URS Corp. v. Maryland-National Capital Park & Planning Commission (Ct. of Special Appeals, Unreported)

Filed: July 6, 2018

Opinion by: Judge Doug Nazarian

Holding: Separate indemnification provisions in multiple documents that form a single agreement between the parties are not in conflict with each other where one indemnification provision provides a duty to defend but the other is silent. 

Facts:  The Maryland-National Capital Park and Planning Commission (the "Commission"), as part of Montgomery County, and URS Corporation ("URS") entered into an agreement for URS to provide the Commission with engineering services for the construction of the Rock Creek Hiker-Biker Trail Bridge over Veirs Mill Road.  The agreement consisted of: (1) a basic ordering agreement between Montgomery County and URS for transportation and engineering services to facilitate the planning and design of various projects (the "BOA"); (2) a request for proposal, extending the basic ordering agreement to include the Commission as a party; (3) a task order issued by the Commission for the specific engineering services; (4) a proposal from URS in response to the task order; (5) a contract between the Commission and URS for the specific engineering services (the "Contract"); and (6) the Commission's procurement rules, regulations and laws.  The BOA contained an indemnification provision that, in addition to indemnification, obligated URS to defend Montgomery County (including the Commission) in any action or suit arising out of URS's "negligence, errors, acts or omissions" arising under the BOA.  The Contract contained an indemnification provision that did not expressly obligate URS to defend any such claims.  The Contract also provided that, in the event of a conflict among the documents comprising the agreement among the parties, the Contract had precedence over the BOA.

Fort Myer Construction Corporation (the "Subcontractor") was retained to assist in the construction of the bridge.  The Subcontractor filed suit against the Commission claiming damages and delays due to defects in URS's design.  The Commission sent a letter to URS invoking URS's duty-to-defend and indemnification obligations under the basic ordering agreement. URS denied the Commission's demand and refused to defend or indemnify the Commission.  The Commission filed suit against URS for breach of contract and sought indemnification and contribution and URS countersued the Commission for failure to pay URS for work performed under the Contract.

Analysis: After multiple hearings and procedural matters that are not relevant for purposes of this analysis, the Court of Special Appeals (in an unreported opinion) affirmed the lower court's finding that URS had a duty to defend the Commission in the lawsuit brought by the Subcontractor.  The court was not persuaded by URS's argument that the indemnification provisions of the BOA and the Contract were in conflict because "the duty to defend is distinct from, and broader than, the duty to indemnify"; therefore, the duty to defend in the BOA supplemented the indemnification obligations in the Contract.  The Contract's silence regarding any duty to defend did not negate the express language of the BOA.  

The court was also not persuaded by URS's argument that the BOA applied only to the pricing of goods and services because the Contract unambiguously and unqualifiedly stated that the BOA was incorporated into the Contract.  The court found URS breached its agreement with the Commission by refusing to defend the Commission in the lawsuit brought by the Subcontractor, even though the suit was ultimately dismissed for a procedural error committed by the Subcontractor, because the duty to defend was triggered by the Subcontractor filing suit against the Commission regardless of the validity of the Subcontractor's claim.

This is an unreported opinion.  See Md. Rule 1-104.

The full opinion is available in pdf.

Host International, Inc. v. Maryland Transportation Authority (Cir. Ct. Balto. City)

Filed: November 5, 2012

Opinion by Judge Audrey J.S. Carrion

Held:  (1) The majority of Plaintiff’s claims failed because the disputed government contract was not “procurement” as defined by applicable statutes, regulations, and the Request for Proposal; (2) although the winning bid was not approved by one of three legislative committees before being awarded as required by statute, the court declined to void the contract for public policy reasons. 

Facts:  Plaintiff sued the Maryland Transportation Authority (“MTA”) and various administrative agency leaders, alleging that a public-private agreement to develop and operate two travel plazas was awarded improperly.  Plaintiff argued that the MTA’s award of the Interstate 95 Travel Plaza Redevelopment Public Private Partnership Lease and Concession Agreement (“I-95 P3”) was illegal under applicable procurement laws and regulations.  Plaintiff sought a declaratory judgment that the award of the I-95 P3 was null and void and imposing procedural requirements for a re-bidding process.  The MTA moved to dismiss.  After a thorough examination of the statutory, regulatory, and administrative law concepts controlling the dispute, the Circuit Court for Baltimore City dismissed Plaintiff’s complaint in its entirety with prejudice. 

Analysis: The I-95 P3 and other public-private partnerships like it are being used increasingly by state and local governments to develop infrastructure with less funding by “delegate[ing] project risks and construction management to private parties[.]”  With those goals in mind, the MTA sought a party to lease two travel plazas and “to enter into a concession agreement for thirty-five years, during which time the private-sector partner would be fully responsible for redeveloping and then maintaining and operating these travel plazas.”  The court noted that the contract was estimated to be worth approximately $400 million. 

          The court determined that the procurement laws and regulations at issue did not apply to MTA’s proposal and award of the I-95 P3.  Under those laws, a “procurement occurs where the State buys or temporarily obtains, as lessee, goods or services.”  Md. Code Ann., Transp. Art. §§ 11-101(m)(1)(i)-(ii).  Further, MTA regulations exclude “from procurement the occurrence when the State of Maryland leases its own property.”  COMAR 21.01.03.03(B)(1)(d) (2012).  Last, the court noted that the Request for Proposal, “which Plaintiff agreed to abide by in bidding for this P3 agreement,” was clear that the project would not be subject to procurement laws.  Thus, the court concluded, “the I-95 P3 lease of State travel plazas in exchange for revenue and other benefits is not covered by the term ‘procurement’ as defined by Maryland law and regulation.”

          The court dismissed with prejudice the majority of Plaintiff’s claims because the procurement laws and regulations the MTA allegedly violated did not apply to the I-95 P3 project.  The court dismissed other claims, such as biased and capricious action by the MTA, for incomplete factual pleading.  Plaintiff’s sole remaining claim was that the award was illegal and void because the MTA submitted it to only two of three legislative committees as required by the Maryland Code, Transportation Article § 4-406(f).  The court agreed that MTA failed to comply with the statute, but it invoked policy justifications in declining to void the award for a technical statutory violations.  The court reasoned: “Nothing in the record suggests that the public interest will be seriously harmed by the enforcement of this agreement as opposed to a rehashing of the bidding and award process.”  Further supporting the court’s conclusion was Plaintiff’s waiver of this claim by its failure to raise the issue during the bidding process.   

         

The full opinion is available in PDF.