Nabholz Construction Corporation v. Contractors for Public Protection Association

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SUPREME COURT OF ARKANSAS  No.  07­843  N A B H O L Z   C O N S T R U C T I O N  CORPORATION,  APPELLANT,  VS.  C O N T R A C T O R S   F O R   P U B L I C  PROTECTION ASSOCIATION,  APPELLEE,  Opinion Delivered  November 1, 2007  APPEAL  FROM  THE  PULASKI  COUNTY CIRCUIT COURT,  NO. CV 07­2784,  HON. MARION ANDREW HUMPHREY,  JUDGE,  REVERSED AND DISMISSED.  PAUL E. DANIELSON, Associate Justice  Appellant Nabholz Construction Corporation appeals from the circuit court’s order  directing it to produce certain documents, which the circuit court deemed “public records”  under Arkansas’s Freedom of Information Act (FOIA), codified at Ark. Code Ann. §§ 25­19­  101–25­19­109  (Repl.  2002  &  Supp.  2005),  and  which  were  requested  by  appellee  Contractors for Public Protection Association (CFPPA).  Nabholz asserts  four points on  appeal: (1) that it was not a proper defendant under the FOIA; (2) that, in the alternative, its  records were not public records; (3) that, in the alternative, its records were exempt; and (4)  that venue was improper.  We reverse the circuit court’s order and dismiss.  A review of the record reveals that on March 2, 2007, CFPPA filed a complaint in the  Pulaski County Circuit Court against Nabholz, under the FOIA.  In it, CFPPA asserted that  Nabholz,  as  general  contractor,  had  contracted  with  the  University  of  Arkansas  for  the erection of the Northwest Quadrant Housing Project on its Fayetteville campus.  CFPPA  stated  that  on  October  25,  2006,  it  had  requested  documents  and  other  items  from  the  University  related  to  the  expenditure  of  public  funds  for  the  erection  of  several  public  buildings.  It  further  stated  that  on  November  8,  2006,  the  University  responded  to  its  request, offering to furnish documents and certain contracts relating to the construction of  public buildings, which included the contract for the Fayetteville housing project.  According to the complaint, CFPPA, upon inspecting and copying the documents  1  furnished by the University, extended its request to inspect certain documents  not previously  disclosed, to which the University responded:  (2)  To  the  extent  that  supporting  documentation  for  pricing  of  contracts and change orders is available it would be maintained in the files  which you will review.  However, it is more likely that such records would be  maintained by the general contractor and is not in our files for the projects  identified.  . . . . 1  The extended request included the following documents, according to the complaint:  (1)  the  actual  construction  file  on  each  of  six  University  projects;  (2)  the  supporting  documentation for the pricing of all contracts and change orders; (3) documentation of all  monies spent on the projects, including the actual checks written or check registers, together  with a schedule of all payments and ledgers; (4) the monthly billings with the supporting  schedules of values for all jobs; (5) the calculations of savings from the guaranteed maximum  proposal, together with documentation for each job; (6) the results of all audits performed  on any of the jobs; (7) the documentation of any costs savings returned to the owner for each  job; (8) documentation of the scope of work and the square footage for each project; (9)  documentation of the labor burden stated as a percentage for each project; (10) complete  supporting documentation  for the general conditions portion of the job for each project,  including the amount paid for general conditions on the job as well as supporting schedules  for  each  individual  item  charged  to  general  conditions  for  the  potential  project;  (11)  documentation of bond costs for each project; and (12) any schedules and printouts available  from information stored on computers regarding each of the projects.  ­2­  07­843  (6)  No audits have been performed on any of the jobs referenced.  . . . .  (10)  The amount paid for general conditions is included with each  payment request in the schedule of values but otherwise I do not believe that  our records of payment exist in our files for any individual items charged to  general conditions.  CFPPA stated that after receiving the information in the University’s possession, which did  not include the information requested by CFPPA in its extended request, it requested the  information,  relating  to  the  Fayetteville  housing  project,  directly  from  Nabholz,  which  refused to release or produce the information.  By its complaint, CFPPA sought the information, which it believed to be in Nabholz’s  possession and which it believed related to charges by Nabholz for its completion of the  Fayetteville housing project.  CFPPA contended that the information it believed to be in  Nabholz’s possession constituted public records under the FOIA and asserted that Nabholz  was the custodian of the records, for purposes of the FOIA.  It further alleged that Nabholz  had violated the FOIA by refusing to make the documents and items of evidence available  for copying and inspection.  For these reasons, CFPPA sought declaratory and injunctive  relief, an in camera review, if necessary, as well as attorney’s fees.  In response, Nabholz  initially moved to dismiss CFPPA’s complaint under Ark. R. Civ. P. 12(b)(6) and for lack  of venue and later answered the complaint, requesting that it be denied and dismissed.  A  hearing  was  held  on  the  matter,  at  the  conclusion  of  which  the  circuit  court  rendered the following decision:  The Court takes into consideration, Judge [I]mbers’ [sic] opinion, the  Fox versus Perroni, where it states that the Supreme Court literally interprets ­3­  07­843  the  Freedom  of  Information  Act  to  accomplish  its  broad  and  honorable  purpose, that public business be performed in an open and public manner.  And it gives broader instruction to it in favor of disclosure.  Taking that into  consideration following that line of thought, the Court is of the opinion that in  the  response  of  Mr.  Harrison  on  December  8,  2006,  which  is  Plaintiffs’  Exhibit 4, Mr. Harrison gives the suggestion that leaves this Court with the  impression that the general contractor had really placed himself in the position  of being the custodian of those documents concerning the contract between  Nabholz  and  the  University.    Now,  whether  or  not  that  was  intended,  this  Court  isn’t  sure,  but  based  upon  the  statement  in  that  Exhibit  and  the  testimony  of  Mr.  Harrison  again  here  today,  it  appears  to  this  Court,  that  Nabholz is the custodian of the records concerning that contract pertaining to  this Northwest Quadrant Housing Project.  Now, for that reason, the Court  declares that to be the case.  And the Court is not willing to say that Nabholz  has knowing [sic] violated the FOIA though.  I’m not sure that they knowingly  did  that.  However,  the  Court  believes  that  Nabholz  should  produce  those  requested documents pertaining to all subcontractors, the services provided by  those  subcontractors,  and  the  charges  for  the  work  done  by  those  subcontractors.    And  I  don’t  think  that  this  will,  in  fact,  be  any  kind  of  prohibition or competition in the past.  I don’t want to give the competitors any  advantage, and I think that all of these competitors need to know that this is  part of the cost of doing business with the state.  However, the Court does not  believe that Nabholz should have to give copies of what was called today,  take­offs for all worked [sic] performed, if that, in fact, infringes upon the  competition with others, the Court will not require that.  But, excluding those  take­offs, the rest of the information requested, as that pertains to who are the  subcontractors here, plus services those contractors provided, and what they  charged for them, that appears to this Court, to be public business.  If there is  some dispute as to what would protect Nabholz from divulging competitive  information, the Court will review that in­camera, if you still cannot agree on  all the documents that should be disclosed, if there is some challenge to that,  but if you can follow this general frame work that the list of subcontractors  and services provided to others should be disclosed, that is the Court’s order.  The Court will not require any party to pay the other’s attorney’s fees, though.  Following the hearing, the circuit court entered its written order, in which it found that venue  was proper in Pulaski County and that Nabholz was the custodian of the desired records.  It  further  found  that  the  items  requested  by  CFPPA  were  public  records,  but  that  the ­4­  07­843  “documents regarding Defendant’s takeoffs, labor burdens charged and bonding costs [fell]  within A.C.A. § 25­19­105(b)(9)(A) as they [were] files which, if disclosed, would give  advantage to competitors or bidders.”  The circuit court then denied Nabholz’s motion to  dismiss and found Nabholz not guilty of any misdemeanor, as it had not knowingly violated  the FOIA.  Finally, the circuit court ordered Nabholz to immediately produce the documents  requested by CFPPA, “including, but not limited to, the documentation to support the general  conditions and the subcontracts and supporting documentation, with the exception of the  takeoffs, labor burdens and bond costs[,]” which the circuit court had found to be excepted.  Subsequent to its final order, the circuit court granted Nabholz’s motion for stay pending  appeal. In addition, in a nunc pro tunc order, the circuit court granted CFPPA attorney’s fees  of $4,000.  Nabholz now appeals.  Nabholz, for its initial point on appeal, argues that it was not a proper defendant under  the FOIA for two reasons.  It first contends that it was not the statutory custodian of the  records  because  its  mere  possession  of  the  requested  documents  did  not  equate  to  administrative control.  Second, it urges that it is a private organization, not supported by or  expending public funds, whose mere receipt of money in exchange for services provided to  the University was insufficient to render it a proper defendant.  CFPPA responds, asserting  that the clear progression of the law has been that records of public business are subject to  disclosure even when the records are not in the custody of the state actor.  It asks this court  to hold that a private entity, having actual possession of the records requested, can be a  custodian within the meaning of the FOIA. ­5­  07­843  This court liberally interprets the FOIA to accomplish its broad and laudable purpose  that public business be performed in an open and public manner.  See Fox v. Perroni, 358  Ark. 251, 188 S.W.3d 881 (2004).  Furthermore, we broadly construe the FOIA in favor of  disclosure.  See id.  Arkansas Code Annotated § 25­19­105(a)(1)(A) (Supp. 2005) provides  that  “[e]xcept  as  otherwise  specifically  provided  by  this  section  or  by  laws  specifically  enacted to provide otherwise, all public records shall be open to inspection and copying by  any citizen of the State of Arkansas during the regular business hours of the custodian of the  records.” Subsection (a)(2)(A) provides that “[a] citizen may make a request to the custodian  to inspect, copy, or receive copies of public records.” Ark. Code Ann. § 25­19­105(a)(2)(A).  Pursuant to subsection (d)(2)(A) of the statute, “the custodian shall furnish copies of public  records if the custodian has the necessary duplicating equipment,” upon request and payment  of a fee as provided in subsection (d)(3).  Ark. Code Ann. § 25­19­105(d)(2)(A).  In the  instant case, CFPPA presented a request to Nabholz for certain records, which pertained to  the construction of the University’s Fayetteville housing project.  We have held that for a record to be subject to the FOIA and available to the public,  it must be (1) possessed by an entity covered by the Act, (2) fall within the Act’s definition  of a public record, and (3) not be exempted by the Act or other statutes.  See Legislative  Joint  Auditing  Comm.  v.  Woosley,  291  Ark.  89,  722  S.W.2d  581  (1987).    The  question  presented  here is whether Nabholz is an entity covered by the Act, such that suit against  Nabholz is even proper.  While our review of the record reveals that Nabholz appears to be  in possession of the records requested, we cannot say that  it  is an entity covered by the ­6­  07­843  FOIA, which would render it subject to suit under the FOIA.  A review of our jurisprudence reveals that in previous cases, the FOIA request being  reviewed was directed to a state agency or public entity covered by the Act and not to a  private corporation, such as Nabholz.  See, e.g., Pulaski County v. Arkansas Democrat­  Gazette, Inc., ___ Ark. ___, ___ S.W.3d ___ (Oct. 4, 2007); Ryan & Co. AR, Inc. v. Weiss,  ___  Ark.  ___,  ___  S.W.3d  ___  (Sept.  27,  2007)  (request  directed  to  the  Department  of  Finance and Administration); Harris v. City of Fort Smith, 359 Ark. 355, 197 S.W.3d 461  (2004); Nolan v. Little, 359 Ark. 161, 196 S.W.3d 1 (2004) (request directed to the Arkansas  State Plant Board); Fox v. Perroni, supra (request directed to a circuit judge); Arkansas Ins.  Dep’t v. Baker, 358 Ark. 289, 188 S.W.3d 897 (2004); Arkansas Prof’l  Bail Bondsman  Licensing Bd. v. Frawley, 350 Ark. 444, 88 S.W.3d 418 (2002); Orsini v. State, 340 Ark.  665, 13 S.W.3d 167 (2000) (request directed to the Department of Correction); Bryant v.  Weiss, 335 Ark. 534, 983 S.W.2d 902 (1998) (request directed to  the  Governor and the  Department of Finance and Administration); Arkansas Dep’t of Fin. & Admin. v. Pharmacy  Assocs., Inc., 333 Ark. 451, 970 S.W.2d 217 (1998); Arkansas Dep’t of Health v. Westark  Christian Action Council, 322 Ark. 440, 910 S.W.2d 199 (1995); Swaney v. Tilford, 320 Ark.  652,  898  S.W.2d  462  (1995)  (request  directed  to  the  Arkansas  Development  Finance  Authority); Byrne v. Eagle, 319 Ark. 587, 892 S.W.2d 487 (1995) (request directed to the  Arkansas Development Finance Authority); Johninson v. Stodola, 316 Ark. 423, 872 S.W.2d  374 (1994) (request directed to the Pulaski County Prosecutor); Furman v. Holloway, 312  Ark.  378,  849  S.W.2d  520  (1993)  (request  directed  to  the  Arkansas  Department  of ­7­  07­843  Correction); Troutt Bros., Inc. v. Emison, 311 Ark. 27, 841 S.W.2d 604 (1992) (request  directed to the sheriff of Craighead County); Bryant v. Mars, 309 Ark. 480, 830 S.W.2d 869  (1992) (request directed to the Attorney General); Young v. Rice, 308 Ark. 593, 826 S.W.2d  252 (1992) (request directed to the City of Little Rock’s personnel office); Hengel v. City of  Pine Bluff, 307 Ark. 457, 821 S.W.2d 761 (1991); Snyder v. Martin, 305 Ark. 128, 806  S.W.2d 358 (1991) (request directed to the Motor Fuel Tax Section of the Department of  Finance and Administration); Arkansas Gazette Co. v. Goodwin, 304 Ark. 204, 801 S.W.2d  284 (1990) (request  directed to the Arkansas State Police and the Sixth Judicial District  Prosecutor); Gannett River States Publ’g Co. v. Arkansas Judicial Discipline & Disability  Comm’n, 304 Ark. 244, 801 S.W.2d 292 (1990); City of Fayetteville v. Edmark, 304 Ark.  179, 801 S.W.2d 275 (1990);  Martin v. Musteen, 303 Ark. 656, 799 S.W.2d 540 (1990)  (request directed to the City of Rogers’s Chief of Police); Gannett River States Publ’g Co.  v. Arkansas Indus. Dev. Comm’n, 303 Ark. 684, 799 S.W.2d 543 (1990); Arkansas Highway  & Transp. Dep’t v. Hope Brick Works, Inc., 294 Ark. 490, 744 S.W.2d 711 (1988); Blaylock  v.  Staley,  293  Ark.  26,  732  S.W.2d  152  (1987)  (request  directed  to  the  Pulaski  County  Clerk); Legislative Joint Auditing Comm. v. Woosley, supra; Ragland v. Yeargan, 288 Ark.  81, 702 S.W.2d 23 (1986) (request directed to the Commissioner of Revenues).  In the instant case, Nabholz is an Arkansas corporation and is not an entity of the  state.  As such, it alone cannot be sued under the Act and directed to turn over documents ­8­  07­843  2  under the Act.  While we liberally construe the FOIA in favor of disclosure, we are also  aware of the need for a balancing of interests to give effect to what we perceive to be the  intent of the General Assembly; in doing so, we must take a common­sense approach.  See  Bryant v. Mars, 309 Ark. 480, 830 S.W.2d 869 (1992).  Indeed, we have held that we will  not  interpret a statute to yield an absurd result that defies common sense.  See National  Home Centers, Inc. v. First Arkansas Valley Bank, 366 Ark. 522, ___ S.W.3d ___ (2006).  Were we to hold in this case that Nabholz, a private corporation, had to comply with a  request under the Act, it would then be in the position of making a crucial decision under the  FOIA, that is, whether or not the requested records constitute public records and are subject  to disclosure.  We cannot say that such was the intent of the General Assembly.  That being said, we render no decision as to whether the requested documents are or  are not public records, subject to disclosure under the FOIA.  The question still remains as  to whether the  documents could be considered under the “administrative control” of the  University, such that they would be subject to disclosure, if found to be public records.  In  addition,  we  note  that  we  will  not  permit  the  circumvention  of  the  FOIA  by  the  simple  “hand­off”  of  documents  to  entities  not  covered  by  the  Act.  Cf.  City  of  Fayetteville  v.  Edmark, 304 Ark. 179, 801 S.W.3d 275 (1990).  Nevertheless, in the instant case, CFPPA 2  We noted in Sebastian County Chapter of the American Red Cross v. Weatherford,  311 Ark. 656, 846 S.W.2d 641 (1993), that we had previously applied the FOIA in several  instances in which private entities had received public funds.  However, in each instance, the  request for the records was directed to a public agency or entity covered by the Act and not  to the private entity itself.  ­9­  07­843  filed  suit  not  against  an  entity  that  would  be  covered  under  the  Act,  but  solely  against  Nabholz, a private corporation.  Therefore, because CFPPA did not bring suit against an  entity covered by the FOIA, we reverse and dismiss the matter, along with the circuit court’s  3  order granting attorney’s fees.  Reversed and dismissed. 3  Because we reverse on Nabholz’s first point, there is no need to address its remaining  points on appeal.  ­10­  07­843 

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