Case Title: Westates Const. Co. v. Sheridan County School Dist. No. 2, Bd. of Trustees

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1986-05-30T00:00:00Z

Document:
Westates Const. Co. v. Sheridan County School Dist. No. 2, Bd. of Trustees1986 WY 123719 P.2d 1366Case Number: 85-141Decided: 05/30/1986Supreme Court of Wyoming
WESTATES CONSTRUCTION 
CO., a Wyoming corporation, Appellant 
(Petitioner),

v.

SHERIDAN COUNTY SCHOOL DISTRICT 
NO. 2, BOARD OF TRUSTEES, Appellee (Respondent).

Appeal from District 
Court, SheridanCounty, James N. Wolfe, 
J.

John R. Vincent, 
Hettinger & Leedy, P.C., Riverton, for appellant.

Fred R. 
Dollison, Badley & Rasmussen, P.C., Sheridan, for appellee.

Before THOMAS, C.J., and ROONEY*, BROWN, CARDINE and URBIGKIT, 
JJ.

* Retired November 30, 
1985. 

THOMAS, Chief 
Justice.

[¶1.]     The primary question 
addressed in this appeal is whether the presence of counsel for the Sheridan 
County School District No. 2, Board of Trustees (Board), at a deliberative 
session in which the responsibility of Westates Construction Co. (Westates) to 
be considered as the bidder on a proposed contract for school construction was 
determined requires reversal of the decision of the Board pursuant to the 
Wyoming Administrative Procedure Act, specifically § 16-3-111, W.S. 1977, as 
amended, or the concepts of due process of law. In addition Westates raises 
questions as to whether the decision of the Board is arbitrary, capricious, and 
an abuse of discretion because it was without the support of substantial 
evidence and is not otherwise in accordance with law and whether the Board's 
decision is arbitrary, capricious and violative of Westates' due process rights 
because it is not supported by adequate findings of fact. Westates appealed the 
Board's decision to the district court, and that decision was affirmed. In our 
judgment there was no reversible error in connection with the proceedings before 
the Board, and we affirm the judgment of the district 
court.

[¶2.]     In Westates' brief as 
the appellant in this court three questions are stated which Westates argues 
should be answered affirmatively with the result that the decision of the Board 
would be reversed. They are stated in this way:

"A. DOES THE PRESENCE OF 
RESPONDENT'S COUNSEL IN THE SECRET, EXECUTIVE, DELIBERATIVE SESSION OF THE BOARD 
VIOLATE THE APPEARANCE OF JUSTICE AND FAIR PLAY REQUIRED BY DUE PROCESS OF LAW, 
THE WYOMING 
ADMINISTRATIVE PROCEDURE ACT, AND SECTION 16-3-111, W.S., 1977, AS 
AMENDED?

"B. IS THE BOARD'S 
DECISION ARBITRARY, CAPRICIOUS, AND AN ABUSE OF DISCRETIONAS 
IT IS WITHOUT THE SUPPORT OF SUBSTANTIAL EVIDENCE OR OTHERWISE NOT IN ACCORDANCE 
WITH LAW?

"C. IS THE BOARD'S 
DECISION ARBITRARY AND CAPRICIOUS AND VIOLATIVE OF PETITIONER'S DUE PROCESS 
RIGHTS BECAUSE IT IS NOT SUPPORTED BY ADEQUATE FINDINGS OF 
FACT?"

The Board as 
appellee in this court presents this statement of its position with respect to 
the questions raised:

"I. THE PRESENCE OF 
COUNSEL WITH THE BOARD OF TRUSTEES WHILE IT DELIBERATED THE QUESTION OF 
APPELLANT'S `RESPONSIBILITY' DID NOT PREJUDICE THE APPELLANT AND DID NOT VIOLATE 
APPELLANT'S RIGHTS TO DUE PROCESS.

"II. THE BOARD'S DECISION 
THAT APPELLANT WAS NOT A RESPONSIBLE BIDDER PURSUANT TO WYO. STAT. § 16-6-102 IS 
AMPLY SUPPORTED BY SUBSTANTIAL EVIDENCE AND IS, THEREFORE, NOT ARBITRARY, 
CAPRICIOUS, OR AN ABUSE OF DISCRETION.

"III. THE FINDINGS OF 
FACT ARE ADEQUATE AND ARE SUFFICIENTLY DEFINITE TO AFFORD THE REVIEWING COURT AN 
OPPORTUNITY TO DETERMINE WHETHER THEY ARE 
SUPPORTED BY SUBSTANTIAL EVIDENCE."

[¶3.]     The background against 
which this dispute arose includes this information with respect to Westates. It 
is a Wyoming corporation which does business in 
Sheridan. It has 
participated in the construction of a number of public works projects in the 
state of Wyoming. These include the Hog Park Dam and 
Reservoir Enlargement, the Laramie Wastewater Treatment Facility, the 
Hot SpringsCountyCounselingCenter, the NorthwestCommunity 
College dormitory project, the DouglasMiddle 
School, the NatronaCountyJunior 
High School, the Basin Wastewater Treatment Plant Improvements, 
and the WestonCountyMemorialHospital. Westates submitted a bidder's 
pre-qualification statement in response to a call for bids published by Sheridan 
County School District No. 2 for the construction of an elementary school. The 
function of the pre-qualification statement is to demonstrate whether a 
contractor has the technical ability and financial resources to perform the 
proposed contract. On the basis of the pre-qualification statement Westates' 
submission of a bid on the contract for the construction of the proposed 
elementary school was approved by the Board and its architects, and Westates did 
submit a bid.

[¶4.]     The bids for the 
proposed elementary school were opened at a special meeting of the Board held in 
September, 1984. Westates was the apparent low bidder, but at a regular board 
meeting on October 3, 1984, the Board indicated that the contract would be 
awarded to a different construction company. Westates protested this action on 
the ground that it was entitled to be awarded the contract as the lowest 
responsible bidder. Members of the Board then evidenced concern as to whether 
Westates in fact was a responsible bidder and could complete the project in a 
satisfactory manner. These concerns were attributable to the experience of the 
Board with Westates on a fire code remodeling project for the School District.

[¶5.]     In response to 
Westates' protest and the concerns of the Board members, a public hearing was 
scheduled for October 10, 1984, to resolve the matter. At that hearing Westates 
produced a number of witnesses with the goal of demonstrating that, despite any 
disappointment over which the manner in which the fire code remodeling project 
was accomplished, Westates should be accepted as a responsible bidder. These 
witnesses included a number of representatives of owners for whom Westates had 
performed other construction work. The Board called other witnesses to testify 
that the work which Westates had done on the fire code remodeling project was 
not acceptable and that Westates was not a responsible bidder. These latter 
witnesses described defective workmanship and produced during their testimony 
photographic exhibits demonstrating unsatisfactory work. In the course of the 
hearing it became apparent that the performance of the fire code remodeling 
project, whether the work was satisfactory, and, if not, the reasons for that 
were in issue. Westates produced evidence intended to establish that remodeling 
work is more difficult than new construction, that the completion date for the 
project was uncertain, and that errors in the architects' plan resulted in 
supply delays. All this was perceived to be necessary to show that the fire code 
remodeling project was an anomaly, and that otherwise Westates' reputation for 
performing satisfactory work on public works projects was 
unblemished.

[¶6.]     After the public 
hearing the members of the Board went into executive session to deliberate. They 
requested their attorney to accompany them into the executive session to answer 
any legal questions that might arise. During that deliberative session both the 
attorney for the Board and the hearing officer were seated at the table with the 
members of the Board. Neither of these individuals participated in the 
discussion of the Board, and they had no voice in the vote which determined that 
Westates was not a responsible bidder, with only one member voting contrary to 
that determination. Depositions of the Board members demonstrate that the 
attorney did not comment on the evidence and that his presence had no impact on 
the decision. He was asked to record the findings of fact and conclusion of law 
which the Board enunciated in support of its position, but this request was made 
after the Board's decision was reached.

[¶7.]     The Board then returned 
from the executive session about 2:45 A.M. on October 11, 1984. At that time the 
chairman read the findings of fact and conclusion of law which the Board's 
attorney had recorded. The formal decision of the Board is dated October 17, 
1984, and it reads:

"FINDINGS OF FACT, 
CONCLUSION OF LAW AND DECISION OF THE BOARD

"FINDINGS OF FACT: 

"1. It is the finding of 
the Board of Trustees that the quality and craftsmanship of the work done by 
Westates Construction on the fire code revision project was below industry 
standards.

"2. The craftsmanship 
involved in the installation of the doors and hardware, construction of the 
additional stairwell at CentralSchool, the application of fire retardant 
paint, and the finish work on the fire code modification project was 
substandard.

"3. Westates Construction 
Company failed to adequately supervise the work on the fire code modification 
project.

"CONCLUSION OF 
LAW:

"Westates Construction 
Company is not a responsible bidder as contemplated in Wyoming Statutes § 
16-6-102.

"DECISION OF THE 
BOARD:

"THEREFORE, the bid 
proposal of Westates Construction Company on the new elementary school is 
rejected."

[¶8.]     Westates then filed its 
petition for review in the district court. The district court entered an initial 
order in which it found that the actions of the Board were not arbitrary, 
capricious or an abuse of discretion or otherwise not in accordance with law; 
that the actions of the Board were not contrary to constitutional right, power, 
privilege or immunity; that the actions of the Board were not in excess of 
statutory jurisdiction, authority or limitations or lacking statutory right; and 
that the determination of the Board was supported by substantial evidence. The 
district court said, "During the sixteen years on the bench this Court has not 
seen a more clear basis for an action taken by a Board and but for the thoughts 
hereinafter expressed this Court would have no problem in affirming without 
reservation the Board's action." The court then expressed a concern that the 
attorney for the Board might have in some way participated in the Board's 
decision. For that reason the court held the matter in abeyance until a hearing 
could be held to determine the question of the participation of the attorney in 
the Board's decision. The hearing was held and a subsequent order entered. In 
that order the district court found that:

"3. Counsel for the Board 
was present with the Board during the Board's deliberations on this matter, that 
counsel for the Board did not participate in the deliberations and that 
counsel's presence did not influence the Board's deliberations or 
decisions.

"4. Counsel's presence 
with the Board during deliberations is not sufficient grounds to order a 
reversal or remand in this matter."

Based upon these 
findings the district court affirmed the action of the Board in all respects, 
and it is from that order that this appeal is taken.

[¶9.]     Section 
16-3-114(c)(ii), W.S. 1977, furnishes the statutory authority for judicial 
review of agency action. The statute provides that a reviewing court 
shall:

"(ii) Hold unlawful and 
set aside agency action, findings and conclusions found to 
be:

"(A) Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;

"(B) Contrary to 
constitutional right, power, privilege or immunity;

* * * * * 
*

"(E) Unsupported by 
substantial evidence * * *."

Westates' claim 
that the Board's decision must be reversed because of the presence of its 
attorney at its deliberative session focuses on the provisions of § 16-3-111, 
W.S. 1977, which define the process that is due to participants in agency 
decisions. In pertinent part, § 16-3-111, W.S. 1977, 
states:

"* * * [M]embers of the 
agency * * * shall not * * * consult with any person other than an agency 
member, officer, contract consultant or employee or other state or federal 
employee, any party other than the agency or with any * * * employee * * * who 
was engaged in the investigation, preparation, presentation or prosecution of 
this case * * *. No * * * employee * * * who has participated in the 
investigation, preparation, presentation or prosecution of a contested case 
shall * * * participate or advise in the decision, recommended decision or 
agency review of the decision, or be consulted therewith except as witness or 
counsel in public proceedings. A staff member is not disqualified from 
participating or advising in the decision * * * because he has participated in 
the presentation of the case in the event the staff member does not assert or 
have an adversary position."

This statutory 
provision clearly prohibits one such as the attorney for Board in this case from 
participating or advising in a decision of the agency.

[¶10.]  In Ririe v. Board of Trustees of School 
District No. 1, Crook 
County, Wyo., 674 P.2d 214, 223 (1983), this court said:

"While there exists `a 
presumption of honesty and integrity in those serving as adjudicators,' Withrow 
v. Larkin, supra [421 U.S. 35, 95 S. Ct. 1456, 43 L. Ed. 2d 712 (1975)] 421 U.S.  at 47, 95 S. Ct.  at 1464, this 
presumption may be overcome by evidence to the contrary."

In this case, 
however, the evidence presented by Westates is not contrary to that presumption, 
and instead the evidence actually strengthens the conclusion that the Board did 
nothing improper during the deliberative session at which its attorney, who had 
presented the case, was present. The depositions of all members of the Board 
demonstrate that the attorney not only did not participate or advise, but that 
his presence did not influence the decisions of the individual members. This 
evidence does not rebut the presumption set forth in Rirrie v. Board of Trustees 
of School District No. 1, CrookCounty, supra.

[¶11.]  In Monahan v. Board of Trustees of 
Elementary School District No. 9, Fremont County, Wyo., 486 P.2d 235 (1971), the 
court considered a situation in which the attorney for the school board served 
as the hearing officer and the prosecutor, and in which he not only sat with the 
board at its deliberative session but also drafted the conclusions for the board 
with the reasons for those conclusions. We approved the district court's 
characterization of the Board's attorney acting as both hearing officer and 
prosecutor as "clumsy and irregular," Monahan v. Board of Trustees of Elementary 
School District No. 9, Fremont County, supra, 486 P.2d  at 238. In this case, 
however, the attorney for the Board did not act as the hearing officer, and he 
did not assume any active role during the deliberative session. The case is not 
only factually distinguishable from Monahan v. Board of Trustees of Elementary 
School District No. 9, FremontCounty, supra, but it is legally 
distinguishable from that case. It cannot be controlled by the holding in 
Monahan that the teacher was denied a fair hearing because that holding was 
premised upon the attorney for the board acting both as the prosecutor and the 
hearing officer, and also because the school board in that case had not adopted 
any rules of procedure to govern such case. We emphasize, however, that the 
practice of including an attorney who has presented the case in the deliberative 
session of an administrative agency when its decision is reached is likely to 
raise questions of propriety. Those questions easily can be avoided by eschewing 
the practice of including the attorney in the deliberative session. Even so, we 
must conclude in this case that the presence of the attorney in the deliberative 
session did not violate the provisions of § 16-3-111, W.S. 1977, and further it 
did not deny Westates any due process right.

[¶12.]  In its third claim of error Westates 
attacks the sufficiency of the Board's findings of fact. The requirement that 
the final decision in a contested case "shall include findings of fact and 
conclusions of law separately stated" and that "[f]indings of fact if set forth 
in statutory language, shall be accompanied by a concise and explicit statement 
of the underlying facts supporting the findings * * *" is found in § 16-3-110, 
W.S. 1977. In addressing the statutory requirements this court continually has 
emphasized the duty of the agency to make findings of basic facts in order to 
facilitate judicial review. Mountain Fuel Supply Company v. Public Service 
Commission of Wyoming, Wyo., 662 P.2d 878 (1983); First National Bank of Worland 
v. Financial Institutions Board, Wyo., 616 P.2d 787 (1980); Powell v. Board of 
Trustees of Crook County School District No. 1, Crook County, Wyo., 550 P.2d 1112 (1976); Geraud v. Schrader, Wyo., 531 P.2d 872, cert. denied sub nom, Wind 
River Indian Education Association, Inc. v. Ward, 423 U.S. 904, 96 S. Ct. 205, 46 L. Ed. 2d 134 (1975); Pan American Petroleum Corporation v. Wyoming Oil and Gas 
Conservation Commission, Wyo., 446 P.2d 550 (1968). We have emphatically stated 
our disapproval of findings which were simply statements of ultimate facts or 
the conclusions of the agency. Shenefield v. Sheridan County School District No. 
1, Wyo., 544 P.2d 870 (1976), citing Pan American Petroleum Corporation v. Wyoming Oil and 
Gas Conservation Commission, supra.

[¶13.]  In construing the statutory requirements 
this court has had occasion to distinguish basic facts from ultimate facts. In 
First National Bank of Worland v. Financial Institutions Board, supra, 616 P.2d  
at 795, we identified the size of a town, the nature of business activity, and a 
projected increase in sales tax as basic facts. On the other hand, findings that 
the evidence did not demonstrate waste and that the evidence did not establish 
cause are ultimate facts. Pan American Petroleum Corporation v. Wyoming Oil and 
Gas Conservation Commission, supra. In Powell v. Board of Trustees of Crook 
County School District No. 1, CrookCounty, supra, 550 P.2d  at 1119-1120, we 
addressed a finding that "the contestant has been unable to control the conduct 
of his students," and we said, "This is a conclusion and not a 
finding!"

[¶14.]  In this case the Board found that (1) 
"the quality and craftsmanship of the work done by Westates Construction on the 
fire code revision project was below industry standards;" (2) "the craftsmanship 
involved in the installation of the doors and hardware, construction of the 
additional stairwell at Central School, the application of the fire retardant 
paint, and the finish work on the fire code modification project was 
substandard;" and (3) "Westates failed to adequately supervise the work on the 
fire code modification project." Arguably the first and third findings relate to 
ultimate facts, but the second finding contains basic facts from which the 
ultimate facts could be drawn. The second finding refers to four specific 
aspects of the earlier project which the Board found to be unsatisfactory. It is 
not necessary that the Board further characterize the nature of the work found 
to be unsatisfactory. While perhaps not a model of perfection, the findings of 
fact by the Board in this case are sufficiently definite to permit judicial 
review of the Board's action, and they satisfy the test of our earlier 
cases.

[¶15.]  In its second claim of error Westates 
argues that the decision of the Board must be set aside because it is not 
supported by substantial evidence. The substance of the Board's decision was 
that Westates was not a responsible bidder and that it was justified in 
rejecting its bid for the contract for the new school. Section 16-6-102, W.S. 
1977, encompasses the requirement that the contract be let to a responsible 
bidder in the following language:

"Whenever a contract is 
let by * * * any * * * school district * * * for the * * * construction * * * of 
any public building * * * the contract shall be let, if advertisement for bids 
is not required, to a resident of the state. If advertisement for bids is 
required the contract shall be let to the responsible resident making the lowest 
bid * * *."

The findings of 
the Board which are quoted above are supported by sufficient evidence in 
accordance with our standards in Wyoming, and it follows that the Board's 
decision to the effect that Westates was not a responsible bidder is supported 
by substantial evidence. 

[¶16.]  On judicial review the court examines the 
entire record to determine whether sufficient evidence supports the decision of 
the administrative agency. Lewis v. State Board of Control, Wyo., 699 P.2d 822 
(1985); Burlington Northern Railroad Company v. Public Service Commission of 
Wyoming, Wyo., 698 P.2d 1135 (1985); Mountain States Telephone and Telegraph 
Company v. Public Service Commission of Wyoming, Wyo., 698 P.2d 627 (1985); 
Mountain Fuel Supply Company v. Public Service Commission of Wyoming, supra, and 
cases cited therein; Gilmore Oil and Gas Conservation Commission, Wyo., 642 P.2d 773 (1982); First National Bank of Worland v. Financial Institutions Board, 
supra. If this examination of the record discloses substantial evidence to 
support the determination of the agency, we cannot substitute our judgment for 
that of the administrative agency. Citizens of Otto v. Wyoming State Committee 
for School District Organization, Wyo., 705 P.2d 831 (1985); Burlington Northern 
Railroad Company v. Public Service Commission of Wyoming, supra; Mountain States 
Telephone and Telegraph Company v. Public Service Commission of Wyoming, supra; 
Kloefkorn-Ballard Construction and Development, Inc. v. North Big Horn Hospital 
District, Wyo., 683 P.2d 656 (1984); Mountain Fuel Supply Company v. Public 
Service Commission of Wyoming, supra; Atchison v. Career Service Council of 
State of Wyoming, Wyo., 664 P.2d 18, cert. denied sub nom, H.M. Trimble and 
Sons, Limited v. Kingsley & Keith (Canada) Limited, 464 U.S. 982, 104 S. Ct. 423, 78 L. Ed. 2d 358 (1983); Wyoming State Department of Education v. Barber, 
Wyo., 649 P.2d 681 (1982); Gilmore v. Oil and Gas Conservation Commission, 
supra; Board of Trustees of School District No. 4, Big Horn County v. Colwell, 
Wyo., 611 P.2d 427 (1980); Shenefield v. Sheridan County School District No. 1, 
supra. Upon review the burden is on the appellant to demonstrate that the 
decision of the administrative agency is not supported by substantial evidence. 
Mountain Fuel Supply Company v. Public Service Commission of Wyoming, supra; 
Spivey v. Lucky MC Uranium Corporation, Wyo., 636 P.2d 518 (1981); First 
National Bank of Worland v. Financial Institutions Board, supra. The weight to 
be given the evidence and the credibility of witnesses is to be determined by 
the administrative agency, the finder of fact, not by the reviewing court. 
Gilmore v. Oil and Gas Conservation Commission, supra; Wyoming Bancorporation v. 
Bonham, Wyo., 527 P.2d 432 (1974); supplemental 
opinion at 563 P.2d 1382, reh'g denied, 566 P.2d 219 (1977). The applicable 
definition for sufficient evidence is that it is "such relevant evidence which a 
reasonable mind might accept as supporting the agency's conclusion." Burlington 
Northern Railroad Company v. Public Service Commission of Wyoming, supra; 
Kloefkorn-Ballard Construction and Development, Inc. v. North Big Horn Hospital 
District, supra; Mountain Fuel Supply Company v. Public Service Commission of 
Wyoming, supra; Wyoming State Department of Education v. Barber, supra; Board of 
Trustees, Laramie County School District No. 1 v. Spiegel, Wyo., 549 P.2d 1161 
(1976); Shenefield v. Sheridan County School District No. 1, supra; Howard v. 
Lindmier, 67 Wyo. 78, 214 P.2d 737 (1951).

[¶17.]  The record presented to this court for 
review encompasses evidence that Westates had performed poorly on the fire code 
remodeling project. The evidence submitted by Westates to the effect that the 
fault for that poor performance could be ascribed to someone else; that 
remodeling is more difficult to accomplish than initial construction; and that 
Westates had performed admirably with respect to other remodeling and new 
construction projects served only to structure a conflict in the evidence 
relating to the question of whether Westates was a responsible bidder. We will 
not substitute our judgment as to the weight to be given to that evidence and 
the credibility of the witnesses for that of the Board. The only issue for our 
determination is whether there was sufficient evidence in light of the 
appropriate definition to justify the Board's decision that Westates was not a 
responsible bidder. The evidence in this record satisfies that 
requirement.

[¶18.]  The judgment of the district court 
affirming the decision of the Board of Trustees of Sheridan County School 
District No. 2 is affirmed.

ROONEY, J., files a concurring 
opinion.

ROONEY, Justice, 
concurring.

[¶19.]  I only want to note that the mere 
presence of counsel during the decision-making process by the board of trustees 
is not statutorily prohibited. The board of trustees could even have made its 
decision without leaving the hearing room. This Court has made decisions from 
the bench without retiring for deliberations. There is no requirement for 
"secret" deliberations. The only requirement is that the deliberations be only 
by the board of trustees.