Massachusetts Highway Department v. Perini Corp.

444 Mass. 366
CourtMassachusetts Supreme Judicial Court
DecidedMay 26, 2005
StatusPublished
Cited by27 cases

This text of 444 Mass. 366 (Massachusetts Highway Department v. Perini Corp.) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Massachusetts Highway Department v. Perini Corp., 444 Mass. 366 (Mass. 2005).

Opinion

Cordy, J.

An arbitration panel, commissioned to resolve certain disagreements between the public agencies overseeing the Central Artery/Tunnel Project (Massachusetts Highway Department and the Massachusetts Turnpike Authority, collectively, the project) and one of its general contractors, determined that it had the authority to hear the contractor’s claim to additional compensation for unexpected construction problems. The project disagreed and sought relief, including a stay of the arbitration proceedings in the Superior Court. That relief was denied and the complaints were dismissed. On appeal, the project argues that the judge was incorrect in his ruling that the arbitration panel had the authority to decide whether the contractor’s claim for additional compensation had ripened into a pending dispute before the panel’s term expired. We affirm the judge’s dismissal of the project’s complaints. The parties had agreed to arbitrate the claim, and the question when it matured into a pending dispute under the terms of the relevant agreements was procedural in nature. In the absence of an express agreement otherwise, such questions are within the authority of the arbitration panel to decide.

1. Background. In 1995, the Massachusetts Highway Department awarded Perini-Kiewit-Cashman Joint Venture (PKC) Public Construction Contract No. C11A1 (contract) for a portion of the project in Boston. The contract included the construction of a tunnel northbound on Interstate Route 93 from Kneeland Street to Congress Street, the reconstruction of the Massachusetts Bay Transportation Authority (MBTA) Red Line South Station, and the construction of a portion of the new MBTA Silver Line. The contract award amount was $377,933,000.

Before it was modified, as described below, division I, subsection 7.16, of the contract established a process for the resolution of disputes between the parties, which was to culminate in nonbinding arbitration before a three-person disputes review board (board). These individuals were to be highly qualified and to have substantial experience in the type of construction involved in the contract, in the interpretation of similar contracts, and in the resolution of construction claims. PKC and the project were each to appoint one member of the board, and these two members were to select another member, a [368]*368chairperson. The board members were to serve one-year terms, which automatically renewed unless either party elected otherwise. Members of the board not renewed were required to “complete consideration of any Disputes that were pending before the [board] at the time the non-renewal election was made” (emphasis added). The first board to convene under the agreement was replaced by a second board, which began its term on December 1, 1999.

Under this dispute resolution process, PKC would submit “claims” to the project director seeking “relief in any form arising out of or relating to” the contract. In the event that PKC disagreed with the director’s “Final Determination” regarding a claim,4 the claim became a “dispute,” which could be heard by the board. After hearing and consideration of the parties’ filings, the board would then submit its findings and recommendations to the director of the project, who would make a final decision on the dispute. The contract provided that the project director’s final decisions could be appealed to the board of commissioners of the Massachusetts Highway Department or to Superior Court.

As the work progressed, hundreds of specific issues related to the contract arose between the parties, and they ultimately agreed to modify the dispute resolution process to expedite consideration of those issues. In March, 1999, the parties executed a binding “Dispute Resolution Agreement” (agreement) to “supersede and/or supplement, where appropriate, the dispute resolution process” set out in the contract. The agreement empowered the board to adjudicate “any and all disputes” concerning claims that the parties listed in an exhibit (exhibit 1) attached to the agreement. It also provided that any decision of the board would be binding on the parties.5 A separate exhibit established “amended meeting rules” that set the board’s [369]*369schedule of meetings in relation to the receipt of the project’s “Final Determination” on a claim.6

One of the claims listed in exhibit 1 involved so-called “underpinning impacts.” In this claim, PKC sought to recover the difference between the estimated cost of the underpinning work prior to the contract award and the actual cost of the work that had been affected by unforeseen conditions encountered during construction.7 Included within the scope of the underpinning impacts claim were thirty-three individual claims totaling $20,000,0008 (collectively referred to herein as underpinning claim). On August 31, 2000, PKG formally submitted the underpinning claim to the project for its “review and final determination as to merit.” On October 11, PKG sent a letter to the project regarding the underpinning claim, with copies to the board, asserting its belief “that the Project does not intend to issue a Final Determination on this major claim within a reasonable period of time.” The letter further stated that “[t]he Project and PKC do not and cannot agree on the issue of whether a ‘Final Determination’ is a jurisdictional prerequisite for resolution of claims by the [board] under” the agreement, and [370]*370contended that “this dispute on ‘Final Determinations’ ... is subject to adjudication by the [board].” The letter concluded by requesting a meeting with the board to ascertain whether “a dispute exists between the parties relative to issuance of a Final Determination on [the underpinning claim] and that this claim is, in fact, a ‘Dispute’ between the parties subject to binding adjudication by the [board].” PKC also requested that the entire underpinning claim dispute be scheduled for the board’s January, 2001, hearing.

On October 12, 2000, the project elected not to renew the terms of the members of the board.9 On October 13, the project responded to PKC’s letter regarding the underpinning claim, stating that it had not yet completed its review of the claim because it needed additional information from PKC to do so. It also objected to PKC’s contention that PKC could bring the claim to the board before the project had issued a Final Determination.

Thereafter, and during the project’s review of the underpinning claim, the parties engaged in an active dispute before the board regarding the necessary procedural prerequisites for it to hear PKC’s claims under the agreement. On December 20, after a November hearing, the board issued Order 8, in which it concluded that “as a procedural requirement, Contractor claims must receive, in the absence of a contractual definition for ‘Final Determination’, an ‘effective denial’ by [the project] prior to [board] adjudication under the Binding Agreement.” It further concluded that such an “[e]ffective denial” could take the form of a “Final Determination” or a “ ‘deemed’ or ‘de facto’ denial resulting from the actions, inactions or apparent intentions of the Parties.” With specific reference to the underpinning claim, the order stated: “To date there has been no [project] denial of this claim. Although not a jurisdictional issue, the procedural step of an effective denial has not taken [371]*371place.

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Bluebook (online)
444 Mass. 366, Counsel Stack Legal Research, https://law.counselstack.com/opinion/massachusetts-highway-department-v-perini-corp-mass-2005.