Free Amended Complaint - District Court of Federal Claims - federal

Case 1:07-cv-00165-JFM

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UNITES STATES COURT OF FEDERAL CLAIMS
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HERNANDEZ, KROONE AND
5 ASSOCIATES, INC.

CASE NO. 1:07-CV-165

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Plaintiff,
vs.

FIRST AMENDED COMPLAINT OF HERNANDEZ KROONE AND ASSOCIATES,INC.
1) Breach of Contract 2) Breach of Contract through

8 UNITED STATES OF AMERICA,
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Defendant.

Nondisclosure of Material Facts 3) Breach of Implied Warranty of
Correctness of Plans and Specifications

4) Violation of Prompt Payment Statutes
5) Breach of Covenant of Good Faith and Fair Dealing
12

13 COMPLAINT
14 Plaintiff Hernandez, Kroone And Associates, Inc. alleges as follows:

15 PARTIES. JURISDICTION. AND VENUE
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1.
Plaintiff

Hernandez, Kroone And Associates, Inc. (flHKAfI) is, and at all times relevant

17 hereto was, a corporation duly organized and existing under the laws of Californa, with its principal

18 place of business in Californa.
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2.
3.

Defendant is the United States of America.

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At all times herein mentioned, each of the acts complained of was performed by an

21 authorized official of the Corps of Engineers.

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4.

Jurisdiction is conferred on this Cour pursuant to Contract Disputes Act of 1987

23 (CDA) 41 U.S. C. §601 et seq.
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5.

HKA has complied with the dispute resolution reqùirements identified in the

25 HKA Ary Corps contract, including but not limited to §52.231 of the contract. HKA timely
26 submitted request for payment or contract adjustments which the Ary Corps denied. Thereafter, on

27 or about December 13,2005, HKA presented to the Ary Corps a timely and sufficient certified

28 claim for the damages sought herein, which claim was denied by the Ary Corps Contracting Offcer
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1 on or about March 16, 2006. A true and correct copy of the March 16, 2006 denial is attached hereto
2 as Exhibit 1 and incorporated herewith. Less than 12 months have passed since Army Corps' denial

3 ofHKA's December 13,2005 claim. On or about December 23,2005, HKA presented to the Ary
4 Corps a timely and sufficient certified claim for the damages sought herein, which claim was denied
5 by the Ary Corps Contracting Officer on or about June 6, 2006. A true and correct copy of

the June

6 6,2006 denial is attached hereto as Exhibit 2 and incorporated herewith. Less than 12 months have
7 passed since Ary Corps' denial of HKA's December 23, 2005 claim Additionally, on or about

8 December 15, and 20,2005 and February 23,2006 and May 3, 2006 HKA presented to the Ary
9 Corps timely and sufficient certified claims for the damages sought herein. The Ary Corp has not
10 yes issued a decision on any of the foregoing HKA claims, nor has it notified HKA of the time within
11 which a decision wil be issued. More than 60 days have passed since HKA's submittal of these
12 claims, and pursuantto 41 U.S.C 605(c)(5), these claims are deemed to have been

denied, authorizing

13 the commencement of suit on the claims.

14 FIRST CLAIM FOR RELIEF

15 (Breach of Contract)

16 6. HKA refers to and incorporates herein by this reference Paragraphs 1 though 5 above.
17 7. On or prior to February 2, 2005, the Ary Corps solicited bids for the United States

18 Border Patrol Station, Indio California located at 83801 Vin Deo Circle in Indio Californa ("Project").
19 The Project documents, including the solicitation for bids, scope of

work, and plans and specifications

20 were posted on-line as Solicitation No. W9126G-05-R-0018 ("Solicitation"). The Solicitation was a

21 "sole Source 8(a) Solicitation" pursuant to a Parnership Agreement between Small Business
22 Administration and the Deparment of

Defense, and accordingly, HKA was the only entity invited to

23 respond to the Solicitation.
24 8. By an e-mail dated February 2, 2005, the Arey Corps directed HKA to the "link" at

25 "ftp.usace.ary.mil/Incoming/SWF/INS/Indio,%20CA/" for obtaining the "whole solicitation" for
26 Solicitation No. W9126G-05-R-00 18 for Border Patrol Station in Indio Californa. A tre and correct

27 copy of that e-mail is attached hereto as Exhibit 3 and incorporated herewith.
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1 9. HKA visited the link at ftp.usace.army.mil/Incoming/SWF/INS/Indio,%20CA/ and
2 viewed, printed and downloaded Ary Corps' Solicitation for the Project, including the scope of
3 work, plans and specifications included therein. A true and correct copy of

that Solicitation is attched

4 hereto as Exhibit 4 and incorporated herewith.

5 10. After reviewing the information contained in the Solicitation, HKA relied on and used
6 the information to determine the scope and requirements of

the Project, and to also calculate its bid for

7 the Project. The Solicitation allowed and invited the bid to be submitted by fax.
8 11. On or about February 15,2005, HKA submitted to the Ary Corps, via fax, its fixed
9 price bid for the Project, agreeing to fuish all services, materials, supplies, plant, labor and
10 equipment and superintendence to construct the Project in accordance with the Scope of

Work and

11 Specifications attached to the Ary Corps Solicitation for the price of$875,468. A true and correct

12 copy ofHKA's bid is attached hereto as Exhbit 5 and incorporated herewith

13 12. The Ary Corps accepted HKA's bid for the Project and awarded HK the contract to
14 fuish all services, materials, supplies, plant, labor and equipment and superintendence to construct

15 the Project in accordance with the Ary Corps' Solicitation ("contract"). After receiving a notice to
16 proceed, HKA began work.

17 13. HKA is informed and believes, and thereupon alleges, that it duly performed all thngs
18 and conditions on its par to be performed under the contract, except as such performances was

19 rendered superfluous or prevented or excused by acts or omissions of Ary Corps, or by acts or

20 omissions of those for whose acts and omissions Ary Corps is responsible, or by frstration or
21 prevention by Ary Corps, or except as such performance was waived by acts or omission of Ary
22 Corps, or except as Ary Corps, by acts or omissions, is estopped to rely upon any failure ofHKA to
23 perform.

24 14. HKA is informed and believes, and thereupon alleges, that Ary Corps breached the
25 contract, inter alia by:
26 (a) Failing to comply with §52.232-5 of

the contract, including but not limited to

27 failng to pay HKA the contract price and failing to make progress payments as provided in the
28 contract;
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1 (b) Failing to comply with §52.232-25 of

the contract, including but not limited to,

2 failng to make prompt payment on HKA invoices, and failing to pay interest penalty;
3 (c) Failng to comply with §52.242-14 ofthe contract, including but not limited to,
4 failng to make equitable adjustments and modifications to the contract for requested changes;
5 (d) Failng to comply with "Parnering" requirements of

the contract;

6 (e) Failing to make timely and complete progress payments, which also violated

7 Federal prompt payment statutes;
8 (f) Failing to timely pay for change orders;
9 (g) Requirig HKA to provide, labor, services, equipment and materials beyond the

10 requirements of the contract without properly negotiating and issuing change orders therefor;
11 (h) Requiring HKA to provide, labor, services, equipment and materials beyond the

12 requirements of the contract without compensation therefor;
13 (i) Interfering with or otherwise disrupting and delaying the performance ofHKA

14 of the contract;
15 G) Causing HKA to be excluded from portions of

the project from time to time and

16 preventing HKA from performing the contract at those times and places;
17 (k) Failing to obtain necessar actions, consent or cooperation from thid paries, or
18 easements, permits or other documentation which was required to enable HKA to perform;

19 (1) Failing to timely perform the things and conditions to be performed by Ary

20 Corps on its par;
21 (m) Failng to comply with the requirements of

the implied covenant of good faith

22 and fair dealing;
23 (n) Exercising the authority and discretion allowed Ary Corps under the contract

24 in an uneasonable, arbitrar and capricious maner;
25 (0) Providing plans, specifications and other materials concernng the Project, as a

26 basis for bidding thereon and entering into the contract which were not accurate, workable, correct

27 and sufficient;
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1 (P) The above mentioned breaches by Ary Corps has provoked subcontractor and

2 supplier claims against HKA for which HKA is entitled to indemnity from Ary Corps or which
3 claims HKA is entitled to pass-through to Ary Corps.
4 15. As a direct and proximate result of the aforementioned breaches by Ary Corps, HK:

5 (a) Has incured expenses to provide labor, services, equipment and materials (plus

6 overhead and lost profits) which were not required under the contract;
7 (b) Has incured expenses to provide labor, services, equipment and materials (plus

8 overhead and lost profits) which were only required by deviations in the nature and extent of the

9 Project from the way it had been presented in the Solicitation, including plans, specifications and other
10 materials given to HKA to use to determine its bid;
11 (c) Has suffered, and is stil suffering, claims and demands from subcontractors and

12 suppliers, including the cost of processing and defending those claims and demands and passing them

13 through to Ary Corps;
14 All to HKA's damage in an amount not yet fully ascertained (but approximately $375,000), and when

15 ascertained this pleading wil be amended to state the correct amount, plus interest thereon as
16 provided in the Contract Disputes Act, plus any prompt payment penalties as provided by the contract

17 and relevant statutes.

18 16. HKA has demanded payment therefor from Ary Corps but Ary Corps has failed
19 and refused, and continues to fail and refuse to pay.

20 SECOND CLAIM FOR RELIEF
21 (Breach of Contract through Nondisclosure of Material Facts)
22 17. HKA refers to and incorporates herein by this reference Paragraphs 1 through 16
23 above.

24 18. In preparing its bid and entering into the contract, HKA relied upon disclosures and
25 representations made by the Ary Corps in the Solicitation - including but not limited to the scope of

26 work, plans, specifications and other materials concernng the Project which the Ary Corps made
27 available to HKA.
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1 19. At all times and places the Ary Corps made those representations and disclosures, it

2 had a duty to disclose any material facts which would indicate any alteration of, interference with, or

3 prevention of HKA's performance of the contract in the maner contemplated therein.

4 20. HKA is informed an believes, and thereupon alleges, that the Ary Corps breached
5 that duty by making untrue representations of material facts; by failing to disclose facts which either
6 materially qualified the representations and disclosures made or rendered those representations and

7 disclosures likely to mislead HKA; and by failing to disclose other material facts which were known

8 or accessible only to the Ary Corps and which the Ary Corps knew were not known to or
9 reasonably discoverable by HKA.

10 21. As a consequence of the foregoing misrepresentations and nondisclosures, HKA was

11 misled into bidding on, and entering into the contract at a lower price than HKA would have otherwse
12 done, and was thereby required to provide labor, services, equipment and materials to and for the
13 proj ect in excess of what it should have had to fuish, all to HKA's damage in an amount not yet fully

14 ascertained (but approximately $375,000), and when ascertained this pleading wil be amended to

15 state the correct amount, plus interest thereon at the lawfl rate. HKA has demanded payment
16 therefor from the Ary Corps, but the Ary Corps has failed and refused, and continues to fail and

17 refuse to pay.
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THIRD CLAIM FOR RELIEF
(Breach of Implied Warranty of Correctness of Plans and Specifications)

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21 above.

22. HKA refers to and incorporates herein by this reference Paragraphs 1 through 21

22 23. By letting out the Solicitation for the Project for HKA to bid, the Ary Corps
23 impliedly waranted that satisfactory contract performance wil result from adherence to the
24 Solicitation for the Project, including the scope of

work, plans and specifications included therein.

25 24. HKA reasonably relied upon the accuracy of

the Solicitation, including the scope of

26 work, plans and specifications for the Project in submitting its bid for the Project.
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1 25. Subsequent to awarding HKA the contract for the Project, HKA discovered that the

2 Ary Corps had breached this implied waranty by issuing defective scope of work, plans and
3 specifications for the Project.
4 26. As a consequence ofthe defective scope of

work, plans and specifications, HKA was

5 forced to expend substatial additional sums for labor, services, equipment and materials which were

6 not contemplated at the time of bidding of the Project, which sums are in an amount not yet fully
7 ascertained (but approximately $375,000), and when ascertained this pleading will be amended to

8 state the correct amount, plus interest thereon at the lawfl rate. HKA has demanded payment
9 therefor from the Ary Corps, but the Ary Corps has failed and refused, and continues to fail and

10 refuse to pay.
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FOURTH CLAIM FOR RELIEF
(Violation of

Prompt Payment Statutes)

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15 above.

27.

HKA refers to and incorporates herein by this reference Paragraphs 1 through 16

16 28. HKA is informed and believes, and thereupon alleges that the Ary Corps's failure to

17 pay HKA money due and owing HKA based on the contract between HKA and Ary Corps
18 represents a violation of Federal prompt payment statutes, including but not limited to Code of

Federal

19 Regulations (5CFR §1315 et seq.) and United States Code Service (41 USCS §601 et seq.). Pursuant

20 to said violation, HKA is entitled to recover interest penalties according to proof.
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FIFTH CLAIM FOR RELIEF
(Breach of Covenant of Good Faith and Fair Dealing)
29.

24
25 above.

HKA refers to and incorporates herein by this reference Paragraphs 1 through 28

26 30. HKA is informed and believes, and thereupon alleges that implied in every
27 construction contract, including the one between HKA and Ary Corps is a waranty that the Ary
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1 Corps would act fairly and in a good faith toward HKA in performing its duties under the contract and

2 would do nothing to injure HKA.
3 31. In fact, Ary Corps has been unfair in its dealings with HK on the Project, placing its

4 own interests above those of HKA and uneasonably, without justification, and deliberately has
5 hared HKA. By way of example, the Ary Corps, among other things, failed to clearly identify the
6 scope of

work for the Project; failed to correctly and consistently interpret contract provisions; failed

7 to abide by the express language of the contract; requiring HKA to provide, labor, services,
8 equipment and materials beyond the requirements of

the contract without compensation; delayed and

9 interfered with HKA's work; failed to timely reply to request for information or submittals; failed to
10 issue change orders when reasonable and necessar; maliciously reported HKA to varous agencies for

11 alleged and non existent violations; maintaining vexatious Ary Corps staf on the Project; retaliating

12 against HKA by withholding payment and refusing to issue change orders for extra work.

13 32. The Ary Corps has been given opportties to reconsider its position and recant on
14 its previous conduct, but it refuses to do so, and is prompted not by honest mistake, bad judgment or
15 even negligence, but by a conscious and deliberate decision which unfairly frustrates the agreed upon

16 common puroses of the contract, and disappoints the reasonable expectations of HKA, depriving
17 HKA of the benefits of

the contract.

18 33. As a result of Ary Corps breaches of

the implied covenant of good faith and fair

19 dealings, HKA has been damaged in an amount not yet fully ascertained (but approximately
20 $375,000), and when ascertained this pleading will be amended to state the correct amount.
21

22 WHEREFORE, HKA prays for judgment against the Ary Corps, as follows:
23 1. For damages according to proof, together with interest thereon at the maximum rate

24 allowed by law;
25 2. For prompt payment penalties per Federal statutes on the principal sum until paid

26 or according to proof;
27 3. For costs of suit incured herein; and

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For such other and further relief as the cour may deem just and proper.

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DATED: June L, 2007

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Laurence P. Lu ka SBN 103752 HUT ORTMANN P ALFFY NIEVES LUBKA DARLING & MAH, INC. 301 North Lake Avenue, 7th Floor Pasadena, California 91101-1807
Phone: (626) 440-5200
Fax: (626) 796-0107

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Attorney for Plaintiff Hernandez, Kroone & Associates

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Of Counsel:

Joseph J. Pertrilo, DC Bar No. 184986 PERTRILLO & POWELL, P.L.L.c. 16 5335 Wisconsin Avenue, N.W., Suite 440 Washington, D.C. 20015
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Phone: (202) 887-4848
Fax: (202) 478-1656

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