Highland Construction v. Dept. of Transportation

Filed 3/22/07 Highland Construction v. Dept. of Transportation CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment and an order of the Superior Court of Los Angeles County, David P. Yaffe, Judge. Affirmed.

Raisin & Kavcioglu, Bradley A. Raisin and Aren Kavcioglu for Plaintiff and Appellant.

Kathryn T. Papalia for Defendant and Respondent.

____________________________________

Highland Construction, the low bidder on three public works contracts, was not awarded the contracts because the agency found Highland was not a responsible bidder. Highland challenged the non-responsible bidder determination by a petition for a writ of mandate and lost, then by an unsuccessful motion for a new trial. Highland appeals. We affirm.

FACTS

A.

In early 2005, Highland Construction submitted the lowest bid for three separate public works contracts for the Department of Transportation of the State of California (DOT).[1] DOT preliminarily determined that Highland was not a responsible bidder and in March, as required by law (City of Inglewood-Los Angeles County Civic Center Authority v. Superior Court (1972) 7 Cal.3d 861, 871), informed Highland of its determination, gave it a summary of its reasons (primarily the threatening and abusive conduct of Highlands owner and on-site representative on other recent projects, and Highlands refusal to comply with contract requirements) and supporting evidence (declarations from numerous DOT employees, correspondence, and other documents), and offered Highland an opportunity to present rebuttal evidence at a meeting.[2]

Highland accepted the opportunity to meet and the matter was heard by an ALJ in June. Both parties were represented by counsel, and the meeting was attended by two DOT employees and three representatives of Highland. DOT clarified at the outset that the ALJs determination would apply to the three contracts that were the subject of Highlands low bids -- but that it would not affect all future contracts.[3] DOT relied on its documentary evidence, including the sworn declarations previously provided to Highland and the ALJ.

Despite DOTs assurances to the contrary, Highland insisted it was DOTs intent to blacklist Highland for all future contracts and put it out of business. For this reason, Highland claimed a protected liberty interest was implicated and that it was entitled to the opportunity to confront and cross-examine the witnesses against it. Highlands attorney -- conceding that he had not asked DOT to produce its witnesses for cross-examination -- objected to the introduction of DOTs declarations and asked the ALJ to throw[] out the matter on the ground that Highland had been denied its due process rights. The ALJ overruled the objection.

The ALJs proposed decision, issued in July, detailed his findings of fact and conclusions of law. In a nutshell, the ALJ sustained DOTs determination of non-responsibility, finding it was established by a preponderance of the evidence that [Highland was] not a responsible bidder in that: [] A. [Highland] refuses to acknowledge the authority of the Resident Engineer. [] B. [Highland] does not comply with established procedures for resolving claims and disagreements. [] C. [Highland] and its employees have repeatedly threatened [DOT] employees. [] D. [Highland] has demonstrated a lack of trustworthiness essential to the good faith and fair dealings implied in every contract. [] E. [Highlands] conduct has resulted in increased administrative burdens in excess of experiences on similar contracts.

In August, DOT informed Highland by letter of its final decision that Highland was not a responsible bidder and thus was ineligible for award of the three contracts at issue.

B.

In September, Highland filed a petition for a writ of mandate and by ex parte application sought a stay of DOTs decision. Highland did not challenge the DOTs factual findings but characterized the proceeding before the ALJ as a debarment hearing and claimed it was deprived of its due process rights because it was not allowed to cross-examine the witnesses against it. DOT opposed both the request for a stay and the petition, contending it was not a debarment hearing and pointing out that no California court had ever require[d] cross-examination of a declarant in a contractor responsibility proceeding. The trial court denied the request for a stay and denied the petition, finding the declarations were admissible and that a non-responsibility determination does not entitle the contractor to a full panoply of procedures.

Highland moved for a new trial, contending for the first time that the declarations were inadmissible because Government Code section 11514, subdivision (a), permits the use of declarations in administrative hearings only if proper notice is given at least 10 days before the hearing, and that no such notice was given here.[4] DOT opposed the motion, contending section 11514 did not apply to Highland or, alternatively, that Highland had waived the issue by failing to raise it earlier. The trial court agreed with DOT and denied the new trial motion. Highland appeals from the judgment and from the order denying its motion for a new trial.

DISCUSSION

I.

In related arguments, Highland contends that, as a contractor subject to debarment, it had a liberty interest at stake and was therefore entitled to cross-examine adverse witnesses. DOT challenges Highlands premise, contending it was never subject to debarment, only to a non-responsible bidder determination vis--vis three specific contracts. We agree with DOT.

Debarment excludes an entity from doing business with the government for a defined period, usually some number of years, and is imposed as a sanction for wrongful conduct or a violation of the requirements of a public contract or program. (Golden Day Schools, Inc. v. State Dept. of Education (2000) 83 Cal.App.4th 695, 703.) Highland ignores both this definition of debarment and the absence of any evidence suggesting that it was at any time at risk of debarment. As explained above, the record is clear that the proceedings applied only to the non-responsible bidder determination affecting three specific contracts.

This conclusion is supported by the documents presented by DOT as part of a request for judicial notice, which we grant over Highlands opposition (Evid. Code, 452, subd. (c), 459; E. H. Morrill Co. v. State of California (1967) 65 Cal.2d 787, 794; Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 813) -- documents establishing that, after entry of judgment in this case, DOT awarded seven separate public works contracts to Highland.

Whatever rights a contractor might have when debarment is threatened, Highland was not entitled to those rights in these proceedings because no debarment or other liberty interest was at risk.

II.

Highland contends section 11514 (fn. 4, ante) did not apply to the proceedings before the ALJ but, assuming it did, DOTs declarations were inadmissible because DOT did not timely deliver them to Highland. There are several problems with this argument.

First, Highland claimed in the trial court (in its new trial motion) that section 11514 did apply to the proceedings before the ALJ.

Second, section 11514 did not apply to the proceedings before the ALJ -- because it is part of the Administrative Procedures Act and thus does not apply except when determined by the statutes relating to that agency ( 11501, subd. (a)), and there is no statute making section 11514 applicable to DOT or non-responsible bidder proceedings. (Bertch v. Social Welfare Dept. (1955) 45 Cal.2d 524, 527, overruled on other grounds in Frink v. Prod (1982) 31 Cal.3d 166, 180.)

Third, if the statute did apply, Highland waived its provisions by failing to raise the issue at the hearing before the ALJ. (NBS Imaging Systems, Inc. v. State Bd. of Control (1997) 60 Cal.App.4th 328, 337.)

Fourth, the declarations were in any event sent to Highland in March with DOTs notice of its preliminary non-responsible bidder determination. The hearing was in June. The statute, if it applied, required only 10 days notice.

III.

Highland contends the ALJ used the wrong standard of review, claiming that, instead of deciding the facts based on the evidence presented, the ALJ thought that his job was to decide whether [DOTs] determination was arbitrary or capricious. Highland offers no reference to the record to support this assertion and we reject it on that ground.

In any event, the record shows just the opposite -- that from the outset DOT told Highland the ALJ would make a recommendation but the final determination would be by DOT (fn. 2, ante), and that the ALJ explained at the hearing that he had to make [his] own independent findings and make the recommendation based on the evidence. The proceedings were appropriate in every respect. (City of Inglewood-Los Angeles County Civic Center Authority v. Superior Court, supra, 7 Cal.3d at p. 871.)

DISPOSITION

The judgment and order denying the motion for a new trial are affirmed. DOT is awarded its costs of appeal.

NOT TO BE PUBLISHED.

VOGEL, J.

We concur:

MALLANO, Acting P.J.

ROTHSCHILD, J.

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[1] DOT is required by law to award public works contracts to the lowest responsible bidder, which is defined by Public Contract Code section 1103 as one who has demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity, and experience to satisfactorily perform the public works contract.

[2] As relevant, DOTs March 2005 letter to Highland stated: If Highland wishes to refute this determination, it is entitled to submit written evidence in rebuttal to try and establish that it is a responsible bidder. [DOT] will then meet with Highland to go over the evidence presented and hear any statement Highland wishes to make to try and establish its responsibility. This meeting will be conducted before an Administrative Law Judge in Sacramento on a date to be determined after receipt of [Highlands] response. The proceedings will last one day and will be recorded. All of the evidence prepared by [DOT] and by Highland will be submitted to the [ALJ] prior to that meeting. [] The [ALJ] will consider the evidence presented by both parties and make a recommendation to [DOTs] Chief engineer . . . as to whether Highland is a responsible bidder. The Chief Engineer will then consider the [ALJs] recommendation along with all the evidence provided by the parties and decide whether or not Highland is responsible and eligible for award of the[] contract[s]. His decision will be [DOTs] final determination on this issue.

[3] The letter described in the preceding footnote addressed only the first of the three contracts for which Highland was the low bidder in early 2005, but as DOTs lawyer explained at the hearing, Highland had (after the letter was sent) been the low bidder on two additional contracts. It was therefore DOTs intention to apply its preliminary non-responsible bidder determination and the ALJs recommendation to all three contracts. Highland did not object, and the ALJ noted Highlands acquiescence in his proposed decision. Later, in the petition for a writ of mandate it filed in the trial court, Highland -- by seeking relief with regard to all three contracts -- impliedly acknowledged that the determination applied to all three contracts. For this reason, we reject Highlands suggestion in its appellate brief that it received no hearing at all with regard to two of the three contracts. (Redevelopment Agency v. City of Berkeley (1978) 80 Cal.App.3d 158, 167.)

[4] Subsequent undesignated section references are to the Government Code. As relevant, section 11514 provides: (a) At any time 10 or more days prior to a hearing . . . any party may mail or deliver to the opposing party a copy of any affidavit which he proposes to introduce in evidence, together with a notice as provided in subdivision (b). Unless the opposing party, within seven days after such mailing or delivery, mails or delivers to the proponent a request to cross-examine an affiant, his right to cross-examine such affiant is waived and the affidavit, if introduced in evidence, shall be given the same effect as if the affiant had testified orally. If an opportunity to cross-examine an affiant is not afforded after request therefor is made as herein provided, the affidavit may be introduced in evidence, but shall be given only the same effect as other hearsay evidence. [] (b) The notice referred to in subdivision (a) shall be substantially in the following form: [] The accompanying affidavit of (here insert name of affiant) will be introduced as evidence at the hearing in (here insert title of proceeding). (Here insert name of affiant) will not be called to testify orally and you will not be entitled to question him unless you notify (here insert name of proponent or his attorney) at (here insert address) that you wish to cross-examine him. To be effective your request must be mailed or delivered to (here insert name of proponent or his attorney) on or before (here insert a date seven days after the date of mailing or delivering the affidavit to the opposing party).