Mayor of Baltimore v. Allied Contractors, Inc.

Hammond, J., delivered the opinion of the Court. This case comes to us confused by the granting below of a summary judgment after two days of testimony on the issues on which the parties differed, but as we see it the points on which the decision must turn are (a) whether the determina ⁵³⁸ tion by the Director of Public Works of Baltimore that a specified number of dollars was due the appellee, Allied Contractors, Inc., for extra work and expense caused by the City during performance of a construction contract was made by him under the contract provisions that : “To prevent disputes and litigations, the Director will be the referee in case any question shall arise between the Contractor and the City touching the Contract, and his determination, decision and/or estimate shall be final and conclusive upon the Contractor, and shall also be a condition precedent to the right of the Contractor to receive any moneys under the Contract” and (b) if so, whether the City was finally bound by the determination or could, as it attempted to do, repudiate the determination and tender a lesser sum in full settlement. Allied was awarded the contract for the erection of a bridge over Northern Parkway by the City in June 1958. Due to a change in plans, notice to proceed was not given until November.

Claiming damages and extra costs of $104,266.26 because of this delay and other reasons attributed to the City — such as extra work, additional costs of winter concreting, changes in construction procedures, added costs of a structural steel assessed to Allied by its suppliers because delivery was delayed, and the cost of rebuilding forms that had been made unusable Allied made demand for payment of this sum upon the City. In March 1961, apparently pursuant to a suggestion by the consulting engineers, J. E. Greiner and Co., Allied submitted a written detailed summary of its claims to. the City’s highways engineer, Walters, sending a copy to the bridge engineer, Kravetz, and a copy to Greiner. On April 13, 1961, a meeting was held in Walters’ office attended by him, Kravetz, an assistant of Kravetz, and three Greiner engineers. The Greiner men explained that they could make recommendations on all claims but that final decision on some would depend on the policy of the City in regard to the lapse of time between an award and the notice to proceed.

They then made comments and specific recommendations to the City officials on each of Allied’s various claims, generally recom ⁵³⁹ mending no allowance at all but, as to some, suggesting payment of a small percentage of the amount claimed. A week later, on April 20, 1961, Walters wrote Allied saying that after examination “and carefully weighing all the circumstances connected with this contract,” the City disallowed all claims. The letter then suggested that under Sec. 4-39 of the contract specifications the matter could go to the Director of Public Works, Werner, for his controlling decision. On May 12, Allied wrote Werner saying that Walters had disallowed their claims on April 20 and that “in accordance with Section 4-39 of the specifications of this contract, we wish to appeal this decision.” Werner then directed Walters and Kravetz to make an investigation and analysis of the facts and figures involved in the claims.

A meeting was held on May 22, 1961, attended by Walters and Kravetz, representing the City, and Allied’s president, Pécora, and its vice-president, Kingan. One small claim was approved and it was agreed that the others would first be gone over by the City and Allied and, if possible, agreed on, and then submitted to Werner for his decision. A number of meetings followed, culminating with two full days of investigation by Kravetz at Allied’s office (on Friday, September 29, and Saturday, September 30), during which each claim was again checked in detail. Kravetz was given Allied’s complete files including material and time sheets, cancelled checks and other written data he wanted for verifications.

As a result of this detailed study, Allied’s claim of $104,266.26 was cut to $71,106.90. Kravetz told Allied he would recommend to his superior Walters that this amount be paid and if Walters agreed that it should the figure would be submitted to Werner for his final decision, and Allied assented. Walters did accept Kravetz’ recommendation after a meeting' in late October with Pécora and Kravetz at which the claims again were gone over thoroughly. Walters suggested to Pécora that he “set up” a meeting with Werner for submission of the claims as reduced.

The meeting was held on November 3, attended by Werner, Walters, Kravetz and Pécora. The claims were discussed one by one, with consideration being given to their backgrounds and reasons for being, and their ⁵⁴⁰ merits and amounts, as originally submitted and as reduced. After this, Walters recommended payment of the claims and Werner said he would accept the recommendation. Thereupon Walters handed Werner a letter addressed to the Board of Estimates of Baltimore City recommending payment to Allied in the amount of $71,106.90, which he told Werner he had caused to be prepared in anticipation of Werner’s decision.

The letter which was dated November 1 and signed by Walters (a) recited the date of the contract, June 25, 1958, the beginning of work on December 1, 1958, and its finish on August 24, 1960, resulting in a total of 349 working days compared to the 270 such days allowed by the contract, and that the final cost of the work performed by Allied was $66,790.98 more than the contract price (the parties are in agreement that previously authorized funds were available to pay the sum of $4,315.92 which is the difference between $71,106.90, the amount it had been determined Allied should receive, and $66,790.98, so that only the latter amount presently was sought from the Board of Estimates); (b) explained the reasons for the delay (deletion of a water line from the bridge and construction by the City of a sewer line in the area) ; (c) set out the details and amounts of each claim; (d) requested authority to. expend $66,790.98; and concluded (e) “these facts, together with the delays interposed by the sewer line construction and changes in plans, in our opinion justify the allowance of 79 extra working days shown by the record, and it is so recommended for your approval.” Werner read the letter, signed it under the typed word “approved” and over the typed words “Director of Public Works” and then authorized its presentation to the Board of Estimates. He directed Walters and Kravetz to be before the Board when the letter was presented in order to be available to answer any questions. Pécora was given a copy of the letter and assured that it would be his evidence that the City had agreed to pay Allied and that payment could be expected in a matter of days after the Board of Estimates approved the request for funds. On November 8 the Board, at a formal meeting, did approve the request.

Allied was not paid because the City disbursing department would not pay more than the $66,790.98 authorized ⁵⁴¹ by the Board of Estimates unless the vouchers which had been presented to it were reformed and the highway officials seemed unable to comply so as to satisfy the disbursing department, although in an effort to do this Werner went with Pécora to see the department head and request expeditious action. Meanwhile, considerable time passed and, at the end of November, Kravetz announced to Pécora that he had come to the conclusion that the City had made a bad settlement and offered Allied $41,000 in full on a take it or leave it basis. It may be inferred from the record that two reasons actuated Kravetz. First, the written reports of Greiner on the subject of Allied’s claims — which had been written almost a year before and the substance of which had been transmitted to Walters and Kravetz and an assistant of Kravetz at the meeting of April 1961 — were forwarded to Kravetz by Greiner on November 22.

(Apparently Greiner would not sooner deliver the written reports to the City because it had not been paid the additional compensation it thought it should be paid for them.) The second was that Kravetz seemingly was disturbed because the City, in weighing the fairness of Allied’s claims and the desirability of paying them, had routinely contemplated that the United States Bureau of Public Highways would pay half of the additional costs, as it had of the original contract costs, and the Bureau refused to pay anything under its regular policy not to do so when the municipality was at fault or responsible for the extra cost. Pécora refused Kravetz’ take it or leave it offer of $41,000 in full settlement, saying that Allied had an accrued and absolute right to $71,106.90 under the award of the referee Werner, the Director of Public Works. On January 9, 1962, the City sent Allied a check for $43,-372.56, marked “final payment of all claims” — the amount having been arrived at by Kravetz without consultation with Werner who did no more than sign the check. After consulting its lawyer, Allied deposited the check and wrote Walters that the check was for less than the amount “awarded us by the decision of the Director of Public Works and approved by the Board of Estimates on Nov. 8, 1961” and that it reserved the right “* * * to take whatever additional steps are necessary to enforce collection of this difference.” ⁵⁴² Allied filed suit against the City on February 23, 1962, for $28,869.37 (the difference between “the final sum due” plus “agreed arbitration adjustments for credits” minus the amount of the check for $43,372.56).

It filed a motion for summary judgment, supported by the affidavit of Pécora as to the matters which have been recited above. The declaration alleged facts to support its theory that there had been “decision and arbitration” under the contract which was “final and binding in a liquidated amount” and had not been paid in full. The City filed the general issue plea, an answer to. the motion for summary judgment, in which it was alleged that there was a genuine dispute as to material facts and admitted “that such claims [those of Allied] were referred to the Director of Public Works as arbitrator,” but denied that the Director decided Allied was entitled to $71,106.90 as alleged by Allied. The answer further asserted “that the amount determined by the arbitration to be due Plaintiff was $43,372.56, which was paid to and accepted by the Plaintiff in full payment and satisfaction.” Also filed by the City was the affidavit of Kravetz in support of the answer.

This did no more than repeat in outline the refutations and allegation of the answer. The City filed interrogatories which, among other things, asked Allied to state in detail the bases of its various claims totalling $71,106.90. Allied excepted to these interrogatories for the reason that “* * * this suit is predicated on an adjudication and arbitration by Bernard L. Werner in his capacity as Director of Public Works and acting under the authority vested in him in the Specifications pertaining to the work.” Allied’s exceptions further stated that the City’s effort was to reopen matters which had all been thoroughly explored prior to Werner’s adjudication and that these matters were not now subject to review, so that Allied “stands on the basis of a binding arbitration and award by the Director of the Board of Public Works.” Judge Niles sustained Allied’s exceptions, the case was placed on the