David E. Olson & Absolute Envtl. Servs., Inc. v. O'Brien

• Decision Date: 31 July 2018
• Docket Number: 3:11-cv-245 JWS
• Parties: DAVID E. OLSON AND ABSOLUTE ENVIRONMENTAL SERVICES, INC., Plaintiffs, v. MARK O'BRIEN, JAMES CANTOR, AND RICHARD WELSH, Defendants.
• Court: U.S. District Court — District of Alaska

DAVID E. OLSON AND ABSOLUTE ENVIRONMENTAL SERVICES, INC., Plaintiffs, v. MARK O'BRIEN, JAMES CANTOR, AND RICHARD WELSH, Defendants.

3:11-cv-245 JWS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ALASKA

July 31, 2018

ORDER AND OPINION

[Re:Motion at Docket 138, 140, 147, & 149]

I. MOTION PRESENTED

Before the court are four motions. The first filed is Plaintiffs David E. Olson and Absolute Environmental Services, Inc.'s ("Plaintiff") motion for partial summary judgment against defendant Mark O'Brien at docket 138. Defendant Mr. O'Brien responds at docket 163. Plaintiff replies at docket 175.

The next motion filed is Defendants Mark O'Brien, James Cantor, anc Richard Welsh ("Defendants") motion for summary judgment at docket 140. Plaintiff responds at docket 166. Defendants reply at docket 174.

The third motion is a motion in limine filed by Plaintiff at docket 147. Defendants respond at docket 156. Plaintiff replies at docket 165.

The final motion is Defendants' motion in limine filed at docket 149. Plaintiff responds at docket 157. Defendants reply at docket 162.

Oral argument was requested and granted on all four motions. Ora argument was heard on July 20, 2018.

II. BACKGROUND

The background of this litigation was described at some length in the order at docket 77, and again more succinctly in the order at docket 120. There is no need to repeat it here.

III. STANDARD OF REVIEW

A. Motions for Summary Judgment

Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."¹ The materiality requirement ensures that "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment."² Ultimately, "summary judgment will not lie if the . . . evidence is such that a reasonable jury could return a verdict for the nonmoving party."³ However, summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."⁴

The moving party has the burden of showing that there is no genuine dispute as to any material fact.⁵ Where the nonmoving party will bear the burden of proof at trial on a dispositive issue, the moving party need not present evidence to show that summary judgment is warranted; it need only point out the lack of any genuine dispute as to material fact.⁶ Once the moving party has met this burden, the nonmoving party must set forth evidence of specific facts showing the existence of a genuine issue for trial.⁷ All evidence presented by the non-movant must be believed for purposes of summary judgment, and all justifiable inferences must be drawn in favor of the non-movant.⁸ However, the non-moving party may not rest upon mere allegations or denials, but must show that there is sufficient evidence supporting the claimed factual dispute to require a fact-finder to resolve the parties' differing versions of the truth at trial.⁹

B. Motions in Limine

Motions in limine are motions which seek to foreclose the use of certain testimony or documentary evidence at trial. When a court rules on a motion in limine, it is necessarily a preliminary order which may be re-examined at trial if circumstances warrant reconsideration.

IV. MOTIONS AT DOCKETS 138 & 140

The majority of the claims in this case revolve around procedure. Therefore, it is important to lay out the procedural history and how it comports with or diverges from the statutory requirements.

David E. Olson is the owner of Absolute Environmental Services, an Alaska corporation ("Absolute"). North Pacific Erectors, Inc. ("NPE") contracted with the State of Alaska to perform work on the State Office Building ("SOB") in Juneau. Among other things, NPE's contract with the State required removal of asbestos from the SOB. NPE subcontracted with Absolute to accomplish the asbestos removal. Absolute encountered what it believed to be differing conditions than those assumed in bidding the work. In Absolute's view, the conditions encountered rendered removing the asbestos costlier than the contract price.

Absolute called upon NPE to present a claim for additional compensation for the asbestos work. The contract involves the procurement of services and is thus subject to the Procurement Code.¹⁰ The Procurement Code provides the procedure for addressing any contract claim.

First, the contractor must raise a claim with the procurement officer.¹¹ In this case, NPE presented a claim to the procurement officer. The procurement officer denied Plaintiff's claim.

Second, the contractor may appeal the decision of a procurement officer through an administrative appeal.¹² NPE's claim involved a construction contract so the administrative appeal was to the Commissioner of the Department of Transportation and Public Facilities ("DOTPF").¹³ The claim goes to arbitration if it is for less than $250,000 and the contractor requests arbitration or if the claim is for more than $250,000 and both parties agree to arbitration.¹⁴ Otherwise, the case is heard under AS 36.30.630.¹⁵

In this case, the claim was for more than $250,000 and the parties did not agree to arbitration so it was designated for a hearing. DOTPF Chief Contracting Officer Mark O'Brien was assigned to review the appeal of the procurement officer's decision. Mr. O'Brien determined that a hearing was justified. He assigned private attorney William Bankston to act as the hearing officer.

Third, a hearing officer's role is to "recommend a decision to the commissioner . . . , based upon the evidence presented. The recommendations mustinclude findings of fact and conclusions of law."¹⁶ Mr. Bankston conducted a hearing from December 1-5, 2008. On January 16, 2009, Mr. Bankston issued a recommendation for an award of $158,821 to Plaintiff. Mr. Bankston did not submit final briefing from the hearing with his recommendation. On January 20, 2009, Mr. O'Brien asked Mr. Bankston for the briefing.

On January 26, 2009, Mr. O'Brien emailed Mr. Bankston and asked: "If a simple walkthrough at the prebid would have revealed the dimples, does this failure to participate in the prebid waive their claim on the issue?"¹⁷ Later, when the dispute eventually reached it, the Alaska Supreme Court noted the remainder of the communication:

[DOTPF] acknowledges that the deputy commissioner's "decision referred to [the] incorrect information" from an email exchange between O'Brien and the hearing officer. O'Brien inquired of the hearing officer:

During the prebid conference were other bidders offered the opportunity to observe the embossed pan deck at an alternate location? I see reference to an "alternate location" but I couldn't tell if that was offered at the prebid, or whether it was assumed that a contractor could have asked on their own to view it at an alternate location.

The hearing officer responded that

[f]rom the evidence all bidders were offered a site inspection. The site inspection would not have revealed the embossed pan deck because it was covered with fire proofing. All bidderswere offered the chance to inspect pan deck that was not covered, which was at another location in the S[tate] Office] B[uilding], so not technically the site, and the inspection had to be at a different time of the day and after normal office hours.

Thus it is undisputed that, based on this exchange, the deputy commissioner incorrectly stated that the Department had affirmatively offered participants at the prebid meeting an opportunity to view an uncovered pan deck.¹⁸

Nonetheless, after this correspondence and still on January 26, 2009, Mr. O'Brien emailed Chief Assistant Attorney General for Transportation James Cantor and expressed concern over Mr. Bankston's decision. He noted:

I received this recommended decision, but I have some real heartburn with its conclusion.

* * *

I'm thinking I may need to either reject or remand this back. The key issue for me is "duty to inspect." The contractor did not attend the prebid. At the prebid, the contractors were offered the opportunity to view an area of similar work where the fireproofing had been removed. This inspection would have clearly shown the dimpled pan (change condition in dispute). Only one of the Contractors at the prebid choose to view the uncovered area.

What I read puts the burden on the contractor to prove that they conducted a reasonable site inspection. If a reasonable site inspection would have revealed the condition, then the contractor cannot establish entitlement.

Mr. O'Brien, while restating the incorrect fact, was actually concerned about the legal standard used in the decision; specifically, the "duty to inspect."

Mr. Cantor assigned Assistant Attorney General Richard Welsh to assist Mr. O'Brien. Mr. Cantor also supervised Assistant Attorney General Jeff Stark, who represented the Department in the appeal. An ethical wall was put in place to separate Mr. Cantor and Mr. Stark as advocates from Mr. Welsh as an advisor to DOTPF (Mr. O'Brien, Commissioner von Scheben, and Deputy Commissioner Richards).

Fourth, the Commissioner "may affirm, modify, or reject the hearing officer's recommendation in whole or in part, may remand the matter to the hearing officer with instructions, or take other appropriate action."¹⁹ On March 5, 2009, DOTPF Commissioner von Scheben remanded the claim to Mr. Bankston. On May 8, 2009, Mr. Bankston issued his second recommendation finding in favor of Plaintiff.

On or about June 4, 2009, Plaintiff moved for Commissioner von Scheben to recuse himself. On June 11, 2009, Commissioner von Scheben recused himself and designated Deputy Commissioner Richards to make a final determination on the claim.

On June 24, 2009, Deputy Commissioner Richards received a draft final decision. The draft was written by Mr. Welsh. Mr. Welsh and Mr. O'Brien communicated about the decision. Neither Mr. Welsh...