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filed a protest, demanding that the contract be rescinded and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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