Protect Lake Pleasant, LLC v. McDonald

• Decision Date: 23 March 2009
• Docket Number: No. CIV 07-0454-PHX-RCB.,CIV 07-0454-PHX-RCB.
• Parties: PROTECT LAKE PLEASANT, LLC, an Arizona limited liability company; David Maule-Ffinch; Michael Viscuis; and Pensus Group, L.L.C., an Arizona limited liability company, Plaintiffs v. J. William McDONALD in his official capacity as Commissioner, United States Bureau of Reclamation;<SMALL><SUP>1</SUP></SMALL> United States Bureau of Reclamation; an agency of the United States Department of Interior, and Ken Salazar, in his official capacity as Secretary, United States Department of Interior,<SMALL><SUP>2</SUP></SMALL> Defendants and Lake Pleasant Marina Partners, LLC, an Arizona limited liability company, Defendant-Intervenor.
• Court: U.S. District Court — District of Arizona

Page 895

609 F.Supp.2d 895

PROTECT LAKE PLEASANT, LLC, an Arizona limited liability company; David Maule-Ffinch; Michael Viscuis; and Pensus Group, L.L.C., an Arizona limited liability company, Plaintiffs v. J. William McDONALD in his official capacity as Commissioner, United States Bureau of Reclamation;¹ United States Bureau of Reclamation; an agency of the United States Department of Interior, and Ken Salazar, in his official capacity as Secretary, United States Department of Interior,² Defendants and Lake Pleasant Marina Partners, LLC, an Arizona limited liability company, Defendant-Intervenor.

No. CIV 07-0454-PHX-RCB.

United States District Court, D. Arizona.

March 23, 2009.

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Andrew Mark Federhar, Lori Anne Higuera, Todd Christopher Wiley, Fennemore Craig PC, Robert Clifford Hackett, Daniel Joseph Kiley, Sherman & Howard LLC, Phoenix, AZ, Cynthia L. Taub, John J. Duffy, Steptoe & Johnson LLP, Washington, DC, for Plaintiffs.

Sue A. Klein, US Attorney's Office, Phoenix, AZ, for Defendants.

Marc Allen Erpenbeck, Ronald W. Messerly, Snell & Wilmer LLP, Phoenix, AZ, for Intervenor-Defendant.

ORDER

ROBERT C. BROOMFIELD, Senior District Judge.

In count one of their First Amended Complaint ("FAC") plaintiffs allege that the United States Bureau of Reclamation ("BOR"),³ by authorizing Maricopa County ("the County") to proceed with the development and construction of the Scorpion Bay Marina & Yacht Club at Lake Pleasant Regional Park ("LPRP"), violated the Federal Property and Administrative Services Act of 1949 ("FPASA"), as well as various related regulations and BOR Directives and Standards ("D & Ss") and policies.

Currently pending before the court is plaintiffs' motion for partial summary judgment pursuant to Fed.R.Civ.P. 56 on count one (doc. 88). BOR is cross-moving for that same relief (doc. 114). Defendant/intervenor Lake Pleasant Marina Partners, LLC, ("Partners") filed a "counter motion" for partial summary judgment also directed to count one (doc. 110). Three motions to strike, by BOR (doc. 106); ("Partners") (doc. 107); and plaintiffs (doc. 124) are also pending. Finally, plaintiffs are moving to supplement the thirteen volume administrative record (doc. 87).⁴

Background

This recitation of facts is for the limited purpose of providing a factual overview of plaintiffs' FPASA claims in count one of the FAC. These facts will be further developed herein as necessary to resolve discrete issues, such as jurisdiction, which these motions raise.

Two agreements figure prominently in plaintiffs' FPASA claims—the 1990 "Recreational Management Agreement" ("RMA") between BOR and the County and the "Use Management Agreement" ("UMA") between the County and Partners. The statutory authority for the first agreement, the RMA, is the Federal Water Project Recreation Act. Admin. Rec., Vol. 1 at 1. In that RMA, BOR "designat[ed]" the County as its "exclusive recreational management contractor[.]" Id. at 4, Art. 2(a). As part of that Agreement, the County transferred "existing park facilities and related property interests" to BOR. Id. at 6, Art. 4. The consideration for that transfer took several forms. As part of that consideration, with BOR's "approval[,]" BOR granted to the County "the authority ... to enter into third party concession agreements[,]" such as the "Use Management Agreement" ("UMA") entered into between the County and Partners for the LPRP marina. See id. at 7, Art. 4(c)(4). Another aspect of that consideration was BOR's $2,500,000.00 payment to the County to "be utilized only in connection with the recreational development of the LPRP wherein [BOR] has Federal land management responsibility." Id. at 7, Art. 4(c)(6).

Article 13 of the RMA delineated the circumstances under which the County could "enter into direct agreements with third parties to operate concession attractions, developments or services on the LPRP[.]" Id. at 15, Art. 13(a). In that Article, the County "agree[d] to provide to [BOR] for its approval, a copy of each third party concession agreement involving a pre-approved use as set forth" later in Article 13. Id. The marina complex which was the subject of the UMA is included in that "pre-approved list." See id. At 16, Art. 13(d)(3); (d)(4); and (d)(6). "Subject to final [BOR] approval," the RMA also provided that the County "may consider" the marina complex, among other items, to be "pre-approved for negotiation purposes[.]" Id.

In 2005 the County issued a Request for Proposal ("RFP") for the Scorpion Bay Marina. That RFP contained a clause, section 6.8, entitled "Competition, Non-Collusion & Conflict of Interest[.]" PSOF (doc. 89)⁵, exh. 29 thereto at BORFOAI00315. Plaintiffs view that clause as "anti-competitive," whereas defendants view it as "pro-competition." Regardless, essentially section 6.8 precluded any party possessing any commercial interest adjacent to or near Lake Pleasant from bidding on that project. Because plaintiff Pensus Group ("Pensus") operates a marina adjacent to the Lake, it claims that in light of section 6.8, it could not bid on the project. In response to the 2005 RFP, Partners submitted the only bid for the Scorpion Bay project.

As the next step in the process, the County prepared a Proposed ("UMA") for Partners. Plaintiffs allege that the Proposed UMA "varied significantly from the terms contained in the 2005 RFP." FAC (doc. 4) at 11, ¶ 43. In particular, the 2005 RFP included two provisions which were not in the Proposed UMA. According to plaintiffs, the 2005 RFP included an encumbrance provision prohibiting the concessionaire from mortgaging or encumbering marina improvements, whereas the Proposed UMA did not include such a provision. Furthermore, the 2005 RFP included a provision mandating that the concessionaire transfer all marina improvements to the County upon termination of any contract entered into pursuant to that RFP, PSOF (doc. 89), exh. 29 thereto at 5, § 2.0, whereas the Proposed UMA omitted that reversion provision. Then, despite the fact that the 2005 RFP did not give the concessionaire a "right of first refusal" with respect to 30 additional acres of land, the Proposed UMA did. Subsequently, the BOR approved the Proposed UMA as tendered by the County. Admin. Rec., Vol. 1 at 000162. In turn, the County entered into a Final UMA with Partners for the development and operation of Scorpion Bay Marina. See id. Vol. 1 at 000163-000210.

Broadly stated, based upon the foregoing plaintiffs contend that the BOR violated the FPASA by not ensuring "full and open competition" with respect to the Scorpion Bay Marina bidding process. For one thing, plaintiffs allege that the BOR improperly allowed the County to include section 6.8 in the 2005 RFP. The result, according to plaintiffs was a "lack of competition for the 2005 RFP" and a concomitant "contract price substantially below market value." Pl. Mot. (doc. 88) at 16:6-7.

Second, plaintiffs contend that the BOR improperly allowed the County to make material changes to the UMA. One purported material change is that the encumbrance and reversion provisions, mentioned above, which had been in the 2005 RFP were not included in the Final UMA. Another improper material change, according to plaintiffs, is that the Final UMA included a right of first refusal which did not appear anywhere in the 2005 RFP.

The underlying theory of plaintiffs' FPASA claims is that the "BOR has independent oversight responsibilities" with respect to non-federal partners, such as the County. See id. at 17:9. Based upon that theory, the FAC sweepingly alleges that "BOR's failure to ensure [the] County's compliance with applicable law, regulation, and policy was arbitrary and capricious, an abuse of discretion, and a violation of governing provisions of federal law." FAC (doc. 4) at 18, ¶ 82. In similarly broad language, plaintiffs further allege that "BOR's approval of the Proposed UMA, which was based on the illegal 2005 RFP, was also arbitrary and capricious, an abuse of discretion, and a violation of governing provisions of federal law." Id. at 18, ¶ 83. Plaintiffs conclude count one by alleging:

The consequences of BOR's unlawful action are, among others, a prima facie violation of federal procurement law that excluded Plaintiffs Maule-Ffinch and Pensus from responding to the 2005 RFP for which they were highly and uniquely qualified and known to be a financially viable candidate.

Id. at 18, ¶ 84. In their motion for partial summary judgment plaintiffs are seeking a declaration that the Final UMA is "illegal and void ab initio." Pl. Mot. (doc. 88) at 1.

Succinctly stated, BOR's response is that for the most part, in count one plaintiffs are focusing on the County's actions, and obviously the County is not a party to this lawsuit. As for the RFP which is the subject of count one, BOR stresses that it was "neither authorized by nor subject to [BOR's] approval." BOR Resp. (doc. 113) at 25:22. Turning to the UMA, over which BOR did have final approval, BOR asserts that it is entitled to summary judgment as to count one because its decision to approve that agreement "was not arbitrary, capricious or otherwise not in accordance with the law." Id. at 9.

As the private entity which ultimately was awarded the UMA for the marina, Partners' interests differ from those of the BOR, and their arguments herein reflect those differences. Instead of focusing on plaintiffs' interactions with BOR, Partners focuses on plaintiffs dealings with the County. It first argues that plaintiff Pensus failed to exhaust available County administrative remedies. Similarly, Partners maintains that "the Arizona Court of Appeals has already found that the County followed local procurement procedures[.]" Part. Mot. (doc. 110) at 4:16-17. Next, Partners assert that jurisdiction properly lies in the Court of Federal Claims, not this district court. Finally, Partners claims that they are...