TRG Construction Inc. v. District of Columbia Water & Sewer Authority
TRG Construction Inc. v. District of Columbia Water & Sewer Authority
Opinion of the Court
This case arises out of a contract dispute between the District of Columbia Water and Sewer Authority (D.C.Water) and its contractor, TRG Construction. TRG was hired to renovate the bathrooms at D.C. Water’s Central Operations Facility. The project took longer than both parties originally anticipated and disputes arose. Ultimately, D.C. Water terminated TRG “for convenience” in accordance with the contract. TRG then filed claims for various damages. After TRG’s claims were denied by D.C. Water, TRG filed this action in the District of Columbia Superior Court, where the trial judge granted D.C. Water’s motion for partial summary judgment in full. This appeal followed.
We remand the case to the trial court for a determination of whether TRG is entitled to “termination for convenience” damages and whether D.C. Water waived a “timeliness” defense with respect to TRG’s claim for delay damages. In all other respects we affirm the decision of the trial court.
When TRG initially contracted with D.C. Water, it agreed to complete the bathroom renovations by June 13, 2004. However, delays plagued the project, and the dead
TRG claims a variety of damages stemming from D.C. Water’s conduct under the contract.
I. Termination for Convenience Damages
In Count IV of its complaint, TRG claims “termination for convenience” damages. Under the contract with D.C. Water, if TRG was terminated for convenience, it was still entitled to “the cost” of any work already performed under the contract, plus a “fair and reasonable” amount of profit for that work. However, D.C. Water was also entitled to “deductf ] ... any claim which [D.C. Water] may have against [TRG] in connection with the contract.”
TRG initially claimed it was entitled to the following: payment of the last two invoices it submitted to D.C. Water in the amount of $44,798.60; the cost of increasing its bond premiums; the cost of materials it purchased and left with D.C. Water; and anticipatory profits.
We must remand for further consideration of this issue. The Superior Court’s opinion granting summary judgment does not adequately explain the basis for denying the relief sought even if D.C. Water was correct in finding that the Time Impact Analysis was inadequate and there was a failure to cure. Further, the court
Because our case law on termination for convenience claims is not well developed, we will also highlight some principles to guide the Superior Court on remand. As we have noted before, “[wjith few exceptions, District contracting practice parallels federal government contract law.” District of Columbia v. Organization for Envtl. Growth, Inc., 700 A.2d 185, 198 (D.C. 1997) (quoting Dano Res. Recovery, Inc. v. District of Columbia, 620 A.2d 1346, 1351 (D.C. 1993)). Further, the termination for convenience language at issue in this case closely resembles the termination for convenience language in the federal acquisition regulations. See 48 C.F.R. § 52.249-2(g)(2), (k) (2012). Therefore, we conclude that the decisions of the federal courts on termination for convenience are persuasive authority on related issues. Cf. Puckrein v. Jenkins, 884 A.2d 46, 56 n. 11 (D.C. 2005) (federal cases interpreting rules identical to the local rules are persuasive authority); Perry v. Gallaudet Univ., 738 A.2d 1222, 1226 (D.C. 1999) (“Interpretations of federal rules identical to our rules are accepted as persuasive authority.”).
The federal courts have been careful to balance the ability of the government to freely terminate a contract for convenience with the corresponding right of a contractor to recover costs after being terminated. Specifically, the courts have held that, following a termination for convenience, a contractor “is entitled to recover for its reasonable, allocable, and allowable costs incurred with respect to termination inventory even if such inventory did not comply in all respects with specification requirements.” Best Foam Fabricators, Inc. v. United States, 38 Fed. Cl. 627, 640 (1997) (quoting New York Shipbuilding Co., ASBCA No. 15443, 73-1 B.C.A. ¶ 9852 at 46,018-19). However, a contractor’s costs are not recoverable if they stem from a “gross disregard by [the contractor] of its contractual obligations.” Id. (quoting New York Shipbuilding, supra, 73-1 B.C.A. at 46,019). Further, after a termination for convenience, “the government may not obtain reprocurement costs for work that it prevented [the contractor] from performing.” United Partition Sys., Inc. v. United States, 90 Fed.Cl. 74, 95 (2009). Finally, the government must prove the amount of its claims. Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 769 (Fed.Cir. 1987).
D.C. Water appears to concede that, “[u]pon terminating a contract for convenience, the government loses whatev
Within the framework established by federal case law, and with further clarification from the parties as to the nature of their claims against one another, the Superior Court should determine on remand whether its grant of summary judgment in favor of D.C. Water is appropriate. If D.C. Water’s permissible claims are greater than the amount to which TRG would otherwise be entitled under the contract, then summary judgment will be appropriate. We note that conducting this analysis may also require an evaluation of TRG’s argument that none of its work was, in fact, substandard. We express no opinion about the quantity or quality of the evidence in support of that claim, or whether that evidence creates an issue of disputed fact.
II. Delay Damages
In Count III of its complaint, TRG sought recompense for damages it suffered as a result of delays allegedly caused by D.C. Water. Originally, TRG submitted this claim to D.C. Water over a year after it was terminated for convenience. Because the contract contained a provision requiring all claims for damages to be filed within thirty days “from the date of the occurrence of the event giving rise to the claim,” the Superior Court granted summary judgment to D.C. Water. See 21 DCMR § 5346.3.
We disagree with the Superior Court’s conclusion that the thirty-day window for claims in 21 DCMR § 5346.3 necessarily bars TRG’s recovery on these damages. Instead, we hold that the protection of filing deadlines, like 21 DCMR § 5346.3, can be waived if not timely asserted. In several eases, federal courts charged with interpreting government contracts have reached this same conclusion. See Mega Const. Co. Inc. v. United States, 29 Fed.Cl. 396, 444 (1993); H.H.O. Co. v. United States, 12 Cl.Ct. 147, 160 (1987) (holding, in regards to an untimely claim, that “the contracting officer may be deemed to have waived untimeliness by considering the claim on the merits”); Copco Steel & Eng’g Co. v. United States, 169 Ct.Cl. 601, 341 F.2d 590, 598 (1965) (“Lack of strict compliance with many kinds of contract requirements concerning writings and notifications have frequently been held to be of no consequence where the conduct of the parties have made it clear that formal adherence would serve no useful purpose or that the parties have in fact waived it.”).
While we recognize that some of these decisions discuss claims submitted under a different type of contractual provision than the one at issue in this case (a “Changes” provision, as opposed to the “Disputes” provision discussed here), we do not find that distinction determinative. Rather, we read those decisions as applying a broader equitable principle: a “wholesome concern that notice provisions in contract-adjustment clauses not be applied too technically and illiberally where the Government is quite aware of the operative facts.” Hoel-Steffen Const. Co. v. United States, 197 Ct.Cl. 561, 456 F.2d 760, 768 (1972).
III. Bond Retention Damages
TRG also complains that D.C. Water “wrongfully retained” a bond that TRG had secured to guarantee its work for one year, commencing from the time that work was completed. However, like the Superi- or Court, we conclude that TRG’s “proof of damages is insufficient and highly speculative.” We are not persuaded by TRG’s analogy to Linan-Faye, supra, 49 F.3d at 930 n. 19. In that case, the Third Circuit noted that the contractor had not “set forth a theory of recovery for damages due to improper retention of the performance bond following termination.” Id. The court concluded that “the appropriate measure of damages would be compensation for jobs lost by Linan-Faye (after termination) that resulted from [the government’s] action.” Id. (emphasis added). Here, TRG has only shown that, because of its decreased bonding authority, there were jobs it did not “pursue” and it could not “submit certain bids.” However, as the Superior Court noted, only one of the unpursued jobs fell outside the one-year period during which TRG was obligated by its contract with D.C. Water to maintain the bond. See International Data Prods. Corp. v. United States, 492 F.3d 1317, 1323 (Fed.Cir. 2007) (finding that specific contractual warranties survived termination for convenience). Because TRG cannot
We affirm the trial court’s order granting summary judgment to D.C. Water on Counts I (bond-related claim) and V (wrongful retention of bond) of TRG’s Complaint.
So ordered,.
. D.C. Water now operates according to a new set of procurement regulations with different numbering. All citations are to the pre-June 12, 2009 regulations that governed this contract.
. TRG's complaint included five counts. Count I alleged a "breach of [an] express written contract.” Count II sought damages for a "failure to extend contract based on excusable delay.” Count III alleged "failure to compensate TRG for excusable delay.” Count IV sought "termination for convenience” compensation. Finally, Count V alleged a breach of good faith and fair dealing based on the alleged seizure of TRG's bond and supplies. TRG does not appeal from the trial court’s dismissal of its claims under Count II, and voluntarily dismissed the portions of Count V based on D.C. Water's alleged retention of TRG's supplies prior to this appeal. The disposition of the remaining claims will be discussed further, infra.
.TRG's contract with D.C. Water clearly forbids the payment of "anticipatory profits or consequential damages” under a termination for convenience claim. TRG appears to have conceded that it is not entitled to such profits.
. We note that, before the trial court, TRG did argue that D.C. Water acted in bad faith when it terminated the contract, and there is case law suggesting that the government may not terminate a contract for convenience in bad faith. See, e.g., Linan-Faye Const. Co., Inc. v. Housing Auth. of City of Camden, 49 F.3d 915, 923-25 (3d Cir. 1995). However, this claim, which TRG does not renew on appeal, is distinct from TRG's claim in Count IV of the complaint that it is entitled to certain payments under the termination for convenience language in its contract with D.C. Water.
. Since Lisbon Contractors (but before Best Foam), at least one of the administrative boards with jurisdiction over federal government contracts permitted deductions for defective and un-cured work. See Ay din Corps., EBCA No. 355-5-86, 89-3 BCA ¶ 22044, 1989 WL 74785, *40 (“In fairness, where no opportunity to correct deficiencies was afforded, no deduction for uncorrected work should be made. In this case, however, termination occurred very late in performance, after [the contractor] had delivered virtually all the hardware to the site, and had ample time to make corrections, which [the government] had repeatedly requested.”).
. See note 1, supra.
. We are not persuaded by D.C. Water’s argument that barring TRG’s claim as untimely in this case is necessary to prevent D.C. Water from being inundated by late claims in the future. Raised properly, 21 DCMR § 5346.3 could have barred an untimely claim. We only rule here that 21 DCMR § 5346.3 can also be waived when D.C. Water fails to assert it in a timely fashion.
. On appeal, TRG argues that it also had bond-related claims in Count I of the complaint. However, TRG does not argue that those claims were based on a different theory of damages from those in Count V. Accordingly, we apply the Superior Court's well-reasoned conclusions to both sets of claims.
.' TRG does not challenge the portions of the order that granted summary judgment to D.C. Water on the non-bond-related sections of Count I and V.
.Because this is a case remand, the trial court is free to consider other factors brought to its attention by the parties. Further, if the trial court, upon reconsideration, again grants summary judgment to D.C. Water, TRG must file a new Notice of Appeal in order to obtain review by this court of that ruling. See Bell v. United States, 676 A.2d 37, 41 (D.C. 1996).
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