ST. CROIX — A U.S. magistrate judge filed a recommendation Wednesday for the District Court of the Virgin Islands to grant in part and deny in part a motion submitted by the VI Public Finance Authority and Office of Disaster Recovery to dismiss a lawsuit claiming the PFA “improperly awarded” a $137 million contract to provide project management and construction management services for ODR’s USVI Rebuild Super Project Management Office, according to a District Court document.
Magistrate Judge G. Alan Teague, in his 34-page report and recommendation, recommended that PFA’s motion to dismiss a lawsuit filed by the global project and construction management firm Hill International Inc. be granted in part and denied in part.
Hill originally filed a civil complaint against the PFA and ODR on September 10, 2024 in Virgin Islands Superior Court, Division of St. Thomas/St. John.
The lawsuit was transferred to the District Court on September 12, 2024.
Hill International claims the PFA board’s decision on August 13, 2024 to approve a three-year, $137 million contract with CH2M Hill Inc. and to deny the award to Hill International was “arbitrary, capricious, and an abuse of discretion, and contrary to both federal and Virgin Islands procurement law.”
Hill cited three reasons why it should have been awarded the contract instead of CH2M — a $107 million price disparity between the bids, the award of a single contract contravenes the RFP’s requirement to award at least two contracts, and the decision to award a single contract to CH2M was tainted by a conflict of interest since three of the five Evaluation Committee members — Public Works Commissioner Derek Gabriel, Jomo McClean and Tawana Nicholas — are employees of the Virgin Islands Department of Public Works, and CH2M’s parent is Jacobs Solutions Inc., which has two employees who work for DPW.
Count I of the complaint asserts Hill is entitled to a declaratory judgment that PFA’s decision violated federal and Virgin Islands procurement law, and that Hill was entitled to be selected as the awardee in a “properly conducted procurement,” according to Teague’s recommendation. Count II asserts Hill is entitled to immediate injunctive relief and urges that Hill will be immediately and irreparably harmed by being deprived of profits and this business opportunity to which it is entitled unless such relief is granted. Count III asserts a taxpayer suit under VI Code Title 5, Section 80 to prevent the wrongful disbursement of territorial funds.
PFA moved to dismiss the lawsuit, arguing the court lacks subject matter jurisdiction over Counts I and II because Hill failed to exhaust its administrative remedies by filing a bid protest with ODR before filing suit. PFA further argued that the court lacks jurisdiction over Hill’s claim alleging PFA lacks procurement power because Hill fails to plead an injury in fact to establish standing. PFA argued several bases for dismissal for failure to state a claim.
Although Hill claims in Count I it is entitled to declaratory judgment, Teague indicated that Hill cites neither a federal nor territorial statute as the basis for the claim, nor any common law cause of action. He noted that because a declaratory judgment is a remedy and not a cause of action, Hill must have a cause of action to seek such a remedy. He further noted Count I does not provide the legal basis grounding Hill’s procurement power claim.
In Count II, Teague noted Hill sought immediate injunctive relief. He noted, however, that an injunction is a remedy, not a cause of action. He said the District Court should dismiss the count because it is not a cause of action.
In Count III, Teague noted Hill brings a taxpayer suit under VI law. Hill contends the PFA improperly awarded the contract and is attempting to “waste” nearly $107 million of money allocated for the benefit of Virgin Islanders. As an initial matter, Teague noted the complaint alleges no facts from which the court can conclude Hill is a VI taxpayer. He noted that because the territory issued Hill a general business license does not mean Hill has paid any VI taxes. Assuming without deciding that Hill is a VI taxpayer, Teague found Count III fails to state a claim for relief.
Discussing the number of contracts, Teague wrote that the RFP indicated in Section 2.0 that a minimum of two contracts would be utilized, but other provisions indicated the possibility of one or multiple awards.
Teague addressed the conflict-of-interest claim relating to three of the five Evaluation Committee members working for DPW, the same agency that employs two people who also work for CH2M’s parent company, Jacobs Solutions. He noted there are no allegations suggesting the Evaluation Committee members and Jacobs Solutions’ employees worked together, or that they intentionally or inadvertently exchanged information that gave CH2M an unfair advantage in preparing its bid or caused the committee to unfairly favor CH2M or disfavor Hill.
Teague recommended for the District Court to grant PFA’s motion as to standing and dismiss Hill’s procurement power claims for lack of standing. He recommended to dismiss Counts I, II, and III for failure to state a claim.
The PFA noted in its motion to dismiss that the court must dismiss Counts I and II because Hill failed to exhaust its administrative remedy by filing a bid protest with ODR as expressly required by the RFP. Teague recommended to deny without prejudice PFA’s motion as to exhaustion. Teague noted he would not address exhaustion as a Federal Rule of Civil Procedure 12(b)(1) argument because, to the extent administrative exhaustion is required, it is a claims-processing rule and not a statutory limit on the court’s jurisdiction.
The PFA moved for dismissal of the lawsuit for insufficient service of process, stating a court may dismiss an action for insufficient service of process based on an attack on the manner in which a summons and complaint were served, or the lack of service thereof. The PFA noted in its motion that a party must serve the designated registered agent of a public corporation that can be sued pursuant to the VI Code, the chief executive officer, or any other person authorized by law to accept service of process, unless otherwise provided by law. Teague recommended to find as moot PFA’s motion to dismiss for insufficient service of process.
Any objections to Teague’s report and recommendation must be filed in writing within 14 days of receipt. Failure to file objections within the specified time shall bar the aggrieved party from attacking the report and recommendation before the assigned District Court judge.
