Mw Builders, Inc. v. United States

In the United States Court of Federal Claims

No. 13-1023C

Filed: March 5, 2018

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MW BUILDERS, INC. f/n/a/ * Rules Of The United States Court Of

MW BUILDERS OF TEXAS, INC., * Federal Claims 52(b) (Amended Or

* Additional Findings); 59(a)

Plaintiff, * (Grounds For New Trial Or

* Reconsideration; Further Action

v. * After Trial); 59(e) (Motion To

* Alter Or Amend Judgment);

THE UNITED STATES, * Tucker Act Jurisdiction, 28 U.S.C.

* § 1491 (2012).

Defendant. *

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Paul Harvey Sanderford, Sanderford and Carroll, P.C., Temple, Texas, Counsel for Plaintiff.

Alexander Orlando Canizares, United States Department of Justice, Civil Division, Washington,

D.C., Counsel for the Government.

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF’S

MOTION FOR RECONSIDERATION

BRADEN, Chief Judge.

On September 29, 2017, the court issued a Post-Trial Memorandum Opinion And Final

Order that granted partial judgment in favor of MW Builders, Inc. (“MW Builders”), but

determined that the claims of MW Builders’ subcontractor, Bergelectric, were waived. See MW

Builders, Inc. v. United States, 134 Fed. Cl. 469, 531 (Fed. Cl. 2017). On October 27, 2017, MW

Builders filed a Motion For Reconsideration And To Alter Or Amend Judgment, pursuant to Rules

of the United States Court of Federal Claims (“RCFC”) 52(b) and 59(a), requesting that the court

reconsider the determination that Bergelectric’s pass-through claims were waived.1 ECF No. 141.

Although a detailed factual history of this case can be found in the court’s September 29, 2017

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The October 27, 2017 Motion For Reconsideration And To Alter Or Amend Judgment is

captioned as one filed, pursuant to RCFC 59(e) and 52(b). RCFC 59(e) refers only to the timing

for filing a motion to alter or amend a judgment. Because the October 27, 2017 Motion For

Reconsideration And To Alter Or Amend Judgment cites RCFC 59(a), that governs motions for

reconsideration, the court considers the motion as one for reconsideration or, in the alternative, to

amend the judgment.

Post-Trial Memorandum Opinion And Final Order, MW Builders, Inc., 134 Fed. Cl. at 476–88,

the court provides a brief overview of the factual findings relevant to MW Builders’ Motion For

Reconsideration And To Alter Or Amend Judgment, below.

I. BACKGROUND.

As discussed in the September 29, 2017 Post-Trial Memorandum Opinion And Final

Order, MW Builders entered into a subcontract with Bergelectric to “provide a complete Electrical

System in accordance with [the Contract] plans and specifications.” MW Builders, 134 Fed. Cl. at

479. The subcontract also required Bergelectric to provide temporary power to the project site,

prior to the installation of permanent power. Id. (citing JX 9 at 14). To receive payment under the

subcontract, Bergelectric was required to sign periodic lien waivers and releases and submit them

to MW Builders, together with applications for payment. Id. (citing DX 124; TR 672).

The lien waivers and releases that Bergelectric signed and executed when it requested

progress payments from MW Builders stated:

NOW, THEREFORE, effective as of receipt of the payment referenced in this

Application, the undersigned [Bergelectric] irrevocably and unconditionally

releases and waives any and all mechanic’s liens or other liens against the Realty

or any other claims on any bonds or any other claims whatsoever in connection

with this Contract and with the Realty through the end of the period covered by this

Application, reserving however, all lien rights for materials and labor furnished or

performed after said period and hold the Beneficiaries and their respective

successors and assigns harmless against any lien, bond, claims or suits in

connection with the materials, labor, and everything else in connection with this

Contract, except with respect to the retainages to date, if any.

Id. at 511 (quoting DX 124 at 2) (emphasis added).

The lien waiver and release language, however, contains no express reservation authorizing

Bergelectric to pass through claims for payment against the Government and Bergelectric signed

waivers covering the entire period of permanent power delay, i.e., from March 13, 2012 to

September 26, 2012. See id. (citing DX 124 at 2, 4, 6, 8, 10, 16, 18).

Therefore, in the September 29, 2017 Post-Trial Memorandum Opinion and Final Order,

the court determined that the lien waivers contained a general release whereby Bergelectric

“irrevocably and unconditionally” waived “any . . . claims whatsoever in connection with th[e]

Contract” through the end of “the period covered by this Application.” Id. As a matter of law, the

United States Court of Appeals for the Federal Circuit has held that, “absent special vitiating

circumstances, a general release bars claims based upon events occurring prior to the date of the

release.” Augustine Med., Inc. v. Progressive Dynamics, Inc., 194 F.3d 1367, 1373 (Fed. Cir.

1999). At trial, MW Builders and Bergelectric proffered extrinsic evidence to demonstrate that

they did not intend to include the pass-through claims in the release. See MW Builders, 134 Fed.

Cl. at 512. The court, however, did not consider the extrinsic evidence relevant in construing the

release language. Id. (citing Augustine Med., 194 F.3d at 1373).

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On reconsideration, MW Builders argues that the court’s determination that Bergelectric

waived pass-through claims was “a manifest error,” because “the [c]ourt failed to consider the

applicable case law requiring consideration of the evidence offered at trial regarding Bergelectric

and MW Builders’ lack of intent to waive Bergelectric’s pass-through claim in the progress

releases.” ECF No. 141 at 1.

II. STANDARD OF REVIEW.

Pursuant to RCFC 59, the court may reconsider and alter or amend its judgment, if the

movant can show: (1) that there has been an intervening change in controlling law; (2) that

previously unavailable evidence is now available; or (3) that the motion is necessary to prevent

manifest injustice. See RCFC 59; see also Dairyland Power Co-op v. United States, 106 Fed. Cl.

102, 104 (Fed. Cl. 2012). A motion for reconsideration is not intended to give an “unhappy litigant

an additional chance to sway” the court. See Matthews v. United States, 73 Fed. Cl. 524, 526 (Fed.

Cl. 2006). Nor may a party prevail on such a motion by raising an issue for the first time on

reconsideration, when the issue was ripe for adjudication at the time the complaint was filed. Id.

Although the court has considerable discretion in ruling on a motion for reconsideration, granting

relief requires “a showing of extraordinary circumstances.” Caldwell v. United States, 391 F.3d

1226, 1235 (Fed. Cir. 2004) (citation omitted), cert. denied, 546 U.S. 826 (2005); Yuba Natural

Res., Inc. v. United States, 904 F.2d 1577, 1583 (Fed. Cir. 1990).

III. DISCUSSION.

A. MW Builders’ Argument.

MW Builders argues that the court’s reliance on Augustine is misplaced, because “that case

was decided based on very different facts[,]” i.e., the parties in that case were disputing a settlement

agreement. ECF No. 141 at 3–4. In this case, Bergelectric and MW Builders agree that the release

language at issue “was never intended to bar Bergelectric’s pass-through claim, and the parties’

subsequent conduct validates that intent.” ECF No. 141 at 4. Therefore, the court should have

considered the extrinsic evidence proffered by MW Builders and Bergelectric to demonstrate that

the parties did not intend to waive Bergelectric’s pass-through claims. ECF No. 141 at 5–6.

In the alternative, MW Builders asks the court to reform the release language. ECF No.

141 at 4. MW Builders relies on a number of United States Court of Claims cases in support of

the request for reformation. ECF No. 141 at 4–5 (citing J.G. Watts Constr. Co. v. United States,

161 Ct. Cl. 801, 806–07 (Ct. Cl. 1963) (holding that an executed release did not bar a claim, where

both parties continued to consider the claim after the release had been executed); Colonial

Navigation Co. v. United States, 149 Ct. Cl. 242, 246 (Ct. Cl. 1960) (holding that a general release

did not bar a claim where there was no indication of an intent to release a given obligation that “no

one would intend to give away or bargain away without any mention or discussion”); Nippon Hodo

Co., Ltd. v. United States, 142 Ct. Cl. 1, 4 (Ct. Cl. 1958) (“This court, under its jurisdiction over

claims founded upon contracts with the United States, has and frequently uses the power of a court

of equity to reform contracts so that they conform to the intention of the parties, if the evidence

shows that reformation is necessary.”); Winn-Senter Constr. Co. v. United States, 110 Ct. Cl. 34,

65–66 (Ct. Cl. 1948) (holding that an executed release did not bar a claim, where the Government

continued to consider a claim thereafter and the conduct of both parties evidenced that they did

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not construe the release as abandoning the claim); E.W. Bliss Co. v. United States, 70 Ct. Cl. 176,

202 (Ct. Cl. 1930) (“It is so apparent that this release then signed was not intended to have any

effect upon the pending claim for increased labor costs that there could be no justification for

giving it any such application at this time.”); L.W. Packard & Co. v. United States, 66 Ct. Cl. 184,

192–93 (Ct. Cl. 1928) (“If it was included by the terms of the settlement it is clearly a mutual

mistake, and the settlement contract may be reformed. This, we think, is unnecessary. We need

not cite authorities to sustain the fact that a receipt or release, however conclusive in its terms, is

subject to explanation as to the subject matter of the accord and satisfaction.”)). MW Builders

also cites Metric Constructors, Inc. v. United States, 314 F.3d 578, 584 (Fed. Cir. 2002), for the

proposition that partial releases do not bar pass-through claims against the Government, where the

parties did not intend to release pass-through claims. ECF No. 141 at 4.

In sum, “[b]ased on the [c]ourt’s failure to consider the above cases and the application to

this specific issue, the [c]ourt also wrongly ignored the evidence relating to Bergelectric’s and

MW Builders’ intent with respect to the progress payment releases.” ECF No. 141 at 5.

B. The Court’s Resolution.

Where the terms of a release are “clear and unambiguous, they must be given their plain

meaning—extrinsic evidence is inadmissible to interpret them. . . . A contract provision is only

ambiguous if susceptible to more than one reasonable meaning.” Barron Bancshares, Inc. v.

United States, 366 F.3d 1360, 1375–76 (Fed. Cir. 2004). For this reason, MW Builders’ reliance

on Metric Constructors is misplaced. In that case, the subcontractor executed a series of lien

waivers and releases in connection with partial payments for work performed under the

subcontract. Id. at 580. The text of those releases stated that the subcontractor released the prime

contractor “and the owners of the project from all claims whatsoever arising out of or relating to

the subcontract or purchase order to the extent of payments actually received.” Id. (emphasis

added). The trial court determined that the final lien waiver and release constituted a full release

of the prime contractor and the Government from any liability under the contract, because the

language was unambiguous. Id. at 582. But, the United States Court of Appeals for the Federal

Circuit reversed, holding that the qualifying language, i.e., “to the extent of payments actually

received,” was ambiguous and tracked a Florida statute that governed construction liens requiring

that: “in the event a progress payment [was] not sufficient to pay all the lienors’ claims for the

work covered by the partial payment, the lienors [were] to execute partial releases to the extent of

the payments made to them.” Id. at 582–83. The Florida statute also provided different procedures

for executing final and partial releases. Id. at 583. Therefore, the Federal Circuit held, the lien

waiver and release language was sufficiently ambiguous to justify the admission of extrinsic

evidence. Id.

Unlike the lien waiver and release in Metric Constructors, MW Builders’ and

Bergelectric’s lien waiver and release contained an irrevocable and unconditional waiver of “any

other claims whatsoever in connection with this Contract and with the Realty through the end of

the period covered by this Application.” DX 124 at 2 (emphasis added). Rather than releasing

claims, to the extent payments were received, MW Builders’ and Bergelectric’s lien waiver and

release expressly reserved only those claims arising after the date of the Application for Payment.

DX 124 at 2. No right to pass through Bergelectric’s claim to the Government existed, nor was

reserved. DX 124 at 2. As such, the court determined that the release language unambiguously

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“waive[d] all of Bergelectric’s claims against MW Builders and any related pass-through claims

against the Army Corps.” MW Builders, 134 Fed. Cl. at 512. Therefore, extrinsic evidence was

not relevant, required, nor admissible to interpret the text of the release. See Barron Bancshares,

366 F.3d at 1375–76.

MW Builders also contends that the other precedential decisions support the argument that,

notwithstanding the unambiguous nature of the release, extrinsic evidence should be admissible to

establish the parties’ intent. But, the cases that MW Builders cites are distinguishable, because

each involved a release executed between the contractor and the Government, not between the

contractor and a subcontractor. See J.G. Watts Constr. Co., 161 Ct. Cl. at 805; Colonial Navigation

Co., 149 Ct. Cl. at 245; Nippon Hodo Co., 142 Ct. Cl. at 2; Winn-Senter Constr. Co., 110 Ct. Cl.

at 64–65; E.W. Bliss Co., 70 Ct. Cl. at 195 (Ct. Cl. 1930); L.W. Packard & Co., 66 Ct. Cl. at 191;

see also George Hyman Constr. Co. v. United States, 30 Fed. Cl. 170, 175 n.7 (Fed. Cl. 1993)

(determining that the cited cases do not provide authority for reforming a subcontract between

private parties).

And, MW Builders fails to recognize that the United States Court of Federal Claims does

not have jurisdiction to reform an agreement between a prime contractor and its subcontractor.

The court’s jurisdiction is limited to contract claims between a plaintiff and the Government. See

28 U.S.C. § 1491(a)(1) (“The United States Court of Federal Claims shall have jurisdiction to

render judgment upon any claim against the United States founded upon . . . any express or implied

contract with the United States[.]” (emphasis added)). The court’s equitable authority does not

extend to reforming contracts between private parties. See 28 U.S.C. § 1491(a)(2) (“To provide

an entire remedy and to complete the relief afforded by the judgment, the court may, as an incident

of and collateral to any such judgment, issue orders directing restoration to office or position,

placement in appropriate duty or retirement status, and correction of applicable records, and such

orders may be issued to any appropriate official of the United States.” (emphasis added)); see also

Severin v. United States, 99 Ct. Cl. 435, 442 (Ct. Cl. 1943) (“The subcontractor could not sue the

Government since it has not consented to be sued except, so far as relevant to this case, for breach

of contract. But the Government had no contract with the subcontractor, hence it is not liable to,

nor suable by him.”); George Hyman Constr. Co., 30 Fed. Cl. at 174–75 (“The court is aware of

no statutory basis for asserting jurisdiction over the release. Plaintiff has not cited, and the court

has not found, any instance where this court has exercised authority to reform a private contract of

this type.”), aff’d, 39 F.3d 1197 (unpublished table decision).

For these reasons, the court has determined that MW Builders has not demonstrated that

the court committed a manifest error of law.

IV. CONCLUSION.

For these reasons, MW Builders’ October 27, 2017 Motion For Reconsideration And To

Alter Or Amend Judgment is denied.

IT IS SO ORDERED.

s/ Susan G. Braden

SUSAN G. BRADEN

Chief Judge

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