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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. J & S Services, Inc. v. Tomter (07/21/2006) sp-6024
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| J & S SERVICES, INC., | ) |
| ) Supreme Court No. S- 11375 | |
| Appellant, | ) |
| ) Superior Court No. 3AN-02-11936 CI | |
| v. | ) |
| ) | |
| MATTHEW A. TOMTER, and THE | ) O P I N I O N |
| STATE OF ALASKA, DEPARTMENT | ) |
| OF NATURAL RESOURCES, | ) No. 6024 - July 21, 2006 |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the
Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Sharon Gleason,
Judge.
Appearances: Herbert A. Viergutz, Anchorage,
for Appellant. Erin B. Marston and Colleen
J. Moore, Marston & Cole, P.C., Anchorage,
for Appellee Tomter. Stephanie Galbraith
Moore and David H. Knapp, Assistant
Attorneys General, Anchorage, and Gregg D.
Renkes, Attorney General, Juneau, for
Appellee State of Alaska, Department of
Natural Resources.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
BRYNER, Chief Justice.
I. INTRODUCTION
In this case we must determine whether the Alaska State
Procurement Codes exclusive remedy provision bars a disappointed
contractor from suing the state and a state procurement officer
in contract and tort for money damages resulting from allegedly
intentional misconduct in awarding a contract under a state-
issued request for proposals. Here, because the exclusive remedy
provision unequivocally bars J&S Servicess civil action against
the Department of Natural Resources, we affirm the superior
courts dismissal as to the department. But by its own terms, the
exclusive remedy provision applies only to claims against the
state, so it does not categorically bar J&Ss claims against
Tomter individually. J&Ss complaint against Tomter alleges
intentional misconduct that potentially falls outside the scope
of Tomters official duties; that would not necessarily be
shielded by Tomters right to claim official immunity; and that
could conceivably support a viable claim under the theories
pleaded in the complaint and the facts shown in the record. We
therefore conclude that dismissing the individual claim against
Tomter was improper.
II. FACTS AND PROCEEDINGS
In November 2001 the Department of Natural Resources
issued a request for proposals (RFP), seeking to lease an
airplane for fighting fires. Matthew Tomter, the departments
director of aviation, was the project manager for the RFP. The
request ultimately produced only one response by the original
deadline, a proposal from J&S Services. After the department
extended the original deadline, Tomter contacted several
companies soliciting additional proposals. He reportedly
complained to an officer of one of the companies he contacted
that J&S was a pain in the ass. A second company, Toram,
submitted two proposals by the extended deadline date. One of
Torams two owners, Russ Torrison, was a close friend of Tomter.
The company evidently had no prior experience in the sale or
leasing of aircraft and was established for the sole purpose of
responding to the RFP. Tomter communicated with Torrison
repeatedly during the bid evaluation process. The department
ultimately declared Torams proposal superior to J&Ss and awarded
the contract to Toram.
J&S protested the award, but the department denied the
protest. J&S then appealed to the commissioner of
administration, complaining that the proposals had been unfairly
scored. The commissioner granted an evidentiary hearing on J&Ss
claim of impropriety. Although the hearing officer found no
actual impropriety and determined that Torams proposal was
clearly superior to J&Ss, he nevertheless concluded that Tomters
numerous contacts with Torrison created an appearance of
impropriety. On this limited basis, the hearing officer resolved
the appeal in J&Ss favor, recommending that the commissioner
award the company its proposal preparation costs as damages. The
commissioner adopted this recommendation as his final decision.
J&S appealed the commissioners administrative ruling to
the superior court. J&S also filed a separate superior court
action against the department and Tomter. Its complaint accused
Tomter individually and the department as his employer of
improperly interfering with J&Ss lease proposal and favoring
Torams by communicating with Torrison during the RFP process and
unfairly evaluating the competing proposals. The complaint
sought compensatory and punitive damages, advancing six causes of
action in tort and contract, including misrepresentation,
negligence, fraud, interference with prospective business
advantage, breach of implied warranty, and breach of the covenant
of good faith and fair dealing.
The department moved to dismiss J&Ss complaint under
Alaska Civil Rule 12(b)(6), asserting that the Alaska procurement
codes exclusive remedy provision and the civil codes related
immunity provision barred J&S from suing in tort or contract for
damages arising from the procurement process, requiring it to
pursue its administrative appeal as its sole source of relief.
The departments motion advanced a number of alternative grounds
for dismissal, including a theory that J&Ss complaint failed to
state a viable claim. In response to the dismissal motion, J&S
asked the superior court to allow discovery; despite opposition
by the department, the court allowed discovery to proceed.
After the parties conducted discovery and submitted
additional pleadings, the superior court heard oral argument on
the departments motion to dismiss. The department and Tomter
renewed their original argument that the procurement codes
exclusive remedy provision limited J&Ss recourse to its
separately pending administrative appeal. The superior court
accepted this argument and dismissed the complaint against both
the department and Tomter, based on the procurement codes
exclusive remedy provision and the civil codes corresponding
provision granting the state immunity from liability in a civil
action arising out of a procurement dispute. The superior court
awarded attorneys fees to the department, denied J&Ss motion for
relief from judgment, and entered final judgment against J&S.
The superior court stayed J&Ss administrative appeal
pending resolution of J&Ss civil action. J&S now appeals the
order dismissing its civil action.
III. DISCUSSION
On appeal, J&S primarily contends that the superior
court erred in dismissing its complaint against the department
and Tomter as barred by the exclusive remedy provision.1
A. Standard of Review
In considering an appeal from a dismissal under Rule
12(b)(6), we apply de novo review,2 presum[ing] all factual
allegations of the complaint to be true and [making] all
reasonable inferences . . . in favor of the non-moving party.3
To survive a motion for dismissal under Rule 12(b)(6), it is
enough that the complaint set forth allegations of fact
consistent with and appropriate to some enforceable cause of
action.4 Only if the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief, is
dismissal proper.5 But even a complaint that is sufficient on
its face may be defeated by a properly pleaded affirmative
defense.6
B. Exclusive Remedy Provision
Alaskas State Procurement Code7 sets out legal and
contractual remedies for state procurement disputes in article 8,
which is codified as AS 36.30.55036.30.699. The key provision in
article 8 at issue in this case is AS 36.30.690, which states:
Notwithstanding AS 44.77 or other law to the contrary, AS
36.30.56036.30.699 and regulations adopted under those sections
provide the exclusive procedure for asserting a claim against an
agency arising in relation to a procurement under this chapter.
The exclusive procedure adopted by the code permits
only one narrow administrative channel for obtaining relief and
allows only a single, limited remedy: The code requires offerors
to seek administrative review of a procurement officers actions
by appealing to the commissioner of administration, whose final
decision may then be appealed to the superior court;8 and when a
disappointed offeror prevails, the code expressly limits the
offerors award of damages to reasonable . . . proposal
preparation costs.9 In Bowers Office Products, Inc. v.
University of Alaska, we recognized that these provisions
create[] an exclusive remedy for interested parties protesting
the states award of a purchasing contract.10
Alaskas Code of Civil Procedure confirms and reinforces
the procurement codes exclusive remedy provisions by preserving
the states sovereign immunity from liability in any civil action
arising from a procurement dispute. Although AS 09.50.250
generally waives the states right to claim sovereign immunity as
to persons having a contract, quasi-contract, or tort claim
against the state, the statute carves out an exception for
procurement cases, providing, A person who may bring an action
under AS 36.30.560 36.30.695 may not bring an action under this
section except as set out in AS 36.30.685.
1. Dismissal of claims against the department
J&Ss complaint against the department unquestionably
amounts to a claim against an agency arising in relation to a
procurement under AS 36.30.690; and J&S indisputably qualifies as
[a] person who may bring an action under AS 36.30.560 36.30.695.
Because these provisions unambiguously apply to J&S and allow
only a narrow form of administrative redress, they appear to
directly bar J&S from pursuing its contract and tort claims
against the department.
Indeed, J&S offers no persuasive basis to avoid this
conclusion. It suggests that the procurement codes remedies may
be inadequate, and should not be applied, because its complaint
alleges bad faith and deliberate misconduct. But we rejected
similar arguments when we limited an unsuccessful bidders remedy
against the state to bid preparation costs in King v. Alaska
State Housing Authority.11 In King, we held that an agency
impliedly contracts to give bids it solicits fair and honest
consideration.12 Adopting the rule in Heyer Products Co. v.
United States,13 we recognized that subjective bad faith on the
part of procuring officials causes the state to breach its
implied contract with the bidder.14 We discussed how an unlimited
damages remedy would subject the state to excessive litigation
arising out of the procurement process, impede the right of the
department to reject any and all bids, and force the public to
pay twice, once for a bad procurement and a second time to
compensate the wronged bidder,15 and ultimately held that bid
preparation costs were the only damages properly available to the
bidder from the state.16
Accordingly, we conclude that the superior court
correctly dismissed J&Ss complaint against the department on the
ground that the exclusive remedy provision barred the claims.
2. Dismissal of claims against Tomter
The same conclusion does not necessarily hold true with
respect to J&Ss claims against Tomter. As indicated above, the
exclusive remedy provision and the corresponding immunity statute
apply to a claim against an agency17 and to a claim against the
state,18 but do not expressly bar claims against individuals.19
Insofar as J&S makes claims against Tomter as a procurement
officer acting within the course and scope of his duties, then,
the exclusive remedy provision would appear to bar the complaint.
But on the other hand, to the extent that J&Ss complaint might be
seen as an individual action against Tomter for deliberate and
bad faith misconduct that falls outside the scope of his proper
duties, then it might not be fair to characterize the complaint
as a claim against the state or to dismiss it as barred by the
exclusive remedy provision.
On its face, the complaint does not restrict J&Ss
claims against Tomter to actions he took in his official
capacity. And neither the department nor Tomter cites any
authority that would support automatically extending the
exclusive remedy provision to conclusively bar, as claims against
an agency, all procurement-related complaints accusing individual
public officials of engaging in deliberate acts of misconduct.
Nor does our decision in King v. Alaska State Housing
Authority compel such a sweeping extension. King did not
consider whether a bidder could sue an individual official in
tort for acting in bad faith outside the scope of his duties;
rather, it only considered the consequences to the state of
breaching its implied contractual duty of good faith to a bidder.
Although we recognized that a promise of honest and fair
consideration of bids can reasonably be implied in the public
contract context, we emphasized the exclusive remedy provisions
importance as a counterweight to the extra responsibility the
government bears as it contracts.20 Yet this rationale loses much
of its force when a bidder claims deliberate misconduct occurring
outside the course of an officials usual duties and seeks damages
from the individual rather than from the state.
To be sure, we recognize that allowing officials to be
sued individually for intentional misconduct occurring under
color of law might entail certain risks, such as discouraging
proper as well as improper state action and encouraging efforts
to evade the exclusive remedy provision. Yet we think that in
the procurement context, as in other areas involving official
misconduct, we can best address concerns like these using the
traditional legal framework governing official immunity, rather
than by artificially extending a limitation expressly drawn to
apply only to claims against state agencies rather than against
individual officials.
In determining the scope of official immunity for
discretionary acts done within the scope of an officials
authority, we generally seek to balance the publics interest in
efficient, unflinching leadership and the interests of the
injured parties by considering three factors: (1) The nature and
importance of the function that the officer performed to the
administration of government . . . ; (2) The likelihood that the
officer will be subjected to frequent accusations of wrongful
motives and how easily the officer can defend against these
allegations; and (3) The availability to the injured party of
other remedies or other forms of relief . . . .21 When dealing
with core duties and vital functions, the balance sometimes
favors applying a rule of absolute immunity.22 But the balance
more typically requires qualified immunity, which only protects
public officials from acts done in good faith.23
In the procurement context, it seems likely that state
officials would be entitled to absolute immunity against suits
alleging impropriety in the performance of certain core
functions, such as evaluating and scoring subjective components
of competing offers. For present purposes, however, we need not
resolve the issue. Here, the superior court dismissed J&Ss
complaint against Tomter on the sole ground that the action was
barred by the exclusive remedy provision. The court did not rely
on official immunity or undertake the balancing analysis
necessary to determine if Tomter should be deemed absolutely
immune or only immune if he acted in good faith. On appeal, the
parties provide no meaningful briefing on this issue. But since
J&S expressly alleges that Tomter acted in bad faith and engaged
in a course of deliberate misconduct potentially including
illegal actions it seems apparent that Tomter would be entitled
to dismissal on grounds of official immunity only if he
established circumstances affording him the right to claim
absolute immunity. Tomter has shown no such circumstances, and
we are unprepared to say as a matter of law that J&S could prove
no set of facts under which Tomter would be unprotected by
absolute immunity.24 Accordingly, dismissing the individual claim
against Tomter as barred by the exclusive remedy provision does
not appear to be justified.
C. Failure To State a Viable Claim
The department and Tomter alternatively claim that the
superior courts judgment dismissing the complaint against both
defendants was justified because J&Ss complaint failed to allege
facts sufficient to support any of the complaints specifically
alleged causes of action. This argument might have considerable
merit if we strictly limited our consideration of this point to
the facts set forth in J&Ss complaint, as we ordinarily would in
reviewing a dismissal under Civil Rule 12(b)(6). The complaint
asserts claims against Tomter for misrepresentation, negligence,
fraud, interference with prospective business advantage, breach
of implied warranty, and breach of the covenant of good faith and
fair dealing. While the complaint on its face alleges facts that
generally suggest the possibility of impropriety, such as Tomters
extensive contact with Toram during the proposal process and
Tomters failure to disclose to his superiors his close friendship
with Torams owner, it does not specifically describe any actions
by Tomter that are patently improper, nor does it provide
specific factual support for its conclusory allegations of bad
faith misconduct. Even applying the charitable standard for
dismissal under Rule 12(b)(6), which requires us to look at the
complaint in the light most favorable to J&S and ask if there is
any conceivable set of circumstances that, if proved, could
support a viable claim, it seems difficult to glean facts from
the complaint alone supporting a viable claim against Tomter for
any intentional impropriety involving bad faith actions outside
the scope of his official duties.
But the circumstances in this case militate in favor of
a somewhat broader perspective. As already indicated, the
superior court did not dismiss J&Ss complaint against either the
department or Tomter on the ground that it failed to state facts
capable of sustaining a viable claim. To the contrary, even
though the court had allowed J&S an opportunity for discovery in
order to develop additional evidence supporting its claim, and
even though J&S had addressed some of this evidence in its
arguments before the superior court, the court ultimately
dismissed the case as to both defendants on the narrow legal
theory that the procurement codes exclusive remedy provision
categorically barred J&S from maintaining its suit. In spite of
the parties opportunity for discovery, then, this narrow ground
for dismissal gave J&S no reason to move to amend its complaint
to incorporate newly discovered facts to flesh out the original
complaints bare-boned allegations. Since it seems likely under
these circumstances that J&S would have been entitled and might
still be entitled to amend its complaint before a final
dismissal for failure to state a claim, we think that basic
fairness requires us to judge the sufficiency of the complaint on
appeal by considering not just the facts recited in the original
complaint, but all newly discovered facts in the superior court
record that J&S might have included in an amended complaint.25
Considering this slightly expanded universe of facts as
if it were true and drawing all reasonable inferences arising
from those facts in favor of J&S, we find it conceivable that the
complaint sets forth allegations of fact consistent with and
appropriate to some enforceable cause of action.26 Or stating the
proposition conversely, we cannot rule out the possibility of a
viable claim.
Specifically, J&S alleges facts tending to indicate
that Tomter displayed animosity toward J&S, went out of his way
to prevent the company from winning the lease, and actively
helped its competitor, Toram, succeed. Both Janet Burts, the
vice president of an aviation company that had supplied the
department in the past, and her husband Doug Burts, a department
employee who sat on the RFP review committee, stated that Tomter
had openly disparaged J&S and had expressed reluctance to award
the contract to it, describing it as a pain in the ass. Toram,
in turn, was co-owned by a close personal friend of Tomter, Russ
Torrison, who, after being contacted by Tomter, formed the
company with another individual for the specific purpose of
responding to the RFP. Neither Torrison nor his co-owner had any
prior experience leasing aircraft. During the course of the bid
evaluation process, Tomter repeatedly communicated with Torrison.
Tomter never informed his superiors in the department of his
friendship or communications with Torrison. More important, Doug
Burts also provided deposition testimony suggesting that Tomter
had made arrangements to receive kickback payments from Toram:
According to Burts, Tomter had said that Burts could expect to
receive money from Toram if Toram was awarded the contract.
When viewed in totality and accepted as true, these
allegations could reasonably suggest the existence of a scheme to
favor Toram in return for personal payments to Tomter a
fraudulent arrangement that would fall well beyond the outer
limits of Tomters official duties. Bad faith actions of this
kind could also potentially fall outside the protections afforded
by qualified, or good-faith, official immunity. And the alleged
misconduct could also conceivably fit into one or more of the
specific causes of action alleged in J&Ss complaint.
For example, the complaint specifically alleges that
Tomters actions amounted to an intentional interference with J&Ss
prospective economic advantage. We have previously recognized
this tort in Alaska, holding that a person who is pursuing
reasonable and legitimate prospects of entering into an economic
relationship with another is protected from a third persons
wrongful conduct that aims to disrupt that relationship.27 To
make out a prima facie case for this tort, the plaintiff must
show:
(1) the existence of a prospective business
relationship between the plaintiff and a
third party; (2) knowledge by the defendant
of the prospective relationship, and intent
to prevent its fruition; (3) conduct by the
defendant interfering with the relationship;
(4) failure of the prospective relationship
to culminate in pecuniary benefit to the
plaintiff; (5) causation of the plaintiffs
damages by the defendants conduct; and (6)
absence of privilege or justification for the
defendants action.[28]
This cause of action provides a potentially viable
theory to address J&Ss chief complaint about Tomter: that Tomter,
motivated by animosity against J&S and a desire for personal
financial gain, abused his position as a participant in the
procurement process to prevent J&S from forming a contract with
the state.29 Alternatively, the same allegations might fairly be
characterized as fitting J&Ss claim of an intentional
misrepresentation also alleged in the complaint. In ruling that
J&S advances sufficient facts under these theories to avoid
dismissal under Rule 12(b)(6), we need not definitively endorse
or approve either theory; rather, it suffices to conclude that
neither the department nor Tomter has authoritatively ruled out
the possibility that J&S might prevail under one or both. We
thus decline to hold that dismissal for failure to state a claim
provides an alternative basis for affirming the superior courts
judgment against J&S as to Tomter.
D. Attorneys Fees
J&S separately challenges the superior courts award of
attorneys fees to the department. Our decision to reverse the
dismissal as to Tomter requires us to vacate the award of fees to
the department, even though we affirm the order dismissing the
complaint as to the department. Because this case is a single
action against two defendants, dismissal as to only one of the
two defendants cannot support entry of a final judgment for the
other in the absence of an express finding of good cause for a
partial judgment under Alaska Civil Rule 54(b). The existence of
cause to enter such a judgment must be decided on remand. And in
any event, because Tomter is no longer a prevailing party, the
award to the department will likely need to be reconsidered in
any event, to eliminate assessing costs against J&S for time
spent by the state in defending Tomter.
IV. CONCLUSION
The exclusive remedy provision of the procurement code
bars J&Ss claims against the department, but does not necessarily
bar J&Ss claims against Tomter as an individual. And as the
record currently stands, failure to state a viable claim against
Tomter does not provide a proper alternative ground for
dismissal. We therefore AFFIRM the superior courts order of
dismissal as to the department but REVERSE the dismissal as to
Tomter and REMAND for further proceedings on that claim after J&S
is given an opportunity to amend its complaint. We VACATE the
award of attorneys fees as premature and REMAND for further
proceedings on that issue in keeping with this opinion.
_______________________________
1 Alternatively, J&S contends that the superior court
erred in declining to reconsider its ruling in response to J&Ss
Rule 60(b) motion for relief from judgment. Our holding that the
superior court erred in ruling that the exclusive remedy
provision bars J&S from pursuing its complaint against Tomter
makes it unnecessary to consider J&Ss alternative argument.
2 Kollodge v. State, 757 P.2d 1024, 1026 n.4 (Alaska
1988).
3 Id. at 1026 (quoting 2A J. Moore & J. Lucas, Moores
Federal Practice 12.07 [2.-5], at 12-63 (1986)).
4 Linck v. Barokas & Martin, 667 P.2d 171, 173 (Alaska
1983).
5 Shooshanian v. Wagner, 672 P.2d 455, 461 (Alaska 1983)
(quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
6 J&L Diversified Enters., Inc. v. Municipality of
Anchorage, 736 P.2d 349, 351 (Alaska 1987).
7 AS 36.30.
8 AS 36.30.685(a).
9 AS 36.30.585.
10 Bowers Office Prods., Inc. v. Univ. of Alaska, 755 P.2d
1095, 1098 (Alaska 1988).
11 King v. Alaska State Hous. Auth., 633 P.2d 256 (Alaska
1981) (holding later codified as AS 36.30.685, .690).
12 Id. at 261-63.
13 140 F. Supp. 409 (Ct. Cl. 1956).
14 King, 633 P.2d at 263 n.7.
15 Id. at 260-61.
16 Id. at 263.
17 AS 36.30.690.
18 AS 09.50.250.
19 AS 36.30.690.
20 King, 633 P.2d at 262.
21 Aspen Exploration Corp. v. Sheffield, 739 P.2d 150, 159-
60 (Alaska 1987).
22 Id.
23 See id.
24 See Shooshanian v. Wagner, 672 P.2d 455, 461 (Alaska
1983).
25 Alaska Civil Rule 15(a) allows parties to amend their
pleadings by leave of the court after the initial time period set
out in the rule expires and commands that leave is to be freely
granted when justice so requires. Prentzel v. State, Dept of
Pub. Safety, 53 P.3d 587, 590-91 (Alaska 2002) (Typical reasons
for denying leave to amend include the added expense and
increased burden the opposing party is likely to face as a result
of the amendment. But a party should be permitted to amend if
there is no showing that amending would cause injustice.).
Amendment to the pleadings may be proper on remand. Swift v.
Kniffen, 706 P.2d 296, 305 n.11 (Alaska 1985) (directing the
trial court to entertain a motion by plaintiffs to amend the
complaint to include a new cause of action based on a case
decided while the appeal was pending) (citing City of Columbia v.
Paul N. Howard Co., 707 F.2d 338, 341 (8th Cir. 1983) (An
amendment can be proper after remand to the district court even
if the claim was presented for the first time on appeal or had
not been presented to the district court in a timely fashion.)).
26 Linck v. Barokas & Martin, 667 P.2d 171, 173 (Alaska
1983).
27 Ellis v. City of Valdez, 686 P.2d 700, 707-08 (Alaska
1984).
28 Hayes v. A.J. Assocs., Inc., 960 P.2d 556, 571 (Alaska
1998).
29 We note that in an analogous setting, the Connecticut
Supreme Court has recognized that a real estate developer
alleging deliberate misconduct by a planning board for denial of
his subdivision proposal might have a potentially viable action
against individual board members on a claim of intentional
interference with business relations. See Kelley Prop. Dev.,
Inc. v. Town of Lebanon, 627 A.2d 909, 910, 923 n.30 (Conn. 1993)
(relying in relevant part on Multi-Service Contractors, Inc. v.
Town of Vernon, 477 A.2d 653, 655-56 (Conn. 1984) (stating that a
tort claim under this theory could proceed if the plaintiff
alleged sufficient facts to show bad faith by officials, which
would effectively render them third parties to the contract they
were charged with procuring for the town in their official
capacities)). Cf. Conway Corp. v. Constr. Engrs, Inc., 782
S.W.2d 36, 40-41 (Ark. 1989) (recognizing that individuals
contracting on behalf of a municipal corporation could be sued
individually for their interference with the contract they were
employed to secure, even though a tort action could not be
maintained against the municipal corporation).
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