In re Proven Mgmt.

• Decision Date: 10 January 2020
• Docket Number: No. 610,610
• Parties: IN THE MATTER OF THE PETITION OF PROVEN MANAGEMENT, INC.
• Court: Court of Special Appeals of Maryland

IN THE MATTER OF THE PETITION OF PROVEN MANAGEMENT, INC.

No. 610

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2018

January 10, 2020

The Circuit Court for Baltimore City

Case No. 24-C-17-004805

UNREPORTED

Fader, C.J., Graeff, Eyler, James R., (Senior Judge, Specially Assigned), JJ.

Opinion by Eyler, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

This appeal arises out of a contract dispute between ProVen Management, Inc. ("ProVen"), appellant, and the Mayor and City Council of Baltimore ("the City"), appellee, specifically, the City's Department of Public Works ("the Department"). The parties entered into a contract pursuant to which ProVen agreed to clean approximately 12,000 linear feet of the City's sewer lines. The project did not proceed as originally contemplated. ProVen submitted to the Department claims for additional time and compensation pursuant to the contract's dispute clause. The Department's Office of Engineering and Construction ("OEC"), reviewed ProVen's claims, initially by a supervisor then by its Chief, and denied its requests for additional compensation, but recommended 15 days of additional non-compensable time. ProVen appealed the decisions of the OEC to the Director of the Department. After a hearing on June 29, 2017, the Director issued a final decision affirming the OEC's denials of ProVen's claims.

ProVen filed in the Circuit Court for Baltimore City a Petition for Judicial Review with respect to three of its claims for compensable delay. A hearing was held on May 2, 2018. In a written order filed on May 8, 2018, the circuit court affirmed the Department's decision, finding that it "was neither arbitrary nor capricious," was "supported by substantial evidence," and that there was no error of law. This appeal followed.

ISSUES PRESENTED

Appellant presents the following issues for our consideration:

I. Whether the Department's final administrative decision provided a sufficient determination of questions of fact as required under the law;

II. Whether the Department's administrative process violated ProVen's due process rights under the law;III. Whether the Department's final decisions as to ProVen's hazardous material, work stoppage and work hours, and unanticipated field conditions claims were arbitrary and capricious, unsupported by substantial evidence on the record, and based on errors of law; and,

IV. Whether the Department's final decision eliminating previously agreed-upon extensions of contract time was arbitrary or capricious, unsupported by substantial evidence on the record, constitutes a violation of due process under the law, or constitutes an error of law.

The City filed a motion to dismiss the appeal for lack of jurisdiction. For the reasons set forth below, we shall (1) deny the motion to dismiss; (2) neither affirm nor reverse, but (3) remand this case to the circuit court with instructions to remand the case to the agency for further proceedings and the filing of a decision that complies with ministerial requirements.

PROCEDURAL AND FACTUAL BACKGROUND

The basic facts giving rise to this appeal are not in dispute, but we shall discuss them in some detail in order to provide context to explain our decision to remand the case. On or about April 23, 2014, ProVen entered into a contract with the City to clean sediment and debris from more than 12,000 linear feet of underground sewer lines that run from North Schroeder and West Lexington Streets to North Wolfe and East Chase Streets. The work was to be performed according to the Department's detailed design specifications and drawings. Bidders on the contract were advised of the conditions they might encounter in the sewer lines and were provided sonar sediment profiles showing the volume of debris that could be expected. Bidders were also instructed that they could assume that the unitweight of extracted material would be 0.9 tons per cubic yard, based on a similar sewer cleaning project that had occurred in Baltimore City.

The contract divided the sewer lines to be cleaned into 37 segments, 21 of which were west of Greenmount Avenue and 16 of which were east of Greenmount Avenue. Sewage flowed in the sewer lines from west to east. Pursuant to the contract, the contractor was to use special equipment to push the debris down the sewer line to the end of each segment, where it would be extracted through a manhole and transported to a waste management facility.

The contract restricted roadway and lane closures during daytime hours, provided 365 days for completion, and stated that time was of the essence. It also provided for compensable time extensions for changes in the work made by the Department. ProVen was awarded the contract. The Department issued a notice to proceed with the work on July 29, 2014, and July 30, 2015 was set as the completion date.

The parties agree that the project did not go well. For example, on or about October 10, 2014, ProVen encountered hazardous waste material and a suspension of work order was issued by the City. The parties developed testing procedures to be used throughout the duration of the contract and ProVen returned to work about 38 days later. On April 15, 2015, ProVen requested permission to work on certain west side segments during daytime hours and the Department approved that request in June 2015. On July 31, 2015, the Department ordered ProVen to cease working at night on the west side of the project because a complaint had been made about the noise level. On the east side of the project, ProVen encountered a large amount of rags in the extracted material, which were moredifficult to remove than the typical sediment. The Department did not issue conditional acceptance of the work until December 12, 2016.

Throughout the project, the Department made several adjustments in time and compensation, but ProVen asserted that it was entitled to additional compensation and time extensions. ProVen submitted to the OEC 13 claims requesting 392 compensable days and 232 non-compensable days. It calculated the total cost of the compensable days to be $1,680,540.09. On initial review, the OEC granted ProVen a 15-day non-compensable extension, but denied the remaining claims.

By letter dated March 21, 2017, ProVen appealed the decision to the Chief of the OEC. On May 23, 2017, Acting Chief of the OEC, Azzam Ahmad, found "no grounds to change OEC's denial of the claim[,]" but agreed to approve "a total of 15 non-compensable calendar days" so as to extend the authorized completion date of the project from September 21, 2015 to October 6, 2015. Mr. Ahmad advised ProVen that the City was "considering and reserving the right to access [sic] liquidated damages in the amount of $500.00 per day as detailed in the contract documents. The liquidated damages from the October 6, 2015 completion date to the actual completion date of December 12, 2016 total $216,500.00."

A. Hearing Before Director Chow

ProVen appealed the OEC's determination to the Department's Director, Rudolph Chow. A hearing was held before Director Chow on June 29, 2017. Director Chow began the hearing by stating:

Okay. Good morning everybody. Thank you for coming in. Let me just explain a bit about the ground rules first, all right. So I don't intend this to be a long drawn out argument going back and forth, right, because I do have what I call all the information, the exchange, hearings or discussions or email exchanges and all that - all the background information here.

Now, if either side feels that additional information needs to be provided to me for consideration, please do so during this hearing. I will not be accepting any additional supplemental information afterwards.

Are we clear on that? That means the only thing that I'm going to consider is what I have. So if you're not sure I have everything, make sure you give me everything, all right, because after today I will be rendering a decision based on what I have.

Counsel for ProVen asked if the parties would have an opportunity to review the material contained in a "fancy book" that the Department had prepared for Director Chow, and the Director asked the Department to provide a copy to counsel. Counsel for ProVen commented on the record that the book contained "just the claim and then [the Department's] letter."

The Director explained how the hearing would proceed, stating:

Okay. So this is how it's going to go, right, six steps. We're going to start with you making an opening statement, right, basically to whatever - say anything you need to say stating why you feel this is worth it, right. And follow with the City side making an opening statement.

And then you will have an opportunity, as a third stop, sort of rebut against some of the things that the City has said. And the fourth step is City will have an opportunity to rebut some of your opening statement. Then we go into closing statement with you going first and City going last. Pretty simple six steps, right?

Like I said, make sure everybody is clear, if you need me to review any information, by all means, give it to me today. I have all the history here, right, and I'll be rendering my decision based on what is here. Are we good?

Counsel for ProVen questioned whether the parties would have a chance to review the transcript of the hearing and submit a summary statement, and the Director denied that request, stating:

No. So what I'm saying today, this is the time for you to make your case because I don't want this to be a long drawn out. [sic] I don't want this comes back, you revise it, you want to supplement additional questions then I got to get the City to review it and then there's no end in sight. I want to be able to draw a conclusion on this based on today's hearing. That's why I'm sort of taking that stance is that - make

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