Korte-Fusco Joint Venture

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of -- )

)

Korte-Fusco Joint Venture ) ASBCA No. 59767

)

Under Contract No. W912QR-11-C-0037 )

APPEARANCE FOR THE APPELLANT: Kirk J. McCormick, Esq.

Hinckley, Allen & Snyder LLP

Boston, MA

APPEARANCES FOR THE GOVERNMENT: Thomas H. Gourlay, Jr., Esq.

Engineer Chief Trial Attorney

Jennifer M. Payton, Esq.

Engineer Trial Attorney

U.S. Army Engineer District, Louisville

OPINION BY ADMINISTRATIVE JUDGE O'CONNELL

ON THE GOVERNMENT'S MOTION FOR SUMMARY JUDGMENT

This appeal involves a delay claim on a U.S. Army Corps of Engineers (Corps)

construction project. The Corps has filed a motion for summary judgment in which it

contends that a bilateral modification executed after the alleged delays shields the

government from any liability. Because this modification does not clearly release the

claim at issue, the government is not entitled to judgment as a matter of law and we deny

the motion.

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

The following facts are undisputed, unless otherwise noted. 1

1. On 31 August 2011, a contracting officer with the Louisville District of the

Corps executed a contract with appellant, Korte-Fusco Joint Venture (KFJV), for the

design and construction of a project that included a new 400 member Armed Forces

training building and two segmental retaining walls (R4, tab 3 ). Due to a bid protest, the

contracting officer waited until 29 November 2011 to issue the notice to proceed (R4,

tab 4; B. Korte aff. ii 8).

1

Both parties have submitted a statement of undisputed material facts. While appellant

has submitted a detailed response to the government's statement, the government

has not responded to appellant's submission. Under Board Rule 7(c)(2), the Board

may accept as true a fact properly proposed and supported by one party unless the

other party properly responds and establishes that it is in dispute.

2. On 16 May 2012, KFJV entered into a subcontract with NCI-CT, Inc. (NCI),

for work that included construction of the retaining walls (R4, tab 9). According to

appellant, "NCI is prosecuting this Appeal in the name of KFJV with the consent,

cooperation, and authorization of KF JV" ( app. br. at 1 n. l ).

3. NCI first submitted the retaining walls as a construction submittal to KFJV on

31May2012 (R4, tab 6). The government provides a long history of the approval

process in its statement of undisputed facts but for present purposes it suffices to say that

after a series of disapprovals and re-submittals, the Corps did not approve the retaining

walls until more than 13 months after the initial submittal, on 9 July 2013 (R4, tab 64).

4. On 21 August 2013, the parties attended a "Red Zone" meeting, a meeting

contemplated by the contract to occur 60 days before the beneficial occupancy date to

discuss the closeout process (R4, tab 3 at GR4-277, ~ 1.52). The minutes of this meeting

quote a Corps employee as stating that "a pending weather mod and time extension will

be executed" (B. Korte aff., ex. 4 at 2 of 8, ~ 19).

5. Attached to the Red Zone meeting minutes is a "Change Request Register."

This register lists 17 change requests, including request no. 5, which is also identified as

"Ref No R00004" and is listed as a negotiated change of 72 days. Under the heading

"Necessity for Change" it states: "l. Contractor is due an increase in the performance

time due to bid protest of over 3 months delaying the contract start, and several adverse

weather days during the construction period." (B. Korte aff., ex. 4)

6. On 13 September 2013, KFJV and the contracting officer executed bilateral

Modification No. A00004, which extended the time for contract completion by 72 days

but left the contract price unchanged (R4, tab 67). In block 14, Description of

Amendment/Modification. the modification states as follows:

Reference No: R00004

Case 005 - Time Extension

(Id. at 1) In a continuation of block 14, the second page of the modification contains the

following relevant language:

A. SCOPE OF WORK

Case 005 -Time Extension

Performance time is increased 72 calendar days to 702

calendar days. Time extension includes all delays incurred by

the contract up to the date of issuance of this modification.

2

D. CHANGE IN CONTRACT PRICE

Total contract price is unchanged.

E. CHANGE IN CONTRACT TIME

... [I]t is understood and agreed that the contract performance

time is hereby extended 72 calendar days to and including

8 November 2013, at no additional cost to the Government.

F. CLOSING STATEMENT

It is understood and agreed that pursuant to the above, the

contract time is extended the number of calendar days stated,

and the contract price is unchanged as indicated above, which

reflects all credits due to the Government and all debits due

the Contractor.

It is further understood and agreed that this adjustment

constitutes compensation in full on behalf of the Contractor

and its Subcontractors and Suppliers for all costs and markups

directly or indirectly attributable for the change ordered, for

all delays related thereto, for all extended overhead costs, and

for performance of the change within the time frame stated.

7. On 12 May 2014, KFJV submitted the certified claim at issue in this appeal

(R4, tab 73). KFJV sought $1,971,209.19, including $1,753,424.96 for NCI, and a

389-day time extension as a result of Corps delays in approving the retaining wall

submittals (id. at GR4-2533).

8. Prior to execution of Modification No. A00004, NCI informed KFJV on three

occasions that it wanted additional money (R4, tabs 16, 26, 66). KFJV agrees that one of

these documents, an email from NCI dated 27 November 2012 (R4, tab 26), relates to the

retaining wall approval process but points out that this email ended with NCI stating that

it could not "calculate the magnitude of the delay value" until it had a confirmed start

date and experienced the severity of the winter. KFJV disputes any suggestion that the

issues raised in the emails contained at Rule 4, tabs 16 and 66, have any relationship to

approval of the submittals (app. statement of genuine issues~~ 14, 62).

3

DECISION

Standard ofReview for Summary Judgment Motions

Pursuant to Board Rule 7(c)(2), the Board looks to Rule 56 of the Federal Rules of

Civil Procedure for guidance in deciding motions for summary judgment. Under

FED. R. C1v. P. 56(a), the Board may grant summary judgment ifthere is no genuine

dispute as to any material fact. In considering such a motion, the evidence of the

nonmovant is to be believed, and all justifiable inferences are to be drawn in its favor.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

Standards Governing Accord and Satisfaction and Releases

Accord and satisfaction occur "when some performance different from that which

was claimed as due is rendered and such substituted performance is accepted by the

claimant as full satisfaction of his claim." Bell BC! Co. v. United States, 570 F.3d 1337,

1340-41 (Fed. Cir. 2009) (quoting Cmty. Heating & Plumbing Co. v. Kelso,

987 F.2d 1575, 1581 (Fed. Cir. 1993)). To prove accord and satisfaction, the government

must show "(l) proper subject matter; (2) competent parties; (3) a meeting of the minds

of the parties; and (4) consideration." Id. at 1341 (quoting O'Connor v. United States,

308 F.3d 1233, 1240 (Fed. Cir. 2002)). In this case, like in Bell BC!, there is no dispute

regarding proper subject matter or competent parties. KFN contends, however, that

there was no meeting of the minds with respect to releasing NCI's delay claim. It also

contends that there was no consideration for KFJV's release.

A release is contractual in nature and must be interpreted in the same manner as

any other contract term or provision. Bell BC!, 570 F.3d at 1341 (citing Metric

Constructors, Inc. v. United States, 314 F.3d 578, 579 (Fed. Cir. 2002)). To resolve this

dispute we must first examine whether the modification is ambiguous; ifthe terms are

unambiguous, we cannot consider extrinsic evidence. McAbee Constr., Inc. v. United

States, 97 F.3d 1431, 1435 (Fed. Cir. 1996). If the modification is ambiguous, requiring

the weighing of extrinsic evidence, the matter generally is not amenable to summary

resolution. Beta Sys., Inc. v. United States, 838 F.2d 1179, 1183 (Fed. Cir. 1988). II

The Government Has Not Carried Its Burden

The government contends that the doctrine of accord and satisfaction bars NCI's

delay claim because Modification No. A00004 contains language that specifically

releases claims for delay. The government relies on the sentence in the modification that

states "Time extension includes all delays incurred by the contract up to the date of

issuance of this modification.'' The government also relies on the sentence that states "It

is further understood and agreed that this adjustment constitutes compensation in full...for

all costs and markups directly or indirectly attributable for the change ordered, for all

delays related thereto." (SOF ii 6)

4

We agree that these sentences, in isolation, could be read to provide for a broad

release of delay claims, at least through the date of the modification. However, when

interpreting a contract, the Board must consider the document as a whole and interpret it

so as to harmonize and give reasonable meaning to all of its parts. NVT Technologies,

Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004). Thus, we must consider all

of the language in the modification at issue.

To begin, close examination of the second sentence that the government relies

upon indicates that the release given may not be as broad as the government contends.

This sentence provides ··It is further understood and agreed that this adjustment

constitutes compensation in full. .. for all costs and markups directly or indirectly

attributable for the change ordered, for all delays related thereto" (emphasis added).

This language at least suggests that KFJV's release is only for the particular "change

ordered" and is not a more general release. The modification does not describe the

"change ordered," although it does cite to "Reference No: R00004" and "Case 005 -

Time Extension." But this does not improve our understanding because the modification

also fails to tell us what Reference No: R00004 and Case 005 mean. While the

government reads this modification to provide for a broad release, we do not believe this

question can be answered without knowing the definition of Reference No. R00004 and

Case 005. Because this question cannot be answered within the four comers of the

document, we hold that the modification is ambiguous. See Edward R. Marden Corp. v.

United States, 803 F.2d 701, 705 (Fed. Cir. 1986) (''if a contract is reasonably susceptible

of more than one interpretation, it is ambiguous'').

Resolution of this issue would require the weighing of extrinsic evidence, which

we will not do on summary judgment. KF JV has submitted extrinsic evidence that, if

nothing else, convinces us that there is a genuine issue for trial. It has submitted

affidavits from Brent and Todd Korte of Korte Construction Company, backed by

documentary evidence, that tell a plausible story that Modification No. A00004 was

intended only to address delays due to the bid protest and weather delays. In their

affidavits, the Kartes discuss much of the history recited in our statement of facts,

namely, that: 1) there was a delay due to a bid protest at the start of the project; 2) the

minutes for the Red Zone meeting state that there was a pending modification for a time

extension; 3) the Change Request Register attached to those meeting minutes states that a

modification for a 72-day time extension had been negotiated due to a bid protest delay at

the start of the project and weather delays; and 4) about three weeks after that meeting,

the parties executed Modification No. A00004, which provided for a 72-day extension

and contained the same or similar descriptive language contained in the Change Request

Register (SOF iii! 1, 4-6; B. Korte aff. iii! 7, 8, 12-17). Both Kartes testified that they

understood A00004 to address the bid protest and weather delays, not any delays relating

to the retaining walls (B. Korte aff. ii 19; T. Korte aff. ii 9). The affidavits and the

attached documentation reinforce our conclusion that there is a material dispute of fact

with respect to whether the parties' intended to resolve NCI's delay claim.

5

The government has not attempted to define or explain "Reference No: R00004"

and "Case 005." In its reply brief, the government changes tactics and asks us to rule, in

limine, that KFJV waived any right to a time extension for delay up to 8 November 2013.

Waiver consists of a voluntary and intentional relinquishment of a known right.

Cherokee Nation v. United States, 355 F.2d 945, 950 (Ct. Cl. 1966). But, as we have

already held, the language of Modification No. A00004 is ambiguous with respect to the

rights KFJV gave up. Thus, the government's waiver argument is no better suited for

summary resolution than its accord and satisfaction argument.

Finally, we have considered the government's contention that at the time it signed

Modification No. A00004, KFJV was aware that NCI would, or was at least

contemplating, the submission of a claim with respect to approval delays. However, this

does not change our analysis on the government's motion for summary judgment. NCI's

notice that it could or would submit a claim is, at best for the government, a piece of

extrinsic evidence that could be considered in determining the intent of the parties when

they executed this modification. The governmenf s demonstration that NCI raised the

possibility of submitting a claim for these approval delays does not alter our conclusion

that the modification is ambiguous and that there are disputed facts as to whether there

was a meeting of the minds.

CONCLUSION

For the foregoing reasons, the government's motion is denied.

Dated: 5 November 2015

SfvLLl '11 o'G~

MICHAEL N. O'CONNELL

Administrative Judge

Armed Services Board

of Contract Appeals

(Signatures continued)

6

I concur I concur

ER RICHARD SHACKLEFORD

Administrative Judge Administrative Judge

Acting Chairman Vice Chairman

Armed Services Board Armed Services Board

of Contract Appeals of Contract Appeals

I certify that the foregoing is a true copy of the Opinion and Decision of the

Armed Services Board of Contract Appeals in ASBCA No. 59767, Appeal of

Korte-Fusco Joint Venture, rendered in conformance with the Board's Charter.

Dated:

JEFFREY D. GARDIN

Recorder, Armed Services

Board of Contract Appeals

7