PSS’ motion to junk shutters suit denied

The Superior Court denied yesterday a Public School System motion to dismiss the lawsuit filed by a company against PSS for allegedly illegally terminating its contract for a typhoon shutters project in CNMI schools.

Associate Judge Ramona V. Manglona disagreed with PSS’ argument that the court should dismiss the lawsuit filed by Kautz Glass Co. for failure to include the Office of the Public Auditor as co-defendant.

Manglona said OPA is not a necessary nor an indispensable party under the Commonwealth Rules Civil Procedure.

Manglona pointed out that OPA, “as a purely adjudicatory agency, is not so situated that a disposition in this case would impair or impede OPA’s ability to protect its institutional interest, or leave the existing parties subject to inconsistent obligations based on OPA’s possible claimed interest.”

Kautz Glass, through lawyer Brien Sers Nicholas, filed the complaint for judicial review in November 2005, asking the court to set aside the termination of its contract with PSS.

Kautz asked the court to declare that PSS’ actions in terminating the contract were illegal.

PSS had solicited competitive sealed bids for the service of a company to supply and install new typhoon shutters for various schools in the Commonwealth. Kautz, along with other interested bidders, including Carpet Masters, submitted their bids for the project.

Nicholas said that based on the evaluations performed by PSS, Kautz was determined to be the “most responsible and responsive” bidder.

On April 28, 2005, Kautz entered into a contract with PSS for the project.

On May 4 and 12, 2005, respectively, PSS received two protests, one on behalf of Eyun Ji Corp. and the other on behalf of Carpet Masters.

Based on these protests, PSS determined that Kautz did not submit the lowest responsive bid and made a decision to terminate its contract with the company. Nicholas said PSS then sent a letter notifying Kautz of the termination of its contract.

Kautz filed its “notice of protest,” questioning defendant’s determination to terminate the contract.

On July 29, 2005, the company filed its “notice of appeal” with the OPA, appealing the PSS decision.

On Oct. 27, 2005, OPA upheld PSS’ earlier decision, on the basis that Kautz did not give any facts supporting why Carpet Masters cannot be or should not have been deemed responsive, Nicholas said.

He insisted, though, that Kautz did not have the duty, much less the burden, of presenting any evidence to support the termination in favor of Carpet Masters in its appeal, he said.

OPA, the lawyer said, failed to determine whether or not PSS, by its own rules and regulations, can terminate the contract for its own convenience based on an alleged mistake.

PSS responded to the lawsuit by filing a motion to dismiss, based on Kautz’s failure to name and serve the Public Auditor as a party.

PSS, through attorney Karen M. Klaver, argued that the failure to join the Public Auditor as a party results in Kautz’s failure to state a claim under Commonwealth Rules of Civil Procedure.

But Manglona ruled that the court can grant complete relief among the present parties in the case, without OPA joining the case.

Furthermore, Manglona said, OPA “does not have the kind of stake in the outcome of litigation that an enforcement agency responsible for implementing government policy has.”

At most, the judge noted, OPA has an institutional interest in having its order defended and enforced, not ignored.

“If OPA truly has an interest in upholding its decision in a judicial review case, the agency can always petition the court to intervene,” Manglona said.