Commonwealth of Kentucky Court of Appeals

Transcription

1 RENDERED: JANUARY 30, 2015; 10:00 A.M. NOT TO BE PUBLISHED Commonwealth of Kentucky Court of Appeals NO CA MR PIONEER PLAZA OF GEORGETOWN, LLC; APPELLANT APPEAL FROM FRANKLIN CIRCUIT COURT v. HONORABLE THOMAS D. WINGATE, JUDGE ACTION NO. 13-CI COMMONWEALTH OF KENTUCKY, FINANCE AND ADMINISTRATION CABINET; LORI H. FLANERY, IN HER OFFICIAL CAPACITY AS SECRETARY, FINANCE AND ADMINISTRATION CABINET; COMMONWEALTH OF KENTUCKY, CABINET FOR HEALTH AND FAMILY SERVICES; AND E. THOMAS MOON APPELLEES OPINION REVERSING AND REMANDING ** ** ** ** ** BEFORE: ACREE, CHIEF JUDGE; MAZE AND THOMPSON, JUDGES. MAZE, JUDGE: Pioneer Plaza of Georgetown, LLC (Pioneer Plaza) appeals from an order of the Franklin Circuit Court which dismissed its statutory appeal

2 challenging the decision by the Finance and Administration Cabinet (the Cabinet) regarding a bid for a lease of state office space. The Cabinet Secretary concluded, and the circuit court agreed that Pioneer Plaza failed to file a timely protest as required by KRS 1 45A.285(2). Pioneer Plaza argues that the Cabinet caused the delay by failing to provide it access to the documents which it needed to determine whether there were reasonable grounds for a protest. We conclude that there are genuine issues of material fact concerning when Pioneer Plaza knew or had reason to know of its grounds for protest. Consequently, the circuit court prematurely dismissed the appeal as untimely. Hence, we reverse and remand for additional proceedings. Pioneer Plaza owns and operates a shopping plaza in Georgetown, Scott County, Kentucky. In April 2011, the Cabinet s Division of Real Property (the Division) placed an advertised solicitation seeking bids for office space for the Cabinet for Health and Family Services (CHFS) in Scott County. The Division received three responses to the advertisement, including one from Pioneer Plaza. However, the other two offerors withdrew their bids. The Division cancelled the previous advertisement. But since CHFS s original lease was expiring, the Division signed a temporary lease with Pioneer Plaza, to run from July 2011 through June In August 2011, the Division placed a new advertisement soliciting bids for the office space. This time, the Division received six bids, including one 1 Kentucky Revised Statutes. -2-

3 from Pioneer Plaza and another from E. Thomas Moon. Because the bidding process was still ongoing, the Division entered into another temporary lease with Pioneer Plaza, to run from July 2012 through June On September 6, 2012, the Division received the Cabinet s final award recommendation selecting Moon s property based on cost and lease term. The lease was formally awarded to Moon on October 22, On the same day, the Division sent a notice informing Pioneer Plaza of the decision. The same letter advised Pioneer Plaza of its right to review the lease files and that the award may be subject to review by the Capital Projects and Bond Oversight Committee. Pioneer Plaza contacted the Finance Cabinet to inquire about the availability of the lease file. However, there is a question whether the files were actually available for inspection. Counsel for Pioneer Plaza alleges that he inquired about inspecting the records, but was told by representatives of the Cabinet that they were not available. Pioneer Plaza then filed several Open Records Requests, dated October 25, November 28, and November 29, The Cabinet denied the first request, explaining that the requested records were preliminary. After the second and third requests, the Cabinet responded on December 6, advising that the requested records would be provided by December 14. By letter dated December 3, 2012, to CHFS, counsel for Pioneer Plaza requested a meeting concerning the bidding and leasing process. Pioneer Plaza raised four grounds of objection, and noted the outstanding Open Records -3-

4 Requests. Pioneer Plaza received the requested documents on December 14, After reviewing those records, Pioneer Plaza filed a formal letter of protest with the Finance Cabinet on December 26, In a determination entered on February 11, 2013, the Cabinet Secretary found that the protest was not timely under KRS 45A.245. Thereafter, Pioneer Plaza filed a complaint in the Franklin Circuit Court, seeking judicial review pursuant to KRS 13B.140 and a declaration of rights pursuant to KRS The Cabinet responded with a motion to dismiss, arguing that Pioneer Plaza s protest was not timely filed. In an order entered on May 20, 2013, the circuit court agreed. Pioneer Plaza filed a motion for relief from the judgment pursuant to CR , which the trial court denied on June 18, Pioneer Plaza filed its notice of appeal the following day. 4 As the circuit court noted, the central issue in this case is whether Pioneer Plaza filed a timely protest of the Cabinet s decision accepting Moon s bid for the office space. The Kentucky Model Procurement Code (the MPC) serves to 2 Pioneer Plaza takes issue with the sufficiency of the Cabinet s response on December 14. However, the Attorney General s office concluded that the Cabinet had provided all of the documents required under the Open Records Act. 3 Kentucky Rules of Civil Procedure. 4 We note that CR motion is reserved for specified grounds to set aside a final judgment or order. Consequently, while the timely filing of a CR postpones finality, a motion under CR does not toll the time for filing a notice of appeal. In this case, Pioneer Plaza filed its notice of appeal within the 30-day period required by CR However, we would strongly caution against using CR in such circumstances, as it is seldom applicable and may lead to the filing of an untimely appeal. See James v. Hillerich & Bradsby Co., 299 S.W.2d 92, 94 (Ky. 1956). -4-

5 provide a fair bidding process for bidders on state contracts. To this end, the MPC provides a means for an unsuccessful bidder to challenge the fairness of the bidding process. See Pendleton Bros. Vending v. Com. Fin. & Admin. Cabinet, 758 S.W.2d 24 (Ky. 1988). KRS 45A.285 sets forth the requirements for an unsuccessful bidder to protest a decision of state contracts. In pertinent part, KRS 45A.285(2) provides that a protest must be filed promptly and in any event within two (2) calendar weeks after such aggrieved person knows or should have known of the facts giving rise thereto. 200 KAR 5 5:380 1 further provides that: (b) For protests based upon alleged improprieties in the award of a contract, the facts giving rise to the protest shall be presumed to have been known to the protester on the date the notice of award of a contract was posted to the Commonwealth of Kentucky's eprocurement Web site, This presumption may be overcome by a showing that the facts giving rise to the protest were not and should not have been known to the protester on the date established by subsection (1)(a) or (b) of this section. 200 KAR 5:380 1(2). Statutory procedures must be strictly complied with in respect to administrative appeals. See Bd. of Adjustments of the City of Richmond v. Flood, 581 S.W.2d 1 (Ky. 1978). If a party fails to exhaust its administrative remedies by filing a timely protest, then that party will be precluded from seeking judicial relief from the administrative action. Popplewell's Alligator Dock No. 1, Inc. v. Revenue Cabinet, 133 S.W.3d 456, 471 (Ky. 2004). 5 Kentucky Administrative Regulations. -5-

6 In this case, there is no dispute that the Cabinet notified Pioneer Plaza of its intent to award the lease to Moon on October 22, However, Pioneer Plaza argues that it could not have know the facts giving rise to a reasonable protest until the Cabinet provided the lease files for review. The Cabinet failed to respond timely to three Open Records Requests seeking those files. A subsequent Attorney General s review found that the Cabinet did not provide the requested documents until December 14. Given this unreasonable delay, Pioneer argues that the two-week period for filing a protest did not commence until the latter date. The circuit court rejected this argument, taking the position that the Cabinet made the lease files available for review at the Division of Public Properties during regular business hours. Instead of availing itself of this avenue of obtaining information, [Pioneer Plaza] filed an Open Records Request to seek the documents. Since Pioneer Plaza could have immediately reviewed the records and determined the basis for a protest, the circuit court implicitly concluded that its decision to pursue the records through the Open Records process was objectively unreasonable. As a result, the circuit court found that Pioneer Plaza s three-month delay rendered the protest untimely. However, the record does not fully bear out the circuit court s reasoning. The Cabinet s October 22 letter to Pioneer Plaza advises: Per KRS , active lease files are open for public inspection in the Finance and Administration Cabinet s Division of Real Properties, Bush Building, 3rd Floor, 403 Wapping Street, Frankfort, Kentucky. Files may be -6-

7 reviewed between the hours of 8:00 a.m. and 4:00 p.m., Monday through Friday. (Underline in original). But while the letter advised Pioneer Plaza that the files were open for public inspection, the Cabinet s responses to the Open Records Requests indicated otherwise. Pioneer Plaza offered evidence that, on October 25, the Finance Cabinet advised its counsel that the lease files were not available for inspection, and the Cabinet did not know when they would be available. On October 28, the Cabinet denied the first Open Records Request, stating that the records sought were preliminary and thus not available for production. In the Open Records appeal, the Attorney General s office pointed out that KRS (5) covers situations where the public record is in active use. In such cases, the statute provides that: the official custodian shall immediately notify the applicant and shall designate a place, time, and date for inspection of the public records, not to exceed three (3) days from receipt of the application, unless a detailed explanation of the cause is given for further delay and the place, time, and earliest date on which the public record will be available for inspection. We recognize that the Cabinet s obligations under the Open Records Act are distinct from those under the MPC. However, KRS provides that active lease files are public records. The Attorney General s office found that the Cabinet s responses failed to include these necessary notices required under the Open Records Act. Although the Cabinet did include that information in its October 22 letter, there is at least a factual issue whether the Cabinet s subsequent -7-

8 responses concerning the availability of the records were materially misleading. Consequently, the circuit court erred in finding, as a matter of law, that Pioneer Plaza should have known of its grounds for filing a protest within two weeks of receiving the notice of the Division s decision to award the bid to Moon. The Cabinet Secretary took a different approach to this issue than the circuit court. The Secretary noted that Pioneer Plaza s December 3 letter to CHFS raised four specific objections to the bidding process: the length of the bid process; the allegedly missing certificates of conformity; the calculation of the lease rate; and the failure to consider the costs of moving. The Secretary also pointed out that the December 3 letter referred to a number of documents supporting these grounds, and all of these documents were included in the lease file. Pioneer Plaza raised several of the same grounds in its December 26 protest. Thus, the Secretary found that Pioneer Plaza was aware of its grounds for protest no later than December 3. As a result, the Secretary concluded that the protest filed on December 26 was untimely. We do not endorse the Cabinet s alleged failure to provide the lease file or its admitted and repeated failures to comply timely with the Open Records Act. However, we agree with the Secretary that that the relevant issue concerns when Pioneer Plaza was aware of its grounds to protest the bid. Of the four issues raised in the December 3 letter, only one did not require additional documentation to confirm: the questions about the length of the bidding process. Counsel couched the remaining three issues in general terms, and indicated that Pioneer Plaza was -8-

9 awaiting the documents through its Open Records Request in order to address the specifics of these issues. The controlling question, therefore, concerns when Pioneer Plaza possessed sufficient information to file a good-faith protest to the bidding process. If the lease files were actually available for inspection, as indicated in the October 22 letter, then Pioneer Plaza had an obligation to make diligent efforts to review those files and determine its grounds for a protest. In that case, its December 26 protest would not have been timely, notwithstanding the Cabinet s violation of its duties under the Open Records Act. However, if the lease files were not actually available for inspection, or the Cabinet made material misrepresentations concerning the availability of the lease file, then Pioneer Plaza s decision to rely on its Open Records Request would have been reasonable. The Cabinet concedes that it did not fully respond to Pioneer Plaza s Open Records Request until December 14. If Pioneer Plaza could not determine its bases for filing a protest until it received those records, then its protest filed on December 26 was timely. The most difficult scenario arises if Pioneer Plaza became aware of some of its grounds for filing a protest prior to receiving the documents on December 14. Pioneer Plaza s letter to CHFS indicates that it had specific concerns about the bidding process by December 3, but did not necessarily have specific facts to back up most of those issues. Nevertheless, the controlling -9-

10 question remains when Pioneer Plaza possessed sufficient information to file a good-faith protest. All of these issues involve factual matters which the circuit court must decide. Of course, Pioneer Plaza bears the burden of proof to rebut the presumption established by 200 KAR 5:380 1 and to show that it could not have filed a good-faith protest until the Cabinet produced the lease files. However, we conclude that Pioneer Plaza presented sufficient evidence to place these factual matters in genuine dispute. Therefore, we must remand this case for additional proceedings and factual findings on these issues. Accordingly, the order of the Franklin Circuit Court is reversed, and this matter remanded for additional proceedings and findings as set forth in this opinion. ALL CONCUR. BRIEF FOR APPELLANT: Noel Mark Botts Harrodsburg, Kentucky BRIEF FOR APPELLEES: Geri Grigsby General Counsel Bradford A. Nilsson Office of the General Counsel Finance and Administration Cabinet -10-