Brawner Builders v. State Highway Admin.

Brawner Builders, Inc., et al. v. Maryland State Highway Administration, No. 58, September Term, 2020, Opinion by Booth, J. STATE FINANCE AND PROCUREMENT—PROCUREMENT CONTRACTS— FORMATION The Court of Appeals held that certifying a supplier as a pre-approved source of materials for future projects did not constitute a procurement contract, as that term is defined in the State Finance and Procurement Article (“SF”) § 11-101. SF § 11-101(n) defines procurement as the process of buying or otherwise obtaining goods or services. Relying on this definition, the Court of Appeals reasoned that certifying a supplier as a pre- approved supplier of materials for future projects, without more, is not a procurement contract because the State is neither buying nor obtaining goods or services from the certified supplier. STATE FINANCE AND PROCUREMENT—PROCUREMENT CONTRACTS— DISPUTE RESOLUTION—NOTICE OF CLAIM—TIMELINESS SF § 15-219 provides that a contractor must file written notice of a claim against a procurement agency within 30 days after the basis for the claim is known or should have been known, and the support for the claim itself must be filed within 90 days after submission of the notice of claim.

The Court of Appeals held that the Maryland State Board of Contract Appeals did not err in concluding a subcontractor failed to timely file a procurement contract claim even though such determination was made at the summary disposition stage because the undisputed facts showed notice of claim was not filed by the contractor within 30 days after the basis for the claim was known or should have been known. Circuit Court for Baltimore City Case No.: 24-C-19-003208 Argued: June 4, 2021 IN THE COURT OF APPEALS OF MARYLAND No. 58 September Term, 2020 BRAWNER BUILDERS, INC., et al. v. MARYLAND STATE HIGHWAY ADMINISTRATION Barbera, C.J. McDonald Booth Biran Rodowsky, Lawrence F. (Senior Judge, Specially Assigned) Harrell, Jr. Glenn T. (Senior Judge, Specially Assigned) Raker, Irma S.

(Senior Judge, Specially Assigned), JJ. Opinion by Booth, J. Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2021-08-25 13:55-04:00 Filed: August 25, 2021 Suzanne C. Johnson, Clerk 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 2 Admin. v. Brawner Builders, Inc., 248 Md. App. 646 (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 3 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 4 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 1 For reasons unknown to this Court, this contract was never placed into evidence and, as a result, is not in the record. 2 Construction aggregates are coarse particulate materials mixed into concrete that may affect the overall strength or durability of a concrete structure. Common construction aggregates include sand, gravel, and crushed stone. 5 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 unapproved aggregate, and requesting a response from Brawner explaining “how [Brawner] intends to remediate this situation.” Faddis was not copied on the May 2 letter. On May 8, 2014, Brawner’s project manager responded to SHA’s letter, advising SHA that the problem was not Brawner’s to remedy, and asserting that the problem was “a breakdown in the fabrication, inspection, and acceptance procedure at a SHA pre-approved concrete precast facility.” Brawner advised SHA that if SHA ultimately revoked Faddis’s status as a pre- approved source of noise barriers, SHA should inform Brawner in a separate letter. The May 8 letter from Brawner to SHA requested a temporary shutdown of the project and advised SHA that Brawner was reserving its rights to extend contract performance and seek 6 monetary compensation. Brawner added that, “[w]e are not requesting either at this time but reserve our right to do so should it become necessary.” (Emphasis added).

A day later, on May 9, 2014, Mr. Gale sent a letter to Mr. Kevin Iddings, Faddis’s Operations Manager, suspending approval of noise barriers manufactured at the Downington plant for a minimum of 180 days, during which time Faddis would be required to undertake specific remedial action. The letter detailed several reasons for SHA’s decision, including not only Faddis’s failure to “provide adequate documentation of the sources for the exposed aggregate material used in the [noise] panels supplied to SHA[,]” and “comply with provisions of [its] own Quality Control Plan,” but also Faddis’s use of a coarse aggregate that neither received SHA approval nor conformed to SHA standards. SHA advised Faddis that future approval of noise panels following the 180-day suspension would be contingent on, among other things, demonstrating that all mix designs prepared for SHA projects conform to all applicable SHA specifications. In a letter dated May 21, 2014, Mr. Iddings responded to the issues raised by Mr. Gale, and stated that, although “Faddis disagree[d] with many of the representations made in the SHA letter, [Faddis] remain[ed] committed to resolving outstanding issues to SHA satisfaction[.]” The relationship between Faddis and SHA deteriorated in June.

On June 9, 2014, the Chief of SHA’s Concrete Technology Division, Ms. Michelle Arminger, sent emails to officials at the Virginia Department of Transportation (“VDOT”) and the Pennsylvania Department of Transportation (“PDOT”), advising those agencies that SHA was having compliance issues with Faddis, and asking whether they had experienced similar issues. Ten days later, the Director of SHA’s Office of Materials Technology sent a follow-up 7 email to VDOT and PDOT, clarifying that the issues mentioned in Ms. Arminger’s email were in dispute, that SHA and Faddis were engaged in an administrative dispute process, and that there had been no “final determination by SHA regarding compliance.” A few days later, on June 23, 2014, Faddis sent letters to SHA, Brawner, and SHA’s legal counsel. The first letter, addressed to SHA’s Mr. Coyne, stated that the letter intended to “supplement[] the notices of claims previously submitted by Brawner[.]”3 In its letter, Faddis notified SHA that Faddis was reserving its right to recover damages for costs related to SHA’s decision to suspend approval of noise panels manufactured at the Downington plant. It was Faddis’s position that, although “SHA’s direct communications with Faddis . . . [were] not contract specific,” SHA’s decision to “halt[] operations at Faddis’[s] [Pennsylvania] plant[]” had “impacted Faddis as it specifically relates to the contract between Faddis and Brawner[.]” Faddis further advised SHA that additional damages were incurred as a result of non-compliance notices emailed to VDOT and PDOT.

The second letter, which Faddis addressed to Brawner, requested that Brawner provide Faddis with the “notice of claim letter” sent to SHA related to the contract between SHA and Brawner, and that Brawner provide SHA with a copy of “this letter which serves to supplement the prior notice and advise the SHA” of continuing damages. The letter did not identify the “prior notice” to which the letter referred. The third letter was from Faddis’s attorney, Paul Logan, and was addressed to SHA’s legal counsel, Assistant Attorney General Scott Morrell. This letter not only 3 It was—and still is—Faddis’s position that Brawner’s letter dated May 8, 2014 constituted a notice of claim for both Brawner and Faddis. 8 provided an overview of the circumstances, as Faddis perceived them, leading up to the present dispute but also accused SHA of acting precipitously, without notice, and without factual or legal justification.

To mitigate the harms associated with SHA’s conduct, Faddis demanded that SHA lift the 180-day suspension, accept Faddis’s noise panels, deem the project complete without assessing any liquidated damages or penalties, and provide a substantive communication to VDOT and PDOT detailing Faddis’s good standing and compliance with SHA specifications. The next day, Mr. Morrell responded by email to Mr. Logan, advising him that any procurement claim against SHA had to be filed by Brawner—the prime contractor with which SHA has its contractual relationship—and that any tort claim had to be filed in accordance with the Maryland Tort Claims Act. The Federal Lawsuit A little over a year later, on July 16, 2015, Faddis filed a complaint against Brawner in the U.S. District Court for the Eastern District of Pennsylvania.4 In its complaint, Faddis alleged it was harmed by Brawner’s failure to “pass through” Faddis’s claims against SHA, as such failure effectively precluded Faddis from pursuing its claims against SHA. In making this argument, Faddis took the position that it had no direct contract with SHA, and as a result, Faddis’s claims against SHA had to pass through the prime contractor— Brawner—before being considered.

SHA was not a party to this lawsuit. Less than a month after Faddis filed its complaint, on August 11, 2015, Brawner sent SHA a copy of the complaint, together with a letter advising SHA of the pending 4 The case was later transferred to the U.S. District Court for the District of Maryland. 9 lawsuit. Brawner indicated that the letter was intended to serve as a “Notice of Claim[.]” SHA acknowledged receipt on August 21, 2015 and accepted it as a Notice of Claim by Brawner. Thereafter, Brawner and Faddis settled the federal case and it was dismissed on December 7, 2017.

The record before us does not reveal the terms of the settlement. SHA did not take any action on the claim. On May 31, 2018, counsel for Faddis, on behalf of both Brawner and Faddis, requested that SHA issue a written decision on the pending claims. When SHA failed to do so, on September 6, 2018, Brawner and Faddis (sometimes referred to collectively as “Petitioners”) filed an appeal with the MSBCA.5 C. The Administrative Proceeding After the appeal was filed, SHA filed a motion to dismiss, or in the alternative, a motion for summary decision.

In its filing, SHA argued that dismissal was appropriate because only persons with whom SHA enjoys a direct contractual relationship may file a contract claim against SHA. SHA reasoned that, because Faddis was simply a subcontractor of Brawner, Faddis lacked standing to sue SHA directly. SHA also argued dismissal was appropriate because (1) Brawner failed to timely file both a notice of claim and a detailed claim within the time periods prescribed by the Code of Maryland Regulations (“COMAR”); and (2) Faddis’s claims did not fall within the waiver of the State’s sovereign immunity, as Faddis’s claims were not “contractual claims arising out of a written procurement contract.” 5 Maryland law provides that where an agency fails to timely issue a decision on a pending procurement contract claim, such failure may be treated as a denial of the contractor’s claim that may be appealed to the Maryland State Board of Contract Appeals (the “MSBCA”). Md. Code, State Finance and Procurement (“SF”) § 15-219(d), (g). 10 Faddis and Brawner agreed with SHA’s contention that only procurement contractors may file a procurement claim against SHA.

However, contrary to the position that Faddis took in the federal case, Faddis now contended that Faddis was a procurement contractor. According to the Petitioners, Faddis’s “contractor” status flowed from its having been certified as one of several pre-approved suppliers of concrete panels on SHA projects. In response to SHA’s assertion that Brawner failed to give timely notice of the claim, the Petitioners asserted that Brawner’s May 8, 2014 letter to SHA constituted notice of Faddis’s pass-through claim and that Faddis’s federal complaint, forwarded with Brawner’s August 11, 2015 letter to SHA, constituted the claim itself. On May 17, 2019, the MSBCA issued an opinion and order granting SHA’s motion for summary decision.

First, the MSBCA ruled that Faddis did not have a written procurement contract with SHA, and therefore, did not have standing to file a direct contract claim. In reaching this conclusion, the MSBCA rejected the argument that Faddis had a written procurement contract with SHA by virtue of its certification as a pre-approved manufacturer of precast concrete walls. Consequently, the MSBCA determined that “[a]ny contract claim Faddis had concerning the [p]roject had to be filed as a pass-through claim by Brawner on behalf of Faddis.” Second, the MSBCA noted the undisputed fact that both Faddis and Brawner had actual knowledge of the claim at least by June 23, 2014, when Faddis wrote to Brawner asking it to “furnish to the SHA a copy of this letter which serves to supplement the prior notice and advise the SHA of the continuing and additional damages related to SHA’s 11 ‘notices’ to VDOT and [P]DOT.” Accordingly, the MSBCA concluded that Brawner was required to provide notice of the claim within 30 days of that letter, i.e., no later than July 24, 2014. The MSBCA rejected Faddis’s argument that Brawner’s letter of May 8, 2014, in response to SHA’s letter of May 2, could constitute the actual filing of a claim, noting that the letter merely reserved Brawner’s right to file a claim in the future.

The MSBCA determined that Brawner failed to provide SHA with notice of Faddis’s claims until August 11, 2015 and concluded that it was untimely. D. The Circuit Court Proceeding Faddis and Brawner sought judicial review of the MSBCA’s decision in the Circuit Court for Baltimore City. After considering written and oral arguments, the circuit court reversed the MSBCA’s decision. In so doing, the circuit court disagreed with the MSBCA’s conclusion that Faddis was not a procurement contractor.

According to the circuit court, SHA’s approval of Faddis as a pre-approved noise panel supplier was “an independent procurement contract[]” because Faddis paid SHA “a fee of some sort” to secure a plant inspection that, if successful, would permit Faddis “to be possibly selected for use in a contract with the State through another contractor.” The circuit court reasoned that because Faddis was a procurement contractor, Faddis was entitled to file a direct claim against SHA. With respect to whether Faddis provided SHA with timely notice of its claims, the circuit court determined that the MSBCA “inappropriately weighed evidence on the issue of whether or not there was adequate timely notice of a claim given.” On these grounds, 12 the circuit court reversed and vacated the MSBCA’s summary decision and remanded the case for a hearing on the merits. E. The Court of Special Appeals Proceeding SHA appealed the circuit court’s decision to the Court of Special Appeals. The intermediate appellate court reversed the decision of the circuit court.

Md. State Highway Admin. v. Brawner Builders, Inc., 248 Md. App. 646 (2020). The Court of Special Appeals concluded that the certification of Faddis’s manufacturing plant as a pre-approved supplier of concrete panels on SHA construction projects did not fall within the definition of a “procurement contract” under the State Finance and Procurement Article. Id. at 662–63. The court observed that, without a separate written contract with a procurement agency, a pre-approved supplier does not automatically become a procurement contractor as a result of its eligibility to become one.

Id. at 662 . Consequently, the court concluded that Faddis, as Brawner’s subcontractor, did not have standing to bring direct contract claims against SHA. Id. at 663 . The Court of Special Appeals also determined that, as a matter of law, Brawner’s submission of a notice of claim on Faddis’s behalf was not timely, where the undisputed facts established the date when Petitioners knew the basis for Faddis’s claim against SHA, but Brawner did not submit its notice of claim until well over a year after the expiration of the 30-day statutory filing period.

Id. at 664–65. 13 Faddis and Brawner petitioned this Court for a writ of certiorari, which we granted, to consider the following issues6: (1) Did the MSBCA err in concluding that Faddis was not a procurement contractor and therefore lacked standing to file a direct procurement contract claim against SHA? (2) Did the MSBCA err in concluding that Brawner failed to timely file a pass-through claim on Faddis’s behalf? For the reasons that follow, we answer both questions in the negative and shall affirm the decision of the MSBCA.

II

Standard of Review When this Court is called upon to review an appeal from an administrative decision, “we ‘review the agency’s decision directly[.]’” Motor Vehicle Admin. v. Pollard, 466 Md. 6 For ease of discussion, we have consolidated and rephrased the issues on appeal. The questions in the original petition for writ of certiorari were: (1) Did the Court of Special Appeals and MSCBA misconstrue the COMAR definition of a “Procurement Contract” and thereby erroneously conclude that Faddis lacked standing to pursue its separate claims against the Maryland State Highway Administration (“SHA”)? (2) Did the Court of Special Appeals and MSCBA improperly conclude that “untimely notice” was a jurisdictional bar to Brawner’s and Faddis’[s] claims rather than an affirmative defense, subject to the doctrine of equitable estoppel? (3) Did the Court of Special Appeals and MSCBA err when they decide [sic] issues of material fact regarding Brawner’s “notice” and the factual issue of the existence of a contract between Faddis and SHA by disregarding SHA’s admissions that claims were pending, would be responded to and that an administrative process was ongoing? 14 531, 537 (2019) (quoting Comptroller of Treasury v. Science Applications Int’l Corp., 405 Md. 185, 192 (2008)). “Thus, our inquiry ‘is not whether the Court of Special Appeals erred, but whether the administrative agency erred.’” Frederick Classical Charter Sch., Inc. v. Frederick Cty.

Bd. of Educ., 454 Md. 330, 369 (2017) (quoting Spencer v. Md. State Bd. of Pharmacy, 380 Md. 515, 523 (2004)). In this case, the agency decision subject to appellate review is an MSBCA order granting summary disposition in SHA’s favor. It is well-settled that the propriety of granting a motion for summary disposition is a legal question which we review de novo. See, e.g., Rosello v. Zurich American Ins.

Co., 468 Md. 92, 102 (2020). Consequently, we must step into the shoes of the MSBCA and determine whether summary disposition was proper under COMAR 21.10.05.06. The legal standard for granting summary disposition is the same as that for granting summary judgment under Maryland Rule 2-501(a). That is, summary disposition is appropriate if “there is no genuine issue of material fact[,] and [a] party is entitled to prevail as a matter of law.” COMAR 21.10.05.06D(2)(a), (b).

Even where there are alleged factual disputes, if the factual disputes are irrelevant, they will not prevent the entry of summary judgment. Seaboard Sur. Co. v. Richard F. Kline, Inc., 91 Md. App. 236, 244 (1992). Moreover, once a movant has met its burden of demonstrating sufficient grounds for summary judgment, “[t]he party opposing summary judgment must do more than show simply that there is some metaphysical doubt as to the material facts.” Tyler v. City of College Park, 415 Md. 475, 498 (2010) (internal quotations and citation omitted).

To defeat a properly supported motion for summary judgment, 15 therefore, the non-moving party must produce admissible evidence