Alaka‘i Na Keiki, Inc. v. Matayoshi

• Citation: 127 Hawai'i 263,277 P.3d 988
• Decision Date: 11 May 2012
• Docket Number: No. SCWC–29742.,SCWC–29742.
• Parties: ALAKA‘I NA KEIKI, INC., Petitioner/Plaintiff–Appellant, v. Kathryn MATAYOSHI, in her official capacity as Superintendent of Education, Respondent/Defendant–Appellee.
• Court: Hawaii Supreme Court

127 Hawai'i 263

277 P.3d 988

ALAKA‘I NA KEIKI, INC., Petitioner/Plaintiff–Appellant,

v.Kathryn MATAYOSHI,¹ in her official capacity as Superintendent of Education, Respondent/Defendant–Appellee.

No. SCWC–29742.

Supreme Court of Hawai‘i.

May 11, 2012.

Perry Confalone, (Carlsmith Ball LLP), for petitioner.

Deirdre Marie–Iha, deputy solicitor general, for respondent.

ACOBA, DUFFY, and McKENNA, JJ.; with RECKTENWALD, C.J., Concurring and Dissenting, with whom NAKAYAMA, J., Joins.

Opinion of the Court by ACOBA, J.

We hold that decisions of administrative officers of the State of Hawai‘i Department of Education (the DOE), headed by Respondent/Defendant–Appellant Kathryn Matayoshi, (Respondent),² to reject the proposal of Petitioner/Plaintiff–Appellant Alaka‘i Na Keiki, Inc. (Petitioner) that responded to a request for proposals (RFP) to provide health and human services under contracts pursuant to Hawai‘i Revised Statutes (HRS) chapter 103F, are subject to judicial review under the circumstances of this case. In so holding, we conclude first that, as construed, HRS chapter 103F is not unconstitutional for violating the doctrine of separation of powers as Petitioner contends, because although the DOE, in interpreting and applying provisions of HRS chapter 103F and in deciding disputes to which it is a party, exercises aspects of the judicial power, its decisions are subject to judicial review under the declaratory judgment statute, HRS § 632–1 (1993). Second, we conclude that Petitioner's request for a declaratory judgment is moot to the extent the subject contracts have been awarded and their terms expired. Third, we conclude that Petitioner's claim for alleged negligence by the DOE in evaluating Petitioner's proposal and in deciding the dispute with Petitioner is barred under HRS chapter 662, the State Tort Liability Act (STLA), because the DOE's conduct herein is not analogous to "a recognized claim for relief against a private person." Kaho‘ohanohano v. State, 117 Hawai‘i 262, 282, 178 P.3d 538, 558 (2008). Fourth, we conclude that Petitioner's claim for injunctive relief, premised on the DOE's alleged faulty administration of the contract process, is moot inasmuch as we interpret such process in HRS chapter 103F as subject to judicial review.

Accordingly, we vacate the June 16, 2011 judgment filed herein by the Intermediate Court of Appeals (ICA)³ and the March 4, 2009 judgment of the circuit court of the first circuit (the court).⁴ We remand this case to the court, with instructions, in respect to the claims in Petitioner's second amended complaint, to enter judgment (1) denying the relief sought in Counts I, II and IV as moot and (2) in favor of Respondent on Count III.

I.

A.

In October 2004, the DOE, as the purchasing agency, issued an RFP "to solicit private providers to provide intensive instructional support service to eligible students[.]" Services would address the students' educational, behavioral and therapeutic needs. The contract term ran from July 1, 2005, to June 30, 2006. Evaluation of proposals was to be conducted in three phases. First, the proposal would be reviewed to ensure proposal requirements were met. Second, the applicant would be evaluated, and third, a recommendation of whether to grant an award would be made.

The RFP established weighted evaluation criteria to determine which proposals would qualify for contracts with the DOE. "[I]n order to be eligible for the contract award," the proposal had to "receive a score of 70 points or better [.]" The RFP explained that "[a]ny applicant may file a protest ... against the awarding of the contract[.]" Only the following matters could be protested: "A state purchasing agency's failure to follow procedures established by [HRS] chapter 103F[,]" "[a] state purchasing agency's failure to follow any rules established by [HRS c]hapter 103F[,]" or "[a] state purchasing agency's failure to follow any procedure, requirement or evaluation criterion in a request for proposals issued by the state purchasing agency."

In January 2005, Petitioner submitted its proposal. On March 31, 2005, Andrell Aoki, a "Fiscal Specialist," notified the applicants that a list of qualified providers had been selected. Petitioner was informed that its proposal was rejected because the DOE determined that it "failed to meet the minimum score of 70 to be entered into the pool of providers." Petitioner received 51.2 points out of 100 possible points.

On April 5, 2005, Petitioner filed a notice of protest stating that the DOE failed to apply proposal evaluation criteria fairly and competently, thereby violating HRS § 103F–402(b) (Supp.2004),⁵ and Hawai‘i Administrative Rules (HAR) § 3–143–205(e)⁶ & (f)⁷ (2004). Petitioner also complained that the RFP failed to explain any criterion for the consideration of multiple award contracts, violating HAR § 3–143–206(d),⁸ and that the DOE, as the purchasing agency, failed to follow RFP procedures and requirements because the DOE made factual errors and drew inaccurate inferences in evaluating the proposal, which "materially prejudiced" Petitioner.

On April 29, 2005, the DOE informed Petitioner that all awards had been "rescinded" and that all proposals were to be rescored due to "concerns" raised in one or more pending protests.

On May 12, 2005, the DOE informed Petitioner that its proposal had been rescored, but that Petitioner had not been selected. Petitioner's score increased 14 points, to 65.2 points, but was still 4.8 points short of the 70–point score necessary to be included in the qualified pool of providers.

B.

On May 18, 2005, Petitioner filed an amended Notice of Protest,⁹ stating that the DOE "failed to promulgate and apply evaluation criteria fairly and competently." According to Petitioner, the DOE did not adhere to RFP procedures and requirements established by statute,¹⁰ rule,¹¹ and the RFP¹² by making factual errors and drawing inaccurate references in evaluating and re-scoring the proposal.

On May 31, 2005, a protest scheduling order was issued, setting forth the time for Petitioner to file its written protest and for the purchasing agency to respond. Pursuant to HAR § 3–148–502 (2005),¹³ each party to the protest was entitled to ask the opposing party for records and information. The scheduling order also established deadlines for clarification requested by either party. The contract award was suspended during the protest.

On June 9, 2005, Petitioner requested clarification under HAR § 3–148–502. Petitioner sought, inter alia, copies of the proposals of all applicants, the evaluation forms for each applicant, and the decisions as to all applicants. On June 24, 2005, the DOE responded by refusing to identify or produce the requested information on the ground that the information had to be kept confidential, until the contract was executed. (Citing HAR §§ 3–143–604¹⁴ & 3–143–616¹⁵ (1999).)

On July 15, 2005, Petitioner sent a "notice of dispute" to the DOE. Petitioner noted that HAR § 3–148–103(a) allows an applicant to protest the "purchasing agency's failure to follow any procedure, requirement, or evaluation criterion in a request for proposals[,]" and that HRS § 103F–504¹⁶ provides that the procedures and remedies under the administrative rules "shall be the exclusive means available for persons aggrieved in connection with the award of a contract to resolve their concerns."

According to Petitioner, the "exclusivity of remedies" provision in HRS § 103F–504, combined with the HAR, "set up a catch–22" because, although "a protester is entitled to determine whether evaluators properly followed evaluation criteria[,]" under the HAR, a protester would have no access to this information until after the contract was awarded. At this point, "there would be no recourse because the agency decision on the protest is purportedly final." (Citing HAR § 3–148–306(c)(4).¹⁷ )

On July 18, 2005, Petitioner filed its formal protest alleging that the DOE, as the purchasing agency, failed to follow the applicable procedures, to properly evaluate Petitioner's proposal, to provide the discovery requested, and to establish criteria for justifying multiple award contracts. On July 27, 2005, the DOE responded to the protest, contending that Petitioner's proposals did not meet or were inconsistent with the requirements in the RFP. Petitioner submitted a reply, contending that its discovery was impeded by the DOE's refusal to provide documents regarding the proposals submitted by other bidders.

On August 9, 2005, Christian H. Butt, a "Procurement & Contracts Specialist" of the Office of Business Services of the DOE, denied the protest. On August 17, 2005, Petitioner submitted a request for reconsideration. On August 25, 2005, Rae M. Louie, "assistant superintendent," denied the request for reconsideration, finding that the purchasing agency made no error.

The contracts were then awarded.

C.

Petitioner subsequently filed an appeal to the court under HRS chapter 91. The court dismissed the action for lack of jurisdiction and entered judgment on October 10, 2005, which was affirmed by this court on January 22, 2007.¹⁸

D.

On September 16, 2005, Petitioner filed its complaint in the instant case against Hamamoto, and on September 20, 2005, Petitioner filed its First Amended Complaint.¹⁹ Petitioner was allowed to amend its First Amended Complaint, and on November 13, 2006, filed its Second Amended Complaint.

The Second Amended Complaint contained four counts. In Count 1, Petitioner asserted that the denial of its request for reconsideration must be vacated because the DOE's actions were unlawful, and the court may review and order appropriate relief for the DOE's unlawful actions pursuant to its express and inherent powers under article VI, section 1 of the Hawai‘i Constitution²⁰ and HRS § 603–21.9.²¹ In Count 2, Petitioner sought a declaratory judgment pursuant to HRS § 632–1²² that, inter alia, (a) "to the extent" HRS § 103F–504 "preclude[s] direct judicial review of...