Court Opinion

ID: 2745111
Source: CourtListenerOpinion
Date Created: 2014-10-23 16:05:41.584879+00
Date Added: 2024-06-11T10:12:03.474203
License: Public Domain

Cite as 2014 Ark. 432

                SUPREME COURT OF ARKANSAS
                                      No.   CV-14-137

ARKANSAS STATE CLAIMS                            Opinion Delivered   October 23, 2014
COMMISSION; ARKANSAS GENERAL
ASSEMBLY, CLAIMS REVIEW                          APPEAL FROM THE PULASKI
SUBCOMMITTEE; ARKANSAS                           COUNTY CIRCUIT COURT
GENERAL ASSEMBLY, JOINT                          [NO. 60-CV-13-1706]
BUDGET COMMITTEE; ARKANSAS
STATE HIGHWAY COMMISSION;                        HONORABLE TIMOTHY DAVIS
AND ARKANSAS STATE HIGHWAY                       FOX, JUDGE
AND TRANSPORTATION
DEPARTMENT
                    APPELLANTS

V.

                                                 REVERSED AND REMANDED;
DUIT CONSTRUCTION COMPANY,                       APPELLANTS’ MOTION TO DISMISS
INC.                                             CROSS-APPEAL GRANTED; CROSS-
                    APPELLEE                     APPEAL DISMISSED.

                          PAUL E. DANIELSON, Associate Justice

       Appellants, the Arkansas State Claims Commission (“ASCC”), the General Assembly’s

Claims Review Subcommittee, the General Assembly’s Joint Budget Committee, the

Arkansas State Highway Commission, and the Arkansas State Highway and Transportation

Department (“ASHTD”), bring this interlocutory appeal from the circuit court’s order

denying in part their motions to dismiss the complaint for declaratory judgment and the first

amended complaint for declaratory judgment of appellee Duit Construction Company, Inc.

Their sole point on appeal is that the circuit court erred in its denial because they were

entitled to sovereign immunity. Duit cross-appeals from the circuit court’s order granting in
                                    Cite as 2014 Ark. 432

part the Appellants’ motions to dismiss, asserting that the circuit court erred in doing so, and

the Appellants have moved to dismiss Duit’s cross-appeal. We reverse and remand on direct

appeal and dismiss the cross-appeal.

       In 2002, Duit entered into a contract with the Arkansas State Highway Commission

to complete an improvement project on Interstate 30 in Saline and Pulaski Counties. Duit

subsequently encountered what it claims were “differing site conditions,” and, in 2006, it

transmitted a “Request for Equitable Adjustment for Cost Overruns” to the ASHTD, which

denied Duit’s request. Duit then filed a complaint with the ASCC on May 5, 2011, and the

ASCC denied and dismissed Duit’s claim “for failure to prove by a preponderance of the

evidence any liability on the part of the [ASHTD].”

       On January 9, 2012, the General Assembly’s Claims Review Subcommittee remanded

Duit’s claim to the ASCC for further evidence or findings. The ASCC held a partial

rehearing on remand, and it once again denied and dismissed Duit’s claim. Duit claims that

it appealed the ASCC’s second denial and dismissal to the General Assembly and that “[b]y

voice vote on March 20, 2013, a Subcommittee of the Joint Budget Committee ‘affirmed’

the ASCC’s . . . decision.       The Joint Budget Committee subsequently adopted the

Subcommittee’s decision without a hearing or notice to Duit.”

       Duit filed a “petition” and what it deemed a “notice of appeal” from the March 20,

2013 vote in the Pulaski County Circuit Court; it later amended that notice of appeal and

additionally petitioned the circuit court for a writ of certiorari, as well as a declaratory

judgment. In doing so, Duit challenged the constitutionality of the method by which the

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State resolves claims against it, asserting that the procedures violated the Due Process Clause

by “failing to provide a fair and impartial post-deprivation procedure for the resolution of

breach of contract claims against the State, and by discriminating against non-residents.”

       The Arkansas State Highway Commission and the ASHTD moved to dismiss Duit’s

amended notice of appeal, petition for writ of certiorari, and complaint for declaratory

judgment. In their motion, they claimed that Duit’s suit was one against the State and that

they were afforded sovereign immunity from Duit’s suit pursuant to article 5, section 20, of

the Arkansas Constitution. They further contended that Duit’s suit should be dismissed for

failure to state facts or a claim upon which relief could be granted under Arkansas Rule of

Civil Procedure 12(b)(6).

       Likewise, the ASCC, the Claims Review Subcommittee, and the Joint Budget

Committee also moved to dismiss Duit’s amended notice of appeal, petition for writ of

certiorari, and complaint for declaratory judgment. They similarly asserted that sovereign

immunity barred Duit’s suit, and they further averred that both this court and the federal

courts had rejected the notion that the resolution of claims against the State by the ASCC and

the General Assembly violated due process. Duit responded to the motions to dismiss, and

the circuit court held a hearing on the motions. After the hearing, Duit filed a first amended

complaint for declaratory judgment, in which it sought a declaration that the current method

of resolving contract disputes was unconstitutional and directing the State to provide Duit

with a fair, impartial, and meaningful forum in which to present its claim.

       On October 21, 2013, the circuit court entered its order, in which it noted that Duit

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had withdrawn its “notice of appeal,” and it dismissed Duit’s petition for writ of certiorari.

With regard to Duit’s claim for declaratory relief, the circuit court found, in relevant part:

       7. The framework for deciding contract claims against the State of Arkansas is not
       violative of the Due Process Clause of the Fourteenth Amendment of the United
       States Constitution. The Court finds that the General Assembly and the Joint Budget
       Committee of the General Assembly are a sufficient and constitutional remedy for Due
       Process Clause purposes. Thus, the Court finds the Amended Notice and Complaint
       and the First Amended Complaint allegations that the current framework for deciding
       claims against the State of Arkansas is facially unconstitutional are barred by Art. 5,
       § 20, Constitution of Arkansas.

       8. The Amended Notice and Complaint and the First Amended Complaint, on the
       other hand, present sufficient factual allegations to constitute a cause of action that the
       Respondents have not been impartial with respect to the claims of non-residents.

               IT IS THEREFORE ORDERED that the District Court Rule 9(f) Appeal is
       hereby dismissed, that the Petition for Writ of Certiorari is hereby dismissed, and that
       the Motions to Dismiss the Complaint for Declaratory Judgment and First Amended
       Complaint for Declaratory Judgment are granted on the grounds that the statutory
       framework for deciding claims against Arkansas is constitutional and, therefore, the
       Petitioner’s claims of facial invalidity of the framework is dismissed on the grounds of
       sovereign immunity, and that the statutory framework is constitutional. The Motion
       to Dismiss the Complaint for Declaratory Judgment and First Amended Complaint for
       Declaratory Judgment, including the motion to dismiss on grounds of sovereign
       immunity, are denied only as to Petitioner’s due-process and equal-protection claims
       that in-state and out-of-state contractors were treated differently. All other claims and
       or requests of Petitioner are hereby dismissed with prejudice.

It is from this order that the Appellants and Duit both appeal.

                                        I. Direct Appeal

       The Appellants contend that the circuit court erroneously denied their motions to

dismiss, contending that they are entitled to sovereign immunity because Duit’s claim attempts

to control the actions of the State and subject it to monetary liability. They further assert that

no exception to the sovereign-immunity doctrine applies because Duit’s complaint does not

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meet the threshold showing required to apply the “unconstitutional act” exception. They

urge that Duit’s complaint is devoid of any factual support for its assertion that the ASCC and

the General Assembly have treated out-of-state contractors differently from in-state

contractors. They further maintain that the unconstitutional-act exception has no application

to claims seeking monetary relief against the State, but is limited in its application to claims

seeking injunctive relief.

       Duit responds that a suit to enforce rights guaranteed by the United States Constitution

overcomes the bar of sovereign immunity, as does a suit for declaratory and injunctive relief

involving illegal or unconstitutional acts by the State. It contends that its complaint for relief

sufficiently averred facts in support of its claim that the State deprived it of its property

without due process of law and equal protection by failing to provide an impartial decision

maker. Duit claims that declaratory relief is the appropriate remedy in its quest to obtain an

unbiased forum for its claims against the State.

       Ordinarily, an appeal may not be taken from an order denying a motion to dismiss.

See University of Arkansas for Med. Scis. v. Adams, 354 Ark. 21, 117 S.W.3d 588 (2003).

However, Arkansas Rule of Appellate Procedure–Civil 2(a)(10) (2013) provides for an

interlocutory appeal of an order denying a motion to dismiss based on the defense of

sovereign immunity. See id. The rationale justifying an interlocutory appeal is that the right

to immunity from suit is effectively lost if the case is permitted to go to trial. See id.

       In reviewing a circuit court’s decision on a motion to dismiss, we treat the facts alleged

in the complaint as true and view them in the light most favorable to the party who filed the

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complaint. See, e.g., Arkansas Dep’t of Envtl. Quality v. Oil Producers of Arkansas, 2009 Ark.
297, 318 S.W.3d 570. In testing the sufficiency of the complaint on a motion to dismiss, all

reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be

liberally construed. See id. However, our rules require fact pleading, and a complaint must

state facts, not mere conclusions, in order to entitle the pleader to relief. See id. Our standard

of review for the denial of a motion to dismiss is whether the circuit court abused its

discretion. See Walker v. Arkansas State Bd. of Educ., 2010 Ark. 277, 365 S.W.3d 899.

       The parties do not appear to dispute that Duit’s action is one against the State, which

is ordinarily barred by the doctrine of sovereign immunity.1            Sovereign immunity is

jurisdictional immunity from suit. See Milberg, Weiss, Bershad, Hynes & Lerach, LLP v. State,

342 Ark. 303, 28 S.W.3d 842 (2000). This defense arises from article 5, section 20, of the

Arkansas Constitution, which provides: “The State of Arkansas shall never be made defendant

in any of her courts.” Id. at 320, 28 S.W.3d at 854 (quoting Ark. Const. art. 5, § 20). This

court has extended the doctrine of sovereign immunity to include state agencies. See Arkansas

Dep’t of Cmty. Corr. v. City of Pine Bluff, 2013 Ark. 36, 425 S.W.3d 731. Where the pleadings

show that the action is, in effect, one against the State, the circuit court acquires no

jurisdiction. See id. In determining whether the doctrine of sovereign immunity applies, the

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         To the extent that Duit might contest this, it is clear that a judgment in Duit’s favor
would operate to control the actions of the State. Duit’s first amended complaint specifically
requests that the circuit court “require the State of Arkansas to provide Duit a meaningful and
fair forum in which to present its claims for breach of contract.” Accordingly, Duit’s suit is
barred by the doctrine of sovereign immunity unless an exception applies. See, e.g., Arkansas
Dep’t of Cmty. Corr. v. City of Pine Bluff, 2013 Ark. 36, 425 S.W.3d 731.

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court must decide if a judgment for the plaintiff will operate to control the action of the State

or subject it to liability. See Arkansas Dep’t of Envtl. Quality v. Al-Madhoun, 374 Ark. 28, 285
S.W.3d 654 (2008). If so, the suit is one against the State and is barred by the doctrine of

sovereign immunity, unless an exception to sovereign immunity applies. See id.

       This court has recognized three ways in which a claim of sovereign immunity may be

surmounted: (1) where the State is the moving party seeking specific relief; (2) where an act

of the legislature has created a specific waiver of sovereign immunity; and (3) where the state

agency is acting illegally, unconstitutionally, or if a state-agency officer refuses to do a purely

ministerial action required by statute. See Board of Trustees of the Univ. of Arkansas v. Burcham,

2014 Ark. 61; Arkansas Dep’t of Cmty. Corr., 2013 Ark. 36, 425 S.W.3d 731; Arkansas Tech

Univ. v. Link, 341 Ark. 495, 17 S.W.3d 809 (2000). At issue in the instant case is whether

the last exception applies. The Appellants assert that the unconstitutional-act exception does

not apply for two reasons: (1) Duit failed to plead sufficient facts to demonstrate an

unconstitutional act; and (2) the exception does not apply to suits for monetary relief, which

the Appellants claim is the ultimate relief sought by Duit. We need only address the former.

       This court has recognized that a complaint alleging illegal and unconstitutional acts by

the State as an exception to the sovereign-immunity doctrine is not exempt from complying

with our rules that require fact pleading. See Link, 341 Ark. 495, 17 S.W.3d 809. In its suit,

Duit alleged that the claims-commission process favors resident contractors over nonresident

contractors, resulting in a violation of equal protection under the Fourteenth Amendment to

the United States Constitution. “In deciding whether an equal protection challenge is

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warranted, there must first be a determination that there is a state action which differentiates

among individuals.” Pledger v. Featherlite Precast Corp., 308 Ark. 124, 135, 823 S.W.2d 852,

859 (1992) (quoting Bosworth v. Pledger, 305 Ark. 598, 604, 810 S.W.2d 918, 920 (1991)).

       A careful review of Duit’s first amended complaint for declaratory judgment, however,

reveals that Duit failed to plead facts that, if proven, would demonstrate a differentiation in

the treatment of in-state and out-of-state contractors. Although Duit provides a table

demonstrating the alleged past awards and denials by the ASCC to nonresident contractors,

its complaint lacks any facts in support of its statement that “[d]uring that same period the

ASCC recommended awards of damages to Arkansas resident contractors for breach of

contract against the AHTD in amounts greater than awards to non-resident contractors.” The

mere statement that it is so, without factual support, simply fails to comport with our

fact-pleading requirements. See, e.g., Arkansas Dep’t of Envtl. Quality v. Brighton Corp., 352
Ark. 396, 102 S.W.3d 458 (2003).

       For purposes of a motion to dismiss, we treat only the facts alleged in a complaint as

true, but not a party’s theories, speculation, or statutory interpretation. See Fitzgiven v. Dorey,

2013 Ark. 346, 429 S.W.3d 234. Taking only the facts alleged in Duit’s first amended

complaint for declaratory judgment as true and viewing them in the light most favorable to

Duit, we cannot say that the complaint states sufficient facts to support Duit’s allegation that

the claims-commission process treated resident and nonresident contractors differently in

violation of the Fourteenth Amendment.                 Accordingly, the exception to the

sovereign-immunity doctrine for unconstitutional acts is not applicable, and Duit’s equal-

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protection claim is barred by sovereign immunity. We therefore reverse the circuit court’s

denial of the Appellants’ motions to dismiss Duit’s equal-protection claim and remand for

entry of an order consistent with this opinion.

                        II. Cross-Appeal; Motion to Dismiss Cross-Appeal

       Duit cross-appeals from the circuit court’s order that granted in part the Appellants’

motions to dismiss based on sovereign immunity, dismissing its due-process claim. Before we

can reach the merits of the cross-appeal, however, we must first address a motion by the

Appellants to dismiss Duit’s cross-appeal. In their motion, the Appellants contend that this

court should dismiss the cross-appeal because Duit seeks to appeal from what is a nonfinal

order. The Appellants aver that because the circuit court only dismissed Duit’s facial

challenge, but allowed it to proceed on its unequal-treatment claim, the circuit court’s order

adjudicated fewer than all of Duit’s claims and, therefore, the order was not final. They

further point out that the appeal is not proper under Ark. R. App. P.–Civ. 2(a)(10), as theirs

is, because that rule limits such an interlocutory appeal to the denial of a motion to dismiss or

for summary judgment on the basis of immunity and does not permit an appeal from the grant

of those motions.

       We agree. In the instant case, the circuit court’s order may have dismissed Duit’s due-

process claim, but it also kept alive Duit’s equal-protection claim, by virtue of its denial in part

of the Appellants’ motion to dismiss.2 Accordingly, the order was in no way final at the time

       2
        In its response to the Appellants’ motion to dismiss the cross-appeal, Duit contends
that there are no unresolved claims at the circuit-court level and that its cross-appeal from the
dismissal of its claim should be heard in conjunction with the Appellants’ direct-appeal. Duit

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it was entered by the circuit court. The requirement of a final judgment is the cornerstone

of appellate jurisdiction, and this court reviews only final orders. See Robinson v. Villines, 2012
Ark. 211. For an order to be final and appealable, it must dismiss the parties from the court,

discharge them from the action, or conclude their rights to the subject matter in controversy.

See id. Stated another way, for an order to be final and appealable, the order must put the

circuit court’s directive into execution, ending the litigation, or a separable branch of it. See

id. According to the circuit court’s order, Duit’s claim that nonresident contractors were

treated differently remained viable; it had not been dismissed, and an order that contemplates

further action by a party or the court is not a final, appealable order. See id.

       Because the circuit court’s order did not dispose of both of Duit’s claims, there is no

final judgment as required by Ark. R. Civ. P. 54(b). Under Rule 54(b), an order that fails

to adjudicate all of the claims as to all of the parties, whether presented as claims,

counterclaims, cross-claims, or third-party claims, is not final for purposes of appeal. See Ford

Motor Co. v. Washington, 2012 Ark. 325. Although Rule 54(b) provides a method by which

the circuit court may direct entry of a final judgment as to fewer than all of the claims, where

there is no attempt to comply with Rule 54(b), the order is not final, and we must dismiss the

appeal. See id. Our review of the instant record reveals no certification pursuant to Ark. R.

takes the position that its complaint consisted of only one claim—one for due process—and
that the circuit court’s order disposed of that single claim.
        We do not agree. Although Duit argues that the complaint consisted of only one
claim against the Appellants, the circuit court’s order clearly treated Duit’s allegations as two
separate claims—one for due process and one alleging a difference in the treatment of resident
and nonresident contractors, a claim readily identifiable to this court as one alleging an equal-
protection violation.

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Civ. P. 54(b).

       Nor is Duit’s cross-appeal a proper interlocutory appeal under Ark. R. App. P.–Civ.

2(a)(10). That rule permits an interlocutory appeal from “[a]n order denying a motion to

dismiss or for summary judgment based on the defense of sovereign immunity,” but Duit

seeks to appeal the circuit court’s grant in part of the Appellants’ motion to dismiss on

sovereign immunity. Since Rule 2(a)(10) does not allow an interlocutory appeal of an order

granting a motion to dismiss based on the defense of sovereign immunity, Duit’s cross-appeal

is improper under that Rule as well. For all of these reasons, we lack jurisdiction over Duit’s

cross-appeal and must dismiss it. Accordingly, we grant the Appellants’ motion to dismiss the

cross-appeal.

       Reversed and remanded for entry of an order consistent with this opinion; appellants’

motion to dismiss cross-appeal granted; cross-appeal dismissed.

       Special Justice J. CARTER FAIRLEY joins.

       HOOFMAN, J., not participating.

       Dustin McDaniel, Att’y Gen., by: Mindy D. Pipkin, Ass’t Att’y Gen., and Michelle

Davenport, for appellants.

       Jack East III, for appellee.

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