Md. State Highway Admin. v. Brawner Builders, Inc.

MARYLAND STATE HIGHWAY ADMINISTRATION v. BRAWNER BUIILDERS, INC.

No. 1643

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2019

Argument Date: November 6, 2020

December 18, 2020

Procurement Law

A subcontractor is entitled to make a contract claim against a procurement agency only if there is a direct contract between the claimant and that agency. The subcontractor had a contract with a contractor to provide materials on a state highway project. Although the state agency had approved the materials the subcontractor would use in state highway noise barrier wall, that did not suffice to create a contract between the subcontractor and the agency. As such, the subcontractor did not have standing to present a claim against the agency. The mere approval of a company's product as being acceptable for a project does not make that company a procurement contractor with standing to make a claim.

Timeliness

In construction contracts, a contractor must file written notice of a claim against a procurement agency within 30 days after the basis for the claim is known or should have been known and the support for the claim itself must be filed within 90 days after submission of the notice of the claim. The subcontractor alleged the contractor was obligated to pass through its complaints to the procurement agency. The court affirmed the decisions of the Maryland State Board of Contract Appeals to dismiss the claim as untimely because the contractor failed to file a written pass-through notice with the 30 days.

Circuit Court for Baltimore City

Case No. 24-C-19003208

REPORTED

Beachley, Gould, Wilner, Alan M. (Senior Judge, Specially Assigned), JJ.

Opinion by Wilner, J.

This case arises under the State procurement law. The State Highway Administration (SHA) rejected claims filed by appellees Brawner Builders, Inc. (Brawner) and Faddis Concrete Products, Inc. (Faddis) on the grounds that (1) Faddis had no procurement contract with SHA and therefore had no standing to file a procurement claim, and (2) the claims filed by Brawner and Faddis were untimely. In an appeal by appellees, the Maryland State Board of Contract Appeals (MSBCA) agreed with SHA on both of those issues and entered a Summary Decision affirming SHA's rejection of the claims.

In a judicial review action, however, the Circuit Court for Baltimore City had a different view. It concluded, (1) as a matter of law, that Faddis did have a procurement contract with SHA and was entitled to file a claim, and (2) that there was a genuine dispute of material fact as to whether the claims were timely. It therefore vacated the MSBCA summary decision and remanded the case for a hearing on the merits of the claims. Before us is SHA's appeal from that judgment. We shall reverse the Circuit Court judgment and remand with instructions to affirm the MSBCA order.

BACKGROUND

The project that spawned this dispute was the construction of a 0.38-mile noise barrier wall along a stretch of I-95 in Howard County. Noise abatement measures along State highways are required both for Federal funding of highway construction projects and by State law. As a result, in August 2011, SHA issued a Highway Noise Policy thatset forth substantive requirements for precast concrete products and a procedure for SHA certification of plants producing those products. Pre-approval of a plant by SHA was required in order for a manufacturer to be eligible to bid on SHA highway projects. Certification was good for one year, subject to renewal following an annual inspection of the plant and subject also to the manufacturer continuing to operate the plant in conformance with the SHA specifications through a Quality Control Plan. SHA charged a cost reimbursement fee for the cost of inspection and certification. Pursuant to that process, SHA, at some point, certified Faddis's plant in Downingtown, Pennsylvania as "Qualified for Sourcing on State Projects" and included that plant on its list of pre-approved manufacturers of noise barrier systems.

The prime contract for the construction of the 0.38-mile section (Contract No. H02485126) was entered into with Brawner on November 19, 2012. That contract, for whatever reason, was not placed in evidence in the court proceeding and therefore is not included in the record. In February 2013, Brawner and Faddis entered into a subcontract, evidenced by a purchase order, for Faddis to furnish 40,910 noise wall panels and three access doors. All materials and work were required to be in conformance with the conditions and specifications pertaining to the prime contract. The purchase order was contingent on SHA approval of Faddis as a supplier and made clear that Brawner was obligated to pay for all products ordered, produced, and shipped regardless of any payment to Brawner by SHA. There were to be no set-offs. Brawner reserved the rightto cancel the subcontract if Faddis was in breach of any of its obligations, including the performance or delivery of non-conforming work or materials.

In September 2013, Faddis furnished SHA with a sample panel which, on September 27, SHA approved for use on the project. Based on that approval, Faddis began manufacturing the panels for Brawner to erect pursuant to its (Brawner's) contract with SHA.

SHA employed an outside agency to furnish inspectors to assure compliance with the SHA standards, one of whom was Nick Patras. Mr. Patras was stationed at Faddis's Downingtown plant for the purpose of inspecting panels destined for the SHA project. No panels were to be shipped without his approval. It appears, at least from SHA's perspective, that Mr. Patras was not doing his job properly, and he eventually was dismissed. In March 2014, SHA's Office of Materials and Technology concluded that panels manufactured by Faddis after November 27, 2013 contained aggregate from an unapproved source, which was a violation of the noise barrier standards, and, as a result, the required strength of the panels could not be determined. Investigations led the Assistant Division Chief for Field Operations (Christopher Gale) to conclude, among other things, that, throughout the production of the panels, Faddis had (1) failed to provide adequate documentation of the source material for the exposed aggregate panels, (2) altered cylinder test data to reflect values higher than what the material actually achieved, (3) used a mix design that did not meet SHA specifications, and (4) was extremely uncooperative about making changes to meet specifications.

On May 2, 2014, SHA's District Engineer, David Coyne, informed Brawner of those conclusions and requested a response as to how Brawner intended to remedy the problem. Faddis was not copied on that letter. Brawner's project manager responded six days later, on May 8, that the problem was not Brawner's to remedy, that it involved instead "a breakdown in the fabrication, inspection, and acceptance procedure at an SHA pre-approved concrete precast facility." The letter requested a temporary partial shutdown of the project and advised that Brawner was reserving its rights to extended contract performance, including monetary compensation. Brawner added that "we are not requesting either at this time but reserve our right to do so should it become necessary."

On May 9, in a letter to Kevin Iddings, Faddis's Operations Manager, Mr. Gale set forth in detail the concerns of SHA, which included failure to provide adequate documentation regarding the exposed aggregate material used in the panels, mixing concrete "of inconsistent and questionable quality," failure to comply with Faddis's own Quality Control Plan, and using a coarse aggregate from an unapproved source that was not in conformance with Maryland Department of Transportation standards. The letter gave notice that further purchases were suspended for 180 days during which Faddis would be required to take certain specified remedial action. On May 21, Mr. Iddings responded to the points made by Mr. Gale, asserting that, although Faddis "disagree[d] with many of the representations made in the SHA letter," it remained committed to resolving the outstanding issues to SHA satisfaction.

Exacerbating the situation, on June 9, 2014, SHA's Chief of Concrete Technology Division, Michelle Armiger, sent e-mails to officials at the Virginia and Pennsylvania Departments of Transportation advising them of the problems SHA had been having with Faddis and asking whether they had experienced similar issues. Ten days later, the Director of SHA's Office of Materials Technology sent an e-mail to those agencies clarifying that the issues mentioned by Ms. Armiger were in dispute, that there was an administrative process in which SHA and Faddis were engaged, and there had been no final determination by SHA.

The next event in this drama consisted of three letters from Faddis on June 23, 2014. One was to SHA's District Engineer, David Coyne, which stated that it supplemented "notices of claims previously submitted by Brawner," and advised that SHA's action had "impacted Faddis as it specifically relates to the contract between Faddis and Brawner" (emphasis added) and had resulted in losses for which "Faddis reserves the right to recover damages for all costs including those related to the idling of Faddis's plant and equipment and interferences with other contracts and Pennsylvania's and Virginia's Departments of Transportation." Faddis insisted that SHA "take immediate steps to abate the harm to Faddis and address these claims and impacts due to its directions and actions."

The second letter was to Brawner, asking that it provide Faddis with "the notice of claim letter" sent to SHA related to the contract between SHA and Brawner and that it furnish SHA with a copy of "this letter which serves to supplement the prior notice andadvise the SHA" of continuing damages. The letter did not identify the alleged notice of claim letter to which it referred. The third letter was from Faddis's attorney, Paul Logan, to ...