ATALIG, Justices. VILLAGOM EZ, Justice: This is an appeal by the plaintiffs, Vicente Rivera and Taiwan M arine Group (collectively “Rivera”), from the dismissal of their com plaint. The trial court dismissed the com plaint for lack of subject matter jurisdiction, for failure to state a claim upon which relief could be granted, and because there is no factual dispute that the rejection of Rivera’s proposal by the Com m onwealth Ports Authority (CPA) was neither arbitrary nor capricious. W e have jurisdiction over this appeal under the Com m onwealth Judicial Reorganization Act of 1989.1 W e affirm the dism issal of Rivera’s com plaint on the ground that the Superior Court lacked jurisdiction. 1 See 1 CMC § 3102(a).  ISSUES AND STANDARD OF REVIEW Rivera raises the following three issues for our review: 1. W hether the trial court erred in ruling that it lacked subject matter jurisdiction due to Rivera’s failure to exhaust his adm inistrative remedy. 2. W hether the trial court erred in ruling that the com plaint failed to state a claim upon which relief could be granted with respect to Rivera’s claim that his constitutional rights to due process and equal protection under the law were violated by CPA. 3. W hether the trial court erred in ruling that CPA’s rejection of Rivera’s proposal was neither arbitrary nor capricious as a matter of law. The first issue, as stated by Rivera, does not adequately or accurately reflect what actually happened at the adm inistrative level. Rivera did not sim ply file a protest with CPA and then proceed to court for judicial review without exhausting his adm inistrative remedy. Instead, he filed an untim ely protest. Then, four days later, he abandoned his administrative protest and filed a separate action in court. Thus, the issue, m ore accurately stated, is whether Rivera’s failure to file a tim ely protest with the CPA precludes judicial review of his com plaint. Because we affirm the dism issal based on lack of subject matter jurisdiction, we do not address the second and third issues.2 Dismissals made pursuant to Com. R. Civ. P. 12(b)(1) are subject to de novo review.3 FACTUAL AND PROCEDURAL BACKGROUND In response to a request for proposals published by the Com m onwealth Ports Authority (CPA), Rivera subm itted a proposal to serve as contractor for the Saipan Harbor Im provem ent Project (“Harbor Project”). Rivera’s proposal was determ ined by CPA ’s contracting officer to be non-responsive to certain requirements set forth in the request for proposals, unclear in several respects, and five m illion dollars higher than the lowest responsive proposal. CPA form ally rejected Rivera’s proposal on December 24, 1992, following the review by and advice of CPA consultants. On that day, Rivera received written notice from the CPA chairm an, acting in his capacity as contracting officer, that Rivera’s proposal had been rejected and that the CPA board of directors (“board”) would pursue negotiations with the four com panies that were deem ed qualified to participate in the contract bidding. CPA, acting pursuant to its procurem ent regulations, subsequently awarded the Harbor Project contract to Sam sung Engineering and Construction Com pany (“Sam sung”), which CPA determined to be the lowest responsive and responsible bidder. Sam sung and CPA executed a contract for the Harbor Project on January 28, 1993. That sam e day, CPA received Rivera’s “Official and Form al Protest of Award of Contract for Im provement and Developm ent of the Saipan Harbor, and Questionable/Illegal Conduct by the CPA,” dated January 27, 1993. In his form al protest, Rivera requested that “negotiations be held and that [Rivera’s] com pany will be included.” 4 Although the CPA procurement regulations provide that proposers such as Rivera m ay protest 5 the 2 W e note here that when the Superior Court determines that it has no subject matter jurisdiction and dismisses a complaint under Com. R. Civ. P. 12(b)(1), the court should proceed no further. See United States v. 40.60 Acres of Land, 483 F.2d 927, 928 (9th Cir. 1973). 3 5A Charles A. W right & Arthur R. Miller, F EDERAL P R AC TIC E A N D P R O C ED U R E § 1350 (2d ed. 1990); Aquino v. Tinian Cockfighting Bd., 3 N.M.I. 284, 291-92 (1992); Seman v. Aldan, 3 CR 152, 155 (D.N.M.I. 1987). 4 Letter from Vicente N. Rivera, President, Investment Group International, to Jesus M. Guerrero, Board of Directors Chairman and Contracting Officer, Commonwealth Ports Authority (Jan. 27, 1993) in Supplemental Excerpts of Record of Appellees/Cross-Appellants at tab 5. 5 The CPA regulations use the term “protest” to describe the first stage of the administrative appeal process established in its regulations. The protest serves as the first step in the overall process of administrative appeal. W e use the words “protest” and “appeal” interchangeably for purposes of this opinion.  Rivera v. Guerrero, 4 N.M.I. 79 (1993) rejection of their proposals within ten days, Rivera did not subm it his protest until thirty-four days after the rejection of his proposal. Then, instead of proceeding with his adm inistrative protest, Rivera filed a com plaint in the Superior Court on February 1, 1993. In his com plaint, Rivera seeks only to have CPA’s contract with Sam sung declared void, and requests attorney’s fees. On February 2, 1993, CPA notified Rivera in writing that his letter of protest had been received, but would not be considered “a form al protest/grievance as it was not received [by CPA] within 10 days from the date [Rivera] received CPA’s letter [of rejection] dated Decem ber 24, 1992.” 6 CPA subsequently moved to dismiss Rivera’s com plaint in the Superior Court pursuant to Com . R. Civ. P. 12(b)(1), 12(b)(6), and 56(b). The trial court dism issed the complaint based on each of the three grounds asserted by CPA. Rivera tim ely appealed. ANALYSIS CPA rejected Rivera’s proposal on Decem ber 24, 1992. Rivera subsequently filed an untim ely protest with CPA. He then filed the present action. For the following reasons, we affirm the dism issal of Rivera’s com plaint for lack of jurisdiction under Com . R. Civ. P. 12(b)(1). W e base our decision on Rivera’s failure to meet the deadline for filing a protest with CPA. A. The Effect of the Untimely Protest under CPA Regulations CPA advised Rivera on February 2, 1993, that his form al letter of protest would not be considered because it was not filed within ten days of CPA’s rejection of Rivera’s proposal. The trial court likewise correctly found that Rivera’s protest was untim ely. 7 The Com m onwealth Ports Authority Act (“the Act”) 8 provides the standards for contracting and bidding. 9 It also em powers the CPA “[t]o adopt and enforce rules and regulations for the orderly, safe, and sanitary operation of its ports.” 10 Under regulations prom ulgated by CPA, “[a]ny actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract m ay protest to the Executive Director.” 11 Protests must be received in writing by the executive director within ten days after the aggrieved person “knows or should have known of the facts giving rise thereto.” 12 The executive director is obligated to consider all protests or objections, whether subm itted before or after 6 Letter from Roman T. Tudela, Executive Director, Commonwealth Ports Authority, to Vicente N. Rivera, President, Investment Group International (Feb. 2, 1993). 7 Findings of Fact ¶ 5, Rivera v. Guerrero, Civ. No. 93-0157 (N.M.I. Super. Ct. Mar. 15, 1993) (order). An agency’s dismissal of an intra-agency appeal for failure to file in a timely fashion does not bar a reviewing court from examining the timeliness of the appeal. See Smith v. Prokop, 496 F. Supp. 861, 863 (N.D. Ohio 1980). 8 2 CMC § 2121 et seq. 9 2 CMC § 2132. 10 2 CMC § 2122(j). 11 Commonwealth Ports Authority Procurement Rules and Regulations [hereinafter “CPA Regulations”] § 10.1(1)(a), 10 Com. Reg. 5642-43 (Aug. 15, 1988). 12 Id. an award of a contract.13 W ithin thirty days, the executive director must decide the protest or certify that the complexity of the m atter requires a longer tim e.14 An appeal from the executive director’s decision then m ay be taken, “to the appeal com m ittee . . . provided that the party taking the appeal has first subm itted a written protest to the Executive Director as provided in section 10.1 . . . and the Executive Director has denied the protest or has failed to act on the protest within the tim e provided for in section 10.1(1)(c).” 15 The appeal com m ittee m ust receive the written appeal within ten days after the appellant receives the Executive Director’s decision.16 On Decem ber 24, 1992, Rivera received written notice of the contracting officer’s rejection of his proposal. He had ten days within which to file a written objection to that decision. However, as the trial court found, Rivera m ailed his form al protest on January 27, 1993, long after the ten days had expired. The tim e lim it for filing an intra-agency appeal is mandatory and jurisdictional. 17 The protest was thus barred from adm inistrative consideration. B. The Effect of the Untimely Administrative Protest on the Court’s Jurisdiction A court lacks jurisdiction to review adm inistrative decisions not tim ely appealed during the administrative process.18 Thus, Rivera’s untim ely protest bars not only further adm inistrative consideration, but also judicial review. Rivera contends, how ever, that he need not have exhausted his adm inistrative remedies, a process which would have begun with a tim ely filed protest, because exhaustion would have been futile. He advances four argum ents in support of his position. First, Rivera asserts that CPA has no power to declare the CPA-Sam sung contract void because CPA itself is a party to the contract. This argum ent contradicts the express provisions of the CPA regulations. The CPA regulations provide that if, before CPA awards a contract, it receives a protest against award of the contract, then CPA must: (1) withhold the award pending disposition of the protest, unless a lim ited exception applies,19 and (2) cancel or revise the solicitation or proposed award if CPA determ ines that the solicitation or proposed award violates a law or regulation. 20 If CPA receives a protest challenging a contract after it has been awarded, CPA may: (1) ratify and affirm the contract or term inate it and com pensate the awardee, if the latter has not acted in bad faith or fraudulently,21 or (2) declare the contract null and void, or ratify and affirm the contract and seek dam ages as appropriate, if the person awarded the contract has acted fraudulently or in bad faith. 22 This survey of CPA regulations m akes it 13 Id. 14 Id. § 10.1(1)(c), 10 Com. Reg. 5643. 15 Id. § 10.2(1), 10 Com. Reg. 5645. 16 Id. § 10.2(3), 10 Com. Reg. 5645. 17 See Nansay Micronesia Corp. v. Govendo, 3 N.M.I. 12, 18-19 (1992) (Coastal Resources Management board lacked jurisdiction to hear untimely appeal of agency’s permit decision); see also Da Cruz v. Immigration & Naturalization Serv., 4 F.3d 721, 722 (9th Cir. 1993). 18 See Nansay, 3 N.M.I. at 19-20; see also Da Cruz, 4 F.3d at 722-23 (court lacked jurisdiction to review administrative law judge’s decision because agency did not timely appeal to its own board of appeals). 19 CPA Regulations, supra note 11, § 10.1(2)-(5), 10 Com. Reg. 5644, 5646. 20 Id. § 10.3(1), 10 Com. Reg. 5648. 21 Id. § 10.3(2)(a), 10 Com. Reg. 5648. 22 Id. § 10.3(2)(b), 10 Com. Reg. 5648.  Rivera v. Guerrero, 4 N.M.I. 79 (1993) abundantly clear that CPA has not only the authority, but also the duty, to consider and act upon protests and requests that are properly filed. Second, Rivera argues that CPA cannot be expected to invalidate its own illegal action. Again, this argum ent is unpersuasive because CPA regulations require that the agency determ ine whether it has violated a law or regulation and, if so, that it cancel or revise the solicitation, proposed award, or contract award. 23 W e have to presum e that CPA would follow this regulatory directive and invalidate any of its own actions that it finds to be illegal. Only if it fails to do so may judicial review follow. Third, Rivera claim s that his allegations that his right to due process and equal protection raise constitutional issues which only a court may adjudicate. Rivera argues that he need not, therefore, have presented his grievances to CPA. This argum ent has no merit. As a general rule, the m ere presence of a constitutional claim does not bar operation of the doctrine of exhaustion of adm inistrative remedies. 24 Courts have m ade exceptions to the exhaustion doctrine in instances where a plaintiff brings constitutional challenges to the validity of a statute or ordinance under which the agency acts, and demonstrates positively what the administrative decision would be, or that the administrative remedy would be inadequate or irreparably harm ful, in his or her particular case.25 In this instance, however, Rivera is not challenging the constitutionality of the Act or the CPA regulations, nor has he demonstrated positively that following the procedures required here would afford him inadequate relief or cause him irreparable harm. Thus, the constitutional claim s raised by Rivera are not of the type which fall within the exception to the exhaustion rule. Rivera cites Torres v. Marianas Pub. Land Corp., 3 N.M .I. 484 (1993), for the proposition that one who is aggrieved by an agency’s action need not exhaust his or her adm inistrative remedies where the person believes that his or her constitutional rights have been infringed by the agency. Torres, how ever, does not stand for that proposition. In Torres, a citizen of the Northern M arianas (Torres) sued a private com pany (Nakam oto Enterprises) to prevent it from violating his right to a clean and healthful public environm ent, as guaranteed by N.M .I. Const. art. I, § 9. 26 W ith respect to that cause of action, Torres, unlike Rivera, was not aggrieved by an agency action. In Torres, the plaintiff alleged that the construction of a large hotel in a particular area of Saipan, under the term s of a lease agreem ent between Nakam oto Enterprises and the M arianas Public Land Corporation, would adversely impact the environm ent and violate his constitutional right to a clean and healthful public environm ent.27 The defendants in Torres urged the court to dism iss the action for lack of subject matter jurisdiction on the ground that the plaintiff had not exhausted his adm inistrative remedies by waiting until the Office of Coastal Resources M anagement (“CRM ”), which was not a party to the lawsuit, decided whether to issue a perm it for the hotel. The trial court dism issed for failure to exhaust. On appeal, we determ ined that since N.M .I. Const. art. I, § 9 is self-executing,28 the plaintiff did not have to wait for a ruling from CRM , the non-party agency. Neither a statute nor regulations required that Torres wait for such a ruling. Following our earlier ruling in Govendo v. Marianas Pub. Land Corp., 2 N.M .I. 482 (1992), that 23 See id. § 10.3, 10 Com. Reg. 5648. 24 See, e.g., Aircraft & Diesel Equip. Corp. v. Hirsch, 331 U.S. 752, 67 S. Ct. 1493, 91 L. Ed. 796 (1947). 25 See, e.g., American Fed. of Gov’t Employees v. Acree, 475 F.2d 1289, 1292 (D.C.Cir. 1973); Ogo Ass’n. v. City of Torrance, 112 Cal. Rptr. 761, 763 (Ct. App. 1974). 26 This constitutional guarantee provides, in pertinent part, “[e]ach person has a right to a clean and healthful public environment in all areas, including the land, air, and water.” N.M.I. Const. art. I, § 9, cl. 1. 27 Torres v. Marianas Pub. Land Corp., 3 N.M.I. 484, 486-87 (1993). 28 See Govendo v. Marianas Pub. Land Corp., 2 N.M.I. 482, 502 n.16 (1992). a strong public policy supports strict enforcem ent of rights secured by N.M .I. Const. art. I, § 9,29 we held in Torres that the plaintiff’s cause of action was viable.30 In the present case, Rivera alleges that the agency’s action in awarding the contract to Samsung violated his rights to due process and equal protection of the law. The CPA rules and regulations provide for claim s such as this to undergo review at the administrative level. However, Rivera failed to tim ely lodge his adm inistrative appeal, and thereby precluded CPA from considering the m erits of his protest. His case is distinguishable from Torres. Fourth, Rivera argues that even if he is required to exhaust his adm inistrative remedies, he could not have executed his adm inistrative appeal because his bid was rejected by J.M . Guerrero, the board chairm an and contracting officer, who alone could not make the rejection decision. Rivera asserts that only the CPA board is authorized to act on a proposal and, since the board never rejected his bid, there is no action by the board from which Rivera may appeal. This argum ent lacks merit in light of express CPA regulations.31 Even if Guerrero lacked the authority to reject a proposal, Rivera incorrectly assumes that CPA regulations perm it a party to protest only board actions. The regulations expressly provide that “[a]ny . . . bidder . . . who is aggrieved in connection with the solicitation or award of a contract may protest to the Executive Director.” 32 If Rivera’s bid was im properly rejected because the rejection should have been made by the board, then Rivera became an “aggrieved” party and he should have tim ely protested the rejection. If Rivera had subm itted his protest within the requisite tim e period, it would have been reviewed by the executive director, whose decision in turn would have been subject to review by the appeal com m ittee. Rivera then could have proceeded to court for review of the com m ittee’s decision. Having failed to tim ely appeal adm inistratively, he may not appeal now to the court. C. Judicial Review under the Commonwealth Administrative Procedure Act (APA)33 Although the parties did not raise or discuss the issue of finality under the APA, we note that the APA provides for judicial review of “[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court.” 34 An aggrieved party may seek such review within thirty days after the agency issues its final decision about the m atter in question.35 In the instant case, CPA’s December 24, 1992, notice to Rivera of the rejection of his proposal might or m ight not be deemed final agency action.36 If it was a non-final CPA action, then Rivera could not seek review under the APA, which authorizes review only of final agency decisions. If the Decem ber 24, 1992, rejection was a final CPA action, then Rivera had thirty days within which to seek judicial review of the rejection. He would not have had to exhaust his adm inistrative remedy under such 29 See id. 2 N.M.I. at 501-02. 30 See Torres, 3 N.M.I. at 492. 31 CPA formally amended its procurement rules and regulations to authorize the chairman of the board to negotiate and execute a contract for the Saipan Harbor Improvement Project. See Commonwealth Ports Authority, Public Notice, Commonwealth Ports Authority Emergency Amendment to Section 2.3(1) of the Commonwealth Ports Authority’s Procurement Rules and Regulations, 14 Com. Reg. 9769-75 (Oct. 15, 1992). 32 CPA Regulations, supra note 11, § 10.1(1)(a), 10 Com. Reg. 5642-43. 33 1 CMC § 9101 et seq. 34 See 1 CMC § 9112(d) (emphasis added). 35 The APA specifies that, unless otherwise precluded by statute, “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action, is entitled to judicial review of the action within 30 days thereafter in the Commonwealth Trial Court.” See 1 CMC § 9112(a) -(b) (emphasis added). 36 W e raise this issue without deciding it here.  Rivera v. Guerrero, 4 N.M.I. 79 (1993) circumstances.37 Rivera, however, did not file his action in court until thirty-nine days after he received notice of the rejection of his proposal. Consequently, even if he could have sought judicial review of the rejection of his proposal as final agency action under the APA, Rivera’s court action was untim ely. CONCLUSION For the above reasons, the dism issal of Rivera’s com plaint for lack of subject matter jurisdiction is hereby AFFIRM ED. 37 Parties seeking review under the APA must first exhaust all intra-agency appeals expressly mandated either by statute or by the agency’s regulations. Such exhaustion requirements create jurisdictional prerequisites to proceeding to court. See Montgomery v. Rumsfeld, 572 F.2d 250, 252-53 (9th Cir. 1978); Lopez v. Civil Serv. Comm’n, 283 Cal. Rptr. 447, 449-51 (Ct. App. 1991). W here no statute or regulation mandates exhaustion, a court may proceed to review the agency’s final decision under the APA, and may not impose additional exhaustion requirements. See Darby v. Cisneros, 509 U.S. __, 113 S. Ct. 2539, 2445, 125 L. Ed. 2d 113, 123 (1993).