Free Response to Proposed Findings of Uncontroverted Fact - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS SKANSKA USA BUILDING, INC., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 07-143C (Judge Firestone)

DEFENDANT'S RESPONSE TO PLAINTIFF'S PROPOSED FINDINGS OF UNCONTROVERTED FACT Defendant, the United States, respectfully submits the following Response To Plaintiff's Proposed Findings Of Uncontroverted Fact ("PPFUFs"). Defendant will respond in accordance with the requirements of RCFC 56(h)(2). 1. Section 01572 of the construction contract granted the Contractor the right to the

financial benefit accruing from the disposal of surplus "soils" from the project. Defendant's Response: Defendant disputes PPFUF No. 1. The PPFUF contains legal conclusions and plaintiff's characterization of its case, but this does not create a triable issue of material fact precluding summary judgment. 2. In reliance on Section 01572, the Contractor had not planned on having any cost of

disposing of surplus soils from the project when preparing its estimate and bidding on the work. Defendant's Response: Defendant does not dispute that Skanska and its subcontractors had not planned on having any cost of disposing of surplus soils from the project when preparing its estimate and bidding on the work. Defendant does dispute, however, that the lack of planning on plaintiff's part was the result of any reliance specifically upon Section 01572 of the contract. First, none of the deposition testimony cited by plaintiff invokes Section 01572. Second, although defendant acknowledges that the Declaration of Dave Berglund submitted in support of

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plaintiff's motion for summary judgment states: "I did not include any amounts in Active's estimate or bid for this expense in reliance on the assurances within Section 01572 that Active would be allowed to retain any savings it could obtain in the course of disposing of any surplus soil we were required to remove from the site," the suggestion that Active or Skanska took, or refrained from taking any action in reliance upon Section 01572 is belied by Mr. Berglund's own deposition testimony. Specifically, Mr. Berglund testified as follows: Q. Prior to Active submitting its bid on this project, did Active have an opportunity to review the contract between Skanska and the government? A. No. Q. It did not have an opportunity to review the contract between Skanska and the government? Did you say no? A. You said prior to submitting-Q. Prior to the submission of its bid. A. Correct, we did not. A47. Active clearly could not have relied upon Section 01572 of the contract when preparing its estimate and bid if it had not actually reviewed the contract before submitting its bid. As such, defendant disputes that plaintiff relied upon Section 01572 in declining to consider the costs of disposing of surplus soils in its estimate and bid. 3. The Government had "confirmed" in writing that the remaining stockpiled soil was surplus

and authorized for offsite removal before lead contamination was discovered. Defendant's Response: Defendant does not dispute that RFI 318 stated as follows:

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Due to a surplus in satisfactory soils on the project, approximately 15,000 cubic yards, Active is requesting permission to place a portion of this material in the low areas next to the revised location of the North irrigation vault per FY03 RFI#25. Active is also requesting that they be allowed to remove the remaining material from the project site. Please note that this work will be done at no cost to the Government. A23. The Government does not dispute that its response to RFI 318, authored by James Packard, stated as follows: "Fort Lewis has no problem with us depositing surplus satisfactory soils in the low area, however it must be kept below the level of the road and they would like to have it topsoiled and seeded. Coordinated with Larry McVay of Public Works 1 Oct 03." A23. The Government does not dispute that Skanska subsequently submitted RFI 318R, which stated as follows: Due to a surplus in satisfactory soils on the project, approximately 15,000 cubic yards, Active is requesting permission to place a portion of this material in the low areas next to the revised location of the North irrigation vault per FY03 RFI#25. Active is also requesting that they be allowed to remove the remaining material from the project site. Please note that this work will be done at no cost to the Government. Post Note: In response to conversation between Jason Hynes and Doug Mcniesh with Skanska and Jim Packard and Tom Wilkin with the COE on 10/3/03, Active has noted that approximately 5,000 cubic yards of soil will be spread over the North irrigation vault. Stripping and hydroseed will be placed over the relocated soil. Active is requesting to remove 10,000 cubic yards of soil from the Post. Please confirm that this is acceptable. A24. The Government does not dispute that its response to RFI 318R, authored by James Packard, stated follows: Fort Lewis has no problem with us depositing surplus satisfactory soils in the low area, however it must be kept below the level of the road and they would like to have it topsoiled and seeded. Coordinated with Larry McVay of Public Works 1 3

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Oct 03. Post Note: Confirmed. Regrade elevated area to grade to existing catch basin and/or add rings to adjust height of same. Continue erosion control around catch basin. A24. The Government does dispute, however, that the foregoing responses to RFIs 318 and 318R confirmed that Active was authorized to remove soils from the project site. First, both responses are ambiguous on the face. The response to RFI 318, for example, does not appear to address the question of whether Active may remove any quantity of soil whatsoever. The response to 318R is no clearer. Specifically, because RFI 318R requests permission for Active to accomplish more than one proposed activity, it is impossible to determine from the face of the document the precise activity to which the statement "Confirmed" attaches. Second, when James Packard, the project engineer and the author of the responses in question, was asked by plaintiff's counsel during his deposition whether he understood that RFI's 318 and 318R "dealt with how to dispose of 15,000 cubic yards of stockpiled soil on the project," Mr. Packard responded, "No, sir, that was not the intent of this particular RFI." A70. Mr. Packard explained that "this is a confirming RFI. We had had some verbal discussions about filling in a low area behind our building to get rid of some of the surplus materials. And Skanska was in the habit of, whenever we had a verbal conversation, of following it up with an RFI to confirm it in writing. And this RFI was written by them to confirm a conversation between Doug McNiesh and Jason Hynes and myself, about disposing of some of that material in that pile in this lower area behind our building . . . . We had no conversations about removing the entire pile from the site, verbally." A70.

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Asked whether Skanska ever gave him a "written request to remove excess or satisfactory soils from the project," Mr. Packard responded, "No, sir. I don't consider this a written request." A70-71. The following exchange then occurred between plaintiff's counsel and Mr. Packard during Mr. Packard's deposition with respect to the Government's response to RFI 318: Q. So at least part of [RFI 318] constitutes a request being transmitted by Skanska of Active to be allowed to remove the remaining material from the project site, correct? A. Yes, sir, that's the way it reads. Q. And in your response, you didn't mention anything about Active's request to be allowed to remove the remaining material from the project site on RFI No. 318, do you? A. No, sir. Q. Is there some reason that you did not respond to that request? A. Yes, sir. This was supposed to be a confirmation of our previous conversation. We had not talked about moving the entire pile, we only talked about putting it in the low spot. A71. Mr. Packard responded similarly with respect to the Government's response to RFI 318R: Q. And then [RFI 318R] proceeds on to say, "Active is requesting to remove 10,000 cubic yards of soil from the Post. Please confirm that this is acceptable." So the only thing that they were asking, if it was acceptable, is the one thing that you hadn't discussed yet, and that's the removal of the 10,000 cubic yards of soil from the post; isn't that true? *** A. Okay. I did not answer that question, the one that says "Active is requesting to remove 10,000 cubic yards of soil from the Post." A72. 5

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Still later, Mr. Packard testified as follows: Q. So they asked you in 318 for permission to remove 15,000 cubic yards from the post and you didn't notice that, and you didn't respond, correct? *** A. I didn't give it any credence at the time. Q. And then they sent you a revised copy, 318R, because you haven't fully responded the first time, and again asked for permission to remove 10,000 cubic yards from the post, to which you responded, "confirmed," and yet your testimony here today is that once again, you ignored that part of the request, and the confirmation was merely confirmation of something you had already agreed to with the contractor. That's your testimony? A. Yes, sir . . . . A72. In this context, where the documents in question are facially ambiguous, and their author unequivocally testified that he did not intend for his responses to address the question of whether Active was being granted permission to remove surplus soil, plaintiff cannot reasonably contend that PPFUF No. 3 is uncontroverted. 4. The Contractor had arranged with a third-party, ESE Corporation, to trade the surplus soil

in exchange for hauling it away at no expense to the contractor. Defendant's Response: Defendant does not dispute that on or about March 3, 2004, approximately a year after Skanska's contract with the Government was finalized, Active received a proposal from ESE Corporation, which stated as follows: We propose to remove approximately 15K cubic yards of stockpiled surplus soil from subject site to 48th & Tacoma Blvd. to be utilized as preload material. Material to be transported by ESE and others at no charge to Active Construction.

NOTE: Proposal contingent upon the following: 6

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1. Work being completed by 5/1/04. 2. Soil sampling certifying soil is not contaminated. 3. Proposal valid for 30 days. A25. 5. Lead contamination was discovered in soil stockpiled at the construction site.

Defendant's Response: Defendant disputes PPFUF No. 5 because it is not supported by the specific material cited. Specifically, contracting officer Nancy Gary testified that what was present in project soils "was not considered soil contamination, but a higher level of lead." A53 (emphasis supplied). She further testified that to her knowledge, there was no "contamination" found in the soil stockpiles because "it was paint chips," and "[i]t was presented to me as a higher level of lead, over the normal limit and­the definition of contaminated soils was different from what th[e] soils with the lead in it had." A54. Defendant does not dispute, however, that on April 7, 2004, the Army Corps of Engineers issued a Stockpile Characterization Report ("Report"), which stated that project soil was "not grossly contaminated with lead, but that [lead] paint ships were randomly mixed in with the soil," A29, and that the soil "contain[ed] some total lead concentrations exceeding . . . unrestricted use criteria . . . . However, the soils do not appear to be a `dangerous waste' . . . and do not need to be handled as such." A30. 6. The contractor did not cause the lead contamination.

Defendant's Response: Defendant does not dispute that, when asked during her deposition whether she "agree[d] that the contractor did not cause the lead contamination," contracting officer Nancy Gary replied, "Yes, I agree." A55. 7. The contract documents did not disclose the lead contamination.

Defendant's Response: Defendant does not dispute that the contract documents did not

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specifically mention the presence of lead in project soils, but notes that, in light of the fact that Skanska's contract with the Government contains detailed provisions that address the handling of "Hazardous Waste" and "Hazardous Materials," Skanska was on constructive notice that not all of the materials that it might be expected to handle and transport under the contract would be devoid of contamination or potentially harmful substances. 8. The contractor's pre-bid site inspection did not disclose the lead contamination.

Defendant's Response: Defendant disputes PFUF No. 8 because it is unsupported by the material cited. The deposition testimony cited by plaintiff indicates only that Active performed a visual inspection of the site, but did not perform any testing of project soils prior to submitting its bid. A46-47. Expert testimony has not yet occurred in this case, but one may reasonably question whether Active're pre-bid inspection was a reasonable one. 9. The Contractor was not aware of the lead contamination when it prepared its bid.

Defendant's Response: Defendant does not dispute that contracting officer Nancy Gary indicated that she personally had no facts that would lead her to conclude that "the contractor" was aware of the lead contamination prior to entering into the contract. A55. Defendant also does not dispute that Robert Matthews testified that a "hazard," purportedly lead, "wasn't identified until way late in the project." 10. The lead contamination was not something the contractor should have been aware of when

it prepared its bid. Defendant's Response: Defendant disputes PPFUF No. 10. The PPFUF contains legal conclusions and plaintiff's characterization of its case, but this does not create a triable issue of material fact precluding summary judgment. Defendant also disputes PPFUF No. 10 because it

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is not supported by the material cited. Specifically, contracting officer Nancy Gary indicated during her deposition merely that she was not personally aware of any facts that would lead her to conclude that the contractor should have been aware of the presence of lead in project soils prior to entering into the contract. A55. 11. The lead contamination was unusual and materially differed from what was ordinarily

encountered in earthwork. Defendant's Response: Defendant disputes PPFUF No. 11. The PPFUF contains legal conclusions and plaintiff's characterization of its case, but this does not create a triable issue of material fact precluding summary judgment. 12. The Government issued a directive requiring the Contractor to dispose of the contaminated

soil at a government-owned landfill nine miles from the location of the project. Defendant's Response: Defendant does not dispute that the Government issued a directive requiring Skanska to dispose of project soils at a Government-owned landfill nine miles from the location of the project. 13. The discovery of the lead contamination was what caused the government to issue its

directive to dispose of the soils at the landfill. Defendant's Response: Defendant disputes PPFUF No. 13, because, as demonstrated by the plain language of each of the Government's directives to Skanska, it was in large part Skanska's own refusal to haul project soils off the work site in an attempt to extort additional compensation from the Government beyond its bid price, A39, that prompted the Government to issue a series of directives requiring project soils to be taken to Landfill #2 to, for example, "mitigate any potential demobilization and remobilization costs," and prevent interference with another

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project. A40-42. 14. The contract, without the directive, did not require the contractor to dispose of the surplus soil at a government-owned landfill nine miles from the project. Defendant's Response: Defendant disputes PPFUF No. 14. The PPFUF contains legal conclusions and plaintiff's characterization of its case, but this does not create a triable issue of material fact precluding summary judgment. 15. The contractor incurred substantial additional costs when the soil contamination was

discovered because it was unable to trade the soil in exchange for hauling it away. Defendant's Response: Defendant disputes PPFUF No. 15 because it is not supported by the material cited, and because it is not a proper finding of fact, but, instead, calls for a legal conclusion as to whether alleged costs incurred were "additional," i.e., above and beyond what Skanska's contract with the Government required it to provide within its bid price. Skanska's written claim cannot support PPFUF No. 15, because, for the legal reasons set forth in detail in defendant's motion for summary judgment, Skanska incurred no "additional costs," much less "substantial additional costs," in connection with the Government's direction to Skanska to transport project soils to Landfill #2. Specifically, the Government's direction decreased Skanska's contractual responsibilities by relieving it of the obligation to transport project soils off Fort Lewis, decreasing hauling distances and costs that should have been contemplated by the contractor, and also by insulating the contractor from landfill disposal fees. As such, it cannot reasonably be said that Skanska incurred any additional costs by reason of the direction to transport project soils to Landfill #2. Moreover, if this Court were to determine that project soils constituted "clean fill" within

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the meaning of Section 01410-3.5.2 of Skanska's contract with the Government, the Court would also be constrained to find that the Government's direction to transport project soils to Landfill #2 was nothing more than a direction to Skanska to fulfill its preexisting contractual obligations to provide transportation for project soils to locations on Fort Lewis within its bid price. As such, Skanska cannot reasonably be said to have incurred any "additional costs" as a result of the presence of lead. It also bears noting that the testimony of James Packard that plaintiff cites in support of PPFUF No. 15 does not support the matter asserted. Specifically, Mr. Packard testified to nothing more than that Skanska submitted a claim for additional compensation in the amount of approximately $140,000, A73, and that it would have been "substantially less to haul [project soils] to the Fort Lewis landfill" than to the nearest Class D Landfill. A75, A77 (emphasis supplied). Accordingly, nothing plaintiff has submitted in support of PPFUF No. 15 would justify the Court in making the requested finding. 16. The costs the Contractor incurred were caused by its being required to transport the

contaminated soil from the stockpile on site to a Government-designated landfill nine miles away. Defendant's Response: Defendant disputes PPFUF No. 16 The PPFUF contains legal conclusions and plaintiff's characterization of its case, but this does not create a triable issue of material fact precluding summary judgment. For the legal reasons set forth in detail in defendant's motion for summary judgment, the Government's direction to Skanska to transport project soils to Landfill #2 did not cause Skanska to incur any costs that were not to have been provided for in Skanska's bid price to the Government, because the direction decreased

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Skanska's contractual responsibilities by relieving it of the obligation to transport project soils off Fort Lewis, decreasing its hauling distances and costs, and insulating it from landfill disposal fees. Moreover, if this Court were to determine that project soils constituted "clean fill" within the meaning of Section 01410-3.5.2 of Skanska's contract with the Government, the Court would also be constrained to find that the Government's direction to transport project soils to Landfill #2 was nothing more than a direction to Skanska to fulfill its preexisting contractual obligations, and that Skanska cannot reasonably be said to have incurred any uncontemplated costs as a result of the presence of lead. It also bears noting that the testimony of James Packard does not support the conclusion that the costs that Skanska incurred were caused by its being required to transport the project soils from the stockpile on site to Landfill #2. In citing Mr. Packard's testimony in support of PPFUF No. 16, plaintiff omits or ignores Mr. Packard's explanation that the Government had already compensated Skanska for the higher hauling costs of transporting project soils off post by awarding Skanska the contract in the amount that Skanska had bid, and that, therefore, paying Skanska more money for hauling a shorter distance amounted to double payment for services rendered. Specifically, Mr. Packard testified that the Government "asked Skanska to move the material to Landfill No. 2, and they started to move it until they realized we weren't going to pay them for that, because we basically couldn't because we had already paid them to transport it off post. So we couldn't pay them twice, so we directed them to take [the project soils] to Landfill No. 2." A74 (emphasis supplied). Mr. Packard went on to explain that the Government "paid Skanska to ­ in the contract, it was their responsibility to haul it off post once they got authorization from us." A74. As such, Mr. Packard clearly indicated that Skanska did not incur

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any costs for which it was not compensated in its contract in connection with the direction to transport soils to Landfill #2. As such, the direction cannot be said to have caused any of Skanska's alleged costs. The testimony of Robert Matthews that plaintiff cites in support of PPFUF No. 16 is completely immaterial. The exchange that plaintiff cites is as follows: Q. [W]hen lead was discovered in the soil, did active have to breach or otherwise get out of that agreement [with ESE]? A. Yes. Q. Okay. And do you recall how that occurred? A. No. Exhibit 13 to the Declaration of Terry R. Marston II. 17. The costs incurred by the Contractor were substantial.

Defendant's Response: Defendant disputes PPFUF No. 17 unsupported by the material cited. Skanska's written claim cannot support PPFUF No. 17, because, for the legal reasons set forth in detail in defendant's motion for summary judgment, Skanska incurred no additional costs in connection with the Government's direction to Skanska to transport project soils to Landfill #2. Specifically, the Government's direction decreased Skanska's contractual responsibilities by relieving it of the obligation to transport project soils off Fort Lewis, decreasing hauling distances and costs that should have been contemplated by the contractor, and also by insulating the contractor from landfill disposal fees. As such, it cannot reasonably be said that Skanska incurred any additional costs by reason of the direction to transport project soils to Landfill #2. Moreover, if this Court were to determine that project soils constituted "clean fill" within the meaning of Section 01410-3.5.2 of Skanska's contract with the Government, the Court would 13

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also be constrained to find that the Government's direction to transport project soils to Landfill #2 was nothing more than a direction to Skanska to fulfill its preexisting contractual obligations to provide transportation for project soils to locations on Fort Lewis within its bid price. As such, Skanska cannot reasonably be said to have incurred any "additional costs" as a result of the presence of lead. It also bears noting that the testimony of James Packard that plaintiff cites in support of PPFUF No. 15 does not support the matter asserted. Specifically, Mr. Packard merely stated that the Government's "own estimate of the cost of moving this­the material to Landfill No. 2 was substantially under $100,000," A77 (emphasis supplied), not that any costs Skanska incurred were substantial. Accordingly, there is no basis for PPFUF No. 17. Respectfully submitted, JEFFREY S. BUCHOLTZ Acting Assistant Attorney General JEANNE E. DAVIDSON Director

s/ Martin F. Hockey, Jr. MARTIN F. HOCKEY, JR. Assistant Director

s/A. Bondurant Eley A. BONDURANT ELEY Trial Counsel Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 14

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Tele: (202) 616-8254 Facsimile: (202) 514-8624 Attorneys for Defendant

January 29, 2008

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CERTIFICATE OF SERVICE I hereby certify that on this 29th day of January, 2008, a copy of the foregoing "DEFENDANT'S RESPONSES TO PLAINTIFF'S PROPOSED FINDINGS OF UNCONTROVERTED FACT" 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/ A. Bondurant Eley A. BONDURANT ELEY

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