Maryland Port Administration v. C. J. Langenfelder & Son, Inc., 543

CourtCourt of Special Appeals of Maryland
Citation438 A.2d 1374,50 Md.App. 525
Docket NumberNo. 543,543
Decision Date11 January 1982

Page 525

50 Md.App. 525
438 A.2d 1374

No. 543.
Court of Special Appeals of Maryland.
Jan. 11, 1982.

Page 526

[438 A.2d 1375] Scott Livingston, Asst. Atty. Gen., with whom were Stephen H. Sachs, Atty. Gen., and Robert B. Harrison, III, Asst. Atty. Gen., on the brief, for appellant.

Jon F. Oster, Baltimore, and J. Roy Thompson, Jr., with whom were William B. Somerville and Smith, Somerville & Case, Baltimore, on the brief, for appellee.

Argued before MASON, WILNER and WEANT, JJ.

WILNER, Judge.

On June 21, 1978, the Maryland Port Administration (MPA), an administrative unit within the State Department

Page 527

of Transportation (DOT), entered into a contract with C. J. Langenfelder & Son, Inc. (Langenfelder) for dredging work in the Baltimore harbor. The agreement permitted MPA to make certain types of changes in the work, but provided that if any such change made by MPA caused an increase or decrease in Langenfelder's cost, "an equitable adjustment shall be made." A similar "equitable adjustment" was provided for in the event subsurface or latent physical conditions at the site differed materially from those indicated in the contract and caused an increase or decrease in the contractor's cost.

[438 A.2d 1376] During the course of the work, Langenfelder filed three claims for additional compensation under these "equitable adjustment" clauses, one (MDOT 1003) being by reason of an MPA change order and two (MDOT 1000 and 1006) arising from different site conditions. In accordance with the "Disputes" clause of the contract, after MPA rejected the claims the disputes were submitted to the Department's Board of Contract Appeals for resolution.

On August 15, 1980, the Board rendered a decision in the three matters. It made an "equitable adjustment" of $39,415 in No. 1000, $42,893 in No. 1003, and $48,476 in No. 1006, all in Langenfelder's favor. With respect to each of these adjustments, the Board added "predecision" interest at what it deemed to be the "legal rate"-6% per annum to June 30, 1980, and 10% per annum from July 1 to August 15, 1980; 1 and it provided that "post decision" interest would accrue at the rate of 10% per annum. The "predecision" interest thus established amounted, in the aggregate for all three claims, to $6,296.

MPA promptly paid the principal amounts awarded on Nos. 1000 and 1006 ($87,891), but it declined to pay the adjustment on No. 1003 or any interest-pre- or post-decision-on any of the claims. Instead, apparently acting under the State Administrative Procedure Act (Md.

Page 528

Code art. 41, § 244, et seq.) it took an appeal to the Baltimore City Court, asking that the contested parts of the Board's awards be reversed. Langenfelder moved to dismiss the appeal, contending that MPA had no right of judicial review of the Board's decisions.

Ultimately, the court decided that (1) MPA did have the right of judicial review under the Administrative Procedure Act, but (2) the Board's decisions, both as to the adjustment in No. 1003 and as to the allowance of interest, were correct. MPA acquiesced in the decision as to No. 1003 by paying the principal amount of $42,893, but it still objects to the allowance of interest, and has appealed that determination. In a defensive move, Langenfelder has taken a cross-appeal, pressing the issue of whether MPA had a right to judicial review in the first place. Since the issue raised by Langenfelder is jurisdictional in nature, we shall address it first.

(1) Right of MPA to Judicial Review

Maryland Rule B 3 provides that an administrative appeal may be taken "by a person now or hereafter authorized by statute to appeal." Langenfelder contends that there is no statute authorizing MPA to take an appeal from a decision of the Board of Contract Appeals, and therefore the right of appeal does not exist. MPA, on the other hand, sees such authority in the statute creating the Board.

To resolve this question, some preliminary comments are in order. MPA, as we have noted, is part of DOT, being one of the five administrations within that Department. 2 The Department is headed by the Secretary of Transportation who, as the chief executive officer of the Department, is "responsible for the operation of the Department." Md. Code, Transportation article (hereafter "Trans. art.") § 2-102(b)-

Page 529

(2). In addition to a number of specific duties, he is authorized to "establish guidelines and procedures to promote the orderly and efficient administration of the Department," (id.) to transfer or assign any power or duty "from any unit in the Department to his office," (Trans. art. § 2-103(f) ) and to "establish, reorganize or abolish areas of responsibility in the Department...." (Trans. art. § 2-102(b)(2).) With exceptions not relevant here, he may "exercise or [438 A.2d 1377] perform any power or duty that any unit in the Department may exercise or perform." (Trans. art. § 2-103(g).)

When the original contract was signed, there was no Board of Contract Appeals (BCA) in existence; that Board was created by Acts of 1978, ch. 418, which took effect July 1, 1978-ten days after the contract was executed. 3 Section 3 of the Act made clear that the Act was to be prospective only, and was to have no "effect upon or application to any contract entered into prior to (its) effective date...." The contract, drawn in accordance with the law then current, made no mention of BCA. It provided that any dispute "concerning a question of fact" that could not be resolved by agreement between the contractor and the MPA engineer would be submitted to the MPA Administrator. His decision would be final and conclusive unless, within thirty days, the contractor filed an appeal to the Secretary. "The decision of the Secretary," said the contract, "shall be final and conclusive" as to issues of fact, although "(n)othing in this Contract ... shall be construed as making final the decision of any administrative official or representative on a question of law."

Keeping in mind that MPA is a unit of DOT subject to the overall authority of the Secretary, it would appear from that provision that, as to MPA, the ultimate decision of the Secretary would have been final and binding, both on issues of fact and on issues of law. Although the contract left open the possibility of an appeal on issues of law, there was no provision

Page 530

in the law for a subordinate unit of the Department to challenge the Secretary's final decision in court. As to Langenfelder, however, it was bound only by the Secretary's determinations of fact; it was free to challenge his conclusions of law, both under the contract and under Md. Code art. 41, § 255(a), part of the Administrative Procedure Act.

By ch. 418, however, the General Assembly sought to provide a different way of resolving contract disputes between DOT agencies and their contractors. It did this by enacting a new subtitle 6 to title 2 of the Trans. art., which:

(1) created BCA as a unit within DOT, its three members to be appointed by the Governor upon recommendation by the Secretary and with the advice and consent of the Senate (§§ 2-601, 2-602);

(2) empowered BCA to "hear and determine all disputes within its jurisdiction" (§ 2-603(A) );

(3) vested BCA with "jurisdiction over all disputes other than labor disputes arising under a contract with the Department, or as a result of a breach of a contract with the Department" (§ 2-603(B) );

(4) directed BCA to "issue a final decision in writing on each dispute submitted," with a copy to be mailed to the Secretary "and to each party to the dispute" (§ 2-603(C) );

(5) required BCA to adopt rules and regulations providing for the "informal, expeditious, and inexpensive resolution of claims and controversies" (§ 2-603(D) ); and

(6) provided that "(t)he Administrative Procedure Act shall apply to proceedings under this subtitle" (§ 2-604).

Shortly after the new law took effect, the parties amended their contract to take advantage of it. 4 On September 11,

Page 531

1978, they agreed upon a new "Disputes" clause which, in effect, substituted BCA for the Secretary. The relevant change, in that regard, was in the sentence providing that the decision of the MPA Administrator would be final and conclusive unless, within [438 A.2d 1378] thirty days, "the Contractor mails or otherwise furnishes a written appeal to the Department of Transportation Board of Contract Appeals." The new clause, though generally substituting BCA for the Secretary, did not track the repealed language providing that the Secretary's determination was to be "final and conclusive" with respect to issues of fact, or the express reservation of the contractor's right to challenge administrative determinations on issues of law. Nothing was said in the new clause about the finality or conclusiveness of BCA decisions, as to fact or law.

In challenging MPA's asserted right of judicial review of BCA's decisions, Langenfelder argues that (1) there is nothing in the BCA law specifically affording that right, and (2) the general application of the Administrative Procedure Act under § 2-604 does not suffice because MPA is not an "aggrieved party" entitled to appeal under art. 41, § 255. It bases the latter contention on a line of cases beginning with Maryland Board of Pharmacy v. Peco, Inc., 234 Md. 200, 198 A.2d 273 (1964), which, it suggests, establish that quasi-judicial administrative agencies are not "aggrieved" parties under § 255 and therefore have no right to appeal from decisions not to their liking.

We think that Langenfelder has misconstrued what the Court of Appeals said and held in Peco and its progeny.

To put the issue in a proper perspective, we start with Board of Zoning Appeals v. McKinney, 174 Md. 551, 199 A. 540 (1938), where the Court concluded that a zoning board had no authority to appeal from a court order reversing its decision to grant a...

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