John Cogliano
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To:
Acting Secretary John Ziemba, EOT
Through:
Commissioner John Cogliano, MHD
From:
Stephen H: Clark, Administrative Law Judge
Date:
April II, 2005
Re:
Repnrt and Recommendation
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I am pleased to submit for your consideration and approval the attached report
and recommendation.
Kinoo, Inc. (KinDo), a subcontractor to Bechtel, Parsons, and
Brinckerhoff (BIPB) in MHD contracts 1196159 and #30103 for
management consultant services, appealed from audit results.
The appeals should both be dismissed because Kinoo bas filed
an action in Superior Court (SUCY 2005-0953) to litigate
identical claims against the Department, as well as additional
claims against BIPB and tbe Massachusetts Turnpike
Authority. Dismissal of both Kinoo's pending appeals in this
office is appropriate because only the Attorney General of the
Commonwealth may DOW conduct the litigation of the Kinoo
claims.
Massachusetts Highway Department· Ten Park Plaza, Boston, MA 02116-3973' (617) 973-7800
STATEMENT OF THE APPEAL
Kinoo, Inc. (Kinoo), a subcontractor providing management consultant services to
Bechtel Parsons Brinkerhoff (B/PB) on the Central Artery Tunnel project (CA/T),
purportedly appealed an adverse decision of the CA/T director to the Office of the
Administrative Law Judge (ALJ) on August 3, 2004. The CA/T director’s decision
upheld the application of a $90,000 salary cap to calculate Kinoo’s indirect cost rate for
fiscal years 1999-2001 on Massachusetts Highway Department (Department) contract
#96159-018 executed December 12, 1996 (1996 Contract). Kinoo also appealed the
decision of the CA/T’s director to set off $51,630 that Kinoo claims CA/T owed it under
Department contract #30103-013 (2001 Contract) to reduce the disputed amount owed to
the Department under the 1996 Contract. The Department’s 1996 Contract and the 2001
Contract were made with B/PB, not subcontractor Kinoo. B/PB has not filed an appeal
arising from either the 1996 Contract or the 2001 Contract to the office of the
Administrative Law Judge (ALJ).1
Kinoo, a “disadvantaged business enterprise,” so-called, asserts that applying the
$90,000 salary cap resulted in a disallowance of $209,950 as a result of the audit findings
of the Department, as affirmed by the CA/T project director; and Kinoo asserts that, in
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Kinoo also purportedly filed an appeal at the office of the ALJ on January 7, 2002 from the CA/T project
director’s adverse decision dated June 19, 2001 with respect to the 1996 Contract. The CA/T project chief
counsel on June 19, 2001 wrote Kinoo’s counsel stating in part that “[i]f Kinoo, Inc. wishes to pursue this
matter further, it may assert a formal claim with Peter Milano, Administrative Law Judge, Massachusetts
Highway Department.” No basis was cited in the letter giving the ALJ jurisdiction over a subcontractor
appeal. Kinoo’s counsel on January 7, 2002 filed a copy of its letter of even date to B/PB (blind copy to
ALJ) stating, “I understand the B/PB, a general contractor, will submit the claim to the Massachusetts
Highway Department.” Kinoo’s counsel apparently filed an unsigned Statement of Claim at the office of
the ALJ on January 7, 2002 with its letter to B/PB. The record at the office of the ALJ is devoid of any
submission by B/PB in the nature of a Kinoo “pass through” claim arising from the 1996 Contract. Kinoo’s
Statement of Claim purportedly filed with respect to the 1996 Contract is unsigned.
the absence of the $90,000 salary cap, it is owed an additional $699,667 under its
subcontract with BPB for the years 1996 through 2004.
The CA/T project director’s decision was made by letter dated July 20, 2004.
Kinoo’s counsel filed a notice of appeal at the Office of the Administrative Law Judge on
August 3, 2004. Thereafter, on December 29, 2004, Kinoo filed a Statement of Claim.
The ALJ has taken no action on either Kinoo’s 2002 appeal or Kinoo’s 2004 appeal.
B/PB has not appeared or filed any papers at the Office of the ALJ with respect to
Kinoo’s 2002 or 2004 appeal.
On March 1, 2004 the undersigned was appointed Chief Administrative Law
Judge. On July 21, 2004, through St. 2004, c. 196, s. 5 (Act), the Legislature abolished
the Board and, so far as is pertinent here, conferred its prior functions on the Secretary of
Transportation and the Commissioner of the Department (Commissioner). See G.L. c.16,
s. 1(b), as appearing in the Act. This report and recommendation is made through the
Commissioner to the Secretary.
On September 2, 2004 Kinoo filed a complaint in the Superior Court, SUCV20050953, asserting claims against the general contractor B/PB, the Massachusetts Turnpike
Authority (MassPike) and the Department. In its action Kinoo asks for a jury trial to
determine damages allegedly suffered, in part, because the Department’s audit results.
The complaint seeks a declaratory judgment that MassPike and Department cannot
withhold sums due under the 2001 Contract that are in dispute under the 1996 Contract.
Kinoo also seeks judgment under G.L. c.93A against the defendants, and the award of
double or treble damages plus attorneys’ fees.
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DISCUSSION
The question presented is whether Kinoo’s pending administrative appeal(s)
arising under either the 1996 Contract or the 2001 Contract should be dismissed because
Kinoo has filed an action in the Superior Court seeking relief on identical claims against
the Department, MassPike and B/PB. The Attorney General of the Commonwealth
represents the Department in Kinoo’s Superior Court action.
I conclude that Kinoo’s administrative appeal in the Department should be
dismissed. Any action taken by the ALJ in hearing or deciding Kinoo’s pending
administrative appeal(s) will conflict with the functions of the Attorney General. As a
matter of policy, neither the ALJ nor the Department should prepare, hear or decide any
appeal of a claim where an identical or related claim has been filed in the Superior Court.
The Attorney General has exclusive jurisdiction to appear for the Department “in
all suits … in which the commonwealth is a party or interested, or in which the official
acts and doings of said [Department] … are called in question, in all the courts of the
commonwealth …. All such suits and proceedings shall be prosecuted or defended by
him or under his direction.” G.L. c. 12, s.3. In the exercise of his statutory and
Constitutional powers, the Attorney General assumes primary control over the conduct of
litigation that involves the interests of the Commonwealth; under his powers in so doing
he decides matters of legal policy normally reserved to a client in the ordinary attorneyclient relationship. See Feeney v. Commonwealth, 373 Mass. 359 (1977). The Attorney
General has the incidental power to compromise or settle matters in which the
commonwealth is a party or interested. See 6 Op. Atty. Gen. 1921, p. 169. The
Department, through proceedings before its Administrative Law Judge, should refrain
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from any action that could even potentially interfere with the Attorney General’s conduct
of identical or related litigation.
Kinoo’s action in Superior Court against the Department raises claims materially
identical to the claims it has purportedly raised in its 2002 and 2004 appeals to the office
of the ALJ. Because only the Attorney General may conduct litigation filed against the
Department, any hearing or report on the merits of Kinoo’s administrative law appeal will
necessarily conflict with the Attorney General’s exclusive statutory and constitutional
authority.
Practitioners before the Office of the Administrative Law Judge understand that
the filing of a court action results in the dismissal of a similar pending administrative
appeal on the same subject matter. With respect to the Department, the report of the “20th
Annual Conference on Massachusetts Construction Law” states (at page III-5):
It should be noted further that wherever a claim is asserted in a
court action, the MHD Hearing Officer … will refuse to entertain
such claim. Accordingly, no action can be brought in court on any
claim which is pending before the MHD Hearing Officer or it will
be immediately be dismissed by the MHD Hearing Officer.
Accordingly, Kinoo’s appeal under both the 1996 Contract and the 2001 Contract
should be dismissed.
RECOMMENDATION
The Secretary should dismiss all appeals of Kinoo pending at the Office of the
Administrative Law Judge.
Respectfully submitted,
Stephen H. Clark
Administrative Law Judge
Dated: April 12, 2005
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