Dano Resource v. District of Columbia, 87-1277.

• Citation: 566 A.2d 483
• Decision Date: 15 November 1989
• Docket Number: No. 87-1277.,87-1277.
• Parties: DANO RESOURCE RECOVERY, INC., Appellant, v. DISTRICT OF COLUMBIA, Appellee.
• Court: D.C. Court of Appeals

566 A.2d 483

DANO RESOURCE RECOVERY, INC., Appellant, v. DISTRICT OF COLUMBIA, Appellee.

No. 87-1277.

District of Columbia Court of Appeals.

Argued June 14, 1989.

Decided November 15, 1989.

Peter Paul Mitrano, Fairfax, Va., for appellant.

Martin B. White, Asst. Corp. Counsel, Chevy Chase, Md., with whom Frederick D. Cooke, Jr., Corp. Counsel at the time the brief was filed, and Charles L. Reischel, Deputy Corp. Counsel, and Lutz Alexander Prager, Asst. Deputy Corp. Counsel, Washington, D.C., were on the brief for appellee.

Before BELSON and STEADMAN, Associate Judges, and PRYOR, Senior Judge.

BELSON, Associate Judge:

This is an appeal from the dismissal of an action in contract against the District of Columbia due to the contractor's failure to exhaust its administrative remedies before the District of Columbia Contract Appeals Board. We affirm.

Appellant Dano Resource Recovery, Inc. (Dano) contracted with the District of Columbia in 1982 to provide sludge and solid waste disposal services at the District's Blue Plains sewage treatment plant. The contract was to be performed in two stages, a one-year demonstration for a fee of over $1 million, followed by provision of disposal services for a five-year period for a total fee of over $77 million. In order to perform the contract, Dano spent approximately $17 million to build a new plant to apply a European composting process that was new to the United States.

In May 1983, asserting that Dano was in default, the District terminated the contract pursuant to its default clause. Dano then followed the complaints procedure specified in the contract's disputes clause and filed a complaint with the D.C. Contract Appeals Board in September 1983. Nearly four years later, dissatisfied with the Board's failure to set a hearing date¹ despite its request, Dano brought a civil action against the District for breach of contract in D.C. Superior Court. Dano's complaint in Superior Court asserted a breach of the disputes clause, but did not use that assertion as a separate basis for liability. Instead, as relief for the alleged breach of contract it asked the trial court to hear the case that Dano had originally brought before the Board.² After a hearing on the District's Motion to Dismiss under Super.Ct.Civ.R. 12(b)(6), the court dismissed the suit without prejudice because Dano had not exhausted its administrative remedies, but left the way open for another breach of contract action should the agency fail to resolve the dispute.³ Dano appeals from that dismissal.⁴ We now affirm the trial court's dismissal of the civil suit as premature, given Dano's failure as of that time to exhaust its administrative remedies.

The issue before this court on appeal is whether the Board's failure to complete resolution of the dispute, or even set a hearing date, four years after Dano filed its appeal with the Board, amounts to a breach of the disputes clause and entitles Dano to a trial de novo in the Superior Court.⁵ Dano argued before us that the breach of the disputes clause and not Dano's effort to litigate the District's original termination of the contract was the subject of the civil suit. Dano's Superior Court complaint, quoted in pertinent part in n. 2 above, does not bear out this contention. The complaint did not contain a separate count seeking relief for a breach of the disputes clause. Compare Rohr Industries v. Washington Metropolitan Area Transit Authority, 232 U.S.App.D.C. 92, 95, 720 F.2d 1319, 1322 (1983) (seeking damages for intentional "obstructionism").

While appellant's complaint asserted a breach of the disputes clause, it did not use that assertion as a separate basis for liability, but rather as a means to avoid the well-established doctrine that where a statute provides an administrative forum to resolve disputes, "`no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." McKart v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194 (1969) (quoting Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 463, 82 L.Ed. 638 (1938)). The exhaustion doctrine does not preclude, but rather defers, judicial review until after the expert administrative body has built a factual record and rendered a final decision. By honoring the exhaustion doctrine, courts avoid interfering with the administrative process, and the initial reviewing court benefits from the specialized knowledge of the agency. "The rule requiring exhaustion also promotes judicial economy by resolving issues within the agency and eliminating the unnecessary intervention of courts. [Also], were we to allow parties to circumvent agency procedures for appeal, the effectiveness of agency rules might be undermined." C Street Tenants Ass'n v. District of Columbia Rental Housing Comm'n, 552 A.2d 524, 525 (D.C. 1989) (citing McKart, supra, 395 U.S. at 195, 89 S.Ct. at 1663).

It is not unusual for parties to seek to circumvent the exhaustion doctrine, see, e.g., Cox v. Jenkins, 878 F.2d 414, 415, 421-22 (D.C.Cir. 1989) ("attempt to avoid the exhaustion requirement by styling the case as an action to `enforce' the hearing officer's decision"), and such efforts are sometimes successful. For example, in Rohr, supra, the court noted that the contractor, having initiated the prescribed administrative review, encountered what it considered unjustifiable delay and "sued WMATA in the District Court to both leapfrog the process as to a single specific claim . . . and to claim a breach of the Disputes provision. . . ." 232 U.S.App.D.C. at 95, 720 F.2d at 1322. Rohr differs from the instant case, however, in that the contractor's complaint there included a separate count claiming breach of the disputes clause for which the contractor sought separate damages. Furthermore, the contractor in Rohr contended that the entire disputes apparatus was inadequate "as established and conducted by WMATA." 232 U.S.App.D.C. at 96, 720 F.2d at 1323. In the instant case, Dano challenged the implementation of the disputes mechanism as applied to its particular dispute with the District, but did not claim damages as a result of the alleged breach of the disputes clause. Dano instead sought to have the trial court replace the agency as the forum for resolution of the dispute.

Generally, a dissatisfied party must pursue and exhaust its administrative remedy before it resorts to the courts ("in the absence of some clear evidence that the appeal procedure is inadequate or unavailable. . . ." Crown Coat Front Co. v. United States, 386 U.S. 503, 512, 87 S.Ct. 1177, 1182, 18 L.Ed.2d 256 (1967) (quoting United States v. Holpuch Co., 328 U.S. 234, 240, 66 S.Ct. 1000, 1003, 90 L.Ed. 1192 (1946)).⁶

Courts in this jurisdiction have recognized a number of interrelated exceptions to the exhaustion doctrine, among them inadequate remedy, unavailable remedy, and futility. See, e.g., Randolph Sheppard Vendors of America v. Weinberger, 254 U.S.App.D.C. 45, 62, 795 F.2d 90, 107 (1986). Appellant here invokes the futility exception, arguing that the delay of four years indicates that the Board will never resolve its dispute with the District fairly. Dano refers us to Rohr, in which the D.C. Circuit pointed out that "when [the administrative] process threatens to drag on . . . for many years, then the rationale supporting deference is much weaker." Rohr, supra, 720 F.2d at 1326. It is well established, however, that delay alone will not suffice to trigger the futility exception. See Cox v. Jenkins, 878 F.2d 414, 419-20 (D.C.Cir. 1989); C Street Tenants Association, supra, 552 A.2d at 526; cf. Walker v. Southern Ry., 385 U.S. 196, 198, 87 S.Ct. 365, 366, 17 L.Ed.2d 294 (1966) (agency's chronic delay among reasons employee's legal action under Railway Labor Act not barred by failure to exhaust administrative remedies). Because any eventual award to a complaining contractor will include interest at the statutory rate, the contractor will have been compensated for the delay. D.C. Code § 1-1188.6 (1987 Repl.).

Dano relies on the following passage from Randolph-Sheppard Vendors, supra, to support its entitlement to prevail under the futility exception: "Thus, administrative delay could meet the futility exception only where it appears that agency inaction is in reality a statement by the agency of its unwillingness to consider the issue. . . ." 254 U.S.App.D.C. at 61, 795 F.2d at 106 (emphasis added).

But the quoted passage expresses the reason we will not excuse Dano from the exhaustion requirement. Dano has made no showing that the Board is unwilling to consider its claims, or that the agency is predisposed to find against it. In Randolph-Sheppard it was not the passage of time but the level of agency activity (or inactivity) as the years elapsed that led the court to excuse a contracting party from the exhaustion requirement. In the instant case, "the largest appeals case ever presented before the Board," [Motions hearing transcript, R. at 5] the failure to set a hearing date reflects the complexity of the case and the volume of the record. The Board has been busy overseeing discovery and ruling on the parties' various motions, including requests from both sides for more time to respond to interrogatories.⁷ We contrast this level of activity with the intentional obstructionist delay alleged by the contractor in Rohr and find that it falls far short of the level that would justify excusing Dano from the exhaustion requirement.

Because Dano did not show "clear evidence" that the appeal procedure provided under its contract with the District was inadequate or that resort to the Contract Appeals Board was otherwise futile, see Crown Coat Front Co., supra, 386 U.S. at 512, 87 S.Ct. at 1182; see also, Cox v. Jenkins, su...