Allan Myers, L.P. v. Mayor & City Council of Balt.

ALLAN MYERS, L.P. v. MAYOR AND CITY COUNCIL OF BALTIMORE

No. 0849

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2019

June 11, 2020

Circuit Court for Baltimore City

Case No. 24-C-18-006397

UNREPORTED

Berger, Wells, Salmon, James P. (Senior Judge, Specially Assigned), JJ.

Opinion by Berger, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

This appeal arises from a dispute between Allan Myers, L.P. ("Myers"), Appellant, and the Mayor and City Council of Baltimore ("the City"), Appellee. Myers entered into a contract ("the Contract") with the Baltimore City Department of Public Works ("DPW") for the construction of a concrete reservoir. During construction of the reservoir, several problems arose which necessitated extra work by Myers. Myers requested change orders for additional compensation relating to the work it completed, which were denied. Myers challenged the denial of its claims through the administrative process afforded to it pursuant to the Contract. Myers' claims were denied three times including a denial by the Chief of the Bureau of Water and Wastewater, Rudolph S. Chow ("Chow").

Myers requested to proceed to the final level of administrative review pursuant to the Contract. The Contract provided for a hearing before the Director of DPW. In the interim, however, Chow had become the Director of DPW. As a result, Myers' hearing proceeded before the Deputy Director of DPW, S. Dale Thompson ("Hearing Officer" or "Thompson"), who denied its claims. Myers petitioned for judicial review in the Circuit Court for Baltimore City. On June 5, 2019, the circuit court affirmed DPW's decision. This appeal by Myers followed and the City moved to dismiss Myers' appeal.

Myers presents the following issues on appeal, which we have rephrased for clarity:¹

1. Whether Myers was denied due process of law where the Hearing Officer was the Deputy of the DPW, acting in place of the Director.

2. Whether the Hearing Officer erred as a matter of law in interpreting the contract to require Myers to consider thermal loads.

3. Whether the Hearing Officer erred in finding that Myers was liable for designing the reservoir roof and in failing to apply the Spearin Doctrine.

4. Whether the Hearing Officer erred as a matter of law in finding that Myers was not entitled to additional compensation for work that was outside the scope of the original contract.

For the reasons stated herein, we grant the City's motion to dismiss. In light of our holding, we need not address the merits of Myers' claims.

FACTS AND PROCEDURAL HISTORY

On November 18, 2009, the City awarded Allan Myers, L.P. Water Contract 1160-R for Montebello Plant 2, Finished Water Reservoir Cover. The Contract was administered by DPW and required the construction of a 665 by 490 foot cast-in-place reinforced concrete reservoir with a precast-prestressed concrete cover. This included "a cast-in-place concrete slab base, cast-in-place concrete walls that connect to precast concrete double tee roof panels that are supported by precast concrete inverted tee girders, and cast-in-place columns." The structure would house millions of gallons of finished water from the City's Montebello 2 water treatment facility. Construction began in January 2010 and was scheduled to be completed in October 2013.

In early July 2011, issues arose concerning the concrete roof, which necessitated a change in the manner in which the roof members were interconnected. These issues were investigated and determined to be the result of movement between the concrete roofmembers, which was caused by thermal forces. Following discussions between the City and Myers, Myers began to make alterations to the roof system. On August 20, 2012, Myers submitted a proposed change order for $4,699,735.00 of additional work that was undertaken to remediate the cracking in the roof. In January of 2014, Myers was informed that leaks were identified in the walls and slabs of the reservoir's base, which exceeded the maximum leakage allowed by the contract specifications. Myers subsequently remediated the leaks. Thereafter, Myers submitted another proposed change order for its remedial work in the amount of $167,265.00.

The Contract incorporated and was governed by the City of Baltimore Department of Public Works Specifications for Materials, Highways, Bridges, Utilities, and Incidental Structures (2006) (the "Green Book") and the Baltimore City Charter ("the Charter"). The Green Book and the Charter established the administrative process available to Myers. The Green Book provided for an initial review heard by an appropriate agency employee, a review by the head of the appropriate Bureau, and a final administrative review by the Director of the applicable City agency. Baltimore City Charter Article II, § 4A governs disputes that arise from construction contracts with the City. Section 4A(e) prohibits the City from requiring in a construction contract "that a dispute between the parties involving $10,000 or more over the terms of the contract or performance under the contract be subject to final binding or conclusive determination by an officer or official body of Baltimore City."

This provision provides two procedural options to resolve disputes arising from construction contracts. First, it allows the City to make a final decision by utilizing a neutral party or arbitration panel, pursuant to § 4A(f), which provides the following:

(f) Construction contracts - Decision by neutral party or arbitration panel. With regard to a construction contract to which it is a party, Baltimore City may provide or require that if there is a dispute over the terms of the contract or performance under the contract, the questions involved in the dispute shall be subject to a determination that is final and conclusive on all parties, made either by:

(1) a neutral person or entity selected by or in accordance with a procedure established by the Mayor of Baltimore City; or

(2) if the other party does not accept as neutral a person or entity selected under paragraph (1) of this subsection, by an arbitration panel composed of the following:

(i) one member designated by the Mayor of Baltimore City;

(ii) one member designated by the other party to the dispute; and

(iii) one member selected by mutual agreement of the 2 designated members from lists to be submitted by the parties to the dispute.

Second, the Charter allows the City to utilize an officer or official body of Baltimore City to render a decision that is subject to judicial review. Section 4A(g) provides:

Notwithstanding the provisions of subsections (e) and (f) of this section, with regard to a construction contract to which it is a party, Baltimore City may provide or require that if there is a dispute between the parties involving $10,000 or more over the terms of the contract or performance under the contract, thedispute is subject to a determination of questions of fact by an officer or official body of Baltimore City, subject to review on the record by a court of competent jurisdiction.

Section 7384 of the Green Book supplements this procedure and provides that the "Director of the applicable department shall act as the Hearing Officer." The City elected to pursue this option in the proceedings below.

Baltimore City Charter Article VII also establishes DPW and its personnel. Critically, it defines the roles of the Director and the Deputy Director. Pursuant to Article VII, § 28, "[t]he Director of Public Works shall supervise and direct the Department. The Director shall have had substantial administrative experience in the construction and maintenance of public works, public improvements and the delivery of related public services or ten years experience as an engineer." Section 29(a) provides that the Director shall select a Deputy Director. Further, § 29(b) provides that "[w]henever a vacancy shall occur in the office of Director or whenever the Director shall be incapacitated or otherwise unavailable for duty for any cause, the Deputy Director shall be the Acting Director, until the Director is again available for duty or the vacancy is filled."

Myers' first administrative hearing occurred on September 10, 2012 before the Construction Project Supervisor. Its claim was denied on September 14, 2012. Myers exercised its right to have a second-level hearing before the Division Chief of Construction Management, who similarly denied its claim. On January 16, 2013 Myers had its third administrative hearing before the Chief of the Bureau of Water and Wastewater, Chow, who denied Myers' claim on February 11, 2013. The Contract and Charter provided for afinal administrative hearing before the Director of DPW. Myers requested to proceed to this level on March 7, 2013.

The final hearing did not occur until 2017. Between Myers' third administrative hearing and the final hearing, Chow was promoted to Director of DPW. Myers raised due process concerns to DPW because Chow had denied its claim at the third-level hearing. Myers proposed that the parties proceed through arbitration, but the City elected to proceed with a hearing before the Deputy Director of DPW, Thompson. Hearings were conducted by the Hearing Examiner on November 28- 29, 2017. Five witnesses testified on behalf of Myers and six witnesses testified on behalf of the City. Additionally, several hundred exhibits were introduced. On November 19, 2018 the Hearing Officer denied both change orders seeking additional compensation. Preliminarily, she addressed Myers' objection to the form of the administrative proceedings and found that she was properly able to conduct the hearing pursuant to the Contract and the Charter. The Hearing Officer determined that the City properly denied Myers' claim regarding additional compensation for work done to the...