Dan Caputo Co. v. Russian River County Sanitation Dist., 83-2166
| Decision Date | 13 December 1984 |
| Docket Number | No. 83-2166,83-2166 |
| Citation | 749 F.2d 571 |
| Parties | DAN CAPUTO CO. and Wagner Construction Co., A Joint Venture, Plaintiff- Appellant, v. RUSSIAN RIVER COUNTY SANITATION DISTRICT, A Public Entity, State of California, State Water Resources Control Board; United States Environmental Protection Agency, etc. et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
John S. Pachter, Wickwire, Gavin & Gibbs, P.C., Vienna, Va., for plaintiff-appellant.
David A. Stein, Lempres & Wulfsberg, Oakland, Cal., David W. Hamilton, Deputy Atty. Gen., San Francisco, Cal., for defendants-appellees.
Appeal from the United States District Court for the Northern District of California.
Before KENNEDY and CANBY, Circuit Judges, and PFAELZER *, District Judge.
Dan Caputo Co. and Wagner Construction Co. (Caputo/Wagner) had a contractual dispute with the Russian River Sanitation District (Russian River) regarding Caputo/Wagner's construction of a sewage treatment system for Russian River. Caputo/Wagner filed this action to prevent Russian River from awarding a contract to
correct alleged defects in Caputo/Wagner's work. The district court dismissed Caputo/Wagner's action for lack of standing. We affirm in part, and because an aspect of the case has become moot, vacate and remand in part.
In 1979, pursuant to a grant from the Environmental Protection Agency, Russian River awarded Caputo/Wagner a contract to construct a sewage treatment system. Caputo/Wagner stopped work on the contract in 1981 when a dispute arose between Caputo/Wagner and Russian River about Caputo/Wagner's compliance with its contractual obligations. The dispute was taken to state court and was still pending when Caputo/Wagner filed this action. When Caputo/Wagner stopped work, $900,000 of EPA's grant to Russian River remained unspent.
Sometime after Caputo/Wagner stopped work, the California Water Resources Control Board (WRCB) authorized Russian River to let a contract for correction and completion of the sewage treatment system. Russian River, the WRCB, and EPA agreed that Russian River could fund the corrective work contract with the $900,000 remaining from the grant for the sewage treatment system. Russian River solicited bids for the corrective work contract on June 16, 1982.
On June 23, 1982, Caputo/Wagner filed a bid protest with EPA. Caputo/Wagner alleged that the solicitation was unlawful because the bidding documents violated EPA standards. See 40 C.F.R. Sec. 35.938-4 (1983). Caputo/Wagner also alleged that the contract offered by Russian River contained unlawful terms, such as a provision preventing the contractor from being compensated for losses due to an unreasonable suspension by Russian River. See 40 C.F.R. Sec. 35.938-8 (1983); Supplemental General Conditions Sec. 4(b), 40 C.F.R. Part 35, Subpart E, Appendix C-2. Caputo/Wagner did not bid on the corrective work contract. EPA denied Caputo/Wagner's bid protest on the ground that as a nonbidder, Caputo/Wagner lacked standing to challenge the procurement process.
Caputo/Wagner filed this action against Russian River, the WRCB, and EPA on December 10, 1982. Caputo/Wagner claimed that Russian River's bid solicitation and the contract it offered violated EPA regulations; that the WRCB unlawfully failed to insure Russian River's compliance with the regulations; and that EPA improperly dismissed Caputo/Wagner's bid protest. The district court dismissed Caputo/Wagner's complaint for lack of standing. The court held that Caputo/Wagner did not meet article III's injury-in-fact requirement because Caputo/Wagner did not allege either that it had bid on the corrective work contract or that it would have been awarded the contract if the alleged violations had not occurred.
Caputo/Wagner subsequently attempted to amend its complaint. The proposed amendment did not challenge the alleged defects in the bid solicitation; rather, it challenged the decision to use the $900,000 remaining from EPA's initial grant as a source of funds for the corrective work contract. The district court denied Caputo/Wagner's motion to amend on the ground that the added claims did not rectify the standing problem.
Caputo/Wagner appeals both the dismissal of its complaint and the denial of its motion to amend.
The original complaint challenged the procurement process; it alleged that the bid solicitation violated several EPA regulations, and that therefore EPA, the WRCB, and Russian River should have stopped the solicitation.
The district court dismissed the original complaint for lack of standing, reasoning that as a nonbidder, Caputo/Wagner suffered no injury from the alleged defects in the solicitation. We do not reach the question whether nonbidders can challenge sewage system procurement, however, for Caputo- /Wagner's particular challenge has become moot.
With regard to its challenge to the bid solicitation, Caputo/Wagner requested as relief only an order enjoining construction until EPA resolved the merits of its bid protest; it made no plea for damages. The corrective work contracts, however, have been awarded and by now the work under them has been completed. There remains no effective relief which we can offer Caputo/Wagner. Accordingly, we vacate the district court's decision and remand with instructions that Caputo/Wagner's challenge to the bid solicitation be dismissed as moot. See Enrico's Inc. v. Rice, 730 F.2d 1250 (9th Cir.1984).
Caputo/Wagner attempted to amend its complaint to add a claim that EPA, the WRCB, and Russian River acted unlawfully when they agreed that Russian River could use the remaining $900,000 of the grant to pay for the corrective work contract. The district court, however, denied the amendment as to all three defendants on the ground that Caputo/Wagner lacked standing to challenge the reallocation decision.
We review denials of motions to amend under an abuse of discretion standard. Keniston v. Roberts, 717 F.2d 1295, 1300 (9th Cir.1983). Motions to amend should be freely given, id., but may be denied if the proposed amendment will not save the plaintiff's suit, Wood v. Santa Barbara Chamber of Commerce, Inc., 705 F.2d 1515, 1520 (9th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1446, 79 L.Ed.2d 765 (1984). If the district court made the correct determination regarding Caputo/Wagner's standing, or if some other fatal defect exists in the proposed amended complaint, then of course the district court did not abuse its discretion in denying the motion to amend. 1
Caputo/Wagner presents two theories to support its contention that it has standing to press its challenge to EPA's involvement in the funding decision. First, Caputo/Wagner argues that it meets the requirements for raising a challenge to agency action under Sec. 10(a) of the Administrative Procedure Act (APA), 5 U.S.C. Sec. 702 (1982). As Caputo/Wagner recognizes, those requirements are twofold: Caputo/Wagner must show both that it satisfies the requirement of actual injury inherent in article III and that its interests are arguably within the zone of interests protected by the statutory or constitutional provision at issue. See Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 152-53, 90 S.Ct. 827, 829, 25 L.Ed.2d 184 (1970); Glacier Park Foundation v. Watt, 663 F.2d 882, 885 (9th Cir.1981).
Caputo/Wagner does meet the injury-in-fact half of the standing test applicable to challenges to agency action. The allegations in Caputo/Wagner's complaint must be charitably construed. Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 109, 99 S.Ct. 1601, 1612, 60 L.Ed.2d 66 (1979). So construed, the amended complaint alleges that Caputo/Wagner has a right to the reallocated $900,000, and that once the reallocated funds are spent, Caputo/Wagner will be unable to collect the $900,000 from Russian River. From the allegations, "it reasonably could be inferred that ... there is a substantial probability" that Caputo/Wagner suffers harm from the reallocation. See Warth v. Seldin, 422 U.S. 490, 504, 95 S.Ct. 2197, 2208, 45 L.Ed.2d 343 (1975).
Caputo/Wagner, however, does not meet the zone-of-interest half of the standing requirement. Title II of the Clean Water Act, 33 U.S.C. Secs. 1281-1297 (1982), authorizes EPA to make grants to municipalities for the construction of sewage treatment works. Caputo/Wagner, however, does not point to any provision in Title II which arguably protects a contractor against the reallocation of grant funds by EPA after a contract dispute, nor can we find one in an independent review.
Caputo/Wagner does argue that its interests are protected by 40 C.F.R. Sec. 35.939 (1983), which allows would-be bidders to protest bid solicitations to EPA. Although courts have expanded the zone-of-interest test by applying it to regulations as well as to statutes and constitutional provisions, e.g., Gull Airborne Instruments, Inc. v. Weinberger, 694 F.2d 838, 842 (D.C.Cir.1982); see Stratman v. Watt, 656 F.2d 1321, 1324 (9th Cir.1981), cert. denied, 456 U.S. 901, 102 S.Ct. 1744, 72 L.Ed.2d 170 (1982), the EPA regulation here does not assist Caputo/Wagner. Section 35.939 addresses only irregularities in the procurement process, such as defects in bidding documents. See Sec. 35.939(c)(1)(iii) (1983). It was not intended to provide a forum for resolving funding disputes. A more pertinent regulation is Sec. 35.936-9 (1983), which does create a mechanism for challenging funding decisions. That section, however, provides that only the grantee, Russian River in this case, can bring the funding protest. It is therefore clear that the regulations are not designed to protect the interests of contractors in grant allocations.
Caputo/Wagner's second theory is that the citizen-suit provision of the ...
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