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Manekin Construction, Inc. v. Maryland Department of General Services

Court of Special Appeals of Maryland

June 28, 2017

MANEKIN CONSTRUCTION, INC.
v.
MARYLAND DEPARTMENT OF GENERAL SERVICES

          Woodward, C.J., Berger, Kenney, James A., III (Senior Judge, Specially Assigned), JJ.

          OPINION

          Berger, J.

         This appeal arises from the circuit court's order affirming the decision of the Maryland Board of Contract Appeals (the "Board") to grant summary decision in favor of the Department of General Services of Maryland ("DGS"), appellee. On June 9, 2010, appellant Manekin Construction, LLC ("Manekin") was awarded a contract with DGS to construct a two-story barrack and a one-story garage for the Maryland State Police in Hagerstown, Maryland. The contract price totaled more than eight million dollars and was subject to mutually agreed upon Proposed Change Orders ("PCOs"). As we discuss in detail below, Manekin submitted PCO No. 68 to DGS requesting additional compensation during the construction of the project. After the project was complete, Manekin submitted a "Request for Equitable Settlement" on March 18, 2013. After DGS's procurement officer denied Manekin's claim for compensation, Manekin appealed to the Board. On September 17, 2016, during a hearing on the merits of the claim, the Board stopped the proceedings and granted DGS's Third Motion for Summary Decision. The Circuit Court for Howard County affirmed the Board's decision. This appeal followed.

         The primary issue we must decide on appeal is whether the Board erred when it stopped the evidentiary hearing and granted summary decision in favor of DGS. More specifically, we must decide whether the Board improperly made findings of fact on disputed issues, including whether Manekin knew or should have known that DGS disputed or rejected Manekin's request for compensation detailed in PCO No. 68. For the reasons explained below, we hold that the Board erred in its decision to grant summary decision in favor of DGS.

         BACKGROUND AND PROCEDURAL HISTORY

         Construction of the barrack and garage took place from June 21, 2010 until the project was substantially complete on or around July 26, 2012. Approximately every two weeks throughout the construction process, Manekin and DGS officials held meetings ("Progress Meetings") to discuss Manekin's progress and other issues. During performance of the construction, Manekin encountered certain difficulties that it attributed to delays caused by DGS (among other reasons) and submitted numerous PCOs, thereby requesting additional compensation. On November 2, 2011, Manekin notified DGS of the "cumulative impact and ripple effect of" certain factors. On December 7, 2011, Manekin submitted PCO No. 68, requesting compensation for the "additional time, and associated general conditions costs resulting from changes" discussed in the November 2, 2011 letter. A letter attached to PCO No. 68 detailed the changes requested, including the five "impact factors" that affected the cost of the project. Manekin and DGS discussed PCO No. 68 at three Progress Meetings, during which the issue was designated as "void" in the minutes for Progress Meetings and in the "PCO Log."

         After the completion of the project, on or around March 18, 2013, Manekin sent a "Request for Equitable Settlement" to DGS requesting compensation for additional time caused by the same five impact factors as outlined in PCO No. 68. DGS denied the request in a letter dated April 3, 2013. DGS indicated in its letter, "if you wish to further pursue this matter, you may do so in accordance with COMAR [Code of Maryland Regulations] 21.10.04 and the Contract Documents, General Conditions, Section 6.13, 'Disputes and Contract Claims.'" On April 10, 2013, Manekin submitted its notice of claim, and on April 29, 2013, submitted its formal claim to the procurement officer. The procurement officer denied Manekin's claim on November 12, 2013, finding that the notice of claim was not submitted within thirty days of when Manekin knew or should have known of the basis of a claim. Manekin timely appealed to the Board.

         On September 17, 2016, the Board stopped the proceedings and granted DGS's pending Third Motion for Summary Decision, finding that Manekin knew of the basis of its claim by no later than March 1, 2012, which was more than thirty days before Manekin submitted its notice of claim. On September 21, 2015, the Board issued a written order. Manekin filed a petition for judicial review in the Circuit Court for Howard County. After a hearing on April 21, 2016, the circuit court affirmed the Board's grant of summary decision in a written opinion issued on April 27, 2016.

         DGS Contract & Relevant COMAR Provisions

         The "Department of General Services General Conditions for Construction Contracts (Revised March 2007)" contains the conditions of the contract between DGS and Manekin. As required, the contract incorporates the language of COMAR 21.07.02.05-1.[1]Under a section of the contract entitled "6.13 Disputes and Contract Claims (COMAR 21.07.02.05-1), " the contract provides that it is "subject to the provisions of State Finance and Procurement Article, Title 15, Subtitle 2, Annotated Code of Maryland, and COMAR 21.10." The following are other pertinent provisions incorporated in the contract from COMAR 21.07.02.05-1:

B. Except as otherwise provided in this contract or by law, all disputes arising under or as a result of a breach of this contract that are not disposed of by mutual agreement shall be resolved in accordance with this clause.
C. As used herein, claim means a written demand or assertion by one of the parties seeking, as a legal right, the payment of money, adjustment or interpretation of contract terms, or other relief, arising under or relating to this contract. A voucher, invoice, or request for payment that is not in dispute when submitted is not a claim under this clause. However, if the submission subsequently is not acted upon in a reasonable time, or is disputed as to liability or amount, it may be converted to a claim for the purpose of this clause.
D. Within 30 days after Contractor knows or should have known of the basis for a claim relating to this contract, Contractor shall file a written notice of claim with the procurement officer.
* * *
F. The claim shall set forth all the facts surrounding the controversy. Contractor, at the discretion of the procurement officer, may be afforded an opportunity to be heard and to offer evidence in support of the claim.

PCO No. 68

         On December 7, 2011, Manekin submitted PCO No. 68 providing two methods for calculating the amount of compensation it asserted to be due for the five impact factors discussed in PCO No. 68 -- a "Change Order Analysis" and a "Measured Mile Approach." Manekin notes in the PCO that, although these two methods produced two different time calculations, they were intended to provide a basis for further negotiations. Manekin relied on its "General Requirements Costs" of $1, 315.00 per day, as provided in the original contract with DGS, and requested 96 days of "Contract Time Extension" plus other expenses, for a total of $128, 134.00. Within the PCO, however, Manekin "reserve[d] the right to request compensation for all direct and indirect costs attributable to this delay impact." At the end of PCO No. 68, Manekin added, "We believe our calculations to be reasonable and an appropriate representation of the impacts to Manekin on this project. However, we are willing to meet and negotiate an acceptable compromise without this matter escalating to another level." Thereafter, the parties' representatives discussed PCO No. 68 at multiple Progress Meetings.

         PCO Log

         The PCO Log is a record of all PCOs as well as each PCO's status. The status of each PCO is indicated in the "Remarks/Days" column. Some of these status designations include "VOID, " "REJECTED, " "CREDIT, " and various phrases such as "No charge VOID, " "Located in PCO #13 VOID, " or "G.C. agrees to amt." Additionally, in the date column, either the date of the action is indicated or, if the PCO's status is "VOID, " only the word "VOID" is listed in place of the date. A column labeled "PCO AMT." lists the amount requested for each PCO, and a column labeled "DGS EST." lists the amount to be added to the total amount due to Manekin. For any item designated as "VOID, " the "DGS EST." is either blank or has a value of "$0.00." At the end of the PCO Log, the total "DGS EST." indicated is $1, 232, 918.00.

         For PCO No. 68, which is described as "Time Extension Request to justify new schedule, " the table indicates a "PCO AMT." of $128, 134.00, and the term "VOID" is included under the "REMARKS/DAYS" column and in the date column. For comparison purposes, PCO No. 22 ("Soil Fill Material Phase #1), which had a "PCO AMT." of $117, 642.00, is recorded as "REJECTED" in the "REMARKS/DAYS" column. PCO No. 70 ("Revise Membrane @ Phse Chimney Caps"), on the other hand, is listed as "No charge VOID" and no amount was added to the total.

         Progress Meetings

         The record before the Board contained the minutes for each relevant Progress Meeting, including Progress Meetings 37, 38, and 39. The minutes for each Progress Meeting include the names of persons attending, who would receive a copy of the minutes, a synopsis of the progress of the project as of that date, and notes of the topics discussed at the meeting. The minutes from Progress Meeting 37, held on January 5, 2012, include a section entitled "Time Extension PCO Discussion" containing eighteen points of discussion. The relevant portion of the minutes from Progress Meeting 37 includes the following:

14. J. Rohrbach tentatively said that with correct back-up:
a. PCO 63 -- 6 days
b. PCO 68 -- VOID
c. PCO 73 -- 10 days
15. Dan Sharpe offered March 1, 2012 and leave open on compensational [sic].[2]
* * *
18. Tentative Schedule:
-- February 15, 2012 -- Develop 'work list'
-- March 1, 2012 -- Substantial Completion Punch List and begin Barrack move
-- Within 60 days (May 1, 2012) the following items will be placed on punch list and complete:
-Abatement
-Demo
-Landscape
-Paving
-Fuel System

         The revised minutes for Progress Meeting 38, which was held on January 19, 2012, reference the need for "fragnets" for PCO No. 68. A fragnet is a detailed analysis of how particular factors impacted the construction project, such as when and how the contractor lost scheduled time. The minutes indicate that the parties continued to discuss PCO No. 68., referenced by the following notation:

VOIDED AA. PCO 068 -- Rock extension is not approved to April 14, 2012.
Day after Jan. 27, 2012 Liquidated Damages will be accessed [sic].
Fragnets must be submitted and part of the time extension.
01-05-12 VOIDED.

         Finally, the minutes from Progress Meeting 39, held on February 2, 2012, included the same notations under points 14, 15, and 18 as the minutes from Progress Meeting 37, with the addition of the following notes added to point 18:

01-19-12 52 days currently being allowed for extension.
02-02-12 Substantial Complete is now May 1st (Added 131 days)

         Hearing Before the Board and the Board's Decision

         In a letter dated August 7, 2015 from Board Member Dana Dembrow, the Board notified the parties of the trial date for Manekin's appeal of the procurement officer's denial of its claim. The brief letter included the following:

As you know, there are three (3) Motions pending for Partial Summary Decision in this matter, which is currently scheduled for trial on September 14, 2015.
Counsel understand that the pending Motions must be based on factual matters as to which there is no genuine dispute, and that all factual inferences must be resolved in favor of the ...

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