King v. Alaska State Housing Authority, s. 5234

Citation633 P.2d 256
Decision Date11 September 1981
Docket NumberNos. 5234,5252,s. 5234
PartiesEarl S. KING and R. J. Cherrier, Appellants and Cross-Appellees, v. ALASKA STATE HOUSING AUTHORITY, Appellee and Cross-Appellant.
CourtSupreme Court of Alaska (US)

George Trefry, Holland & Trefry, Anchorage, for appellants and cross-appellees.

Michael W. Price and Teresa Hogan, Groh, Eggers, Robinson, Price & Johnson, Anchorage, for appellee and cross-appellant.

Before RABINOWITZ, C. J., CONNOR, MATTHEWS and COMPTON, JJ., and HODGES, Superior Court Judge. *

OPINION

RABINOWITZ, Chief Justice.

This litigation has been before the Alaska court system for more than ten years. It is now on appeal to this court for the third time.

The facts pertinent to the present appeal are not in dispute. In 1964, the Alaska State Housing Authority (hereinafter "ASHA") adopted, and the Anchorage City Council approved, an urban renewal plan for the Eastchester area of Anchorage. Pursuant to this plan, ASHA condemned the land on which the Eastchester project was to be built, part of which was owned by appellants King and Cherrier. One provision of the urban renewal plan was as follows:

Opportunities for Former Owners to Re-Establish Themselves In the Project Area

Owners of property within the project area whose property is acquired by the Alaska State Housing Authority will be given preferential consideration as redevelopers in the project area, if the Alaska State Housing Authority in its sole discretion determines all other things being equal that such owner's proposal for redevelopment is equal to or superior to proposals of other redevelopers.

This provision was promulgated as a regulation by ASHA when it invited proposals for the private redevelopment of part of the Eastchester urban renewal project in December of 1970. Relying on their "repurchase preference rights," appellants submitted a detailed proposal for the project and an estimate of the cost of construction.

Based on a numerical scoring system which evaluated each proposal according to its economic and aesthetic merits and its "relative live ability," ASHA selected the proposal of a competing developer, J. L. Johnston, as "the best project development plan." Notice of this selection was given to the Anchorage City Council, as required by AS 18.55.540(b), 1 and in the course of a regularly scheduled meeting the City Council voted to reject ASHA's selection.

Subsequent to ASHA's selection of Johnston's proposal, but before the City Council considered the matter, King and Cherrier filed suit against ASHA and Johnston. Their complaint alleged various improprieties in ASHA's selection procedure and sought an injunction against acceptance of Johnston's bid by ASHA and a declaratory judgment to the effect that King and Cherrier were entitled to purchase and develop the parcel in issue. The complaint was dismissed and judgment was entered for ASHA on September 30, 1971. Apparently a stay pending appeal was not requested.

On appeal, we rejected several of King and Cherrier's allegations of error, but concluded that by producing evidence that computational errors had resulted in assignment of incorrect numerical ratings to their proposal, 2 King and Cherrier had established a prima facie case on the issue of abuse of administrative discretion by ASHA. King v. Alaska State Housing Authority, 512 P.2d 887, 895 (Alaska 1973) ("King I "). Accordingly, the superior court's decision was vacated and the case remanded for completion of the trial proceedings. Id. at 896.

During the time the appeal was pending, however, ASHA awarded the contract to Johnston; the property had been conveyed and construction and begun by the time the first appeal was decided. Recognizing that injunctive relief was no longer practicable, King and Cherrier sought and were granted leave to file an amended complaint. This complaint asserted a claim for damages in the amount of $400,000, representing the profit King and Cherrier expected to make had they been awarded the contract. On June 28, 1976, however, ASHA's motion for judgment on the pleadings, which alleged that the superior court was without jurisdiction to consider the issues raised in the amended complaint, was granted. Another appeal to this court followed. In reversing the superior court on the jurisdiction issue, we reiterated that appellants had "established a prima facie case of abuse of discretion." King v. Alaska State Housing Authority, 571 P.2d 1010, 1012 (Alaska 1977) ("King II "). We added, however, that:

We do not decide whether a claim for damages may be properly maintained if ASHA is found to have acted negligently or to have abused its discretion, as those questions were not presented.

On remand, ASHA moved for summary judgment on the ground that King and Cherrier's amended complaint did not state a claim for which damages could be awarded. The present appeal is from the superior court's decision granting ASHA's motion for summary judgment in that action. It is, then, the issue that was expressly reserved in King II, id., that is before us on this appeal. ASHA concedes that, for purposes of this appeal, it must be assumed that the computational errors alleged by King and Cherrier occurred and that those errors were material to ASHA's rejection of their redevelopment proposal.

Appellants now urge several alternative theories under which they claim to be entitled to damages from ASHA. In addition to opposing those theories, ASHA, as cross-appellant, argues that appellants' tort and constitutional claims are barred by the doctrine of sovereign immunity. Appellants also attack the superior court's award of $18,000 in attorney's fees to ASHA.

Appellants' first argument for recovery of damages from ASHA is based on the due process clauses of the United States and Alaska Constitutions. 3 Assuming that the preference rights in issue were property rights within the protection of the Fourteenth Amendment 4 and, further, that ASHA's behavior constituted a deprivation of those rights, appellants assert that the holding of Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), provides them with a cause of action based directly on the United States Constitution. Because we cannot agree that Bivens is applicable to the facts of this case we need not consider the validity of the assumptions upon which this argument is premised.

In holding that Bivens was entitled to recover damages for harm inflicted by federal agents during an unconstitutional search, the Supreme Court said:

Of course, the Fourth Amendment does not in so many words provide for its enforcement by an award of money damages for the consequences of its violation. But 'it is ... well settled that where legal rights have been invaded, and a federal statute provides for a general right to sue for such invasion, federal courts may use any available remedy to make good the wrong done.' The present case involves no special factors counselling hesitation in the absence of affirmative action by Congress.

Id. at 396, 91 S.Ct. at 2004, 29 L.Ed.2d at 626 (citation omitted). In a more recent case, Davis v. Passman, 442 U.S. 228, 99 S.Ct. 2264, 60 L.Ed.2d 846 (1979), the Supreme Court reaffirmed the principles set forth in Bivens. Emphasizing the absence of "alternative forms of judicial relief" and noting that "(f)or Davis as for Bivens, 'it is damages or nothing,' " id. at 245, 99 S.Ct. at 2277, 60 L.Ed.2d at 862-63, the Court held that the Fifth Amendment's due process clause provided a cause of action for damages, id. at 248-49, 99 S.Ct. at 2278-79, 60 L.Ed.2d at 865.

The most serious obstacle to appellants' argument under Bivens and Davis is the question of whether this case involves any "special factors counselling hesitation" in creating a damages remedy based on the Constitution. Bivens, 403 U.S. at 396, 91 S.Ct. at 2004, 29 L.Ed.2d at 626; Davis, 442 U.S. at 245, 99 S.Ct. at 2277, 60 L.Ed.2d at 862. ASHA urges that various public policy considerations compel rejection of appellants' claim. The superior court found that argument persuasive and cited several policy factors that underlie "the generally accepted view (that) a disappointed bidder is not entitled to an award of money damages against a public authority even though his bid was wrongly rejected":

First, to award money damages to a disappointed bidder twice penalizes the public. Premier Electrical Construction Co. v. Board of Education of the City of Chicago (70 Ill.App.3d 866, 27 Ill.Dec. 125), 388 N.E.2d 1088, 1094 (Ill.App.1979). When a public contract is not awarded to the lowest bidder, the public must pay the additional expense. If money damages are awarded to the disappointed bidder, the public is again penalized. Second, judicial review of bid selections thwarts the right of a public authority to reject any and all bids and would subject public agencies to endless lawsuits by disappointed bidders. Universal By-Products v. City of Modesto (43 Cal.App.3d 145), 117 Cal.Rptr. 525 (Cal.App.1974). Third, the power to let a public contract is exercised for the benefit of the public and not the bidder. Townsend v. McCall (262 Ala. 554), 80 So.2d 262 (Ala.1955); Beaver Glass and Mirror Co., Inc. v. Board of Education (59 Ill.App.3d 880, 17 Ill.Dec. 378), 376 N.E.2d 377 (Ill.App.1978); Pioneer Co. v. Hutchinson, 220 S.E.2d 894 (W.Va.1975).

Although appellants distinguish the cases cited by the superior court on the ground that they, and not the public, were the intended beneficiaries of the preference rights on which they rely, we find the superior court's reasoning applicable here. Even granting appellants' contention that the present case is distinguishable from those cited by the superior court, the fact that the urban renewal project undertaken by ASHA was in the public interest, and that recovery by appellants would entail double payment for the project by the public, militates against...

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