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Davis & Associates v. Williams

February 23, 2006

DAVIS & ASSOCIATES, APPELLANT,
v.
ANTHONY WILLIAMS, ET AL., APPELLEE.



Appeal from the Superior Court of the District of Columbia (CA7762-02) (Hon. Jeanette Jackson Clark, Trial Judge).

Argued June 8, 2004

Before SCHWELB, Associate Judge, WAGNER and STEADMAN, Senior Judges.*fn2 WAGNER,Senior Judge: Appellant, Davis & Associates (Davis), appeals from an order of the trial court dismissing for lack of subject matter jurisdiction and failure to exhaust administrative remedies Davis' complaint for breach of contract and declaratory judgment against appellees, District of Columbia, Mayor Anthony Williams, Chief Financial Officer Natwar M. Ghandi, and the D.C. Public Benefit Corporation (PBC)*fn3 (collectively referred to as the District). Davis argues that the trial court erred in its ruling because: (1) the subject contract is exempt from review by the Contract Appeals Board (CAB); and (2) the CAB lacks authority to grant declaratory relief. We conclude that Davis' contract is not exempt from review by the CAB and that the CAB's jurisdiction is not affected by Davis' request for declaratory relief. Therefore, we affirm the trial court's decision dismissing Davis' complaint for failure to exhaust administrative remedies.

I. Factual and Procedural Background

Davis filed a complaint in the Superior Court against the District for declaratory judgment and breach of contract. Davis alleged that under the terms of its contract, it was responsible for analyzing and preparing the Cost Reports for PBC "in order to recover payments due to 'D.C. General Hospital' from Medicaid/Medicare." The contract, a copy of which was attached to the complaint,*fn4 provided that Davis would complete certain Medicare and Medicaid Cost reports on behalf of PBC to comply with timely filing requirements. In that connection, the contract provided that Davis would perform the following services, among others: (1) "[r]eview all data and provide documentation to file cost reports related to Medicare and Medicaid;" (2) "[d]evelop strategies to maximize reimbursement on Cost Reports;" and (3) "furnish the PBC with all copies of worksheets and relevant regulations to justify the reimbursable costs." PBC used the cost reports to recover payments from Medicaid/Medicare. The contract is described as a "Contingency Contract," under the terms of which Davis' compensation is to be paid at the rate of ten percent of the revenues "realized and collected" above a certain baseline figure. The contract provides for Davis to submit to PBC invoices for payment, along with a certification "that the amounts billed are accurate and proper." The contract indicates that PBC has a "monetary obligation" to pay under the contract, but that no services were to be performed after September 30, 2000 unless there were appropriated funds to ensure payment.

Davis alleged that, in the performance of the contract, it identified for collection money due D.C. General Hospital (Hospital) from uncollected Medicare and Medicaid payments in an amount in excess of $200,000,000. Davis requested that the court enter a declaratory judgment to the effect that the money payable to the Hospital is "dedicated revenue" as defined in D.C. Code § 32-262.1 (4) (1999) and that as such, it must be deposited into the Hospital's "fund" established pursuant to D.C. Code § 32-262.6 (c) (1999). Davis also claimed damages based on the theory that the District breached the contract by failing to deposit the funds in the manner required by law, thereby preventing Davis from collecting the contingent fees due under the contract.

The District filed a motion to dismiss pursuant to Super. Ct. Civ. R. 12 (b)(1), arguing that the Superior Court did not have subject matter jurisdiction over the controversy. Specifically, it contended that the CAB has primary jurisdiction under the District of Columbia Procurement Practices Act of 1985 (DCPPA) and that the CAB has full statutory jurisdiction over Davis' claim. In opposition to the motion, Davis argued that (1) the contract was expressly exempt from the DCPPA, and (2) the CAB lacked jurisdiction or authority to grant declaratory relief. The trial court granted the motion to dismiss, for the reasons advanced by the District.*fn5 The court also concluded that Davis had failed to demonstrate that it was relieved of the requirement that it exhaust administrative remedies before seeking judicial review. Davis filed a motion for reconsideration or, alternatively, for clarification in which it requested that the trial court state its reasons for granting the motion and address its claim that D.C. Code §1-1181.4 (b) (1999)*fn6 exempts the subject contract from CAB's jurisdiction. The trial court denied the motion, stating that it had provided specific reasons for granting dismissal in its earlier order and that the authorities relied upon by Davis had been repealed or recodified. This appeal followed.

II. Jurisdictional Challenge

Davis argues that the trial court erred in granting the District's motion to dismiss for lack of subject matter jurisdiction or failure to exhaust administrative remedies for two reasons. First, it contends that its contract is one for the recovery of federal financial assistance funds, a category excluded from CAB's jurisdiction by D.C. Code § 1-1181.4 (b). Second, Davis argues that the CAB does not have jurisdiction to consider its request for declaratory judgment. The District responds that Davis' claims come within the scope of the Procurement Practices Act of 1985 and CAB's jurisdiction. It contends that the contract at issue does not fall within the "federal financial assistance" exception and that it must be presented first to the CAB, even if it is only arguably within CAB's jurisdiction. Further, the District contends that Davis' demand for declaratory judgment cannot defeat the CAB's jurisdiction. We outline first some of the applicable legal principles, before turning to the parties' respective argument.

A. Applicable Legal Principles

"'Subject matter jurisdiction concerns the court's authority to adjudicate the type of controversy presented by the case under consideration.'" In re J.W., 837 A.2d 40, 44 (D.C. 2003) (quoting In re R.L., 590 A.2d 123, 128 (D.C. 1991) (citing 1 RESTATEMENT (SECOND) OF JUDGMENTS § 11 (1982)). Whether the trial court has subject matter jurisdiction is a question of law which this court reviews de novo. Id. (citing Martin v. District of Columbia Courts, 753 A.2d 987, 991 (D.C. 2000)); Heard v. Johnson, 810 A.2d 871, 877 (D.C. 2002) (citation omitted).

It is a rule of long standing that "no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." Fisher v. District of Columbia, 803 A.2d 962, 964 (D.C. 2002) (citation and internal quotation marks omitted). This doctrine of exhaustion of administrative remedies "applies where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course."*fn7 Drayton, supra note 5, 462 A.2d at 1118 (quoting United States v. Western Pac. R.R. Co., 352 U.S. 59, 63 (1956)). The exhaustion requirement is intended to maintain proper relationships between courts and the agencies that have been given regulatory responsibility in certain specialized areas. Western Pac., 352 U.S. at 63. Application of the doctrine affords the courts the benefit of the agency's expertise and promotes judicial efficiency by development of the factual record before the agency, thereby at times, eliminating the need for judicial review. Barnett v. District of Columbia Dep't of Employment Servs., 491 A.2d 1156, 1160 (D.C. 1985) (citations omitted). However, the exhaustion rule is not one of jurisdiction. See District of Columbia v. Group Ins. Adm., 633 A.2d 2, 20 (D.C. 1993) (citing National Treasury Employees Union v. King, 295 U.S. App. D.C. 153, 156, 961 F.2d 240, 243 (1992)) (distinguishing on the basis of its flexibility the exhaustion of administrative remedies doctrine from jurisdiction and standing). It is subject to exceptions for compelling reasons. See id. (citing Dano Resource Recovery v. District of Columbia, 566 A.2d 483, 486 (D.C. 1989)) (listing as exceptions to the doctrine "inadequate remedy, unavailable remedy, and futility"); see also Barnett, 491 A.2d at 1160-62 (adopting the principle that the failure to exhaust administrative remedies may be excused for compelling reasons in unemployment compensation appeals); Randolph-Sheppard Vendors of America v. Weinberger, 254 U.S. App. D.C. 45, 59-62, 795 F.2d 90, 106-07 (1986) (listing as exceptions to the doctrine, for example, the futility of resorting to the agency process, inadequacy of the administrative remedy, or a showing that irreparable injury would result in the absence of immediate judicial review).

"The CAB is a creature of, and derives its powers from, the District's procurement statute." A. L. Eastmond & Sons, Inc. v. District of Columbia Contract Appeals Bd., 795 A.2d 52, 55 (D.C. 2002) (citing D.C. Code § 2-309.01; Jones Artis Const. Co. v. District of Columbia Contract Appeals Bd., 549 A.2d 315, 320 (D.C. 1988)). By statute, the CAB is "the exclusive hearing tribunal for, and shall have jurisdiction to review and determine de novo . . . [a]ny appeal by a contractor from a final decision by the contracting officer on a claim by a contractor, when such claim arises under or relates to a contract . . . ." D.C. Code § 1-1189.3 (a)(2) (1999).*fn8 This statute further provides that the CAB's jurisdiction "shall be consistent with the coverage of this chapter as defined in § 1-1181.4." Id. Section 1-1181.4 states, in pertinent part, that the procurement chapter shall apply to all District agencies and to "any contract for procurement of goods and services, . . . but shall not apply to a contract or agreement receiving or making grants-in-aid or for federal financial assistance." D.C. Code § 1-1181.4 (b) (1999).*fn9

B. The CAB's Jurisdiction and Davis' Claim of Exemption

Davis argues that its claim does not come within the jurisdiction of the CAB under D.C. Code § 1-1189.3 (a)(2), which covers claims by a contractor related to a contract with the District. It contends that, in any event, its contract is specifically exempted from CAB's jurisdiction as one "for federal financial assistance" within the meaning of D.C. Code § 1-1181.4 (b) because it involves the recovery of Medicare and Medicaid funds on behalf of the District.*fn10 The District argues that Davis' claims are within the scope of the DCPPA and the CAB's jurisdiction. Further, the District contends that the contract does not qualify for the claimed exemption because neither Davis nor the District will receive federal financial assistance under the contract. Rather, it contends, the contract simply provides for Davis to ...


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