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A.L. Prime Energy Consultant, Inc. v. Massachusetts Bay Transportation Authority (Lawyers Weekly No. 12-052-17)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION 1684CV05562 A.L. PRIME ENERGY CONSULTANT, INC. vs. MASSACHUSETTS BAY TRANSPORTATION AUTHORITY RESERVIATION AND REPORT OF AN INTERLOCUTORY ORDER TO THE APPEALS COURT This action arises out of a contract between the plaintiff, A.L. Prime Energy Consultant, Inc. (Prime), and the defendant, Massachusetts Bay Transportation Authority (MBTA) for the supply of Ultra Low Sulfur Diesel Fuel (ULSDF) (the Supply Contract), and the unilateral termination of the Supply Contract by the MBTA. Prime asserts, among other claims, that the MBTA breached the Supply Contract by terminating it before its end date. Factual Background Prime was awarded the Supply Contract on July 1, 2015, after a public bidding process. It was to continue for a period of two years. The Supply Contract contained a so-called “termination for convenience” provision that states: Termination for Convenience. The Authority [MBTA] may, in its sole discretion, terminate all or any portion of this Agreement or the work required hereunder, at any time for its convenience and/or for any reason by giving written notice to the Contractor [Prime] thirty (30) calendar days prior to the effective date of termination or such other period as is mutually agreed upon in advance by the parties. If the Contractor is not in default or in breach of any material term or condition of this Agreement, the Contractor shall be paid its reasonable, proper and verifiable costs in accordance with generally accepted government contracting principals as set forth in the Federal Acquisition Regulations, including demobilization and contract closeout costs, and profit on work performed and Accepted up to the time of termination to the extent previous payments made by the Authority to the Contractor have not already done so. Such payment shall be the Contractor’s sole and exclusive remedy for any Termination for Convenience, and upon such payment by the Authority to the Contractor, the Authority shall have no further obligation to the Contractor. The Authority shall not be responsible for the Contractor’s anticipatory profits or overhead costs attributable to unperformed work. On July 12, 2016, the MBTA terminated the Supply Contract pursuant to the termination for convenience clause quoted above. In its complaint, Prime alleges that the sole reason for the MBTA’s exercise of the termination for convenience clause was that it had learned that it could obtain ULSDF at a cheaper price from another vendor. It contends that an agency’s right to invoke termination for convenience clauses is limited by principles of bad faith and abuse of discretion and, under these principles, a government agency is not permitted to cancel a contract solely to enable it to purchase the same […]

A.L. Prime Energy Consultant, Inc. v. Massachusetts Bay Transportation Authority (Lawyers Weekly No. 12-052-17)

A.L. Prime Energy Consultant, Inc. v. Massachusetts Bay Transportation Authority (Lawyers Weekly No. 12-027-17)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss.SUPERIOR COURT CIVIL ACTION 1677CV01366 A.L. PRIME ENERGY CONSULTANT, INC. vs. MASSACHUSETTS BAY TRANSPORTATION AUTHORITY MEMORANDUM OF DECISION AND ORDER ON DEFENDANT’S MOTION TO DISMISS In July 2016, defendant Massachusetts Bay Transportation Authority (MBTA) terminated its two-year fuel supply agreement with plaintiff A.L. Prime Energy Consultant, Inc. (Prime). The MBTA explained that thetermination was made pursuant to its exercise of a contractual right that permitted termination for convenience.The MBTA terminated the contract in order to take advantage of cost savings it believed it could achieve by purchasing fuel through the Commonwealth’s existing statewide fuel contract. Prime alleges that the MBTA abused its discretion when it invoked the termination for convenience provision and that therefore the MBTA is liable for breach of contract and breach of the covenant of good faith and fair dealing. The matter is now before the Court on the MBTA’s motion to dismiss pursuant to Mass. R. Civ. P. 12(b)(6). For the reasons that follow, the motion is DENIED. BACKGROUND The following facts are drawnfrom the allegationsin Prime’s complaint, which are accepted as true for the purposes of this motion, the exhibits attached to the complaint, and matters of public record appropriate for judicial notice. SeeSchaer v. Brandeis Univ., 432 Mass. 2 474, 477 (2000); Waterson v. Page, 987 F.2d 1, 3-4 (1stCir. 1993).1 1 At the hearing on the motion, the Court asked the parties to agree on a stipulated statement of facts regarding whether and to what extent the Commonwealth’s statewide fuel contract was in effect during the relevant periodand available to the MBTA. The parties were not able to do so. Nevertheless, in lieu of the joint statement, the MBTA submitted a Supplemental Statement of Facts in Support of its Motion to Dismiss. The Court accepts some of the facts set outin the statement in this background sectionbecause they are found either in the complaint, its exhibits, public records, or Massachusetts acts and regulations. 2 The ULSD delivery locations for the MBTA arewithin zone 1. 3 The MBTA initially awarded the contract to Sprague Oil but Prime successfully appealed the award. Because of the delay resulting from the appeal, Prime’s first delivery was made on September 1, 2015. The MBTA agreed that the two-year contract period originally scheduled to begin on July 1, 2015 would begin on September 1, 2015. On January 15, 2015, the MBTA’s Materials Management Department issued an Invitation for Bids (IFB) for the supply of Ultra Low SulfurDiesel Fuel (ULSD). The IFB provided that the contract would have a two-year term. A few months later, the Operation Services Division of the Commonwealth’s Executive Office of Administration and Finance (OSD), which is responsible for establishing […]