CONSTRUCTION COMPANY INC v. MASSACHUSETTS WATER RESOURCES AUTHORITY (2012)

MEMORANDUM OF DECISION AND ORDER ON THE PARTIES' MOTIONS FOR SUMMARY JUDGMENT

The plaintiff, D & C Construction Company, Inc. (“D & C”), brought this action against the

defendant, the Massachusetts Water Resources Authority (“MWRA”), claiming that it is owed the balance of unexpended funds remaining in a $200,000 allowance.   The matter is before the court

on the parties' Motions For Summary Judgment.

Pursuant to Article 19 of the contract, the decision of the Engineer with respect to any and all claims shall be final and conclusive, provided that any party may file an action challenging the decision of the Engineer.   Article 19 further states that the decision of the Engineer shall be final and binding upon the contractor, unless the contractor gives written notice to the MWRA and to the Engineer of its objection to such decision within ten (10) days after receipt by the contractor of the Engineer's decision.   If the contractor fails to give notice of objection to the Engineer's decision within such a ten-day period, it shall be conclusively deemed to have waived its right to object such a decision.

General Laws c. 30, § 39J, provides a limited review of the Engineer's decision.   Under § 39J, the decision shall be final unless it is made “in bad faith, fraudulently, capriciously, or arbitrarily ․ or is based upon an error of law.”   An engineer's decision must be upheld if it is “plausible and cannot be characterized as having no rational basis.”  Ostrow Electrical Co. v. J.L. Marshall & Sons, Inc., 59 Mass.App.Ct. 816, 820–821 (2003).

Here, the court finds that the Engineer's decision is not based upon an error of law.   The court credits the Engineer's determination that “allowance” is a commonly used term whose purpose is to balance the risk for all bidders when it is known that an item of work will be performed, but the exact amount of work is unknown.   In this case, rainfall events would determine whether or not it would be necessary to utilize the overflow allowance.   It is undisputed that D & C was paid all of the costs it incurred in relation to the overflow allowance.   Furthermore, under Bid Item No. 1, the contract states that payment for the lump sum bid shall be full compensation for all mobilization and demobilization, labor, equipment, materials, tools and supervision to complete all work other than included in Bid Item 2. While D & C argues that the term lump sum indicates that it is entitled to the entire $200,000 allowance, given the common use of the term allowance, as well as the language governing payment in the contract, the court finds that is plausible that contract terms meant payment will be based on D & C's actual costs.   Given that the court finds that the Engineer's decision had a rational basis, pursuant to the Article 19 of the contract, the decision is final.

ORDER

For the foregoing reasons, it is hereby ORDERED that D & C's Motion for Summary Judgment be DENIED and MWRA's Motion for Summary Judgment be ALLOWED.

Paul E. Troy Justice of the Superior Court