E-Alert Case Updates

County construction Contract Arbitration award only appealable to Circuit Court

Ross Contracting, Inc. v. Frederick County
--- A.3d---, (Md. Spec. App. 2015)
by Gregory S. Emrick, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdcourts.gov/opinions/cosa/2015/0977s13.pdf

In 2008, Frederick County issued an “Invitation to Bid” hereinafter (“Invitation”) on the construction of the “Replacement of Bidle Road Bridge, No. F03-10 over Catoctin Creek.” The Invitation called for the removal of the bridge structure and supporting abutments, excavation and construction for a new two lane bridge. The bidders were provided with information regarding the soil conditions, including information that Abutment B was disintegrated rock to a depth of 360 feet above sea level, requiring the contractor to dig to a depth of 385 feet to place the abutment. Ross Contracting, Inc. (“Ross”) won the low bid contract and began work on April 22, 2009. During the excavation of Abutment B, Ross encountered soil conditions different than provided by the County. Work was stopped on May 1, while a third-party quality control inspector subcontractor, ECS, Ltd., analyzed and prepared a report on the soil condition. ECS’s report determined there was a different soil condition than was expected, and the County revised the contract to reflect that Abutment B only required digging to 382 feet. The bridge construction was concluded on June 24, 2009, after which Ross submitted a Proposed Change Order (“PCO”) requesting an equitable adjustment of the contract price in the amount of $89,971.55, as well as compensation for ECS’s charges, in accordance with the relevant Contract provisions. The County rejected PCO stating that Ross was “only due a reasonable amount for the Geotechnical Services provided by ECS… and that the credit due as a result of the raising of the bottom foot elevation … may offset the additional inconvenience caused by the time it took to excavate the harder rock.” Ross revised his claim to $124,902.64, which the County also denied.

Thereafter, Ross invoked the Contract Arbitration provision. The Arbitration proceeding included site visits, hearings and briefing, after which the hearing officer issued a written opinion that there was not a materially different site condition as defined in the contract, that Ross was on notice of the potential of hitting rock, and other contractors were on notice of the potential condition and it would be inequitable to allow Ross to win the low bid, and make up the difference on a site condition change order. The hearing Officer did award Ross $31,949.41 for the delay in the project to investigate the conditions. The holding was appealed to the Circuit Court for Frederick County who upheld the Hearing Officer’s finding. Ross appealed to the Court of Special Appeals.

Ross’s appeal focused on whether the Hearing Officer erred in finding that Ross was not entitled to the full amount of its equitable adjustment claim. The Court of Special Appeals, however, reviewed the threshold issue of its own jurisdiction to hear the matter. In finding that Ross had not right of appeal to the Court of Special Appeals, the Court noted that Courts and Judicial Proceedings, § 12-301 provides general appeals rights, except as provide by § 12-302. Courts and Judicial Proceedings §12-302(a) provided appellate jurisdiction for the review of administrative agencies. The Court further noted that the Circuit Court exercises the appellate jurisdiction under §12-302(a), and therefore, subsequent appellate jurisdiction had be based on another statute other than §12-301. After reviewing the Court’s jurisprudence in Gisriel v. Ocean City Bd. Of Supervisors of Elections, 345 Md. 477 (1997), the Court held that the right to appeal the matter arose under Art. 25 § 1(a), now codified in Cts & Jud. Proc. § 5-5A-02, which did not provide for a right of appeal to the Court of Special Appeals. The Court further rejected Ross’s argument that the Arbitration provisions invoked the Administrative Procedure Act under State Gov’t §10-101, et seq. which would have provided him with appellate jurisdiction. The Court dismissed the appeal for lack of jurisdiction.