Brasel & Sims Construction Co. v. State Highway Commission of Wyoming

655 P.2d 265, 1982 Wyo. LEXIS 418

• Court: Wyoming Supreme Court
• Decided: December 14, 1982
• Docket: 5678
• Status: Published

Opinions

RAPER, Justice.

The jurisdiction of the district court to entertain a petition for review under the provisions of the Wyoming Administrative Procedure Act, § 9-4-101, et seq., W.S. 1977, from the findings of fact, conclusions of law and final order made following a claim procedure provided for by a highway construction contract between Brasel and Sims Construction Company (appellant) and the State Highway Commission of Wyoming (appellee) is the issue upon which this court will make disposition. The district court affirmed the appellee’s denial of appellant’s claim.

This is not the issue presented by either of the parties in their briefs or during oral argument on the appeal to this court, but originated during the course of the court’s conference following oral argument. We became concerned about jurisdiction and therefore requested supplemental briefs on the following question:

“Does the Wyoming Administrative Procedure Act, § 9-4-101, W.S.1977, et seq., confer upon the district courts of this state jurisdiction to review the denial of a claim made upon a contract with the Wyoming State Highway Department which has been presented and denied in accordance with the rules and regulations of the Wyoming State Highway Department, and, if so, what is the impact upon such review jurisdiction of the right of the claimant to bring suit against the Wyoming State Highway Department based upon the claim?”

We will dismiss the appeal for the ultimate reason that the district court had no jurisdiction to entertain a petition for review, and, therefore, neither do we. Pritchard v. State, Division of Vocational Rehabilitation, Department of Health and Social Services, Wyo., 540 P.2d 523 (1975); Snell v. Ruppert, Wyo., 541 P.2d 1042 (1975).

In September, 1978, the appellee called for bids to do construction work on a two-lane highway between Midwest and Reno Junction. Appellant’s low bid of $4,011, 221.70 was accepted by appellee and a contract dated October 19, 1978, was entered into. Part VII of the contract provided:

“VII. Any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Engineer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Engineer shall be final and conclusive unless, within 30 days from the date of receipt of such conclusion, the Contractor mails or otherwise furnishes the Wyoming State Highway Commission written appeal. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of his appeal.”

Wyoming Highway Department Specifications for Road and Bridge Construction, 1974, were, by reference, made a part of the contract. Section 105.17 of those specifications set out a claim procedure:

“105.17 CLAIMS FOR ADJUSTMENTS AND DISPUTES. If in any case the Contractor deems that additional compensation is due him for work or material not clearly covered in the contract or not ordered as extra work as defined herein, or that contract time be extended, the Contractor shall notify the Engineer in writing within a reasonable time of his intention to make claim for such additional compensation or extended time. This notification should also specify the basis for the claim. The Engineer will acknowledge receipt of said intention and advise the Contractor that consideration will be given the claim when it is submitted in a formal manner with complete and thorough justification for every item. “Within sixty (60) days from the date of the Contractor’s formal claim, the Department will render to the Contractor a judgment in writing. This judgment shall be final and binding upon both parties to the contract unless the Contractor files within thirty (30) days of the date of said judgment a written notice of appeal with the Secretary of the Highway Commission. Subsequent to the filing of the notice of appeal, the claim will be pursued according to the Contractor’s Claim Procedure adopted by the Highway Commission.

“Under no circumstances will a claim be considered if submitted later than sixty (60) days after publication of first notice of advertisement that work has been accepted as complete.

“If the claim is found to be just, it will be paid on the basis of actual costs to which no percentage will be added. The justification for payment may be based upon an audit by the Department of the Contractor’s project records and cost accounting system. Nothing in this subsection should be construed as establishing any claim contrary to the terms of subsection 104.02.”

Pursuant to the above provision, appellant filed a claim in the amount of $2,323, 635.00 for additional compensation, allegedly not clearly covered by the 1978 contract. The claim was denied by the State Highway Department whereupon an appeal was taken to appellee. An extensive hearing was held before the appellee in accordance with the rules of practice adopted by the appel-lee for hearings “as authorized and required by Chapter 108, Session Laws of Wyoming, 1965 [Wyoming Administrative Procedure Act, § 9-4-101, et seq., W.S.1977].”

The dispute involved water, excavation, gravel pits, fencing, revegetation, removal and stockpiling of old road surface, guardrail and cost calculations. After the hearing, comprehensive findings of fact, conclusions of law and an order, dated September 18, 1981, were adopted by the chairman of the appellee deciding that the appellant “recover none of the additional compensation sought * * The claim was denied by appellee primarily because of failure of proof and was held to be an effort to convert a fixed-price contract, given to the lowest bidder, into a cost-plus contract.

The appellant thereupon filed a petition for review in the district court, Fremont County, Ninth Judicial District. Following submission of briefs to the district judge, the September 18, 1981 order of the appel-lee was affirmed. This appeal on the merits followed. During the course of oral argument, it was revealed that a separate action had been filed by appellant in the District Court for Laramie County, First Judicial District, apparently seeking a recovery for monies claimed and arising out of the same contract now here as the subject of an administrative review. In the supplemental brief of appellant it is also disclosed that a claim had been filed with and rejected by the state auditor prior to commencement of the action in accordance with § 9-2-332, W.S.1977, Cum.Supp.1982:

“Except as provided by W.S. 1-39-101 through 1-39-119, persons having claims against the state shall exhibit the claim, with the evidence in support thereof, to the auditor, to be audited, settled and allowed, within one (1) year after the claim accrues and not afterward.”

The scope of the jurisdiction of the Wyoming State Highway Commission with respect to road construction is circumscribed by § 24-2-108, W.S.1977, in pertinent part:

“All road and bridge construction work, any part of the cost of which is paid from the state highway fund, shall be performed in accordance with the plans and specifications prepared by the state highway superintendent and approved by the commission, and shall be performed by or under contracts awarded by the commission. * * * The commission shall adopt general rules and regulations for the publication of notice to bidders, the awarding of contracts, and for determining the qualifications and responsibilities of bidders.”

Litigation is authorized by § 24-2-101(e), W.S.1977, Cum.Supp.1982:

“ * * * The commission is empowered to sue in the name of the ‘State Highway Commission of Wyoming,’ and may be sued by that name in the courts of this state and in no other jurisdiction upon any contract executed by it. * * * ” (Emphasis added.)

The general rule is that only those powers expressly conferred by the legislature are granted to an administrative agency. McNeill v. Park County School Dist. No. 1, Wyo., 635 P.2d 818 (1981); Tri-County Electric Ass’n, Inc. v. City of Gillette, Wyo., 525 P.2d 3 (1974); Bruegman v. Johnson Ranches, Inc., Wyo., 520 P.2d 489 (1974). While these cases did not involve contracts with the administrative agency before whom the administrative hearing was held, they clearly held that, in the absence of statutory authority, administrative agencies may not decide contract disputes between the parties to the contract. If an agency cannot decide contract questions from a posture of disinterested decision making, then it would seem imperative that the agency not decide contract questions in which it is a party to the contract in question.

To allow such a quasi-judicial function to exist robs the system of at least the very important appearance of having an impartial tribunal, fair and unbiased as it may try to be. Even under the most sterile of circumstances, there is an underlying innuendo of bias. This court has been able in most cases to justify the workability of the combination of investigatory and adjudicative functions in administrative matters. This was commented on in First National Bank of Thermopolis v. Bonham, Wyo., 559 P.2d 42 (1977), where it was said that before we set aside an administrative decision on the ground of interest, the combination of investigative and adjudicative functions must create a risk of bias in administrative adjudication which overcomes a presumption of honesty and integrity in those serving as adjudicators. The system came under so much fire that the state examiner, as an investigator and adjudicator in banking matters, was legislatively replaced for adjudicative functions by a financial institutions board. Ch. 177, Session Laws of Wyoming, 1977 (§ 13-2-203, et seq., W.S.1977). In Monahan v. Board of Trustees of Elementary School Dist. No. 9, Cty. of Fremont, Wyo., 486 P.2d 235 (1971), because of the manner in which a hearing was conducted, the risk of bias compelled this court to remand for further proceedings by which that risk would be allayed.

We perceive a good deal of danger in the proliferation of a rule which would have the effect of granting to one of the parties to a contract the authority to adjudicate disputes over the amounts due under the contract. Over the years, this court has created appellate concepts, granting deference to the role of the fact finders. For example, it has been said that the supreme court cannot lightly disregard the weight and credibility given witnesses by an administrative body in reviewing a determination made by that body. Snake River Land Company v. State Board of Control, Wyo., 560 P.2d 733 (1977). An administrative decision is to be reversed only for errors of law, including lack of substantial evidence. Shenefield v. Sheridan County School Dist. No. 1, Wyo., 544 P.2d 870 (1976). Substantial evidence within that rule is relevant evidence which a reasonable mind might accept as supporting the agency’s conclusion. This is so even though we might have come to a different conclusion from one drawn by the agency. Laramie River Conservation Council v. Industrial Siting Council, Wyo., 588 P.2d 1241 (1978).

When the Wyoming Highway Commission is sitting in an adjudicatory role on its own contract, it is not only judging but is at the same time in the position of an adversary litigant. If we were to accept that inconsistency, we would be treating a litigant in the same fashion as we do a tribunal — giving the deference and allowing the same presumptions to which a quasi-judicial body must have but not allowing those benefits to its adversary. Such a picture is unbecoming the fairness which must permeate an acceptable structure for the administration of justice. We do not permit judges to sit on eases in which they are litigants nor jurors to sit on cases in which they are parties. As said in Tri-County Electric Association, Inc. v. City of Gillette, Wyo., 584 P.2d 995 (1978), contracts cannot be used to hoodwink the law. Contractual provisions cannot rise above the statutory law.

Against that landscape, it is difficult to visualize the procedures contemplated by § 105.17 of the Wyoming Highway Department Specifications for Road and Bridge Construction, 1974, supra, as anything more than a provision incorporated into the contract between appellant and appellee for the negotiation of “ * * * additional compensation * * * for work or material not clearly covered in the contract * * which were not procedures intended to be a formal administrative proceeding under the Wyoming Administrative Procedure Act. This view lights up more the absence of any statutory authority to conduct such a hearing, as contemplated by the definition of “contested case,” found in § 9-4-101(b)(ii), W.S.1977, Cum.Supp.1982:

“(ii) ‘Contested case’ means a proceeding including but not restricted to ratemak-ing, price fixing and licensing, in which legal rights, duties or privileges of a party are required by law to be determined by an agency after an opportunity for hearing.” (Emphasis added.)

We can find no statutory authority for the appellee to conduct a hearing and make findings, conclusions of law, and a decision in a dispute between itself and one of its contractors, which is reviewable by the district court on a petition for review. In Rissler & McMurry Co. v. Wyoming Highway Department, Wyo., 582 P.2d 583 (1978), this court referred to such proceedings as “negotiations” and “settlement negotiations.” The only viable question before the supreme court in that case was whether a claim against the state could be filed with the Highway Department on a highway contract as well as with the state auditor. The matter was remanded to the district court for “trial upon the issues” and not review.

As we see it, the contract procedure for a hearing was only a necessary prelude to filing the action in the district court for additional monies claimed to be due, authorized by § 24r-2-101, supra. In Cooke Contracting Company v. State, 55 Mich.App. 336, 222 N.W.2d 231 (1974), it was held that under a similar contract provision, no lawsuit could be maintained by the contractor against the state until the administrative remedy provided for in a contract for bridges and traffic regulations had been exhausted. Where a highway contract provided for an audit prior to payment of a claim, it was held no suit could be brought against the state until the official charged with making the audit had done so. City of New York v. State, 40 N.Y.2d 659, 389 N.Y.S.2d 332, 357 N.E.2d 988 (1976). Parties to a contract can create valid conditions precedent to the right to bring an action, and the claim will not accrue until the condition has been performed. Allen N. Lashner, Inc. v. Commonwealth, Depart. of Highways, 1 Pa.Cmwlth. 486, 275 A.2d 403 (1971).

Appellant’s relief may be found in its action on the contract filed in the District Court, Laramie County, First Judicial District.

Appeal dismissed and remanded with directions to the district court to dismiss the petition for review.