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Contractor Cannot Sue DCAM Seeking Money Damages for Denial of Certification - Construction Law Group News

January 15, 2014

The Massachusetts Court of Appeals has held that a contractor aggrieved by DCAM’s denial of its annual application for certification to bid on public building construction projects cannot sue DCAM seeking money damages. In Mello Constr., Inc. v. Div. of Capital Asset Management, 84 Mass.App.Ct. 625 (2013), the contractor, Mello Construction, Inc. (“Mello”), a general contractor specializing in large public construction projects, applied for its annual DCAM certification pursuant to M.G.L. c. 149. DCAM denied Mello’s application for certification citing Mello’s (1) failure to achieve a minimum average project rating; (2) receiving failing scores on two different projects; (3) failure to disclose that it was terminated from a project; and (4) failure to disclose the invoking of a performance bond. Mello sought reconsideration and had a hearing before the Attorney General, which agreed with DCAM that the denial of Mello’s application was proper. Mello then filed suit against DCAM seeking money damages. In response to Mello’s Complaint, DCAM filed a motion seeking to have the matter proceed pursuant to a writ of certiorari, a procedure used to correct errors in judicial or quasi-judicial proceedings. Both Mello and DCAM then filed motions for judgment on the pleadings. The Superior Court denied Mello’s Motion, granted DCAM’s Motion, and dismissed the Complaint. Mello then commenced this appeal.

Massachusetts General Laws Chapter 149 § 44D(4) provides that a party aggrieved by the Attorney General’s review of a DCAM denial of a certification may seek “remedies at law.” In this case the Court of Appeals held that “remedies at law” does not include the right to bring suit for money damages. In rendering its holding, the Court found that the Commonwealth did not waive its sovereign immunity and that the legislative intent was not to provide for a private right of action. The Court also held that no such cause of action for money damages existed under the common law. The proper course of action for a contractor whose certification was denied by DCAM and such denial was affirmed by the attorney general, was to pursue a writ of certiorari.

Turning to the merits of Mello’s claims, the Court reached the same conclusion as the Superior Court did – that DCAM’s denial of Mello’s application was not arbitrary or capricious. The negative evaluations of Mello’s past work and its failure to disclose relevant information in its application served as a sufficient basis to deny Mello’s application for certification. The court rejected Mello’s argument that the reviews completed by parties in litigation with Mello were inherently unreliable. In doing so the Court pointed out that the litigation was disclosed in the review, the reviewers were involved in the project and had personal knowledge, each review contained specific examples of performance problems and deficiencies with detailed descriptions, and each review was certified as “a true analysis of the contractor’s performance record.” The Court also found support for the denial in the fact that Mello failed to disclose that it was terminated from a project and that a performance bond had been invoked against it.

The takeaways here are that DCAM may deny certifications based on poor performance reviews and the failure to disclose information requested in the application. In addition, a contractor seeking to appeal a DCAM decision, after first following the administrative appeals procedures, cannot bring suit for money damages and may only seek a writ of certiorari.

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