GANNETT FLEMING, INC.
CORMAN CONSTRUCTION, INC.
Circuit Court for Anne Arundel County Case No.
C.J., Kehoe, Berger, JJ.
an appeal from a judgment of the Circuit Court for Anne
Arundel County that denied a petition to stay an arbitration
proceeding governed by the Maryland Uniform Arbitration Act.
Our opinion addresses two issues. The first appears to be a
question of first impression in Maryland: whether, in the
absence of waiver or a specific deadline imposed by contract,
a party forfeits the right to demand arbitration if the
demand is not made within the limitations period which would
apply if the claim were brought in an action at law. The
second is whether the dispute in this case is substantively
arbitrable, that is, whether it falls within the scope of the
arbitration provision in one of two agreements between the
parties. Because we answer no to the first question and yes
to the second, we will affirm the judgment of the circuit
Fleming, Inc. is a civil engineering firm. Among other
activities, Corman Construction, Inc. builds and repairs
roads and bridges. In 2011, the two companies agreed to work
together to prepare bids for several highway construction
projects in North Carolina. To be qualified to submit bids to
the North Carolina Department of Transportation
("NCDOT"), the companies formalized their
commitment to work together in a written contract (the
"Teaming Agreement"). Under the Teaming Agreement,
signed November 7, 2011, Gannett Fleming agreed to provide
quantity and pricing estimates for the building materials
needed to complete the highway projects. Corman would act as
the team's general contractor, using Gannett
Fleming's estimates to prepare the bids that it
Teaming Agreement also set out what would happen if
Corman's bids for the highway projects were
In the event of contract award to Corman by NCDOT, the
parties will enter into a subcontract agreement consistent
with the terms of this Teaming Agreement, encompassing
Gannett Fleming's proposed services, and consistent with
[Corman's contract with NCDOT]. Such subcontract will
also include ACG Document No. 420 "Standard Form of
Agreement Between Design-Builder and Architect/Engineer for
Design-Build Projects - as Modified by Corman" and is
made a part hereof. Any such form will contain the
requirement that Gannett Fleming is to provide professional
liability insurance in an amount not less than $2, 000, 000
in aggregate for each separate contract and will cover errors
and omissions arising out of the performance of, or failure
to perform, professional services. If the parties are unable
to mutually agree on the terms of a subcontract after good
faith efforts, then neither party will have any obligation to
Pricing and scope furnished by Gannett Fleming at time of Bid
are considered firm and are to be incorporated into the
subcontract agreement subject to any post award changes
directed or allowed by NCDOT and/or Corman.
other aspects of the Teaming Agreement are particularly
relevant to the parties' appellate contentions.
the Teaming Agreement provided that, if Corman's bid were
not accepted by NCDOT, Gannett Fleming would receive as
payment for its pre-bid services any stipend received from
the department. This was promised to Gannett Fleming
"[i]n recognition of the highly unusual effort
required" in assisting with the bid preparation.
the Teaming Agreement limited Gannett Fleming's liability
for its provision of pre-bid services:
Gannett Fleming's liability for engineering services
provided during the proposal preparation phase will be
limited to the amount of stipend actually received by Gannett
Fleming pursuant to Paragraph 7 of this Teaming Agreement.
This limitation of liability provision does not apply to work
or services performed by either party after award of a
contract to Corman by NCDOT and the subsequent execution of a
subcontract between the parties.
the Teaming Agreement did not contain a provision for
arbitration of disputes between the companies.
was a successful bidder and was awarded a contract to replace
seven bridges and five culverts in North Carolina. In August
2012, Corman and Gannett Fleming entered into a subcontract
agreement for the project (the "Design
Subcontract"), as the Teaming Agreement required them to
do. The Design Subcontract provided that it was to be
governed by Maryland law and laid out the parties' duties
as they worked together to complete the project. The relevant
provisions are outlined below.
3 of the subcontract agreement defined Gannett Fleming's
post-bid responsibilities, including a provision for
"Basic Services" (emphasis added):
3.2 BASIC SERVICES Gannett Fleming's Basic Services
consist of a review of the Project information furnished by
Corman and the provision of the Preliminary Design Documents,
Design Development Documents, Construction Documents,
bidding or negotiation assistance, Construction
Phase Services, and other basic services as may be provided
in this agreement. . . . These services shall be performed in
accordance with the schedule established by the
Design-Builder pursuant to Article 5. Any Basic Services
provisions that are not required under this
Agreement shall be stricken.
the Design Subcontract designated as "not
applicable" several subsections normally reserved for
some of these basic services-including "Preliminary
Design Documents" and "bidding and negotiation
assistance." These pre-bid services were not required of
Gannett Fleming under the Design Subcontract because they had
already been performed under the terms of the Teaming
5 of the Design Subcontract provided that Gannett Fleming
"shall provide the Services required by this Agreement
at such reasonable times as will enable Corman to complete
its work in accordance with the schedules established by the
Design-Builder." It further stated (emphasis added):
5.1 DELAYS BY ENGINEER If the progress or completion of the
Project is delayed by reason of any negligent act, error
or omission of Gannett Fleming, Gannett Fleming shall
compensate Corman for and indemnify it against costs,
expenses, liabilities or damages which accrue as a result of
such delay. . . .
6.1 provided that Corman would compensate Gannett Fleming for
all "Basic" and "Additional Services"
provided. The stipulated fee of $1, 236, 703.16 covered both
"Design" and "Post Design" services.
Article 7.1.3 of the agreement also limited Gannett
Fleming's potential liability to $5 million.
Article 9 of the Design Subcontract provided a mechanism for
resolving disputes between Gannett Fleming and Corman
9.1 INITIAL DISPUTE RESOLUTION If a dispute arises out of
or relates to this Agreement or its breach, the parties
shall endeavor to settle the dispute first through direct
discussions. If the dispute cannot be settled through
direct discussions, the parties shall endeavor to settle the
dispute by mediation under the Construction Industry
Mediation Rules of the American Arbitration Association
before recourse to the dispute resolution procedures
contained in this agreement. Once a party files a request for
mediation with the other party and with the American
Arbitration Association, the parties agree to conclude such
mediation within sixty (60) days of filing of the request. .
* * *
9.4 DISPUTE BETWEEN DESIGN-BUILDER AND ENGINEER . . . Any
disputes not resolved by mediation shall be decided by
arbitration under the Construction Industry Arbitration
Rules of the American Arbitration Association.
parties' relationship began to sour when Corman came to
believe that some of the pre-bid quantity estimates provided
by Gannett Fleming were faulty. According to Corman, Gannett
Fleming's errors resulted in delays, cost overruns, and,
ultimately, substantial financial losses. In March 2015,
Corman invoked the three-phase dispute- resolution procedure
outlined in Article 9 of the Design Subcontract. Corman
scheduled a meeting with Gannett Fleming to begin direct
discussions to attempt to settle Corman's claim against
October 2016, while these direct discussions were still
ongoing, Gannett Fleming and Corman entered into a tolling
agreement. This allowed Corman to investigate claims against
Gannett Fleming, "for loss, cost, expense, or damage, or
any other matter, breach, act, error or omissions, arising
from design information provided to Corman," and to seek
a settlement "without regard to the time constraints
that exist because of any future expiration of any applicable
statute of limitations, to the extent the Tolled Claims are
within the applicable statute of limitations." The
companies agreed "not [to] file suit or commence an
arbitration proceeding" until the tolling agreement
expired on January 31, 2017 (emphasis added). The parties
extended the tolling period three times.
the tolling agreement was still in effect, the parties also
engaged in mediation, as required by the terms of the Design
Subcontract. Mediation proved unsuccessful, however, and on
August 15, 2017, the day the third extension of the tolling
agreement expired, Corman filed a demand for arbitration with
the American Arbitration Association. The demand described
the dispute to be arbitrated as a ...