Unfavorable feedback from past projects gave plenty of reason for the State to knock a contractor off the list of those eligible to do State construction work.  Negative reviews are hard to shake, especially plausible ones.

In a recent Massachusetts case, Mello Construction Inc. v Division of Capital Asset Management 84 Mass App Ct 625 (2013) the contractor not only challenged the decision, it wanted to sue the denial-issuing state agency for money in a jury trial.  The Court reviewing the matter denied the suit and upheld the disqualification. 

FACTS   Eligibility to perform public construction in Massachusetts depends on written performance evaluations involving a numerical rating system. Bidders for public work are chosen from lists of contractors who have established qualifications to become eligible.  Mello was so certified annually for almost 20 years.

Two negative contractor evaluations made it to Mello’s record.  Architects and local public project managers rated Mello by interviews and under a point system.  The litany of complaints would be familiar to any experienced construction lawyer: unreasonable pursuit of change orders, poor management of subcontractors, sub-standard jobsite superintendents.   

While Mello had been terminated from a public job its certification application omitted this fact.

The contractor submitted lengthy rebuttals of allegedly biased evaluations. The contractor was in litigation and arbitration with two of the past project evaluators. The contractor’s explanations for all these things the Court characterized as “gloss”. 

The state agency did meet with Mello before the decision and heard its view. Mello challenged the denial of its right to bid public work, first internally through the State administrative system.  Still unsatisfied, Mello turned to the Courts and sought a jury trial against the State agency who issued the denial.

ISSUE    May a General Contractor sue the State agency for money damages for a discretionary denial of the contractor’s application to become certified as eligible to bid on public projects?

HOLDING – No. No private right of action is permitted against a State agency for a jury trial challenge seeking money damages based on a denial of eligibility under discretionary authority granted by law.

REASONS – The law and regulations did not waive the State’s presumptive immunity from suit.  Courts reviewing administrative overreach modify or annul the government decisions; they do not typically expose a co-equal branch to money damage claims.  For instance, there is no right to sue for money for the improper denial of a license. The law did allow for private rights against any individual who submitted a wanton or reckless evaluation. 

Eligibility must be denied under some conditions, other reasons may justify a discretionary denial.  Terminations for cause and sub-standard project ratings permit denial under the lengthy regulations

Looking at the record the Appeals Court decided the original certification denial was not arbitrary or capricious. Mello was in the midst of arbitration and litigation with two of the reviewers.  Mello argued their views were biased.  The State agency could permissibly consider them reliable the Appeals Court found.

Mello’s failure to include and disclose information was also a proper basis for declining certification.   

CHUCK COBB’S COMMENTARY – This facts and baggage trailing this contractor made it badly suited to challenge the way the ratings were applied.