Facilitec Inc v. J Elliott Hibbs

SUPREME COURT OF ARIZONA
En Banc
FACILITEC, INC., ) Arizona Supreme Court
) No. CV-02-0412-PR
Plaintiff-Appellee, )
) Court of Appeals
v. ) Division One
) No. 1 CA-CV 01-0139
J. ELLIOTT HIBBS, in his capacity )
as Director of the Department of ) Maricopa County
Administration for the State of ) Superior Court
Arizona, ) No. CV 99-22372
)
Defendant-Appellant. )
) O P I N I O N
__________________________________)
Appeal from Superior Court of Maricopa County
No. CV 99-22372
The Honorable Susan R. Bolton
The Honorable Kenneth L. Fields
The Honorable Edward O. Burke
REVERSED AND REMANDED
Opinion of Court of Appeals Division One
204 Ariz. 39, 59 P.3d 803 (App. 2003)
VACATED
________________________________________________________________
Fennemore Craig Phoenix
by Timothy Berg
and Keith L. Hendricks
and Theresa Dwyer
and Emily Chang
Attorneys for Facilitec, Inc.
Terry Goddard, Attorney General Phoenix
by Charles A. Grube, Assistant Attorney General
Attorneys for J. Elliott Hibbs, in his capacity as
Director of the Arizona Department of Administration
M c G R E G O R, Vice Chief Justice
¶1 We granted review to determine whether the Director of
the Arizona Department of Administration (ADOA) may delegate to
the Deputy Director authority to make the final decision on the
appeal of a procurement protest. We answer this question in the
affirmative. We exercise jurisdiction pursuant to Article VI,
Section 5.3 of the Arizona Constitution, Rule 23 of the Arizona
Rules of Civil Appellate Procedure, and Arizona Revised Statutes
(A.R.S.) section 12-120.24 (2003).
I.
¶2 ADOA solicited bids on a contract to provide office
furniture to the state and awarded the contract to a bidder
other than the appellee, Facilitec, Inc. (Facilitec). Facilitec
filed a protest, demanding that the contract be rescinded and
that a new one be awarded. When the state procurement officer
denied the protest, Facilitec appealed to the ADOA Director, J.
Elliott Hibbs (the ADOA Director or Hibbs). Hibbs delegated the
matter to the ADOA Deputy Director, William Bell (the Deputy
Director or Bell). Bell issued a Preliminary Decision and Order
and then referred the matter to the Arizona Office of
Administrative Hearings (OAH) for a hearing on certain
identified issues. After the hearing, the administrative law
judge entered a recommended decision (the Decision). The
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Decision did not suggest that the original contract be
rescinded, but it did recommend that Facilitec be awarded an
additional non-exclusive contract to provide office furniture to
the state. Bell rejected the administrative law judge’s
recommendation and issued an agency decision denying Facilitec’s
protest.
¶3 Facilitec filed a motion for review with Hibbs. Hibbs
himself took no action, but Bell issued an order denying the
motion for review.
¶4 Because Hibbs took no action within thirty days,
Facilitec requested the OAH to certify the Decision as the final
decision. In making that request, Facilitec relied upon A.R.S.
section 41-1092.08.D, which provides:
[I]f the head of the agency . . . does not accept,
reject or modify the administrative law judge’s
decision within thirty days after the date the [OAH]
sends a copy of the administrative law judge’s
decision to the head of the agency . . . the [OAH]
shall certify the administrative law judge’s decision
as the final administrative decision.
A.R.S. § 41-1092.08.D (Supp. 2003). After OAH denied
Facilitec’s request, Facilitec filed a complaint in superior
court.
¶5 In superior court, Facilitec again argued that because
the head of the ADOA did not review the administrative law
judge’s Decision, the trial court should deem the Decision to be
the ADOA’s final decision under the terms of section 41-
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1092.08.D. In addition, Facilitec argued that the Deputy
Director lacked authority to review the Decision.
¶6 The trial court granted partial summary judgment to
Facilitec, finding that “‘[i]n order for the [ADOA] Director to
have the power to delegate legislative or judicial functions the
legislature must expressly grant the power.’” Facilitec, Inc.
v. Hibbs, 204 Ariz. 39, 40 ¶ 5, 59 P.3d 803, 804 (App. 2002)
(quoting the superior court).
¶7 The court of appeals reversed, concluding that “the
Deputy Director decided Facilitec’s procurement protest pursuant
to a proper grant of authority from both the Arizona Legislature
and the ADOA Director.” Id. at 41-42 ¶ 14, 59 P.3d at 805-06.
We granted Facilitec’s petition for review to consider this
recurring issue of statewide importance.
II.
¶8 Administrative agencies are governmental bodies
“charged with administering and implementing particular
legislation.” Black’s Law Dictionary 45 (6th ed. 1990).
Because the legislature is often unable to specify detailed
rules of conduct, especially in highly technical and rapidly
changing fields, it frequently entrusts agencies with the
responsibility for developing and implementing regulatory policy
for a limited subject matter.
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¶9 Agencies often exercise powers that are peculiar to
each of the three principal branches of government. For
example, agencies frequently operate under statutes that grant
them legislative power to issue rules, executive power to
investigate possible violations of rules or statutes and to
prosecute offenders for these violations, and judicial power to
adjudicate particular disputes regarding compliance with
relevant governing standards. See, e.g., State ex rel.
Schneider v. Bennett, 547 P.2d 786, 791 (Kan. 1976) (stating
that “administrative agencies exercise many types of power
including legislative, executive, and judicial powers often
blended together in the same administrative agency”); Kenneth
Culp Davis, Administrative Law Text 24 (3d ed. 1972) (stating
that “a typical administrative agency exercises many types of
power, including executive, legislative, and judicial power”).
¶10 Because agencies are creatures of statute, the degree
to which they can exercise any power depends upon the
legislature’s grant of authority to the agency. “An agency . .
. has no powers other than those the legislature has delegated
to it. . . . ‘Any excursion by an administrative body beyond
the legislative guidelines is treated as an usurpation of
constitutional powers vested only in the major branch of
government.’” Cochise County v. Kirschner, 171 Ariz. 258, 261-
62, 830 P.2d 470, 473-74 (App. 1992) (citing Swift & Co. v.
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State Tax Comm’n, 105 Ariz. 226, 230, 462 P.2d 775, 779 (1969),
overruled on other grounds by Pittsburgh & Midway Coal Mining
Co. v. Arizona Dep’t of Revenue, 161 Ariz. 135, 776 P.2d 1061(1989)); see also Arizona Health Care Cost Containment Sys. v.
Bentley, 187 Ariz. 229, 232, 928 P.2d 653, 656 (App. 1996)
(stating that “‘[t]he scope of an agency’s power is measured by
statute and may not be expanded by agency fiat’”) (citing
Cochise County v. Arizona Health Care Cost Containment Sys., 170
Ariz. 443, 445, 825 P.2d 968, 970 (App. 1991)). Thus, in
deciding whether the ADOA Director may delegate to the Deputy
Director authority to make the final decision on the appeal of a
procurement protest, we look to the statutes defining the ADOA
Director’s authority.
¶11 The starting point of our analysis is A.R.S. section
38-462, the general statute governing agency deputies. That
section states: “Unless otherwise provided, each deputy of a
state or county officer possesses the powers and may perform the
duties prescribed by law for the office of the principal.”
A.R.S. § 38-462.A (2001). This broad statutory language imposes
no limits upon the ability of a deputy director to perform any
duty prescribed for the principal, including those set forth in
section 41-1092.08.D, unless otherwise provided. Facilitec
asserts that because some statutes “otherwise provide,” the ADOA
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Director improperly delegated his quasi-judicial
responsibilities to the Deputy Director.
¶12 The statutes upon which Facilitec relies appear as
part of A.R.S. sections 41-701 to -806 (2001 & Supp. 2003),
through which the legislature created the ADOA. Section 41-
703.11 addresses the ADOA Director’s authority to delegate and
provides that the ADOA Director shall “[d]elegate the
administrative functions, duties and powers as the director
deems necessary to carry out the efficient operation of the
department.” A.R.S. § 41-703.11 (2001) (emphasis added).
Section 41-702.A, which deals with the Deputy Director,
provides: “The director with the approval of the governor shall
appoint a deputy director of the department. The deputy
director serves at the pleasure of the director and shall assist
the director in administering the department by performing the
duties and responsibilities that the director prescribes.”
A.R.S. § 41-702.A (2001) (emphasis added).
¶13 Facilitec argues that sections 41-702.A and 41-703.11
permit the ADOA Director to delegate administrative functions
only and that nothing in Title 41 authorizes the ADOA Director
to delegate his quasi-judicial functions to the Deputy Director.
According to Facilitec, the specific language of Title 41
prevails over the general language of section 38-462.
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¶14 Facilitec’s argument that sections 41-702.A and 41-
703.11 prevent the ADOA Director from delegating quasi-judicial
duties because the statutes refer to delegating “administrative
functions, powers and duties” and permit the Deputy Director to
assist the ADOA Director “in administering the department”
relies upon too narrow an interpretation of administrative
duties. As noted above, an administrative agency can exercise
executive, legislative and judicial power, often blended
together. Therefore, we do not construe the legislature’s
reference to administrative duties in these statutes as
excluding decision-making responsibilities.
¶15 Moreover, even if we were to read sections 41-702.A
and 41-703.11 narrowly, we would not regard the statutes as
inconsistent with section 38-462. “[W]henever possible we adopt
a construction of a statute that reconciles it with other
statutes and gives force to all statutes involved.” Achen-
Gardener, Inc. v. Super. Ct., 173 Ariz. 48, 54, 839 P.2d 1093,
1099 (1992); see also Pima County v. Maya Constr. Co., 158 Ariz.
151, 155, 761 P.2d 1055, 1059 (1988) (“[W]hen reconciling two or
more statutes, courts should construe and interpret them,
whenever possible, in such a way so as to give effect to all the
statutes involved.”). We see no conflict between section 38-462
and the statutes on which Facilitec relies.
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¶16 Nothing in section 41-702.A or 41-703.11 prohibits the
ADOA Director from delegating any “duties prescribed by law,”
including quasi-judicial duties, to the Deputy Director.
Instead, sections 41-702.A and 41-703.11 provide additional
instruction pertaining to the Deputy Director’s responsibilities
and the ADOA Director’s general power to delegate duties to
subordinates. Hibbs, therefore, acted within his statutory
authority under section 38-462 in delegating review of
procurement protests to Bell.
¶17 Another indication that the legislature intended to
permit the ADOA Director to delegate to the Deputy Director
authority to make the final decision on the appeal of a
procurement protest is that the legislature did not prohibit him
from doing so. In other instances, the legislature has
expressly restricted the exercise of powers. For example,
A.R.S. section 41-1604 enumerates the duties and
responsibilities of the Director of the Arizona Department of
Corrections. Section 41-1604.B.2.d states that the director
“shall not delegate” the responsibilities set forth in A.R.S.
section 41-1604.A.1-5. A.R.S. § 41-1604.B.2.d (1999 & Supp.
2003). The legislature has not included such a prohibition in
the ADOA statutes, which indicates that the legislature intended
to permit the ADOA Director to delegate his powers, as permitted
by section 38-462.
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¶18 In addition to arguing that Title 41 “otherwise
provides,” Facilitec contends that the ADOA Director cannot
delegate quasi-judicial duties absent express legislative
approval. In support of this argument, Facilitec relies on two
court of appeals opinions, Godbey v. Roosevelt School District
No. 66 of Maricopa County, 131 Ariz. 13, 638 P.2d 235 (App.
1981), and Cactus Wren Partners v. Arizona Department of
Building & Fire Safety, 177 Ariz. 559, 869 P.2d 1212 (App.
1993). Facilitec’s reliance on these cases is misplaced.
¶19 In Godbey, the acting school superintendent, without
prior formal approval from the Board of Trustees, issued an
administrative order requiring every teacher requesting paid
sick leave to provide a doctor’s certificate stating that the
teacher was ill. 131 Ariz. at 15, 638 P.2d at 237. The
teachers sued, claiming that the superintendent lacked power to
issue the administrative order without either prior Board
delegation of authority or express legislative authorization in
the absence of prior Board approval. Id. at 19, 638 P.2d at
241. The court of appeals found in favor of the teachers,
stating: “If the action of the superintendent is characterized
as ‘ministerial or administrative’, then the power was delegable
without express legislative authorization. If the action is
characterized as ‘legislative or judicial’, then the power was
not so delegable.” Id. at 19-20, 638 P.2d at 242.
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¶20 Facilitec argues that Godbey stands for the
proposition that a quasi-judicial function is not delegable
unless explicitly permitted by statute. We disagree with this
broad interpretation of Godbey. In Godbey, no statute
authorized the delegation of authority to the superintendent.
Here, A.R.S. section 38-462 expressly gives the Deputy Director
power to exercise all authority possessed by the ADOA Director.
¶21 Cactus Wren is similarly inapposite. In that case,
tenants of the Desert Skies Mobile Home Park filed a petition
with the Arizona Department of Building and Fire Safety (the
Department) challenging Cactus Wren Partners’ (Cactus Wren)
charges for trash removal and sewage services as violative of
the Arizona Mobile Home Parks Residential Landlord and Tenant
Act (the Act). 177 Ariz. at 561, 869 P.2d at 1214. A mobile
home parks hearing officer of the Department determined that the
sewage disposal and trash collection fees violated the Act and
required the refund of or rental credit for these overcharges.
Id. Cactus Wren sought judicial review, claiming that the
consideration and resolution of conflicts regarding the Act by
the Department’s hearing officer unconstitutionally infringed
upon the powers of the judiciary. Id. The court of appeals
recognized a difference between the operation or administration
of an agency and an agency’s quasi-judicial responsibilities and
found that the Department’s hearing officer did perform a
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function “judicial” in nature, but concluded that no separation
of powers violation occurred. Id. at 562-63, 869 P.2d at 1215-
16.
¶22 Cactus Wren provides little assistance in this case.
There, the issue was whether the legislature had power to permit
the Department’s hearing officer to consider and resolve
conflicts regarding the Act, or whether this remedy was reserved
to the judicial branch of government. The case before us
presents no separation of powers issue. All parties acknowledge
that the legislature has the power to create the administrative
remedy provided to Facilitec.
¶23 Like Godbey, Cactus Wren does not support Facilitec’s
argument that, despite the broad language of section 38-462, the
Deputy Director could exercise the ADOA Director’s quasi-
judicial power only if the legislature expressly granted the
ADOA Director authority to delegate that power to the Deputy
Director. In crafting section 38-462, the legislature intended
to confer upon the ADOA Director authority to delegate his
powers, including quasi-judicial powers, to the Deputy Director,
and no additional legislative delegation of authority is needed.
III.
¶24 For the foregoing reasons, we vacate the decision of
the court of appeals, reverse the judgment of the superior
court, and remand to the superior court for further proceedings
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consistent with this opinion.
_______________________________________
Ruth V. McGregor, Vice Chief Justice
CONCURRING:
__________________________________
Charles E. Jones, Chief Justice
__________________________________
Rebecca White Berch, Justice
__________________________________
Michael D. Ryan, Justice
__________________________________
Andrew D. Hurwitz, Justice
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