Free Memorandum - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

HITT CONTRACTING, INC., Plaintiff, v. THE UNITED STATES, Defendant. PLAINTIFF'S MEMORANDUM IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT Plaintiff Hitt Contracting, Inc. states the following in support of its Motion for Partial Summary Judgment: I. INTRODUCTION This case arises out of a contract between The Architect of the Capitol ("AOC") and Hitt Contracting, Inc. ("Hitt") for the construction of the West Refrigeration Plant Expansion of the Capitol Power Plant located in Washington, DC. More specifically, it relates to the excavation and removal of soil from the site, a task which Hitt subcontracted to The Anderson Company, LLC ("Anderson").1 Pursuant to the terms of the general contract between Hitt and AOC, all vehicles entering or leaving United States Government property during the performance of work on the project, including the trucks which Anderson used to remove soil, were subject to clearance and inspection. Civil Action No. 07-823C (Chief Judge Damich)

The facts on which this motion is based and the evidence in support of these facts are included in the Proposed Findings of Uncontroverted Fact filed with the motion.

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When Anderson commenced work on the project on or about May 22, 2003, its vehicles were inspected at the entrance to the project. On or about June 12, 2003, however, the inspection requirements changed. On that day, The United States Capitol Police directed Anderson to send all vehicles entering the West Refrigeration project site to the Capitol Police inspection station for the Capitol Visitor Center project located at 3rd St. and Constitution Avenue NW, several blocks from the West Refrigeration project. Because Anderson was hauling the material to dump sites located in southern Maryland, the change in inspection location required Anderson's truckers to take a substantially different and longer route to the project site. As a result, the time required to dispose of each load of material increased. Because Anderson paid the trucks by the hour, its direct costs increased as well. Anderson informed Hitt that it was entitled to additional compensation as a result of this change. Hitt passed the claim on to AOC. By final decision dated April 11, 2005, the contracting officer denied the claim. The contracting officer's final decision was premised on the contention that the contract did not require security inspections to take place on-site and that the claim was barred by the "No Damages for Delay" provision of the general contract and by the Severin doctrine. Hitt appealed the decision to the House Office Building Committee Board of Contract Appeals. By decision dated May 30, 2007, The Board granted summary judgment in favor of AOC against Hitt.2 The basis of the decision was that "the solicitation and resulting contract could not afford Hitt any basis for assuming that the vehicle security inspections provided for under the solicitation and resulting contract would only occur at the project site," and that therefore "there [was] no basis for finding that AOC changed the contract
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The Board's rules do not provide a procedure for summary judgment.

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so as to entitle Hitt to an equitable adjustment." Hitt filed the present appeal pursuant to the Wunderlich Act, 41 USC §321 et seq. The dispositive question in this case is whether the government's decision to move vehicle security inspections for the West Refrigeration Plant Expansion project from the entrance to the project site to a remote inspection site located many blocks away constituted a change to the specifications for the project. Because no reasonable person would conclude from the specifications that vehicles entering the project site would be required to undergo inspection at an off-site location many blocks from the project site before being released into the streets of Washington, DC with no further monitoring for up to 15 minutes before entering the project site, the decision to move the inspections offsite was a change to the contract entitling Hitt to an equitable adjustment in the price. This entitlement is not affected by the contract's "No Damages for Delay" provision or the Severin doctrine. II. ARGUMENT A. Standard for Summary Judgment

Summary judgment is appropriate if " the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." United States Court of Federal Claims Rule 56. Summary judgment may be entered on the issue of liability alone. Id. Hitt is entitled to summary judgment with respect to liability in this case because the decision to move the security inspection station was a change to the contract. B. The Contract Specified on Site Security Inspections.

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The only reasonable interpretation of the specifications is that they provide for on site security inspections. The idea that security inspections would be anywhere but at the entrance to the secured area is absurd. Nothing in the specifications provides for off-site inspections, and no bidder could have been expected to infer such a counterintuitive requirement. The relevant contract provisions are set forth below3. Article 3.5 of the Supplementary Conditions provides that: All vehicles, and contents, used by the Contractor or his subcontractors, which enter or leave United States Government property during performance of the work, will be subject to clearance, inspection and identification procedures conducted by the United States Capitol Police. Instructions and map(s) will be provided to the contractor upon award. Article 1.6 of the Conditions to the contract provides that: Clearance: Special arrangements for deliveries shall be arranged a minimum of 48 hours in advance of arrival to permit inspection by the United States Capitol Police. The Police inspection station is on P Street and South Capitol Street S.E. (over-strike in original) Coordinate deliveries with the US Capital (sic) Police by contacting them at 202-224-0908 (emphasis in original). Article 1.4 of the conditions to the contract provides that: Site access for the Contractor shall primarily occur from Virginia Avenue with limited use of the service entrance from E Street. All access shall be through guarded gates and allowed only to secure personnel. 1. A reasonable person would interpret the contract to provide for on-site inspections.

In order to interpret this contract language, the court must "[determine] what a reasonable person in the position of the parties would have thought the disputed language
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These provisions are also attached hereto as Exhibit 1

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meant." Washington Properties, Inc. v. Chin, Inc., 760 A.2d 546 (D.C. 2000). The provisions quoted above could only lead a reasonable person preparing to undertake construction of the West Refrigeration Plant Expansion project to the conclusion that the security inspections were to be conducted on site. The fact that the contract does not use the words "on-site" in describing the location of inspections does not mean that AOC was entitled to conduct them in any location it chose. If this were the case, AOC could have required Hitt to undergo vehicle inspections in Pittsburgh, Pennsylvania. Or it could have required Hitt to use covered wagons to move the material, as the specifications do not explicitly allow the use of trucks. While these examples are extreme, they illustrate the real issue in this case. The question is not whether the specifications explicitly provided for on-site inspections. The question is whether a reasonable person would interpret the specifications to provide for anything but on-site inspection. The answer to this question is no. The only reasonable interpretation of the specifications is that they require on-site inspection Article 3.5 provides for inspection of all vehicles "which enter or leave United States Government property during performance of the work." Article 1.4 informed the contractor that site access would be through guarded gates located at Virginia Avenue and E Street. While these provisions do not explicitly say that inspections will take place on the site, no reasonable person would interpret them to mean anything else. Conducting security inspections many blocks from the project site before leaving the inspected vehicles unsupervised on the streets of Washington, DC for up to 15 minutes is ridiculous. A driver with one accomplice could easily pick up explosives, weapons, or just about anything else on the way from the inspection station to the project

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site. While AOC would have been entitled to explicitly mandate such a procedure, it did not do so. No contractor could be expected to infer such a requirement from the contract specifications. Contrary to the conclusion in the contracting officer's final decision, the reference in article 3.5 to instructions and maps which would be provided to the contractor is not rendered meaningless if inspections were to occur on-site. The maps and instructions could have shown any number of things other than an off-site inspection location, including the location of the on-site inspections, the procedure for lining up for inspections, and the procedure and directions for leaving the inspection station. Nor does the fact that the original version of Article 1.6 referenced the Capitol Police inspection station at P Street and S. Capitol Street indicate that inspections would occur off site. This language was stricken from the contract as part of addendum 3.4 Hitt could not possibly be expected to make inferences concerning its contractual obligations based on language which had been removed from its contract. In fact, the removal of this language from the contract would only bolster the conclusion that inspections would be conducted on-site by demonstrating that AOC would explicitly specify the location of inspections if they were to be at a remote site. Likewise, the direction in Article 1.6 to "coordinate" deliveries with the Capitol Police also supports the conclusion that inspections were to be conducted on-site. There would be no need to coordinate inspections if they were to take place at an established, permanently manned facility. In fact, Anderson never had to coordinate deliveries with the Capitol Police. The inspection station was open during defined hours, and Anderson's trucks simply had to report for inspection.
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See Exhibit 1

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Nor was there any reason for Hitt205 or Anderson to contact the Capitol Police to find out where the inspections would be before entering the contract. The direction to coordinate deliveries with the Police does not imply that there is any need to contact them prior to award, but only when deliveries are to be scheduled. There was no direction to contact the Capitol Police to find out where inspections would be. If this had been required, AOC should have said so in the specification. C. Hitt's Claim Is Not Barred by the "No Damages for Delay" Clause

The contracting officer's final decision also relied on the "No Damages for Delay" clause contained in Article 14 of the contract's general conditions. Article 14 provides in relevant part that: 14.1 The Architect shall not be obligated or liable to the Contractor for, and the Contractor hereby expressly waives any claims against the Architect on account of any damages, of any nature whatsoever, which the Contractor, or its subcontractor at any tier may incur as a result of delays, interferences, disruptions, suspensions, changes in sequence or the like arising from or out of any act or omission of the Architect, it being understood and agreed that the Contractor's sole and exclusive remedy in such event shall be a reimbursement of direct costs necessarily incurred as a result of the foregoing causes, and an extension of the contract time, but only in accordance with the provisions of the Contract Documents. 14.2 For purposes of this Article, the term "Damages" shall include all indirect and/or impact costs which shall include, without limitation: Unabsorbed Home-Office Overhead (including calculations under the "Eichleay Formula"), Idle Labor and Equipment, Loss of Productivity, and Interest; the term "Damages" shall not include on-site direct costs, which shall include direct labor (superintendence, labor, time-keeping, and clerical work) direct materials and supplies (including material handling), direct equipment, restoration and cleanup, overhead and profit ...

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This provision does not bar Hitt's claim for additional trucking expenses because the claim is not for damages arising from delay, interference, disruption, or some similar cause. Even if it were, however, the direct equipment costs it claims are recoverable under the terms of the clause. Article 14 is not a true No Damages for Delay clause, but only limits the types of costs that can be recovered. The costs which make up Anderson and Hitt's claim are not excluded by the terms of Article 14. The exculpatory provisions of Article 14 apply only to damages resulting from "delays, interferences, disruptions, suspensions, changes in the sequence or the like." The damages claimed by Hitt and Anderson do not arise from any of these causes, but rather from a change in the contract specifications. Thus, Article 14 does not apply. Even if it were applicable, however, Article 14 would not prevent Hitt and Anderson from recovering the damages claimed in this appeal. The only costs Hitt and Anderson claim in this appeal are the additional monies paid by Anderson to its trucking subcontractors as a result of the change in inspection location and a $.50 per ton premium charged to Anderson by its contaminated soil disposal subcontractor for the same reason. The only additions to these direct costs are Anderson's markup.5 There is no field or home office overhead. There is no charge for idle labor or equipment. There is no interest. There are only direct equipment costs. Article 14.2 specifically excludes direct equipment costs such as these from the exculpatory provision of the No Damages for Delay clause. Hitt is entitled to recover these costs. D. Hitt's Claim Is Not Barred by the Severin Doctrine

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Hitt also seeks a markup on Anderson's claim in accordance with the contract.

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The contracting officer's final decision also cites Severin v. United States, 99 Ct. Cl. 435 (1943) as a basis for denying Hitt's claim. While Severin did hold that a general contractor could not pursue claims on behalf of a subcontractor unless it was liable to the subcontractor, the doctrine is limited and not applicable to this case. A long line of cases holds that prime contractors may pursue claims on behalf of their subcontractors even when they are only liable to the subcontractor if and to the extent that they are able to recover from the government. See e.g. Keydata Corp. v. United States, 202 Ct. Cl. 467, 504 F.2d 1115 (1974); J.L Simmons Co. v. United States, 158 Ct. Cl. 393, 304 F.2d 886 (1962); Donovan Constr. Co. v. United States, 138 Ct. Cl. 97, 149 F.Supp. 898 (1957). Donovan is the most instructive of these cases. In it, the Court held that the general contractor could pursue a claim on behalf of its subcontractor where the subcontract provided that the contractor would pay the subcontractor for extra work "as and when" it received payment from the government. This is precisely the arrangement that exists between Hitt and Anderson. Article 6 of the subcontract between Hitt and Anderson (Appeal File, Exhibit 2, pp. 6-7)6 provides that Anderson will be entitled to an equitable adjustment "according to the same provisions as Contractor's equitable adjustment from the Owner," (Article 6.B.) and that Hitt "shall not be liable to [Anderson] on account of any adjustments or changes in the Subcontract Agreement price or time unless and until [Hitt] shall receive payment from Owner, which is an express condition precedent to payment to [Anderson]" (Article 6.D). E. CONCLUSION

The only reasonable interpretation of the contract between Hitt and AOC is that vehicle inspections were to take place upon entrance to the project site. Conducting the
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Article 6 is attached as Exhibit 2

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inspections at a remote location defeats their purpose. As a result, the government's decision to move the inspection station to a location several blocks away was a change to the contract entitling Hitt to an equitable adjustment. Hitt's claim is not barred by the contract's "No Damage for Delay" clause or the Severin doctrine. Hitt is entitled to summary judgment as to AOC's liability for the claim. Respectfully Submitted, /s/ M. Joseph Pierce________ M. Joseph Pierce, Esq. Kasimer & Annino, P.C. 7653 Leesburg Pike Falls Church, VA 22043 Phone: (703) 893-3914 Fax: (703) 893-6944

CERTIFICATE OF FILING I hereby certify that on the 26th day of March, 2008 a copy of the foregoing Plaintiff's Motion for Partial Summary Judgment, Plaintiff's Statement of Proposed Uncontroverted Facts and Memorandum was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

/s/ M. Joseph Pierce________

P:\Docs\Anderson\Hitt Contracting\AOC\Court of Claims\pleadingss\memo motion summary judgment.032508.doc

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