Balfour Beatty Infrastructure, Inc. v. Mayor of Baltimore
2017 U.S. App. LEXIS 7252
| 4th Cir. | 2017Background
- BBII (successor to Fru-Con) contracted with the City of Baltimore to construct parts of a wastewater treatment system; contracts incorporated the City’s "Green Book" public-works specifications and dispute-resolution procedures.
- Contracts made time "of the essence" with a completion date of February 28, 2015 and authorized liquidated damages for daily delay, withheld from monthly payments.
- After alleged City design errors delayed work, the City assessed liquidated damages beginning March 2, 2015 and began deducting $40,000 per day across two contracts. Several BBII extension requests remained unresolved.
- BBII sued the City in federal court for breach of contract, alleging the City improperly assessed liquidated damages without first using the Green Book administrative process and thus acted ultra vires, and contending that requirement should be excused.
- The district court dismissed for lack of subject-matter jurisdiction because BBII failed to exhaust the contractually mandated administrative remedies; BBII appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BBII had to exhaust the Green Book administrative remedies before suing | BBII: City abandoned/acted ultra vires re: administrative process, so BBII excused from exhaustion | City: Contracts require contractor exhaustion; administrative process governs contractor claims and remains available | Held: BBII must exhaust administrative remedies before court; dismissal affirmed |
| Whether the "palpably without jurisdiction" exception excuses exhaustion | BBII: City acted palpably without jurisdiction by taking damages without following Green Book | City: The Department of Public Works has authority to hear and resolve such disputes | Held: Exception inapplicable — agency has authority to hear claims; not palpably without jurisdiction |
| Whether alleged ultra vires or illegal agency action excuses exhaustion | BBII: City’s actions were illegal/ultra vires so exhaustion should be excused | City: Interpretive dispute about agency authority should be decided administratively first | Held: Ultra vires allegation does not excuse exhaustion under Maryland law; agency must first decide interpretation |
| Whether alleged bias/predetermination by City excuses exhaustion | BBII: City officials biased; administrative forum would be futile/predetermined | City: Alleged bias is conclusory and cannot automatically defeat exhaustion requirement | Held: No adequate factual showing of bias; bias claim insufficient to bypass exhaustion |
Key Cases Cited
- Heery Int’l, Inc. v. Montgomery Cty., Md., 862 A.2d 976 (Md. 2004) (Maryland law requires exhaustion of administrative remedies; defines "palpably without jurisdiction" exception)
- State v. Md. State Bd. of Contract Appeals, 773 A.2d 504 (Md. 2001) (explains when administrative tribunal lacks jurisdiction and exhaustion is unnecessary)
- United Ins. Co. of Am. v. Md. Ins. Admin., 144 A.3d 1230 (Md. 2016) (recognizes futility-based exhaustion exception where agency cannot provide a remedy)
- McCarthy v. Madigan, 503 U.S. 140 (U.S. 1992) (futility/exception to exhaustion where agency cannot grant effective relief)
- Soley v. State Comm’n on Human Relations, 356 A.2d 254 (Md. 1976) (holds ultra vires or illegal agency acts do not automatically excuse exhaustion)