Opinion ID: 2326847
Heading Depth: 2
Heading Rank: 2

Heading: Public Policy Challenge to the 1999 Contract Amendments

Text: The District argues that the 1999 amendment on which Fairman's claim is based is void because: (1) the amendments were acted upon in executive session rather than at a public meeting; (2) a quorum of the Board of the PBC was not present at that time; (3) the severance amendment imposed an improper restraint on the right of future Boards to terminate Fairman, since the PBC's statute stated that the general manager shall serve at the pleasure of the Board; (4) the severance provision does not conform to the CMPA; (5) the amendments contradict a prior order of the Control Board which approved severance pay only in an amount of six month's pay; (6) Fairman's services could not be paid for out of the appropriation for the fiscal year in which the contract was made; and (7) the amendments violate public policy in that they were not approved by the District of Columbia Council. [9] While acknowledging that this court can affirm on grounds different from those relied upon by the trial court, Fairman argues that these arguments should be rejected because they are new and/or contradictory, and they do not meet the exception for their consideration in that they were not pleaded by the parties and are not apparent from the record. Generally, in reviewing a case de novo, this court may affirm an order for reasons different from those relied upon by the trial court, as long as the grounds are apparent from the record and were pleaded by the parties. Greycoat Hanover v. Liberty Mut. Ins., 657 A.2d 764, 767 (D.C.1995) (citing Dale Denton Real Estate, Inc. v. Fitzgerald, 635 A.2d 925, 927 (D.C.1993)). This waiver rule is one of discretion rather than jurisdiction. District of Columbia v. Helen Dwight Reid Educ. Found., 766 A.2d 28, 33-34 n. 3 (D.C.2001) (citing D.D. v. M.T., 550 A.2d 37, 48 (D.C.1988)). This court has recognized that in `exceptional situations and when necessary to prevent a clear miscarriage of justice apparent from the record,' we may deviate from the usual rule that our review is limited to issues that were properly preserved. Id. (quoting Williams v. Gerstenfeld, 514 A.2d 1172, 1177 (D.C.1986)). Generally, this exception will be applied if the issue is purely one of law, particularly if the factual record is complete and a remand for further factual development would serve no purpose, the issue has been fully briefed, and no party would be unfairly prejudiced. Id. (citing 11 and 19 MOORE'S FEDERAL PRACTICE, §§ 56,441[3][c] and 205.05[2] (Matthew Bender 3d ed.2000)). With one exception, appellant's belated arguments do not meet the requirements for application of the exception to the rule that issues not raised in the trial court will not be considered on appeal. That area concerns whether the 1999 amendments are void as against public policy because they were not approved by the District of Columbia Council as required by law. [10] The District argued in the trial court that the arbitration award cannot stand because it contravenes paramount considerations of public policy. See Lopata, supra, 735 A.2d at 938. The District's public policy argument was based upon the claim that the amendments were approved in violation of the law that required the approval of the Control Board. The District now concedes that Control Board approval was not required at the time relevant to the execution of the amendments. However, it makes the quite related argument that the amendments required at least the approval of the Council, which was not obtained. This argument appears to raise a pure question of law, and no further factual record is required to address it. See Reid Educ. Found., supra, 766 A.2d at 33-34 n. 3. Therefore, we will consider the argument. See id. When the PBC was created, it was given broad authority to make and execute contracts. See D.C.Code § 32-362.5(f) (1997). Certain contracts made by governmental entities required Council approval. See D.C.Code § 1-1130. [11] Section 1-1130 was first enacted in 1973 as part of the District of Columbia Self-Government and Governmental Reorganization Act (Home Rule Act). See D.C.Code § 1-1130 (1992) (unchanged from 1973 and 1981 versions). Subsequently, amendments were enacted to this law. Only those pertinent to the present issue need to be set forth here. In 1995, Congress enacted the District of Columbia Financial Responsibility and Management Assistance Act of 1995 (FMRAA). See Pub.L. No. 104-8, 109 Stat. 97 (1995). That act amended section 1-1130 by adding a section which required Council approval for contracts which involved expenditures of over one million dollars in a twelve month period. See D.C.Code § 1-1130(b). In 1996, Congress passed the Omnibus Appropriations Act of 1996, which included the District of Columbia appropriations for 1996. See Pub.L. No. 104-134, 110 Stat. 1321 (1996). The provisions of this Act, which became effective on September 9, 1996, amended section 1-1130 by adding the following provision that reads, in pertinent part, as follows: (c) Multiyear contracts. (1) The District may enter into multiyear contracts to obtain goods and services for which funds would otherwise be available for obligation only within the fiscal year for which appropriated. (2) If the funds are not made available for the continuation of such a contract into a subsequent fiscal year, the contract shall be cancelled or terminated, and the cost of cancellation or termination may be paid from (A) appropriations originally available for the performance of the contract concerned; (B) appropriations currently available for procurement of the type of acquisition covered by the contract, and not otherwise obligated; or (C) funds appropriated for those payments. (3) No contract entered into under this subsection shall be valid unless the Mayor submits the contract to the Council for its approval and the Council approves the contract (in accordance with criteria established by act of the Council). The Council shall be required to take affirmative action to approve the contract within 45 days. If no action is taken to approve the contract within 45 calendar days, the contract shall be deemed disapproved. D.C.Code § 1-1130(c) (1997). On August 7, 1996, after the 1995 Amendments in the FMRAA, but before the 1996 Amendments in the Omnibus Act, the D.C. Council passed the District of Columbia Health and Hospitals Public Benefit Corporation Act which created the PBC. See 43 D.C.Reg. 4962 (Sept. 13, 1996). Significantly, in section 301 of this proposed act, the D.C. Council asked Congress to exempt the PBC from the contract approval provisions of section 1-1130 as they existed at the time the bill was passed. See 43 D.C.Reg. 4980 (Sept. 13, 1996). However, Congress did not accept the recommendation. Although the PBC was exempted from several other statutory requirements, neither the PBC's governing statute nor the statutory history indicate that the PBC was to be exempt from contract approval requirements in effect at the time the PBC was created. In fact, the statutory history indicates the opposite. In section 301 of D.C. Law 11-212 (the law which eventually became the PBC's governing statute), the Council recommended that Congress amend section 1-1130 of the Home Rule Act to exempt the PBC from the statutory requirement of approval for contracts over one million dollars. However, Congress declined to do so. [12] In light of this history, it is clear that the PBC was subject to the Council approval requirement in section 1-1130. Since the PBC was subject to the approval requirements in section 1-1130, the question is whether the 1999 amendments required such approval. Subsection (c) states that the District may enter into contracts spanning several years although funds are only appropriated from the current fiscal year; however such contracts require Council approval. D.C.Code § 1-1130(c)(3). Fairman contends that there is no evidence in the record indicating that the 1999 Amendments constituted a multiyear contract. This argument is not persuasive. Under the amendments, Fairman's contract term was from October 1998 to September 2003. The appropriations bills in effect for fiscal 1998 and fiscal 1999 indicate that no appropriations would be available beyond each of those current fiscal years. See Pub.L. No. 105-100, § 108, 111 Stat. 2160 (1997) (No part of any appropriation contained in this Act shall remain available for obligation beyond the current fiscal year unless expressly so provided herein.); Pub.L. No. 105-277, § 108, 112 Stat. 2681 (1998) (same for fiscal 1999). Since funds for the PBC were only available within the fiscal year for which appropriated, Fairman's contract falls within the scope of subsection (c) and requires approval of the Council. The statutory pronouncement, that [n]o contract entered into under this subsection shall be valid unless the Mayor submits the contract to the Council for its approval, expresses a clear legislative intent that any contract not so approved would be invalid. This policy, no doubt, seeks to promote financial accountability of executive branch agencies and entities. This lack of approval renders the Amendments invalid, and therefore calls into question the validity of the arbitration award to the extent that it relied upon them. The language of subsection (c) indicates that its intent was to prevent the District from entering into long term contracts where funding had not yet been appropriated unless the Council first approved this action. The 1999 Amendments required the District to pay Fairman up to five years of severance pay and benefits. The arbitration award predicated upon these Amendments appears to give Fairman roughly three years of severance pay and benefits. If the District were required to pay this award, the award would stand in clear contravention of the explicit statutory policy against entering into such long-term agreements in the absence of Council approval. In the absence of such approval, the 1999 Amendments violate the public policy, expressly provided for by law, against entering into multi-year contracts without legislative approval. An award based thereon would violate a clear and dominant public policy that would support vacating an arbitrator's award. See Lopata, supra, 735 A.2d at 938 (recognizing that the courts may refuse to enforce an arbitrator's decision based on a clear public policy ascertainable by reference to laws). For the foregoing reasons, we conclude that Fairman is not entitled to severance pay under the 1999 amendments as the arbitrator concluded. However, Fairman remains entitled to severance based on the 1997 agreement the validity of which the District is now precluded from challenging. The calculation of the severance pay due under that agreement, which until this appeal the District was prepared to pay, appears to be straightforward. If the parties cannot agree to the amount, the dispute may be submitted for further arbitration on that issue. Accordingly, the trial court order vacating the arbitration award based on the 1999 amendments is affirmed, and the case is remanded to the trial court for further proceedings consistent with the opinion. So ordered. STEADMAN, Senior Judge, concurring: Principles of judicial and equitable estoppel applicable to private parties do not translate readily where the government is a litigant and considerations of protection of the public fisc and the public interest are involved. See, e.g., District of Columbia v. Gould, 852 A.2d 50, 56-57 (D.C. 2004); Mamo v. District of Columbia, 934 A.2d 376, 386-87, No. 06-CV-845, slip op. at 17-19 (Oct. 18, 2007). However, in the particular and special circumstances presented here, coupled with the discretionary nature of permitting new arguments to be made even by the government for the first time on appeal, see, e.g., District of Columbia v. Wical Ltd. P'ship, 630 A.2d 174, 182-84 (D.C.1993), I concur in the ultimate conclusion that the District at this point may not challenge the validity of the original 1997 agreement, and I otherwise join the opinion of the court.