United States District Court, D. Alaska
DAVID E. OLSON AND ABSOLUTE ENVIRONMENTAL SERVICES, INC., Plaintiffs,
MARK O'BRIEN, JAMES CANTOR, AND RICHARD WELSH, Defendants.
ORDER AND OPINION [RE: MOTION AT DOCKET 138, 140,
147, & 149]
W. SEDWICK SENIOR JUDGE
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.
next motion filed is Defendants Mark O'Brien, James
Cantor, and Richard Welsh (“Defendants”) motion
for summary judgment at docket 140. Plaintiff responds at
docket 166. Defendants reply at docket 174.
third motion is a motion in limine filed by
Plaintiff at docket 147. Defendants respond at docket 156.
Plaintiff replies at docket 165.
final motion is Defendants' motion in limine
filed at docket 149. Plaintiff responds at docket 157.
Defendants reply at docket 162.
argument was requested and granted on all four motions. Oral
argument was heard on July 20, 2018.
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.
STANDARD OF REVIEW
Motions for Summary Judgment
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.” 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.” Ultimately, “summary judgment will
not lie if the . . . evidence is such that a reasonable jury
could return a verdict for the nonmoving
party.” 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.”
moving party has the burden of showing that there is no
genuine dispute as to any material fact. 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. 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. 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.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.
Motions in Limine
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.
MOTIONS AT DOCKETS 138 & 140
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
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.
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. The Procurement Code provides the
procedure for addressing any contract claim.
the contractor must raise a claim with the procurement
officer. In this case, NPE presented a claim to
the procurement officer. The procurement officer denied
the contractor may appeal the decision of a procurement
officer through an administrative appeal. NPE's
claim involved a construction contract so the administrative
appeal was to the Commissioner of the Department of
Transportation and Public Facilities
(“DOTPF”). 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. Otherwise, the case is
heard under AS 36.30.630.
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.
a hearing officer's role is to “recommend a
decision to the commissioner . . ., based upon the evidence
presented. The recommendations must include findings of fact
and conclusions of law.” 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.
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?” Later, when the dispute eventually
reached it, the Alaska Supreme Court noted the remainder of
[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
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
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 bidders were offered the chance to inspect pan deck that
was not covered, which was at another location in the S[tate]
O[ffice] 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.
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.
O'Brien, while restating the incorrect fact, was actually
concerned about the legal standard used in the decision;
specifically, the “duty to inspect.”
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).
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.” 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.
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.
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 nor Mr. O'Brien attended the hearing, listened to a
recording of the hearing, or read a transcript of the hearing
prior to drafting the final decision. Deputy Commissioner
Richards did not attend the hearing, listen to a recording of
the hearing, read a transcript of the hearing, or review any
material other than Mr. Welsh's draft final decision.
Deputy Commissioner Richards did ask Mr. O'Brien some
questions regarding the draft. On June 25, 2009, Deputy
Commissioner Richards signed and issued a final decision
appealed the final decision of Deputy Commissioner Richards
to the superior court sitting as an intermediate appellate
court. The appeal contained both substantive
and due process claims. The superior court allowed discovery
[H]eld a limited trial de novo to consider North
Pacific's procedural arguments regarding (1) the timing
of the deputy commissioner's decision, (2) the
decision-making role of the deputy commissioner, (3) the role
of Department of Transportation and Public Facilities staff
in the decision, (4) the alleged deprivation of a hearing,
and (5) the alleged ex parte contact. After trial, the
superior court made thorough findings of fact on the agency
appeals process, the agency's factual error,
communications between the deputy commissioner and the staff,
and the lack of bias in the agency decision-making process.
Finally, the superior court concluded that the agency
decision was not procedurally flawed.
superior court affirmed Deputy Commissioner Richards'
final decision. The superior court rejected NPE's due
process claims but noted some issues. “While the
superior court was ‘troubled' by some of the
procedural issues, it ultimately held that the final agency
decision ‘was not legally flawed' and the
State's ‘resolution of the legal questions raised
by [North Pacific] was reasonable.'” In addition,
“The superior court further found that North Pacific
had ‘not proved by a preponderance of evidence that
[the deputy commissioner], [Chief Contracting Officer]
O'Brien and [the assistant attorney general] were
individually or collectively personally biased against [North
Pacific].'” Regarding the communication between
Mr. O'Brien and Mr. Bankston, “the court concluded
that there was no traditional ex parte contact because the
communication did not involve a party to the case. The
superior court further concluded that the erroneous factual
finding that was likely caused by the exchange did not
substantially impact the agency
decision.” Finally, the superior court acknowledged
that the argument that Mr. O'Brien, Mr. Welsh, and Deputy
Commissioner Richards failed to review the record had
“more than a little surface appeal” but the
argument was rejected for two reasons: “(1) ‘the
oral testimony was not the entire record,' and the agency