Court Opinion

ID: 4272175
Source: CourtListenerOpinion
Date Created: 2018-05-03 13:07:21.395823+00
Date Added: 2024-06-11T14:32:44.595736
License: Public Domain

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SJC-12370

   A.L. PRIME ENERGY CONSULTANT, INC. vs. MASSACHUSETTS BAY
                    TRANSPORTATION AUTHORITY.

            Suffolk.    January 5, 2018. - May 2, 2018.

   Present:    Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher,
                           & Kafker, JJ.

Massachusetts Bay Transportation Authority, Contract. Contract,
     Termination, Contract clause, Performance and breach,
     Implied covenant of good faith and fair dealing.

     Civil action commenced in the Superior Court Department on
September 6, 2016.

     A motion to dismiss was heard by Mitchell H. Kaplan, J.,
and a question of law was reported by him to the Appeals Court.

     The Supreme Judicial Court granted an application for
direct appellate review.

     Kevin P. Martin (Joshua J. Bone also present) for the
defendant.
     Michael P. Murphy for the plaintiff.

    LENK, J.    This case concerns the proper construction of the

termination for convenience clause in a contract between the

Massachusetts Bay Transportation Authority (MBTA) and A.L. Prime
                                                                   2

Energy Consultant, Inc. (Prime), a private fuel supplier.     A

termination for convenience clause permits a contracting public

entity, under certain circumstances, to cancel a procurement

contract without exposure to liability for breach of contract.

See Maxima Corp. v. United States, 847 F.2d 1549, 1552 (Fed.

Cir. 1988).   Termination for convenience clauses originated in

Federal procurement contracts, and have given rise to a body of

Federal case law defining Federal entities' termination rights.

Some State and municipal procurement contracts also contain

termination for convenience clauses, but the case law

interpreting them is sparse.   As a result, some State courts

have looked to Federal precedent for guidance when construing a

termination for convenience clause in a State or municipal

procurement contract.

    We are asked to determine first, whether, in Massachusetts,

a termination for convenience clause in a State or municipal

procurement contract should be construed according to Federal

precedent; and second, if not, whether Massachusetts law permits

a State or municipal public entity to invoke a termination for

convenience provision solely to obtain a more favorable price.

This dispute began when the MBTA terminated the MBTA-Prime

contract (contract), in order to procure fuel more economically

through an existing Statewide contract with a different vendor.

Prime filed a complaint against the MBTA for breach of contract
                                                                   3

and breach of the implied covenant of good faith and fair

dealing, claiming that the MBTA's termination must be evaluated

according to Federal case law.   Prime further argued that, under

Federal precedent, a public entity may not invoke a termination

for convenience clause solely to secure a lower price.   A

Superior Court judge agreed, and denied the MBTA's motion to

dismiss Prime's complaint.   The judge then granted the MBTA's

motion to report the case for interlocutory review pursuant to

Mass. R. Civ. P. 64, as amended, 423 Mass. 1410 (1996), and we

allowed the MBTA's motion for direct appellate review.

    The Federal standard for construing a termination for

convenience provision in a governmental procurement contract

departs from the general rule that contracts must be enforced

according to their plain meaning.   We decline to import this

Federal case law, which conflicts with Massachusetts precedent

indicating that basic contract principles determine the proper

construction of a termination for convenience clause.    We

conclude that a State or municipal entity may terminate a

procurement contract for its convenience in order to achieve

cost savings, where, as here, the contractual language permits,

and in the absence of contrary applicable law.   As a result, we

conclude further that the Superior Court judge erred in denying

the motion to dismiss on the ground that a public entity may not

invoke a termination for convenience clause in a State or
                                                                   4

municipal public procurement contract in order to secure a lower

price.

    1.   Background.   We summarize the facts alleged in the

plaintiff's complaint, Polay v. McMahon, 468 Mass. 379, 382

(2014), as well as relevant "matters of public record, orders,

items appearing in the record of the case, and exhibits attached

to the complaint" (citation omitted).   Schaer v. Brandeis Univ.,

432 Mass. 474, 477 (2000).

    In January, 2015, the MBTA issued an invitation for bids to

supply it with ultra low sulfur diesel fuel (ULSD) for two

years.   The MBTA's procurement of the ULSD was supported with

Federal assistance awarded by the Federal Transit

Administration.   See note 10, infra.   The MBTA attached to its

invitation for bids the entire contract that the successful

bidder would sign with the MBTA.   This contract included the

following provision, entitled "Termination for Convenience":

         "Termination for Convenience. The [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 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 principles as set forth in the Federal
    Acquisition Regulations, including demobilization and
    contract closeout costs, and profit on work performed
                                                                  5

     and Accepted up to the of termination to the extent
     previous payments made by the [MBTA] 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 [MBTA] to the Contractor, the [MBTA] shall have no
     further obligation to the Contractor. The [MBTA]
     shall not be responsible for the Contractor's
     anticipatory profits or overhead costs attributable to
     unperformed work." (Emphasis supplied.)

     In July, 2015, the MBTA awarded the ULSD contract to

Prime, and agreed that the contract would take effect in

September of that year.1    July, 2015, also saw the creation

of the Fiscal and Management Control Board through

legislative enactment.     See St. 2015, c. 46, §§ 199-208.

This body is charged with, among other things, securing the

fiscal stability of the MBTA.    See St. 2015, c. 46,

§ 200 (f).

     Separately, in May, 2015, the Commonwealth issued a

request for response (RFR) seeking bids for a Statewide

supply of ULSD for executive branch agencies.    Dennis

Burke, Inc. (Burke), was the successful bidder, and

executed a contract with the Commonwealth in June, 2015.

         Almost one year later, in April, 2016, the MBTA told Prime

that the MBTA could achieve cost reductions by opting into the

     1 The Massachusetts Bay Transportation Authority (MBTA)
initially had awarded the contract to a different bidder. A.L.
Prime Energy Consultant, Inc. (Prime), appealed from this
decision on the ground that it was based on incorrect price
calculations, and subsequently was awarded the contract.
                                                                     6

Statewide ULSD contract with Burke.    On July 12, 2016, the MBTA

notified Prime in writing that it intended to terminate the

contract, pursuant to the termination for convenience provision,

effective August 15, 2016.    Later that month, Prime demanded

that the MBTA rescind its termination of the contract.    The MBTA

replied in August that its termination was proper, and would

allow the MBTA to "utiliz[e] economies of scale available

through the Commonwealth's existing blanket fuel contract," and

encouraged Prime to submit a termination claim.2

     In September, 2016, Prime filed a complaint against the

MBTA in the Superior Court.   The complaint asserted claims for

breach of contract and breach of the implied covenant of good

faith and fair dealing, and sought "compensatory damages, costs

of suit, reasonable attorney[']s fees, interest, and such

further relief as the court may deem just and equitable."

Although Prime's complaint suggests that the MBTA incorrectly

calculated its potential cost savings, its claims rest on the

premise that the MBTA terminated the contract in order to secure

a lower price for ULSD through the Statewide contract.

     In October, 2016, the MBTA moved to dismiss the complaint

pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974).

     2 The record is silent as to whether the MBTA paid Prime the
reimbursement costs required in the event of a termination for
convenience, but Prime has not alleged that the MBTA failed to
provide this payment.
                                                                     7

In March, 2017, a Superior Court judge denied the motion.     The

judge's decision was based on Federal case law interpreting

termination for convenience clauses in Federal procurement

contracts.   The judge reasoned that, under that precedent, Prime

could show that the MBTA acted improperly if Prime proved that

the MBTA had terminated the contract solely to obtain a better

price from another contractor.

     In April, 2017, the MBTA filed a motion for reconsideration

or, in the alternative, to report the case for interlocutory

review pursuant to Mass. R. Civ. P. 64.   The judge denied the

motion for reconsideration but allowed the rule 64 motion.     The

judge stayed all proceedings in the Superior Court pending

interlocutory appeal, and reported the following question to the

Appeals Court:

          "May a government agency[3] invoke a termination for
     convenience clause contained in a procurement contract for
     the purchase of goods for the sole reason that it has
     learned of an opportunity to purchase the same goods at a
     lower price from another vendor?"

We allowed the MBTA's application for direct appellate review.4

     3 Although the MBTA is a political subdivision akin to "a
county, a regional school district, or a fire, improvement, or
incinerator district," see Massachusetts Bay Transp. Auth. v.
Boston Safe Deposit & Trust Co., 348 Mass. 538, 543 (1965);
G. L. c. 161A, § 2, we construe the reported question as
applying to the MBTA.

     4 Although the trial judge's report takes the form of a
question of law, we evaluate the propriety of the judge's
decision denying the MBTA's motion to dismiss. See Maher v.
                                                                      8

    2.   Discussion.    We are asked to determine, as a matter of

first impression, whether to construe a termination for

convenience clause in a State or municipal public procurement

contract according to Federal case law concerning such clauses

in Federal procurement contracts.   We first discuss this

precedent, which provides that a court must evaluate whether a

Federal government entity acted in bad faith or abused its

discretion in terminating for its convenience.    See, e.g.,

Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1541 (Fed.

Cir. 1996), cert. denied, 520 U.S. 1210 (1997) (Krygoski).       We

then compare the Federal standard to our own jurisprudence,

which indicates that a termination for convenience clause in a

public procurement contract should be interpreted under "general

contract principles."   See Morton St. LLC v. Sheriff of Suffolk

County, 453 Mass. 485, 490 (2009) (Morton St.).    Because the

State and Federal approaches cannot be reconciled, we conclude

that Massachusetts law must determine the proper construction of

a termination for convenience clause.

    In this case, the contract unambiguously vests the MBTA

with the discretion to terminate "for any reason," a phrase

which necessarily includes the decision to cut costs.     We

identify nothing in Massachusetts law to indicate that this,

Retirement Bd. of Quincy, 452 Mass. 517, 522 n.9 (2008), cert.
denied, 556 U.S. 1166 (2009); Mass. R. Civ. P. 64, as amended,
423 Mass. 1410 (1996).
                                                                    9

standing alone, is an impermissible reason to terminate a

contract for convenience.    Nor does construing the termination

for convenience provision as written render the contract

illusory, because the contract required the MBTA to provide

Prime with valuable consideration, and placed certain

restrictions on the MBTA's termination right.    As a result, we

conclude that Prime has not alleged sufficient facts to

demonstrate that the MBTA committed a breach of the contract or

the implied covenant of good faith and fair dealing.     The

Superior Court judge therefore erred in denying the MBTA's

motion to dismiss on the ground that Prime had not stated a

viable claim upon which relief could be granted.

    a.   Standard of review.    We review an order on a motion to

dismiss de novo.   See Galiastro v. Mortgage Elec. Registration

Sys., Inc., 467 Mass. 160, 164 (2014); Shapiro v. Worcester, 464
Mass. 261, 266 (2013).     Factual allegations are sufficient to

survive a motion to dismiss if they plausibly suggest that the

plaintiff is entitled to relief.    Iannacchino v. Ford Motor Co.,

451 Mass. 623, 636 (2008).    Resolution of this case turns on the

proper construction of the contract before us; this is a

question of law, which we also review de novo.     See James B.

Nutter & Co. v. Estate of Murphy, 478 Mass. 664, 667 (2018).

    b.   Applicable law.     We first must determine whether to

construe the termination for convenience provision according to
                                                                    10

Federal precedent.    Certain background is helpful in

understanding Prime's argument that Federal law should guide our

analysis.

    In general, a termination for convenience clause permits a

contracting public entity, under certain circumstances, to

cancel a procurement contract without exposure to liability for

breach of contract.   See Maxima Corp., 847 F.2d at 1552.    If a

public entity properly invokes a termination for convenience

clause, the contractor is not entitled to common-law damages;

rather, the remedy is limited to "costs incurred, profit on work

done and the costs of preparing the termination settlement

proposal" (citation omitted).   Id.   The concept of terminating a

procurement contract for the Federal government's convenience

developed during the Civil War, as a way to avoid military

procurement costs following the completion of a war effort.        See

Krygoski, 94 F.3d at 1540.   Congress subsequently enacted new

legislation governing terminations for convenience after each of

the World Wars.   See id. at 1541.    By the end of the Twentieth

Century, the principle had been extended beyond the military

context, and Federal law required that many Federal procurement

contracts contain a termination for convenience clause.      See

id.; 48 C.F.R. § 49.502.   Indeed, Federal regulations now

provide uniform language for termination provisions that must be

included in certain Federal procurement contracts, permitting
                                                                  11

termination when it is "in the Government's interest."

48 C.F.R. §§ 52.249-1 to 52.249-6.5

     Judicial interpretation of this language has evolved along

with the changes in statutory and regulatory requirements,

primarily in the United States Court of Appeals for the Federal

Circuit and the Court of Claims, which was the predecessor to

the United States Court of Federal Claims.6   See Krygoski, 94
F.3d at 1541-1544; South Corp. v. United States, 690 F.2d 1368,

1369 (Fed. Cir. 1982); Torncello v. United States, 681 F.2d 756,

763-766 (Ct. Cl. 1982).   Following some confusion concerning the

correct standard, the United States Court of Appeals for the

Federal Circuit settled that a termination for convenience is

     5 The Federal acquisition regulation provides uniform
termination for convenience clauses for seven different types of
procurement contracts. See 48 C.F.R. §§ 52.249-1 to 52.249-7.
These clauses are distinct from one another, but all contain
language permitting termination when it is "in the Government's
interest," with one exception for termination clauses required
in contracts for architect-engineer services when a fixed-price
contract is contemplated, which provides that the government may
terminate "for the Government's convenience or because of the
failure of the Contractor to fulfill the contract obligations."
See 48 C.F.R. § 52.249-7. The United States Court of Appeals
for the Federal Circuit applied the bad faith or abuse of
discretion standard in considering the "in the Government's
interest" language provided by 48 C.F.R. § 52.249-2. See
Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1544-1545
(Fed. Cir. 1996), cert. denied, 520 U.S. 1210 (1997).

     6 The United States Court of Appeals for the Federal Circuit
is a specialized court that hears appeals from the United States
Court of Federal Claims, which has jurisdiction to review
appeals of most decisions by Federal contracting officers. See
28 U.S.C. § 1295(a)(3); 41 U.S.C. § 7104(b)(1).
                                                                    12

proper so long as a government entity does not act in bad faith

or abuse its discretion.     See Krygoski, supra at 1541.

     The United States Court of Appeals for the Federal

Circuit's precedent as to abuse of discretion "suggest[s] that

[the] court will avoid a finding of abused discretion when the

facts support a reasonable inference that the contracting

officer terminated for convenience in furtherance of statutory

requirements for full and open competition."     See id. at 1544,

citing Caldwell & Santmyer, Inc. v. Glickman, 55 F.3d 1578, 1582

(Fed. Cir. 1995) (Caldwell), and Salsbury Indus. v. United

States, 905 F.2d 1518, 1521 (Fed. Cir. 1990), cert. denied, 498
U.S. 1024 (1991); 41 U.S.C. § 3301(a)(1) (requiring full and

open competition in procurement by Federal executive branch

agencies).    See also discussion, infra.   With respect to the bad

faith standard, in order to succeed on a claim that a

termination for convenience clause was invoked in bad faith, a

contractor must overcome the presumption that a contracting

officer has acted in good faith, by showing "'well-nigh,

irrefragable proof' that the government had a specific intent to

injure it."     Caldwell, supra at 1581, quoting Torncello, 681
F.2d at 770.7    The Court of Federal Claims has explained that

     7 The United States Court of Appeals for the Federal Circuit
has concluded that the requirement for "well-nigh, irrefragable
proof" approximates the "clear and convincing evidence"
                                                                  13

"[a] claim for breach of contract based on breach of the implied

duty of good faith and fair dealing is distinct from a claim for

breach of contract based on an improper termination for

convenience" under Federal law.   See TigerSwan, Inc. v. United

States, 110 Fed. Cl. 336, 345 (2013).8,9

     Our own precedent concerning termination for convenience

clauses in public procurement contracts is far less extensive.

We have had one previous occasion to construe such a clause.

See Morton St., 453 Mass. at 486-487.   In Morton St., supra at

494, we held that where a sheriff lost outside funding to pay a

standard. See Am-Pro Protective Agency, Inc. v. United States,
281 F.3d 1234, 1239-1240 (Fed. Cir. 2002) (Am-Pro Protective).

     8 The Court of Federal Claims held in TigerSwan, Inc. v.
United States, 110 Fed. Cl. 336, 345 (2013), quoting Am-Pro
Protective, 281 F.3d at 1239-1240, that "[t]o establish a breach
based on bad faith in this context, a contractor must present
clear and convincing evidence that the government's termination
was made with the 'intent to injure' the contractor." By
contrast, under Federal common law, "[p]arties can show a breach
of the implied duty of good faith and fair dealing by proving
lack of diligence, negligence, or a failure to cooperate."
TigerSwan, Inc., supra. "[P]roof of 'bad faith' is not required
to show a breach of the implied duty of good faith and fair
dealing in most cases," and "[e]vidence of government intent to
harm the contractor is not ordinarily required." Id. at 346.
But see Austin v. United States, 118 Fed. Cl. 776, 790 (2014)
(rejecting claim for breach of implied duty of good faith and
fair dealing against Federal government entity, based on
conclusion that "the record does not reflect that any government
official acted with the specific intent to injure plaintiffs").

     9 A claim that a Federal public entity has invoked a
termination for convenience clause in bad faith also is distinct
from a claim for breach of the implied duty of good faith and
fair dealing under Massachusetts law. See discussion, infra.
                                                                     14

lease, she lawfully could terminate the lease under a

termination for convenience provision.   We applied "general

contract principles," looking to the unambiguous contractual

language and the dictionary definition of "convenience."       See

id. at 490, 494.   We concluded that "losing the funding for the

lease is plainly an inconvenience justifying termination"

because, to continue the lease, the sheriff would have been

required to reduce or eliminate funding for other obligations.

Id. at 494.

    In Morton St., the parties did not raise, and the court did

not address, the question whether to import Federal precedent

when construing a termination for convenience provision.       See

id. at 490-494.    The court interpreted the termination for

convenience clause according to "general contract principles."

Id. at 490.   This approach is consonant with the canon that "in

general the law applicable to public contracts is the same as

that applicable to private contracts."    R. Zoppo Co. v.

Commonwealth, 353 Mass. 401, 404 (1967).

    The Federal standard, by contrast, is a gloss that has

settled on the uniform language found in certain Federal

termination for convenience clauses, informed partly by Federal

procurement requirements that have no application to State or

municipal agencies.    See Krygoski, 94 F.3d at 1544 ("court will

avoid a finding of abused discretion when the facts support a
                                                                    15

reasonable inference that the contracting officer terminated for

convenience in furtherance of statutory requirements for full

and open competition"); 41 U.S.C. § 3301(a)(1) ("an executive

agency in conducting a procurement for property or services

shall . . . obtain full and open competition through the use of

competitive procedures in accordance with the requirements of

[the Federal Procurement Policy] and the Federal Acquisition

Regulation").   The Federal acquisition regulation mandates that

certain Federal procurement contracts include a termination for

convenience clause, and provides stock language for them.     See

48 C.F.R. §§ 49.502, 52.249-1 to 52.249-6.     Non-Federal

entities, however -- such as the MBTA -- may craft their own

termination for convenience clauses when drafting procurement

contracts, because they are not bound by the Federal acquisition

regulation.   See 48 C.F.R. §§ 1.104, 2.101.   As a result, for

example, the contract here allows the MBTA to terminate "in its

sole discretion," and "for any reason," rather than allowing

termination only where the termination is "in the Government's

interest."

    Our precedent instructs courts to examine how a contract,

by its plain language, defines the parties' rights.     See

Schwanbeck v. Federal-Mogul Corp., 412 Mass. 703, 706 (1992).

The Federal standard, conversely, requires inquiry into whether

a public entity has abused its discretion or acted in bad faith.
                                                                  16

Embracing the Federal approach would require Massachusetts

courts, in construing termination for convenience clauses, to

apply the meaning that Federal courts have assigned to language

provided by Federal regulations -- regardless of the specific

contractual language in front of them.   The Federal standard,

therefore, cannot be reconciled with "general contract

principles" provided by Massachusetts law, Morton St., 453 Mass.

at 490, including the "elementary" axiom that "an unambiguous

agreement must be enforced according to its terms."   Schwanbeck,

supra.10

     Prime's argument that, by referencing the Federal

acquisition regulation, the contract incorporates Federal case

     10Although Prime does not discuss this fact, we note that
the MBTA's procurement of fuel under section 6.1.1 of the
contract is supported by Federal funding awarded by the Federal
Transit Administration (FTA). The Federal acquisition
regulation, however, does not apply to procurements conducted
with Federal assistance by non-Federal entities, such as the
MBTA. See 48 C.F.R. §§ 1.104, 2.101; Federal Transit
Administration, Circular No. FTA C 4220.1F, at 9 (rev. Mar. 18,
2013) (FTA Circular). A different Federal regulation instructs
that contracts supported by Federal funding must include a
termination for convenience clause, but leaves State and
municipal recipients of Federal funds free to craft their own
contractual language. See 2 C.F.R. Part 200, Appendix II(B); FTA
Circular, supra at 13. Compare 48 C.F.R. §§ 52.249-1 to 52.249-
7 (requiring specific language for termination for convenience
clauses in Federal procurement contracts). The MBTA's receipt
of Federal funding does not alter our conclusion that
Massachusetts law must govern construction of the termination
for convenience clause. See Linan-Faye Constr. Co. v. Housing
Auth. of Camden, 49 F.3d 915, 917, 920 (3d Cir. 1995) (State law
governs termination for convenience clause in State or municipal
contract drafted by Federal funding recipient, using forms
provided by Federal agency, if controlling State law exists).
                                                                  17

law, is unavailing.   The contract states that, in the event of

termination for convenience, "the Contractor shall be paid its

reasonable, proper and verifiable costs in accordance with

generally accepted government contracting principles as set

forth in the Federal Acquisition Regulations."   This language

does no more than provide that, once the MBTA terminates for its

convenience, Prime's reimbursement is to be determined under the

principles provided by the Federal acquisition regulation.      See,

e.g., 48 C.F.R. § 31.205-42 (cost principles in event of

termination).   The single reference to the Federal acquisition

regulation does not incorporate the Federal standard for

interpreting a termination for convenience clause, as Prime

seems to suggest.   "[T]he scope of a party's obligation cannot

'be delineated by isolating words and interpreting them as

though they stood alone.'"   Starr v. Fordham, 420 Mass. 178, 190

(1995), quoting Boston Elevated Ry. v. Metropolitan Transit

Auth., 323 Mass. 562, 569 (1949).   The MBTA's power to terminate

is expressly defined by other language in the termination

provision; disregarding this language would belie the "general

rule of contract construction" "that contracts should be

construed as a whole."   See Polaroid Corp. v. Rollins Envtl.

Servs. (NJ), Inc., 416 Mass. 684, 690 (1993).

    Neither Prime's additional contention that a termination

for convenience clause -- construed according to its plain
                                                                    18

language -- would deprive a contractor of any consideration, nor

the fact that certain other States have adopted the Federal

standard, persuades us that we should import Federal precedent

that would conflict with State law.    Prime suggests that, in

order to ensure that public procurement contracts provide

contractors with real consideration, we must adopt the Federal

standard.   We recognize that Federal case law might represent

"an effort to [rein] back on the government's non-negotiable,

statutorily-conferred entitlement to terminate its contracts as

it pleases."   See Handi-Van, Inc. v. Broward County, 116 So. 3d
530, 538 (Fla. Dist. Ct. App. 2013).    Public entities, however,

are constrained by the general contract principle that "a

promise that binds one to do nothing at all is illusory and

cannot be consideration."   Graphic Arts Finishers, Inc. v.

Boston Redev. Auth., 357 Mass. 40, 43 (1970).     A public entity's

power unilaterally to walk away from a contract, without

restrictions, therefore would render the contract illusory.      See

Mb Oil Ltd. Co. v. Albuquerque, 382 P.3d 975, 978 (N.M. Ct. App.

2016) (government's unlimited right to terminate could render

contract illusory).11   That is a situation, however, not

confronting us in the contract at issue here.12

     11We leave for another day   the question whether a public
entity may terminate a contract   for its convenience in order to
rebid the contract in search of   a lower price. See Petricca
Constr. Co. v. Commonwealth, 37 Mass. App. Ct. 392, 392-397
                                                                    19

    We recognize that some State courts have consulted Federal

precedent in construing a termination for convenience clause in

a State or municipal contract.   See, e.g., Krygoski, 94 F.3d at

1542, 1544; RAM Eng'g   & Constr., Inc. v. University of

Louisville, 127 S.W.3d 579, 584, 587 (Ky. 2003) (applying now

defunct Federal standard permitting termination only under

changed circumstances).   Nonetheless, there is no consensus

concerning whether or how to apply the Federal standard.     See,

e.g., Old Colony Constr., LLC v. Southington, 316 Conn. 202, 204

n.1 (2015) ("Unlike [F]ederal contracts, no [S]tate regulations

dictate the requirements and obligations attendant to

termination for convenience in municipal contracts.     As in the

present case, such obligations generally are dictated by the

(1994) (G. L. c. 30, § 39M, which allows awarding authority to
"reject any and all bids, if it is in the public interest to do
so," did not permit State entity to reject valid bid and
readvertise procurement contract in order to "recapture the
benefit of a lower bid that was properly rejected"). In this
case, the MBTA had the opportunity to contract with a new vendor
by joining an existing Statewide contract. Under the
Commonwealth's regulations for the procurement of commodities or
services, which the MBTA has elected to follow, see 801 Code
Mass. Regs. § 21.01(2)(a) (2003), State agencies typically must
procure goods and services through a competitive process, but
this requirement does not apply when an agency joins a
collective purchasing agreement. See 801 Code Mass. Regs.
§§ 21.05(5), 21.06 (1997).

    12 See discussion, infra, concerning consideration provided
by the MBTA-Prime contract in the event of termination.
                                                                      20

terms of the contract").13    Additionally, at least one Federal

court has held that, where controlling State law exists, a State

court need not look to Federal precedent construing termination

for convenience clauses.     See Linan-Faye Constr. Co. v. Housing

Auth. of Camden, 49 F.3d 915, 917, 920 (3d Cir. 1995).

     In sum, in light of the incompatibility between the Federal

standard and our own jurisprudence, we are not persuaded that

Federal law should supplant Massachusetts precedent in

determining the proper construction of a termination for

convenience clause in a State or municipal public procurement

contract.    Having concluded that the termination for convenience

clause must be construed according to Massachusetts law, we turn

to Prime's claims against the MBTA.

     c.     Proper construction.   i.   Breach of contract.   Prime

alleges that the MBTA's decision to terminate the contract in

order to secure a better price or contract terms from another

vendor "rendered the competitive bidding process meaningless"

and was a breach of the contract.       In order to determine whether

     13See Mb Oil Ltd. Co. v. Albuquerque, 382 P.3d 975, 978-980
(N.M. Ct. App. 2016) (discussing Federal standard and plain
contractual language, and declining to state controlling
standard); Louis Food Serv. Corp. v. Department of Educ. of the
City of New York, 76 A.D.3d 956, 958 (N.Y. 2010) (New York law
permits State government agency to exercise rights under
termination for convenience clause without judicial inquiry); 4N
Int'l, Inc. v. Metropolitan Transit Auth., 56 S.W.3d 860, 861-
862 (Tex. Ct. App. 2001) (rejecting Federal standard and
applying Texas law).
                                                                   21

Prime has alleged sufficient facts to show that the MBTA's

termination was impermissible, we analyze the contract according

to the principle that "[w]hen contract language is unambiguous,

it must be construed according to its plain meaning."     Balles v.

Babcock Power Inc., 476 Mass. 565, 571-572 (2017).

    The language of a contract is unambiguous unless "the

phraseology can support a reasonable difference of opinion as to

the meaning of the words employed and the obligations

undertaken" (citation omitted).     Bank v. Thermo Elemental, Inc.,

451 Mass. 638, 648 (2008), and cases cited.     The contract at

issue vests the MBTA with "sole discretion" to terminate.      "Sole

discretion" means the "power to make decisions without anyone

else's advice or consent."     Black's Law Dictionary 565 (10th ed.

2014).     See Thomas v. Oregon Fruit Prods. Co., 228 F.3d 991, 994

n.3 (9th Cir. 2000) ("sole discretion" represents "unambiguous

grant of discretion").    The words "sole discretion" cannot

reasonably be interpreted in multiple ways.    See Bank, supra.

They clearly permit the MBTA to terminate the contract

unilaterally.

    The termination provision further provides that the MBTA

may terminate the contract "for its convenience and/or for any

reason."    As we concluded in Morton St., 453 Mass. at 494,

quoting the American Heritage Dictionary of the English Language

411 (3d ed. 1996), "'convenience' means the 'quality of being
                                                                  22

suitable to one's comfort, purposes, or needs.'"    Conserving

resources meets an important need.   See Morton St., supra at

492, 494 (recognizing "concern about the public fisc" and "many

challenging decisions that public officials with considerable

obligations and limited resources often need to make, especially

during difficult fiscal times, in order to allocate available

resources more suitably").

    The word "any" is defined as "one, no matter what one:

every."   Webster's Third New International Dictionary 97 (2002).

The phrase "for any reason" thus unambiguously includes the

MBTA's reason for termination:   achieving cost savings.    See

Insurance Brokers W. Inc. v. Liquid Outcome LLC., 874 F.3d 294,

298 (1st Cir. 2017); (phrase "for any reason" is unambiguous);

Ruiz v. A.B. Chance Co., 234 F.3d 654, 672 (Fed. Cir. 2000)

(same).   "There is no ambiguity here that would allow a court to

search for an intent of the parties not to be held strictly to

the plain terms of the contract language."   Eigerman v. Putnam

Invs., Inc., 450 Mass. 281, 287 (2007).

    Prime argues that, under Morton St., only a funding loss or

other change of circumstances could justify invocation of a

termination for convenience clause, but Morton St. contains no

such limitation.   Indeed, in that case we concluded that

"challenging decisions" forced by budget constraints may

motivate a public entity to terminate a contract.   See Morton
                                                                     23

St., 453 Mass. at 494.    We did not define the full extent of the

sheriff's discretion in Morton St., because it clearly

encompassed the sheriff's right to end the lease when she lost

the financing for that lease.    Id.   The sheriff's circumstances

were sufficient, but not necessary, to justify termination for

convenience.

     The Legislature's decision to create the Fiscal and

Management Control Board in order to secure the MBTA's fiscal

stability indicates that the MBTA's budget is under pressure.

See St. 2015, c. 46, § 200 (f).    Moreover, the contract language

in this case contains a broader authorization of discretion than

was at issue in Morton St., 453 Mass. at 486-487.     In that case,

the termination provision provided simply that the contract

could "be terminated at any time for the convenience of the"

sheriff.   Id.   Accordingly, we considered whether the funding

loss constituted an inconvenience.     Id. at 494.   Here, by

contrast, the contract specifies that the MBTA may terminate

"for any reason"; Prime does not allege that the MBTA terminated

the contract for no reason at all but, rather, argues that its

stated reason is improper.14    In sum, Prime has not alleged any

impermissible conduct or wrongdoing, aside from its contention

     14As noted, although Prime's complaint asserts that the
MBTA incorrectly calculated its potential cost savings, the
complaint does not allege that the MBTA's stated reason for
terminating the contract concealed another, illegitimate one.
                                                                  24

that the MBTA could not terminate the contract in order to

secure a lower price.15

     Finally, construing the termination clause as written does

not, as Prime argues, render the contract unenforceable for lack

     15In its brief, Prime suggests that the MBTA's decision to
terminate the contract runs afoul of Massachusetts public
bidding laws that are aimed at fostering equitable competition.
We observe that, as a recipient of Federal assistance, the MBTA
both must comply with applicable State law and must ensure that
"procurement transactions be conducted in a manner providing
full and open competition." 2 C.F.R. §§ 200.318(a), 200.319(a).
Prime, however, has alleged no statutory or regulatory
violations that occurred during the process by which the
contract at issue here, or the Statewide ULSD contract, was
awarded. On the facts provided, we have no reason to conclude
that these procedures did not comply with applicable law, and,
accordingly, must enforce the contract as written. Contrast
Phipps Prods. Corp. v. Massachusetts Bay Transp. Auth., 387
Mass. 687, 692 (1982) (contract was unenforceable where MBTA did
not comply with statutory public bidding requirements).

     To the extent that Prime argues that the contract,
construed according to its plain language, is unenforceable as
contrary to the public policy of treating bidders fairly and
equally, we reject this claim. "'Public policy' in this context
refers to a court's conviction, grounded in legislation and
precedent, that denying enforcement of a contractual term is
necessary to protect some aspect of the public welfare." Feeney
v. Dell Inc., 454 Mass. 192, 200 (2009), and cases cited.
Although "[w]e have repeatedly stated that the purpose of
competitive bidding statutes is not only to ensure that the
awarding authority obtain the lowest price among responsible
contractors, but also to establish an open and honest procedure
for competition for public contracts," Modern Continental
Constr. Co. v. Lowell, 391 Mass. 829, 840 (1984), terminating a
procurement contract in order to secure a lower price does not
conflict with this purpose. If a contract clearly defines the
public entity's right to terminate, the bidders are equally on
notice of such a possibility. Furthermore, the Legislature has
encouraged State agencies to join cooperative purchasing
agreements. See G. L. c. 30B, § 23. As explained supra, the
MBTA's termination was consistent with this court's precedent.
                                                                   25

of consideration.   The contract here bound the MBTA to provide

certain valuable consideration to Prime.   See Graphic Arts

Finishers, Inc., 357 Mass. at 43 ("The law does not concern

itself with the adequacy of consideration; it is enough if it is

valuable").   In addition to payment for ULSD, the contract

guaranteed Prime thirty days' written notice and reimbursement

for certain costs in the event of termination.   See 3 R.A. Lord,

Williston on Contracts § 7:13 (4th ed. 2008) (consideration

exists when reservation of right to cancel requires written

notice).   Compare Torncello, 681 F.2d at 769-770 ("a route of

complete escape vitiates any other consideration furnished,"

where no notice or additional payment was provided).   The MBTA's

termination does not render the contract illusory.   See Simons

v. American Dry Ginger Ale Co., 335 Mass. 521, 525 (1957)

(contract construed as terminable at will on reasonable notice

was not illusory prior to termination).    For these reasons, we

conclude that Prime has not alleged sufficient facts to state a

claim for breach of contract.

    ii.    Breach of the implied covenant of good faith and fair

dealing.   Prime's complaint also asserts that the MBTA

terminated the contract "in order to undercut the [c]ontract

price set through the competitive bidding process, thereby

depriving Prime of the fruits of the [c]ontract," and therefore

committed a breach of the implied covenant of good faith and
                                                                   26

fair dealing.   The MBTA's broad latitude under the contract does

not immunize it against such an allegation.    See Robert & Ardis

James Found. v. Meyers, 474 Mass. 181, 189 (2016) (covenant of

good faith and fair dealing is implied in every contract).

    "The covenant of good faith and fair dealing . . . provides

'that neither party shall do anything which will have the effect

of destroying or injuring the right of the other party to

receive the fruits of the contract.' . . .    'A breach occurs

when one party violates the reasonable expectations of the

other'" (citations omitted)   Weiler v. PortfolioScope, Inc., 469
Mass. 75, 82 (2014).   "There is no requirement that bad faith be

shown; instead, the plaintiff has the burden of proving a lack

of good faith. . . .   The lack of good faith can be inferred

from the totality of the circumstances."    Robert & Ardis James

Found., 474 Mass. at 189, quoting Weiler, supra.   See Anthony's

Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 473-474 (1991)

(rejecting argument that, because trial judge did not find "bad

faith," he erred in ruling that defendant violated implied

covenant of good faith and fair dealing).

    Prime has not alleged sufficient facts to show that the

MBTA's decision to terminate "injured" its right to "receive the

fruits of the contract," which, as discussed, included payment

for ULSD delivered, as well as thirty days' written notice and

reimbursement for certain costs in the event of termination.
                                                                     27

Nor do Prime's allegations state a claim that the MBTA violated

its "reasonable expectations."      "The plaintiff cannot have

misunderstood the broad discretion on the part of" the MBTA.

Eigerman, 450 Mass. at 289.     "Any expectation otherwise on the

plaintiff's part, as [a] matter of contract law, would not be

reasonable."   Id.16

    On the facts provided, this is not a case in which one

party leveraged its discretion to "recapture opportunities

forgone on contracting" or "to refuse 'to pay the expected costs

of performance.'"      See Anthony's Pier Four, Inc., 411 Mass. at

473, quoting E.A. Farnsworth, Contracts § 7.17 (a), at 329

(1990).   Nor has Prime claimed that the MBTA entered into the

contractual relationship without intending to continue it for

the full term, compare K.G.M. Custom Homes, Inc. v. Prosky, 468
Mass. 247, 254-255 (2014) (party who had no intention of

completing contract committed breach of implied covenant of good

faith and fair dealing), or asserted that the MBTA's stated

reason for terminating the contract concealed an illegitimate

    16 Prime contends, in addition, that the obligation of good
faith imposed by the Uniform Commercial Code (U.C.C.) is
applicable here. For the reasons discussed, the MBTA has not
violated this obligation. See G. L. c. 106, § 1-304; Knapp
Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 72 F.3d 190, 199 & n.3
(1st Cir. 1995), cert. denied, 517 U.S. 1245 (1996) (combining
common law and statutory good faith analyses); official comment
to U.C.C. § 1-203, 1 U.L.A. 273 (Master ed. 2012) ("This section
does not support an independent cause of action for failure to
perform or enforce in good faith . . . [and] does not create a
separate duty of fairness and reasonableness").
                                                                        28

one.   See T.W. Nickerson, Inc. v. Fleet National Bank, 456 Mass.
562, 571 (2010); Fortune v. National Cash Register Co., 373
Mass. 96, 104-105 (1977) (employer acts in bad faith by

terminating employee in order to deprive him or her of

commission).

       Simply put, "the implied covenant of good faith and fair

dealing cannot create rights and duties that are not already

present in the contractual relationship."      Eigerman, 450 Mass.

at 289.     Under the terms of the contract, terminating to obtain

a better price, alone, is not a violation of this duty.         Prime

has not alleged sufficient facts to prove that the MBTA

committed a breach of the implied covenant of good faith and

fair dealing.

       3.   Conclusion.   We construe the reported question as

asking whether the MBTA's motion to dismiss properly was denied.

We conclude that the Superior Court judge erred in denying the

motion on the ground that a public entity may not invoke a

termination for convenience clause in a public procurement

contract in order to secure a lower price.      The matter is

remanded to the Superior Court for further proceedings

consistent with this opinion.

                                      So ordered.