Edealer Serv. v. N.C. Dep't of Transp.

• Court: North Carolina Court of Appeals
• Writing for the Court: FLOOD, Judge.
• Citation: 899 S.E.2d 873
• Docket Number: COA23-680
• Decision Date: 19 March 2024
• Parties: EDEALER SERVICES, LLC, Petitioner, v. NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, Respondent, and Vanguard Direct, Inc., Respondent-Intervenor.

899 S.E.2d 873

EDEALER SERVICES, LLC, Petitioner,

v.NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, Respondent, andVanguard Direct, Inc., Respondent-Intervenor.

No. COA23-680

Court of Appeals of North Carolina.

Filed March 19, 2024

Appeal by respondent-appellant and intervenor-appellant from order entered 5 March 2023 by Judge Keith O. Gregory in Wake County Superior Court. Heard in the Court of Appeals 6 February 2024. Wake County, No. 22CVS8414

Attorney General Joshua H. Stein, by Assistant Attorney General Jonathan J. Evans and Special Deputy Attorney General Kathryne E. Hathcock, for respondent-appellant.

Stevens, Martin, Vaughn & Tadych, PLLC, by Michael J. Tadych and K. Matthew Vaughn, for respondent-intervenor-appellant.

Parker Poe Adams & Bernstein, LLP, Raleigh, by R. Bruce Thompson, II, Michael A. Goldsticker, and Catherine G. Clodfelter, for petitioner-appellee.

FLOOD, Judge.

The North Carolina Department of Transportation (the "NCDOT") and Vanguard Direct, Inc. appeal from the superior court’s order and opinion vacating a contract the NCDOT had awarded to Vanguard. On appeal, the NCDOT and Vanguard argue the superior court erred by: (A) incorrectly applying the relevant standards of review by making independent findings of fact; and (B) reversing the Final Agency Decision and ordering the contract be awarded to eDealer Services, LLC instead of remanding to State Chief Information Officer Thomas Parish, IV (the "State CIO") for further findings. After careful review, we affirm.

I. Factual and Procedural Background

In 2019, the NCDOT and the North Carolina Department of Information Technology (the "NCDIT") issued a Request for Proposal (the "RFP"), seeking proposals from bidders to be the vendor for North Carolina’s ELT Solution. The ELT Solution is an electronic platform that tracks lien and title information between the NCDOT and the lienholder of a vehicle. The RFP used a "Best Value" procurement method that considered five criteria when evaluating bids:

Criterion A: Substantial conformity to solicitation specifications and requirements

Criterion B: Proposed project approach and schedule

Criterion C: Corporate existence of similar size and scope and strength of references relevant to technology areas of specifications

Criterion D: Explanations of the Statewide Technical Architecture Objectives

Criterion E: Price

eDealer and Vanguard were the only vendors to submit proposals in response to the RFP. These two proposals were evaluated by the appointed Evaluation Committee (the "Committee") and subject matter experts for the NCDIT and the NCDOT. In the review process, the Committee evaluated the strengths and weaknesses of eDealer’s and Vanguard’s proposals and then compared and contrasted the proposals. Thereafter, the Committee determined Vanguard’s proposal was the most advantageous and offered the "best value" to the State.

In June 2020, the NCDOT awarded Vanguard the contract. On 26 June 2020, eDealer filed a bid protest with the NCDOT and the NCDIT, arguing the Committee improperly applied the procurement rules and policies and improperly evaluated the competing proposals. On 8 September 2020, the NCDOT sent a written response to eDealer, affirming its decision to award the contract to Vanguard.

On 22 October 2020, eDealer sent a letter to the State CIO and requested a hearing on the bid protest. The State CIO applied to the Office of Administrative Hearings (the "OAH") requesting it preside over the bid protest. On 6 November 2020, the OAH issued a Notice of Contested Case and Assignment. After ten months of pre-hearing filings, the matter came before an Administrative Law Judge (the "ALJ") on 8 through 10 and 17 September 2021.

At the conclusion of the hearing, the ALJ issued a Proposed Decision recommending that the State CIO cancel the contract award to Vanguard and award the contract to eDealer. In its proposed decision, the ALJ concluded that the Committee failed to use proper procedures, and Vanguard failed to meet "multiple" RFP requirements, rendering its proposal incomplete.

On 8 June 2022, the State CIO reviewed the ALJ’s Proposed Decision and issued a Final Agency Decision (the "Final Decision"), concluding eDealer failed to meet its burden of showing the award to Vanguard was an error, rejecting the ALJ’s Proposed Decision, and affirming the award to Vanguard.

On 8 July 2022, eDealer filed a Petition for Judicial Review with Wake County Superior Court, requesting the award to Vanguard be canceled and the contract be awarded to eDealer. On 5 March 2023, the superior court issued its Order and Opinion on Petition for Judicial Review (the "Order"), concluding the Final Decision contained procedural errors, and the award to Vanguard was "arbitrary and capricious." In lieu of remanding to the State CIO for further findings, the superior court vacated the award to Vanguard and awarded the contract to eDealer. The superior court concluded remand would be "futile" as the "only reasonable decision, justified by the entire record, was that eDealer’s proposal provided the ‘Best Value’ to the State."

The NCDOT and Vanguard filed separate notices of appeal.

II. Jurisdiction

This Court has jurisdiction to review this appeal from a final judgment from a superior court pursuant to N.C. Gen. Stat. § 7A-27(b) (2023).

III. Analysis

The NCDOT and Vanguard present two issues on appeal: whether the superior court, sitting as an appellate court, erred by (A) failing to apply the proper standards of review and improperly making findings of fact and conclusions of law, leading to the vacatur of the award to Vanguard; and (B) exceeding its authority in ruling to reverse the Final Decision and order the contract be issued to eDealer, instead of remanding to the State CIO for further findings.

A. Standards of Review

We first address the NCDOT and Vanguard’s contention that the superior court misapplied the applicable standards of review. Specifically, the NCDOT and Vanguard argue the superior court did not apply the proper standards of review because it made new, independent factual findings when conducting its de novo and whole-record reviews. We disagree.

[1] Under our review of a superior court’s order entered upon review of an agency decision, we must first "determine whether the trial court exercised the appropriate scope of review and, if appropriate[,] … decide whether the trial court did so properly." N.C. Dep’t of Revenue v. Bill Davis Racing, 201 N.C. App. 35, 40, 684 S.E.2d 914, 918 (2009) (alterations in original) (citation omitted and internal quotation marks omitted).

1. Appropriate Scope of Review

[2, 3] "The proper standard for the superior court’s judicial review ‘depends upon the particular issues presented on appeal.’ " Powell v. N.C. Crim. Just. Educ. and Training Standards Comm’n, 165 N.C. App. 848, 851, 600 S.E.2d 56, 58 (2004) (citation omitted). "[Q]uestions of law receive de novo review, whereas fact-intensive issues such as sufficiency of the evidence to support [an agency’s] decision are reviewed under the whole-record test." N.C. Dep’t of Env’t and Nat. Res. v. Carroll, 358 N.C. 649, 659, 599 S.E.2d 888, 894 (2004) (second alteration in original) (citation and internal quotation marks omitted). Thus, claims that a decision is "[m]ade upon unlawful procedure" receive de novo review whereas claims that a decision is "[u]nsupported by substantial evidence … or [is a]rbitrary or capricious" receive whole-record review. Id. at 658–59, 599 S.E.2d at 894.

In its request for judicial review, eDealer argued the Final Decision was made upon unlawful procedure. In its petition, eDealer alleged, inter alia, the Final Decision relied on the following procedural errors: (1) the Committee failed to employ a "Best Value" methodology as required by law; (2) Van- guard’s proposal failed to satisfy all the RFP requirements, resulting in multiple material deficiencies; (3) the Committee impermissibly used clarifications to cure Vanguard’s material deficiencies; and (4) the Committee failed to follow their own procedures when evaluating eDealer and Vanguard’s strengths and weaknesses because they relied on two out of the five criteria.

Based on eDealer’s assignment of the above procedural errors, the superior court correctly noted that it reviews claims of procedural errors under a de novo standard of review. See Carroll, 358 N.C. at 659, 599 S.E.2d at 894.

eDealer further argued that the Final Decision was unsupported by substantial evidence, and was arbitrary, capricious, and an abuse of discretion because the Committee failed to apply the "Best Value" methodology, which led to several errors in their analyses of Criterion A, Criterion B, and Criterion C. Again, the superior court correctly noted that its review of these claims was whole-record review. See Carroll, 358 N.C. at 659, 599 S.E.2d at 894.

[4] The NCDOT and Vanguard concede that the superior court correctly summarized the standards of review in its Order, but argue that the Order demonstrates that the superior court impermissibly made new independent factual findings. The NCDOT specifically challenges paragraphs 11–15, 17–20, 22–29, 54(b), 57–62, and 66–67.

[5, 6] "According to well-established law, it is the responsibility of the administrative body, not the reviewing court, ‘to determine the weight and sufficiency of the evidence and the credibility of the witnesses, to draw inferences from the facts, and to appraise conflicting and circumstantial evidence.’ " Bill Davis Racing, 201 N.C. App. at 41, 684 S.E.2d at 919 (citation omitted). The superior court, therefore, acts as an appellate court when exercising judicial review over an agency decision. See In re Denial of N.C. IDEA’s Refund of Sales, 196 N.C. App. 426, 432, 675 S.E.2d 88, 94 (2009). "It is the traditional function of appellate courts to review the decisions of lower tribunals for errors of law or procedure, while generally deferring to the latter’s ‘unchallenged superiority’...