Beka Industries, Inc. v. Worcester County Board of Education
18 A.3d 890
| Md. | 2011Background
- BEKA contracted with Worcester County Board of Education in 2004 for public school construction; lump-sum price $1,856,000 with three approved change orders increasing to $1,961,913.
- BEKA completed work by May 2006; County Board had paid $1,421,852 to BEKA by trial stage.
- BEKA sued for money damages; BEKA claimed about $1,157,053.75 total due (original contract plus additional alterations).
- County Board asserted a recoupment/back-charge defense totaling $531,979.52 and raised numerous defenses; trial court ultimately judgment for BEKA of $1.1 million (no fees or prejudgment/post-judgment interest).
- Court of Special Appeals reversed for new trial, citing evidentiary issues on recoupment and potential delay-damage issues; then this Court granted certiorari to address sovereign immunity and related questions.
- This Court held: (i) S.G. § 12-201(a) waives sovereign immunity for the Worcester County Board of Education on contract actions; (ii) § 12-203 provides a funding mechanism to satisfy judgments; (iii) § 5-518 does not apply to contract claims; (iv) recoupment evidence must be considered at a new trial; (v) no-damages-for-delay clause and Rule 2-522 issues must be readdressed on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does SG 12-201(a) waive sovereign immunity for a county board on contract actions? | BEKA asserts Board is a State unit; waiver applies to written contracts. | Board contends Board is not a State unit for waiver purposes. | Yes; SG 12-201(a) applies to the Board, waiving immunity in contract actions. |
| Does SG 12-203 provide funding for judgments under a waived sovereign immunity contract claim? | BEKA argues §12-203 funds final judgments; no proof required about funding at trial. | Board argued funding must be shown or proven; relying on Chesapeake Charter distinctions. | Yes; §12-203 provides a funding mechanism; BEKA need not prove funding at trial. |
| Does CJP 5-518 apply to contract claims against the Board? | BEKA contends §5-518(b)/(c) limits recovery based on insurance or $100,000 cap. | Board relies on Zimmer-Rubert that §5-518 applies to tort/insurable claims, not contract. | No; §5-518 does not apply to BEKA's contract claim. |
| Was the County Board’s recoupment defense properly considered given trial court rulings? | Court should allow recoupment evidence; pleadings preserved defense; trial court erred denying it. | BEKA argued recoupment was waived due to contract claims procedures and timeliness. | Recoupment evidence and defense must be addressed in a new trial; not barred as a matter of law. |
| Did the contract’s delay-damages provision preclude BEKA’s claims in light of Md. Rule 2-522 and contract language? | Some claims are delay-related; contract precludes delay damages, issue not clearly resolved by court. | Court of Special Appeals found no-damages-for-delay clause broad enough to bar BEKA claims. | Delay-damages issues must be reexamined; the court’s Rule 2-522 analysis and damages allocation require remand. |
Key Cases Cited
- Stern v. Board of Regents, 380 Md. 691 (2004) (establishes three-part Ruff/Stern framework for sovereign immunity and funding)
- Ruff v. Board of Education, 278 Md. 580 (1976) (three-part test for sovereign immunity and funding)
- Maas v. University of Md., 173 Md. 554 (1938) (Maas test on when funds must be appropriated to satisfy judgments)
- Chesapeake Charter v. Board of Ed., 358 Md. 129 (2000) (county boards are state-like but not general procurement units; procurement procurement scope)
- Chesapeake Charter (Board of Ed. v. Norville), 160 Md. App. 12 (2004) (hybrid nature of county boards of education)
- BeKA v. Worcester County Bd. of Ed., 190 Md. App. 668 (2010) (intermediate appellate reasoning on sovereign immunity waiver and funding; recoupment issues)
- Board v. RTK L Assoc., 380 Md. 670 (2004) (statutory immunity framework and procurement considerations)