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

• Decision Date: 25 August 2021
• Docket Number: No. 58, Sept. Term, 2020,58, Sept. Term, 2020
• Citation: 476 Md. 15,258 A.3d 217
• Parties: BRAWNER BUILDERS, INC., et al. v. Maryland STATE HIGHWAY ADMINISTRATION
• Court: Court of Special Appeals of Maryland

476 Md. 15

258 A.3d 217

BRAWNER BUILDERS, INC., et al.

v.Maryland STATE HIGHWAY ADMINISTRATION

No. 58, Sept. Term, 2020

Court of Appeals of Maryland.

August 25, 2021

Argued by Paul A. Logan (Post & Schell, P.C., Philadelphia, PA), on brief, for Petitioners.

Argued by Sonia Cho, Asst. Atty. Gen. (Brian E. Frosh, Atty. Gen. of Maryland, Baltimore, MD), on brief, for Respondent.

Argued before: Barbera, C.J.; McDonald, Booth, Biran, Lawrence F. Rodowsky (Senior Judge, Specially Assigned), Glenn T. Harrell, Jr. (Senior Judge, Specially Assigned), and Irma S. Raker (Senior Judge, Specially Assigned), JJ.

Booth, J.

In this case, we must determine whether a material supplier's status as a "pre-approved supplier" of concrete panels on construction projects administered by the Maryland State Highway Administration ("SHA") constituted a "procurement contract" with the State under the State Finance and Procurement Article. The supplier, who was a subcontractor on a State construction project, contends that its status as a pre-approved supplier of products by SHA constituted a procurement contract with the State, thereby entitling the subcontractor to file a direct contract claim against SHA under the procurement statute.

The dispute arises out of a contract between SHA and Brawner Builders, Inc. ("Brawner") entered on November 19, 2012, for the construction of noise barriers along a section of I-95 in Howard County. To secure the necessary materials for the project, Brawner subcontracted with Faddis Concrete Products, Inc. ("Faddis"), a pre-certified noise barrier manufacturer, to obtain noise wall panels for the project. Unfortunately, things did not proceed as planned. Shortly after Faddis began manufacturing noise wall panels for Brawner's use in connection with the project, SHA learned that the noise panels produced by Faddis contained construction aggregate of a non-conforming coarseness from an unapproved source. Following an investigation, SHA suspended approval of Faddis-manufactured noise panels for a minimum of 180 days.

Displeased with SHA's decision, Faddis sent letters to SHA and SHA's legal counsel alleging, in general terms, harm due to SHA's decision to suspend approval of Faddis-produced noise panels. In addition to sending letters to SHA, Faddis also sent a letter to Brawner. This letter, which apparently recognized that the Maryland State Board of Contract Appeals ("MSBCA") will not hear procurement contract claims filed by subcontractors unless they pass through the prime contractor, requested that Brawner pass Faddis's contract claims through to SHA, which Brawner ultimately declined to do.

Approximately four years later, Faddis and Brawner sent a joint letter to SHA demanding that SHA render decisions on Faddis's claims, which they asserted were properly submitted to SHA. SHA did not respond to this letter. Interpreting SHA's silence as a denial of all claims, the parties filed an appeal with the MSBCA. SHA timely moved for summary disposition, which the MSBCA granted. In so doing, the MSBCA agreed with SHA that Faddis had no procurement contract with SHA and therefore had no standing to file a procurement claim unless such claim timely passed through Brawner. The MSBCA reasoned that, because Brawner did not timely file Faddis's claim, dismissal was appropriate.

Faddis and Brawner timely filed a petition for judicial review in the Circuit Court for Baltimore City. The circuit court reversed the MSBCA's decision, concluding that, as a matter of law, SHA's certification of Faddis as a pre-approved supplier of noise barriers constituted a procurement contract, thereby conferring upon Faddis standing to file a direct claim against SHA. The circuit court also found error in the MSBCA's conclusion that Faddis failed to timely file a notice of claim with SHA. According to the circuit court, it was inappropriate for the MSBCA to make factual determinations with respect to notice without a full hearing on the merits.

An appeal to the Court of Special Appeals followed. In a reported decision, the intermediate appellate court reversed the circuit court's decision. Md. State Highway Admin. v. Brawner Builders, Inc. , 248 Md. App. 646, 242 A.3d 1188 (2020). In so holding, the court agreed with the MSBCA's conclusion that Faddis lacked standing to file a direct claim against SHA because SHA's certification of Faddis as a pre-approved supplier of noise barriers, without more, did not constitute a procurement contract. Similarly, the court agreed with the MSBCA's conclusion that Brawner failed to timely file notice of claim on Faddis's behalf.

For the reasons more fully set forth herein, we affirm the decision of the MSBCA. We agree with the MSBCA that SHA's certification of Faddis's manufacturing plan as a pre-approved supplier of concrete panels on SHA construction projects does not fall within the definition of a "procurement contract" under the State Finance and Procurement Article. Consequently, Faddis, as Brawner's subcontractor, did not have standing to bring direct contract claims against SHA. We also determine that, as a matter of law, Brawner's submission of a notice of a claim on Faddis's behalf was not timely.

I.Factual and Procedural Background

A. SHA Highway Noise Policy and Manufacturer Certifications

When Congress enacted the Federal-Aid Highway Act of 1970, Congress compelled the Federal Highway Administration (the "FHWA") to, among other things, adopt highway noise abatement standards and conditioned approval of federal highway projects on adherence to such standards. See Federal-Aid Highway Act of 1970, Pub. L. No. 91-605, § 136 (codified, as amended, at 23 U.S.C. § 109(i) ). Consistent with this directive, the FHWA not only promulgated regulations establishing noise abatement standards, see Noise Standards and Procedures, 38 Fed. Reg. 15,953 (June 19, 1973) (codified, as amended, at 23 C.F.R. § 772), but also issued guidance requiring state highway agencies to adopt written noise policies demonstrating substantial compliance with the FHWA noise regulations, see Fed. Highway Admin., U.S. Dep't of Transp., Highway Traffic Noise Analysis and Abatement Policy and Guidance 65 (June 1995). The FHWA later issued additional guidance designed to assist states in drafting adequate noise abatement policies, though this guidance left considerable discretion to the states. One such area of deference left to the states included the authority to draft noise barrier material specifications, subject to FHWA approval. Fed. Highway Admin., U.S. Dep't of Transp., Highway Traffic Noise: Analysis and Abatement Guidance 57 (Dec. 2011).

In Maryland, SHA is the agency that implements the FHWA noise regulations.

As a result, SHA is tasked with developing noise barrier material specifications and submitting such specifications to FHWA for approval. To ensure that noise barrier manufacturers comply with SHA's specifications, SHA has also developed procedures to pre-certify facilities producing noise barriers for use in SHA projects and limited eligibility to bid on SHA highway projects to SHA-certified manufacturers.

Pursuant to this process, manufacturers interested in attaining SHA pre-certification must, among other things, develop and submit to SHA a Quality Control Plan, undergo an initial plant inspection, and submit to SHA a cost reimbursement fee to cover costs associated with certifying production facilities. Once certified, SHA places the manufacturer on a list of pre-approved noise barrier suppliers. Certification is valid for one year, subject to the condition that the certified manufacturer continues to operate the plant in accordance with SHA specifications. In the event SHA concludes that a manufacturer failed to satisfy SHA specifications, SHA may suspend or revoke a manufacturer's certification.

B. The I-95 Construction Project

On November 19, 2012, SHA contracted with Brawner to install noise barriers along a 0.38-mile stretch of I-95 in Howard County.¹ Less than three months later, on February 7, 2013, Brawner subcontracted with Faddis, whose Downington, Pennsylvania plant had been certified by SHA as a pre-approved supplier of noise barrier systems, to secure 40,910 noise wall panels and three access doors for the project. In the months that followed, Faddis produced—and furnished to SHA for inspection—a sample noise wall panel. SHA approved the sample on September 27, 2013, and based on that approval, Faddis began manufacturing additional panels for Brawner's use in connection with the project.

The Downington Plant Suspension

The project did not proceed as anticipated. Shortly after Faddis began manufacturing noise panels for Brawner en masse , SHA learned that on or around November 27, 2013, Faddis began manufacturing noise panels that contained construction aggregate² of a non-conforming coarseness from an unapproved source, which was a violation of SHA's noise barrier standards. After SHA issued a Non-Compliance Report related to the incident and Faddis agreed to a Quality Improvement Plan, and after a subsequent investigation, SHA continued to have concerns. Specifically, SHA Assistant Division Chief for Field Operations, Mr. Christopher Gale, concluded, among other things, that Faddis: (1) used a mix design that did not meet SHA specifications "[f]or a considerable portion of production[;]" (2) created panels of inconsistent quality due to deviations from the approved mix design; (3) failed to provide timely documentation identifying the source material for the exposed aggregate panels; (4) "altered cylinder test data to reflect values higher than what the material actually achieved[;]" and (5) "engaged in a pattern of deceptive practices," including the obstruction or delay of almost every SHA effort to assist Faddis in complying with SHA specifications.

Following the investigation, SHA's District Engineer, Mr. David Coyne, sent Brawner a letter, dated May 2, 2014, advising Brawner of Faddis's use of...