United States District Court, D. Maryland
RICHARD D. BENNETT, UNITED STATES DISTRICT JUDGE.
Star Development Group, LLC ("Star") and Hopkins
Investors, LLC ("Hopkins") bring this lawsuit
against defendants Constructure Management, Inc.
("CMI") and Allied World Specialty Insurance
Company ("Allied") (f/k/a "Darwin National
Assurance Company") seeking damages for breach of
contract. The parties voluntarily participated in
arbitration, which resulted in a Final Award
("Award") in favor of CMI. Now pending are
plaintiffs' petition to vacate the Award (Civil No.
17-1956, ECF No. 1 (hereinafter "ECF No. 1")) and
defendants' motion to confirm the Award and award
attorneys' fees (ECF No. 28). The parties have fully
briefed the motions, and no oral argument is necessary.
See Local R. 105.6. For the reasons set forth below,
plaintiffs' petition is denied, defendants' motion is
granted and the Award is confirmed and attorneys' fees
shall be awarded to CMI.
dispute concerns many claims relating to a construction
contract between Star and CMI. On April 8, 2013, Star and CMI
entered into a Guaranteed Maximum Price ("GMP")
Contract (the "Contract") for the construction of a
hotel in Laurel, Maryland (the "Project"). (ECF No.
9, ¶ 9). Plaintiff Hopkins, a Maryland limited liability
company, is the property owner, and plaintiff Star, also a
Maryland limited liability company, served as Hopkins'
construction and development manager. (ECF No. 1, p. 2-4,
¶¶ 1-3, 8). Under the Contract, defendant CMI, a
Pennsylvania corporation, was the general contractor for the
construction of the hotel. Id. at p. 3, ¶¶
4, 8. CMI obtained payment and performance bonds from Allied,
formerly known as "Darwin National Assurance Company,
" naming Star and Hopkins as multiple obligees.
Id. at p. 4, ¶ 8. The parties allege numerous
claims against each other. Star claims various damages,
including delay-related damages incurred due to the
Project's late completion. CMI claims the contract
balance and various change order payments. Additionally, Star
and Hopkins allege payment bond claims against Allied.
and Hopkins filed a complaint in the Circuit Court for Howard
County in March of 2016, alleging breach of contract against
CMI and breach of contract/action on performance bond against
CMI and Allied. (ECF No. 2). CMI and Allied removed the case
to the District of Maryland on April 27, 2016. (Civil No.
16-1246, ECF No. 1). The case, Civil No. RDB-16-1246, was
stayed while the parties voluntarily participated in
arbitration pursuant to the arbitration clause in their
contract. (ECF No. 12).
arbitration panel ("Panel") was composed of three
American Arbitration Association ("AAA")
construction arbitrators. (ECF No. 26, Ex. A (hereinafter
"Final Award"), p. 17). Each party presented
multiple claims for decision by the Panel. (Final Award,
¶ 7). CMI claimed from Star the unpaid GMP contract
balance, including amounts for eight disputed change order or
added work claims, plus interest. Id. CMI's
claim totaled $1, 797, 008.00 before interest. Id.
Star claimed against CMI various types of delay damages, a
list of punchlist/warranty/defective work items,
consequential damages, attorneys' fees, costs, and
interest. Id. Star's claim totaled $4, 112,
611.00, excluding interest and attorneys' fees.
Id. Star and Hopkins also claimed that full amount
against Allied as third-party claimants.
were conducted over the course of eight days: April 4-7, 2017
and April 11-14, 2017. (Final Award, ¶ 6). Fifteen
witnesses testified, and several hundred exhibits were
admitted into evidence. Id. The testimony generated
a transcript of 2, 414 pages. (ECF No. 26, Exs. B, C, D, E,
F, G, H, I). After testimony concluded, the parties submitted
proposed awards and final Statements of Claims. (Final Award,
14, 2017, the arbitrators issued a Final Award. (Final
Award). The Panel summarized its legal and factual findings
in 50 numbered paragraphs spanning 16 single-spaced pages.
Id. The Panel's Award provides:
1. Claimant CMI is hereby AWARDED against Respondent Star the
net amount of One Million Seven Hundred and Sixty-Six
Thousand, Thirty-Three Dollars ($1, 766, 033.00). This amount
is due and payable by Star within thirty (30) calendar days
of the date of this Award. Interest shall accrue at the
applicable Maryland statutory judgment rate after that date.
2. The administrative fees of the AAA totaling $29, 400.00
and the compensation and expenses of the Panel totaling $150,
928.23 shall be borne by Star. Therefore, Star shall
reimburse CMI the sum of $90, 164.12 representing the portion
of said fees and expenses in excess of the apportioned costs
previously incurred by CMI.
3. This Award is in complete resolution of all claims,
counterclaims and third-party claims submitted for
resolution, as set forth in the Introduction.
4. All claims submitted by any party that are not expressly
granted herein are hereby DENIED.
Id. at ¶ 1-4. Two of the Panel's specific
decisions are at issue in the motions at hand: (1) the
Panel's denial of Star's delay damages and (2) the
Panel's award of $368, 504.18 to CMI for added steel.
(ECF No. 1, p. 8).
Panel's Denial of Star's Delay Damages
Project consisted of two parts: (1) a six-floor tower portion
containing the hotel rooms and (2) a one-story area
containing the lobby and other common areas. (Final Award,
¶ 12). The original GMP for the Project was $11, 541,
000, and the original Substantial Completion Date under the
Contract was July 26, 2014. Id. at ¶¶ 8,
38. The Project was not completed until August 6, 2015, about
376 days late. Id. at ¶ 8. Star claimed CMI was
solely responsible for this delay, and, as such, claimed
liquidated damages and other delay-related damages.
Id. at ¶ 9. CMI did not claim delay damages,
but claimed the delay was excusable and therefore Star was
not entitled to delay-related damages. Id. at ¶
hearing expert testimony, the Panel found CMI and Star were
concurrently responsible for the entire project delay,
holding CMI responsible for the tower delay and Star
responsible for the one-story delay. Id. at
¶¶ 11, 16. Thus, the Panel concluded the delay was
non-apportionable. Id. at ¶ 16. This,
conclusion implicated General Conditions § 188.8.131.52 of
the parties' Contract, which provides,
Notwithstanding Section 184.108.40.206, or anything to the contrary
set forth in the Contract, in no event shall Contractor be
entitled to an extension of the Contract Time, nor to recover
Extended General Conditions nor to recover any other damages,
costs or expenses of any kind as a result of a delay or
suspension, if such delay or suspension for which Contractor
claims entitlement: (a) was caused in whole or in part,
directly or indirectly, by the wrongful acts or omissions or
other default of Contractor or any other Contractor Party;
and/or (b) is concurrent with a delay caused in whole or in
part, directly or indirectly, by the wrongful acts or
omissions or other default of Contractor or any other
(ECF No. 1, Ex. A, Contract A-201-2007, § 220.127.116.11). This
provision of the parties' contract would allow Star to
recover delay damages even though the delay was concurrent
and could not be apportioned, overriding a widely recognized
contractual rule. (Final Award, ¶ 18). The Panel,
however, found § 18.104.22.168 did not apply to the
circumstances at hand because CMI was not required to seek
time extensions to avoid delay damages liability.
Id. at ¶ 19. The Panel concluded Star had
waived and abandoned the contractual completion date, meaning
CMI's obligation was simply to complete the work within a
reasonable time. Id. at ¶¶ 20-21. The
Panel found CMI had completed its work in such fashion, and
accordingly, denied Star's claim for delay
damages. Id. at ¶ 21. Star and
Hopkins now argue the Panel's decision regarding §
22.214.171.124 should be vacated because it constitutes
"manifest disregard of the law" and is based on
"completely irrational" factual findings.
Panel's Award to CMI for Added Steel
change order at issue in the arbitration was CMI's extra
work claim totaling $368, 504.18 for extra costs to construct
the structure and exterior of the one-story area. (Final
Award, ¶ 30). This claim stemmed from additional
structural elements, namely structural steel, added by
Star's structural engineer in May and July 2014.
Id. at ¶ 30. Substantial evidence was submitted
relating to this claim. From that evidence, the Panel found
the original construction drawings were inadequate for CMI to
build the one-story structure because the drawings failed to
identify key structural elements and necessary performance
requirements. Id. at ¶ 32. The Panel also found
CMI made several attempts to bring this issue to the
attention of Star's structural engineer, who was
non-responsive or otherwise did not clarify the design
intent. Id. at ¶ 33.
sketches in May and July 2014 therefore added significant
structural elements that CMI could not have anticipated from
the original sketches, which changed the scope of the GMP
contract and entitled CMI to the resulting added costs.
Id. CMI made its claim for the added steel against
Star on March 29, 2017. Star contended this claim was waived
by CMI because it was untimely and subject to a June 2015
release. The Panel rejected both of Star's arguments.
Star's timeliness argument, the parties' contract
provides with regard to claims by the contractor,
"Unless the Contract Documents provide a shorter period,
Claims by the Contractor must be initiated within seven (7)
days after the occurrence of the event giving rise to such
Claim or the Claim is waived." (ECF No. 1, Ex. A,
Contract A201-2007, § 15.1.2). The Panel found Star
waived the requirements of § 15.1.2, stating,
"Given Star's general pattern of failing to follow
the contract's administrative processes.. .we do not find
the contractual time limits for change order submissions to
be a bar to recovery." (Final Award, ¶ 29).
Star's release argument, CMI submitted a signed and
notarized Release and Waiver of Claims and Mechanic's
Liens on June 17, 2015. (ECF No. 1, Ex. S, p. 7). According
to Star, CMI waived the added steel claim by signing this
release. The Panel rejected this argument as well, although
it did not explain its precise reasoning for doing so. Thus,
the Panel awarded CMI its claimed damages of $368, 504.18,
consisting of the actual net costs to complete the structure
and exterior of the one-story area, less the remaining
balance within the budget for this work. (Final Award, ¶
35). Star and Hopkins now argue the Panel's decision on
the added steel must be vacated because it constitutes
"manifest disregard of the law." (ECF No. 1, p.
arbitration had concluded and the Panel had issued its Award,
plaintiffs Star and Hopkins filed another case on July 14,
2017, Civil No. RDB-17-1956, to petition this court to vacate
the Award. This subsequent case, 17-1956 was consolidated
with the lead case, 16-1246, on August 16, 2017. (Civil No.
17-1956, ECF No. 9). Defendants CMI and Allied then filed a
cross-motion to confirm the Award and award attorneys'
fees on October 2, 2017. (ECF No. 28). ...