Davis Associates, Inc. v. Secretary, Dept. of Hous. & UD, 74-1149.

• Decision Date: 28 June 1974
• Docket Number: No. 74-1149.,74-1149.
• Citation: 498 F.2d 385
• Parties: DAVIS ASSOCIATES, INC., Plaintiff, Appellant, v. SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, and Dover Housing Authority, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

498 F.2d 385 (1974)

DAVIS ASSOCIATES, INC., Plaintiff, Appellant, v. SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, and Dover Housing Authority, Defendants, Appellees.

No. 74-1149.

United States Court of Appeals, First Circuit.

Submitted June 5, 1974.

Decided June 28, 1974.

David A. Brock, Concord, N. H., with whom Perkins, Douglas & Brock, Concord, N. H., was on brief, for appellant.

Joseph M. Corwin, Boston, Mass., with whom Corwin & Corwin, Boston, Mass., and Donald R. Bryant, Dover, N. H., were on brief, for Dover Housing Authority, appellee.

Robert A. Schwartz, Asst. U. S. Atty., with whom William J. Deachman, U. S. Atty., and David Sonenshein, Atty., Office of Regional Counsel, Dept. of Housing and Urban Development, Concord, N. H., were on brief, for Secretary, Dept. of Housing and Urban Development, appellee.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

McENTEE, Circuit Judge.

Davis Associates brought this action in the district court for equitable relief contending, in essence, that the defendants abused their statutory discretion in rejecting its bid for the main contract on a federally-assisted housing project. The district court dismissed the action on the ground that defendants' rejection of the bid was not "reviewable." We affirm the dismissal, but base our decision on a somewhat different line of reasoning.

The facts are not in dispute. In early 1973 the Dover (N.H.) Housing Authority (hereinafter "the Authority") reached a preliminary agreement with the Department of Housing and Urban Development (hereinafter "HUD") on a proposed hundred-unit housing project for the elderly that would be supported by federal loans under the provisions of the United States Housing Act of 1937, 42 U.S.C. § 1401 et seq. (1970). The Authority thereafter invited bids on the project, but expressly reserved the right to reject any and all bids so received. When no bid came in below HUD's initial cost estimate, known as the prototype cost, the Authority was permitted to enter negotiations with the three lowest bidders, one of whom was Davis. In the course of negotiations, one of the two other bidders withdrew and the second one was disqualified for reasons not relevant here. On September 19, 1973, the Authority voted to award the contract to Davis subject to the approval of HUD. The negotiated award price was still higher than HUD's initial estimate. On September 25, HUD notified the Authority that it would not approve the award to Davis because of (1) "considerable confusion" which it found in the negotiations, (2) the possibility of litigation by the disqualified bidder and (3) the possibility that "considerable savings" would result if the project were redesigned and rebid. Davis responded by arranging a meeting with HUD to seek reconsideration of its rejection. After the meeting HUD agreed to modify its decision "to the extent that the Dover Housing Authority may, at its discretion, resubmit its previous recommendation to HUD to award the construction contract to Davis." HUD noted that if the Authority chose to resubmit the recommendation there was still no guarantee that it would change its prior decision and approve. However, HUD never had to reconsider because the Authority voted not to resubmit the Davis award. It informed Davis that it was rejecting all the initial bids and would redesign and rebid the project as HUD had initially suggested.

Davis filed the instant action against the Secretary of HUD and the Authority. The complaint was styled "a petition in equity requesting review and/or trial de novo of certain decisions and rulings of a federal administrative agency made by it under and pursuant to Title 42 U.S.C.A., § 1401 et seq." It alleged that the defendants' actions constituted a "breach of good faith and an arbitrary, capricious and gross abuse of their discretion in the performance and administration of their duties under the laws of the United States, and that said action was not in the best interest of the government and in other ways not in accordance with the law."¹ The principal relief sought was an order "requiring the defendants to show cause why the contract should not be immediately awarded" to Davis.

The district court recognized that "the essence of Davis' complaint is that HUD's disapproval of the negotiated bid and the Authority's decision not to resubmit the Davis bid after HUD's disapproval was conditionally withdrawn were both arbitrary, capricious, and an abuse of discretion." The court then engaged in a three-part analysis under the headings of "jurisdiction," "standing," and "reviewability." Initially, the court found subject-matter jurisdiction by treating the rather inartful complaint as both an action in the nature of mandamus under 28 U.S.C. § 1361 (1970), and, alternatively, as a petition seeking judicial review of HUD's and the Authority's administrative determinations under the Administrative Procedure Act (hereinafter "APA") § 10, 5 U.S.C. § 701 et seq. (1970).² With respect to standing, the court held that an "unsuccessful bidder" such as Davis could assert the instant claim. Merriam v. Kunzig, 476 F.2d 1233, 1240 (3d Cir.), cert. denied, Gateway Center Corp. v. Merriam, 414 U.S. 911, 94 S.Ct. 233, 39 L.Ed.2d 149 (1973). The final consideration was "whether the agency action complained of is reviewable by this court." Here, the court implicitly abandoned its previous analysis of the complaint as separately seeking both mandamus and judicial review, and focused solely on the latter question. After considering the relevant statutes and regulations, plus the type of determination it would have to make if it did grant review,³ the court held that the actions complained of were not reviewable and therefore dismissed the complaint.

Davis appeals from the determination of nonreviewability and HUD and the Authority, as appellees, challenge the court's holdings on jurisdiction and standing. We think the court's dismissal was essentially correct. However, the court appears to have confused its analyses of the right to mandamus as opposed to the right to judicial review. Although closely related, the two concepts are different. A party may be entitled to judicial review under the APA even where mandamus might not lie under § 1361. Therefore, we will briefly review these issues separately.

Section 1361 provides that district courts "shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff." In mandamus actions, the usually separate questions of jurisdiction and failure-to-state-a-claim merge. There can be no mandamus jurisdiction if no "duty" exists on the part of the defendants. On the other hand, if a duty does exist, then not only is there jurisdiction under § 1361 but plaintiff has also adequately stated a claim in asking that such duty be fulfilled. See Ashe v. McNamara, 355 F.2d 277 (1st Cir. 1965).

Thus, in a highly technical sense, the district court erred in finding subject-matter jurisdiction under § 1361 in this case, because its subsequent analysis of the statutory materials under the heading of "reviewability" conclusively demonstrated that the defendants had no "duty" to award the contract to Davis. Both the statute and the regulations are written in discretionary terms. They generally leave to HUD and the local housing authorities the assessment of competing bidders, within, of course, certain outer parameters of acceptability.⁴ The existence of some fixed requirements means that the area of contract awards is not totally shut off from mandamus relief. Instead, in each case we must measure the allegations in the complaint against the statutory and constitutional framework to determine whether the particular official actions complained of fall within the scope of the discretion which Congress accorded the administrators. See Work v. United States ex rel. Rives, 267 U.S. 175, 177-178, 45 S.Ct. 252, 69 L.Ed. 561 (1925); Ashe v. McNamara, supra; Murray v. Vaughn, 300 F.Supp. 688, 696-697 (D.R.I.1969); Byse & Fiocca, Section 1361 of the Mandamus and Venue Act of 1962 and "Nonstatutory" Judicial Review of Federal Administrative Action, 81 Harv.L.Rev. 308, 333-35 (1967).⁵ Here, the allegation is that defendants abused their discretion in not awarding the contract to Davis, a qualified bidder. The only supporting argument as to why this action constituted an abuse is that costs are rising so quickly that the delay attendant to redesign and rebidding may prevent the "desperately needed" housing project from ever being completed. See note 1 supra. First of all, the statute does not require that this particular project be built. Second, the statute clearly leaves the inflation determinations to HUD and the local authorities. Therefore, there was no "duty" to award the contract to Davis and thus no mandamus jurisdiction.

Also, Davis was not entitled to judicial review of the administrative determinations which lay behind the rejection of its bid. We note that we need not review the court's holding that the APA is in itself a source of jurisdiction,⁶ because in any event the question of whether the APA authorizes judicial review under these particular facts is one "arising under" federal law and thus covered by 28 U.S.C. § 1331 so long as there is at least $10,000 in controversy.⁷ In the instant case, although not expressly alleged, Davis' anticipated profits on the roughly $2,500,000 project certainly must exceed $10,000.

Turning to the merits, we hold that the APA does not authorize judicial review here. Therefore, Davis failed to state a claim. Although there is a presumption of review expressed in APA § 10(a), 5 U.S.C. § 702 (1970), see Hahn v. Gottlieb, 430 F.2d 1243, 1249 (1st Cir. 1970), that presumption will be overcome by clear and convincing evidence that Congress intended to cut off...