Driggs Corp. v. Maryland Aviation Admin.

• Court: Maryland Supreme Court
• Writing for the Court: Argued before BELL, C.J., ELDRIDGE, RODOWSKY, CHASANOW, RAKER and WILNER, JJ., and ROBERT L. KARWACKI; WILNER
• Citation: Driggs Corp. v. Maryland Aviation Admin., 348 Md. 389, 704 A.2d 433 (Md. 1997)
• Decision Date: 01 September 1997
• Docket Number: No. 68,68
• Parties: The DRIGGS CORPORATION v. MARYLAND AVIATION ADMINISTRATION. ,

Page 389

348 Md. 389

704 A.2d 433

The DRIGGS CORPORATION v. MARYLAND AVIATION ADMINISTRATION.

No. 68, Sept. Term, 1997.

Court of Appeals of Maryland.

Jan. 14, 1998.

J. Richard Margulies (Leonard A. Sacks, Sacks & Margulies, all on brief), Rockville, for appellant.

William A. Kahn, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen. of Maryland; Douglas G. Carrey-Beaver, Asst. Atty. Gen., all on brief), Baltimore, for appellee.

Argued before BELL, C.J., ELDRIDGE, RODOWSKY, CHASANOW, RAKER and WILNER, JJ., and ROBERT L. KARWACKI, Judge (retired), Specially Assigned.

WILNER, Judge.

The underlying dispute that generated this appeal arises from the termination by appellee, Maryland Aviation Administration (MAA), of an $11.5 million contract it had entered into with appellant, The Driggs Corporation (Driggs), to extend and upgrade Runway 10-28 at Baltimore-Washington International Airport. We are not directly concerned here with the merits of that dispute--whether MAA acted properly in terminating the contract with Driggs. After an extensive hearing, the Maryland State Board of Contract Appeals (BCA) held that MAA did not act unlawfully in doing what it did.

The issue presented to us by the parties is whether the Circuit Court for Anne Arundel County erred in dismissing Driggs's petition for judicial review of the BCA decision on the ground that, by declining to produce evidence after BCA had denied its motion for summary disposition, Driggs had acquiesced in the decision. We shall hold that the court did err in that ruling. There is, unfortunately, another issue, not addressed by the parties but apparent from the record, that requires consideration as well and that will ultimately govern this appeal. The fact is that the petition for judicial review was premature. As we shall explain, there remained at issue the question of damages, which (1) was part of MAA's claim, (2) had been bifurcated by BCA, and (3) had not apparently been resolved by BCA when the petition was filed. Ordinarily, only final administrative decisions resolving the entire claim before the agency are appropriate for judicial review, and the order sought to be reviewed in this case did not qualify either as a final decision or as the kind of special interlocutory order for which immediate judicial review is available.

FACTUAL BACKGROUND

The contract in question was approved by the Board of Public Works on April 14, 1993. It called for Driggs to complete certain work (Phases 1 and 2) on Runway 10-28 within 200 days after issuance of a Notice to Proceed. The completion date was eventually extended by MAA to December 31, 1993. The contract also incorporated two clauses mandated by a State Procurement Regulation. One, required by COMAR 21.07.02.07, was a Termination for Default clause, authorizing MAA to terminate the contract "[i]f the Contractor refuses or fails to prosecute the work, or any separable part thereof, with such diligence as shall insure its completion within the time specified in this contract, or any extension thereof...." In the event of such a termination, the clause made Driggs and its surety liable for any damage to the State resulting from Driggs's failure to complete the work within the specified time. The other clause, mandated by COMAR 21.07.02.09, was a Termination for Convenience provision, authorizing the State to terminate the contract "whenever the procurement officer shall determine that such termination is in the best interest of the State." If the State invoked that clause, it would be liable to Driggs for certain costs and expenses enumerated in the clause.

On October 21, 1993, MAA invoked the Termination for Default clause and terminated the contract on the grounds that Driggs had (1) "failed to prosecute the contract work with such diligence as would have assured completion of Phases 1 and 2 within the time and as required by the terms of the contract" and (2) also failed "in its obligation to submit a schedule by August 13, 1993 showing a realistic plan to complete Phases 1 and 2 by December 31, 1993."

Driggs filed a complaint with BCA, asking that the termination be overturned because of excusable delays, waiver by MAA of its right to terminate for default, and material breaches by MAA. It also asked that the termination for default be converted to a termination for convenience and that it be awarded damages accordingly. MAA answered the complaint, asking that Driggs's claim challenging the termination for default be dismissed. In an accompanying counterclaim, MAA asserted that, because of its default, Driggs was responsible to MAA "for all damages occasioned by [Driggs's] default" and asked that BCA affirm the termination.

On October 18, 1994, after some discussions between BCA and the parties, BCA decided that, as the procurement officer had not yet resolved the question of what damages MAA would be entitled to because of the termination for default, that issue was not properly before BCA but, when resolved by the procurement officer, would be dealt with by BCA in a separate proceeding. The pending proceeding would therefore be limited to "entitlement, i.e., the propriety of the procurement officer's final decision terminating Driggs' contract for default." That was confirmed when the hearings actually commenced and MAA advised that it was not planning to offer any evidence as to damages but intended to proceed only on the issue of liability. That bifurcation decision set the stage for the prematurity problem noted above.

With the concurrence of the parties and in accordance with BCA's past practice and with established Federal procurement law, the termination for default was treated as an MAA claim against Driggs, upon which MAA had the burden of proof. ¹ Accordingly, MAA proceeded first with its case, to establish sufficient grounds for its decision to terminate the contract. In hearings extending over 40 days, it produced 11 fact witnesses, three expert witnesses, and 281 exhibits. Driggs not only cross-examined the MAA witnesses but, either through them or otherwise, placed into evidence 217 exhibits of its own. In addition to certain procedural defenses, it vigorously contested the accuracy of many of the assertions made by MAA with respect to Driggs's diligence and its ability to complete the work within the allotted time. It pressed the point that, at the time of the termination, it still had 135 days left to complete the work. ²

Near the end of MAA's case, Driggs indicated, as it had at the outset of the hearing, that it would be filing a motion for summary disposition, i.e, a motion testing whether MAA had presented a prima facie case establishing the validity of the termination. The BCA Chairman explained that, although BCA used the administrative terminology "motion for summary disposition," the motion would be in the nature of a motion for judgment, asserting that Driggs was entitled to prevail as a matter of law on the issues covered by the motion. He advised that

"the Board will review the evidence of the record compiled up to the time that the motion is made in the light most favorable to the party against whom the motion is directed, and will resolve reasonable inferences from conflicts in the oral and written testimony comprising the record compiled to the date of the motion. It will resolve such inferences in the favor of the party against whom the motion is directed, and if, having done so, there is lacking a factual predicate pursuant to which, as a matter of law, the moving party is entitled to prevail, the motion will be denied."

When Driggs suggested that, in a non-jury court proceeding, the court, entertaining a motion for judgment at the end of the plaintiff's case, was not required to view the evidence in a light most favorable to the non-moving party, the Chairman iterated that the proceeding was an administrative one and that BCA would apply the standard of review he had announced. He further advised, however:

"The party who made that motion could then stand up and rest, at which point in time another motion could be presented in which the standard of review, if you will, by the Board of the evidence of record would be somewhat different. There we would be focusing on whether the State had met its burden to demonstrate that the termination for default was appropriate in the context that the hearing and notice was mandated by the Administrative Procedure."

Presumably on that premise, Driggs orally moved for summary disposition at the end of MAA's case. BCA initially took the motion under advisement but, in a 22-page memorandum opinion filed January 2, 1996, it denied the motion. In its memorandum, BCA reiterated that, in considering a motion for summary disposition, the Board determines only whether there are material facts in dispute and what legal principles govern the issues in dispute. It once again made clear that, in ruling on such a motion, it must resolve "all conflicting evidence and all legitimate inferences raised by the evidence ... in favor of the party ... against whom the motion is directed" and that "[t]he purpose of summary disposition is not to resolve factual disputes nor to determine credibility, but to decide whether there is a dispute over material facts which must be resolved by the Board as trier of fact." Accordingly, it confirmed that summary disposition was not appropriate "if a genuine issue of material fact is in dispute" or if undisputed facts are susceptible of more than one permissible factual inference.

With that introduction, BCA proceeded to examine the issues raised by Driggs, the positions taken by the parties with respect to those issues, and some of the evidence bearing on the issues. In the course of that examination, BCA identified a number of specific and substantial factual conflicts. Its overall conclusion was that "there are material facts in dispute concerning whether [Driggs] was in breach of the contract...