McLean Contracting Co. v. Maryland Transportation Authority

ALPERT, Judge. At Walnut Point, just below Curtis Bay, the Baltimore Beltway (U.S. Route 695) crosses Curtis Creek at a drawbridge linking Anne Arundel County to Baltimore City. In April, 1980, appellee, the Maryland Transportation Authority (MTA), an agency within the Maryland Department of Transportation (DOT), entered into a contract with appellant, McLean Contracting Company (McLean) to construct a second drawbridge at that site. On October 14, 1982, two months before completing the bridge, McLean submitted a claim for additional compensation under the “equitable adjustment” provision of its contract.

This claim was submitted to MTA pursuant to procedures outlined in the contract’s “Disputes” clause. McLean asserted that it had incurred additional expense in constructing the drawbridge due to delays caused by MTA and/or its agents. Mr. John A. Moeller, MTA’s procurement officer, issued a final decision denying McLean’s claim on May 6, 1985. One month later, McLean filed an action in the Circuit Court for Anne Arundel County alleging that MTA breached the April, 1980 contract.

McLean’s suit was not an appeal from MTA’s May 6th decision but a wholly new action, ex contractu, directed to the court’s general, primary jurisdiction. After filing its answer, MTA moved to dismiss the action on the basis that the court lacked subject matter jurisdiction to resolve the dispute. MTA argued that McLean was ⁵¹⁷ required to take an appeal to the Maryland State Board of Contract Appeals (MSCBA) before the circuit court could review the dispute. In a well-reasoned and concise opinion, Judge Martin A. Wolff held that McLean had indeed failed to exhaust necessary administrative remedies.

For that reason, the court dismissed McLean’s suit for lack of subject matter jurisdiction. McLean filed this appeal. In resolving McLean’s appeal, we are called to answer a narrow question: Is the Maryland State Board of Contract Appeals vested with exclusive subject matter jurisdiction to review final agency action in disputes filed after July 1, 1981 involving Maryland Department of Transportation procurement contracts entered into between July 1, 1978 and July 1, 1981. We are convinced that an appeal to the MSBCA is a statutorily mandated prerequisite to circuit court jurisdiction over disputes involving these contracts.

Therefore, we shall affirm the decision of the circuit court. Legislative History Between 1976 and 1981, the Maryland General Assembly was quite active in creating and changing procedures for resolving disputes related to DOT procurement contracts. The forum in which a contractor was required to resolve such a dispute changed three times during those five years. We shall summarize relevant legislature history. a.

Department of Transportation Board of Contract Appeals Before 1976, the doctrine of sovereign immunity precluded contractors from suing the Maryland Department of Transportation in the circuit courts of this State. By Chapter 450, Laws of Maryland, 1976, the General Assembly enacted a limited waiver of immunity, thereby allowing contractors, on authorized State contracts, to bring an ac ⁵¹⁸ tion against the State in those courts. 1 Two years later, the General Assembly enacted Chapter 418, Laws of Maryland, 1978 (hereinafter, Chapter 418), codified at Md.Transp.Code Ann. §§ 2-601 through 2-604 (1979 Supp.). This legislation established the Department of Transportation Board of Contract Appeals (DOTBCA) within the DOT and gave the DOTBCA “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.” 1978 Maryland Laws, ch. 418, § 1. Chapter 418 and its dispute resolution procedures were to be construed prospectively and were not to be applied to any contract entered into before the effective date of the legislation. 1978, Maryland Laws, ch. 418, § 3.

Parties to a pre-existing contract, however, could make their agreement subject to those procedures. Maryland Port Administration v. C.J. Langenfelder and Son, Inc., 50 Md.App. 525 , 530 n. 4, 438 A.2d 1374 (1982). Thus, the circuit courts were divested of part of their recently acquired original jurisdiction over disputes involving DOT contracts. b. Maryland State Board of Contract Appeals In 1980, the General Assembly enacted a comprehensive procurement contract code.

With the passage of Chapter 775, Laws of Maryland, 1980 (hereinafter, Chapter 775), provisions governing State procurement of supplies, services and construction were repealed and reenacted under a single code Article. The provisions of Chapter 775 included a contract dispute resolution mechanism. The General Assembly put this mechanism in place through a series of legislative maneuvers: (1) it abolished the Department of Transportation Board of Contract Appeals and created the Maryland State ⁵¹⁹ Board of Contract Appeals, 1980, Maryland Laws, Ch. 775, § 9; (2) it gave the newly created MSBCA jurisdiction to hear and decide any appeal taken from a final action by an agency disapproving a settlement or approving a decision not to settle any dispute involving a State procurement contract, Id; (3) it transfered all appeals pending before the DOTBCA as of the effective date of the Act (July 1, 1981) to the MSBCA, Id., § 22. Chapter 775 went on to provide that, although existing obligations or contractual rights could not be impaired by the law, its procedural provisions, including those requiring review by the MSBCA, could, at the contractor’s option, be applied to contracts in force on the effective date of such provisions.

Id., § 25. As eventually and presently codified at Subtitle 2 of Title 17, Division II of the State Finance and Procurement Article, Chapter 775 created a four-step procedure for resolving procurement contract disputes. 2 First, the contractor submits its dispute to the agency procurement officer who may “negotiate and resolve” it. Md.State Fin. & Proc.Code Ann. § 17-201(a) (1985). Second, an agency head reviews and approves or disapproves the procurement officer’s decision.

Id. § 17-201(e) and (d). Third, the decision of the reviewing authority under step two may be appealed to the MSBCA. Id. § 17-201(e). Four, the decision of the MSBCA under step three is subject to review in accordance with the Administrative Procedure Act.

Id. § 17-203. The Timing Of McLean’s Contractual Dispute The McLean contract was entered into before the adoption of chapter 775 and, therefore, the procedural require ⁵²⁰ ments of chapter 418 were included in the agreement’s “Disputes” clause. 3 Under that clause, the appropriate DOT Administrator decides any dispute not disposed of by a DOT engineer. Consistent with Section 1 of Chapter 418, the McLean contract provides that appeals from the Administrator’s decisions must be taken to the DOTBCA. There's the rub.

When the Administrator issued his decision to McLean, the DOTBCA no longer existed, having been abolished by Chapter 775. Further, because McLean’s dispute was not docketed with the DOTBCA on the effective date of chapter 775, the dispute did not automatically transfer to the newly created MSBCA. Rather than filing an appeal with the MSBCA, clearly an option available to it, McLean started over again in the circuit court. Our Analysis When an administrative remedy is provided by statute, relief generally must be sought initially from the appropriate administrative agency, and that relief must be exhausted before a party may resort to the courts.

Md. Comm’n ⁵²¹ on Human Rel. v. Bethlehem Steel Corp., 295 Md. 586, 592-93 , 457 A.2d 1146 (1983); Berwyn Heights v. Rogers, 228 Md. 271, 274 , 179 A.2d 712 (1962). If a statutory method of appeal from the decision of an administrative agency, including an appeal to a higher administrative forum, is provided, that procedure must generally be followed. See Berwyn Heights; Comm’rs of Cambridge v. Eastern Shore Pub. Service Co., 192 Md. 333 , 64 A.2d 151 (1949).

The rule that a party must pursue his remedy in the proper administrative forum has been succinctly stated: [A] claimant ordinarily must seek to redress the wrong of which he complains by using the statutory procedure the legislature has established for that kind of case, if it is adequate and available, and that if he is unsuccessful and wishes aid from the courts, he must take judicial appeals in the manner the legislature has specified rather than by seeking to invoke the ordinary general jurisdiction of the courts____ [Consequently, we] have consistently held that where a special form of remedy is provided, the litigant must adopt that form and must not bypass the administrative body or official, by pursuing other remedies. Prince George’s County v. Blumberg, 288 Md. 275, 283-84 , 418 A.2d 1155 (1980), cert. denied, 449 U.S. 1083 , 101 S.Ct. 869 , 66 L.Ed.2d 808 (1981), quoting, Agrarian, Inc. v. Zoning Insp., 262 Md. 329, 332 , 277 A.2d 591 (1971). Whether the administrative procedure constitutes a claimant's exclusive remedy is, in turn, a matter of legislative intent: [w]here there exists a special statutory remedy for the resolution of a particular matter, as well as an ordinary action at law or in equity, whether the special statutory remedy is exclusive, and preempts resort to the ordinary civil action, is basically a question of legislative intent. In ascertaining that intent, it is a settled principle of statutory construction that, absent a legislative indication to the contrary, it will usually be deemed that the Legislature intended the special statutory remedy to be exclu ⁵²² sive.

Moreover, where the special statutory scheme for relief is exclusive and includes administrative proceedings and provisions for judicial review of the administrative decision, one must normally exhaust the administrative remedy before recourse to the courts under the judicial review provisions. White v. Prince George’s County, 282 Md. 641, 649 , 387 A.2d 260 (1978) (citations omitted). Even in those cases in which the administrative remedy is not exclusive, a court may refuse to exercise its concurrent jurisdiction pursuant to the doctrine of primary jurisdiction. Md. Nat’l Capital Park and Planning Comm. v. Wash.

Nat’l Arena, 282 Md. 588 , 601-602, 386 A.2d 1216 (1978). As the Court of Appeals said: [Primary jurisdiction] is not concerned with subject matter jurisdiction or the competence of a court to adjudicate, but rather is predicated upon policies of judicial restraint: “which portion of the dispute-settling apparatus—the courts or the agencies—should, in the interests of judicial administration, first take the