Comtrol, Inc. v. U.S.

• Decision Date: 26 June 2002
• Docket Number: No. 01-5115.,01-5115.
• Parties: COMTROL, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

294 F.3d 1357

COMTROL, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 01-5115.

United States Court of Appeals, Federal Circuit.

June 26, 2002.

Jack L. Schoenhals, of Salt Lake City, Utah, argued for plaintiff-appellant. Of counsel on the brief were Richard J. Webber, and Natalie Stoney Walters, Arent Fox Kinter Plotkin & Kahn, PLLC, of Washington, DC.

Kent G. Huntington, Attorney, Commercial Ligitation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Director; and Kathryn A. Bleecker, Assistant Director. Of counsel on the brief was Karen D. Huber, Attorney, Office of Regional Counsel, Federal Aviation Administration, of Renton, Washington.

Before NEWMAN, LINN, and DYK, Circuit Judges.

DYK, Circuit Judge.

Comtrol, Inc. ("Comtrol") appeals the decision of the Court of Federal Claims granting summary judgment that Comtrol is not entitled to an equitable adjustment of a contract between Comtrol and the Federal Aviation Administration ("FAA") for construction work at the Salt Lake City International Airport, and that Comtrol is not entitled to damages for breach of that contract. Comtrol, Inc. v. United States, 49 Fed. Cl. 294 (2001).

Comtrol urges five claims on appeal: 1) a claim for differing site conditions and defective specifications based on the presence of quicksand at the site; 2) a claim for differing site conditions and defective specifications based on the placement of a fuel pipeline; 3) a claim for additional costs relating to alleged improvements to three underground duct banks; 4) a claim for additional costs including overhead, time, and acceleration costs resulting from numerous change orders, the direct costs of which have already been resolved by the parties; and 5) a claim for breach of the implied contractual duties of cooperation, non-interference with contract, and good faith and fair dealing.

As to the first claim, we hold that the soils encountered did not constitute differing site conditions because the specification did not indicate that only hard materials would be encountered at the site, and because Comtrol cannot rely on an engineering report that it did not review before award. We similarly reject the defective specifications claim. As to the differing site conditions and defective specifications claims relating to the fuel pipeline, we hold that the contract was ambiguous as to the existence and location of the pipeline, but that the ambiguity was patent, barring recovery. As to the claim relating to additional costs for alleged improvements of the duct banks, we hold that the Court of Federal Claims erred by treating the issue as depending entirely on the site conditions claim. We vacate and remand for further consideration of that claim. As for the claim relating to additional costs resulting from certain unresolved change orders, we hold that the Court of Federal Claims erred in failing to specifically address this claim, and vacate and remand for further proceedings. As for the breach of contract claim, we hold that the Court of Federal Claims erred in finding that this claim depended entirely on Comtrol's ability to prove differing site conditions, and vacate and remand for further proceedings. Thus, we affirm in part, vacate in part, and remand.

BACKGROUND

In December 1994, FAA invited bids for a firm, fixed-price contract to construct an air traffic control tower and base building at the Salt Lake City International Airport. The contract was awarded to Comtrol on April 6, 1995.

1. Soil Conditions

The Solicitation included the standard Federal Acquisition Regulation ("FAR") clauses for differing site conditions and site investigations, 48 C.F.R. §§ 52.236-2 and 52.236-3 (1994), and the standard changes clause, 48 C.F.R. § 52.243-4 (1994).

Paragraph 1.6 of the Solicitation stated that "Hard material ... may be encountered," and paragraph 1.3.11 defined "[h]ard [m]aterial" as "[w]eathered rock, dense consolidated deposits or conglomerate materials which are not included in the definition of `rock' but which usually require the use of heavy excavation equipment with ripper teeth or the use of jack hammers for removal." Paragraph 1.7.2 directed bidders to include in their bids "the collection and disposal of surface and subsurface water encountered in the course of construction." Paragraph 1.7.1 provided that "[t]he Contractor shall have the option to provide shoring and sheeting." The Solicitation stated that a site visit was encouraged and noted that prior arrangements were not necessary for bidders to visit the FAA site.

Paragraph 1.1.5 of the Solicitation, entitled "Project Specific Information," incorporated by reference a soils report prepared by RB & G Engineering, Inc. dated August 1993 ("RB & G Report"), and four sets of construction drawings. The RB & G Report and construction drawings were maintained at the offices of FAA's architect. Comtrol did not review the RB & G Report before submitting its bid.

The RB & G Report made numerous representations as to the soil conditions at the site. The Report stated that "the subsurface material in the upper 6.5 to 10 feet in Test Holes 1 through 4 consists of a relatively soft gray clay. The remainder of the soil profile in these four borings generally consisted of interbedded sand and clay layers," and noted that "all of the subsurface materials are natural deposits." The Report stated that the soils investigated had recently been saturated with water and that groundwater was encountered at an approximate depth of seven feet for one test hole and two feet for the remaining test holes. The Report further stated that "standard penetration tests indicate that the cohesive material in the upper portion of the soil profile is in a medium stiff condition. The sandy material throughout the soil profile is generally in a medium dense state;" that "[t]est hole 5 defines the characteristics of the subsurface material;" that it "is apparent from this boring that most of the subsurface material in the upper portion of the profile consists of cohesive material;" and that "the results of these tests indicate that the cohesive material in the upper portion of the soil profile is in a medium stiff condition."

Soon after award, Comtrol proceeded with the excavation by driving a sheet pile wall around the perimeter of the excavation to contain groundwater. When Comtrol began excavating within the sheet pile walls, it encountered loose sand and water. Quick conditions were created when the high water table at the site exerted pressure on this loose sand and water. The surrounding soils then subsided and the sheet piling failed, damaging a nearby duct bank.

2. Chevron Pipeline

Paragraph 1.6 of the Solicitation stated that "No pipes ... except those indicated, will be encountered." However, one of the drawings referenced in paragraph 1.1.5 of the Solicitation (the "Pipeline Drawing") depicted a structure labeled "Existing Chevron Pipeline" and noted that this pipeline was "to be relocated to new utility corridor by others." The drawing also indicated a proposed location for the "New Utility Corridor" running beneath a portion of the site that was later proposed as the location of the tower. These drawings were maintained at the offices of FAA's architect. Comtrol did not request or obtain these drawings until after the failure of the sheet pile wall.

Comtrol found the pipeline after award when it used precautionary measures to locate and identify existing subsurface features. This pipeline had been relocated after the preparation of the RB & G Report in August 1993, but before FAA invited bids in December 1994.

3. Duct Banks

After the sheet pile failed, FAA directed Comtrol to uncover and perform additional work on two nearby duct banks that were not damaged during excavation. Comtrol wrapped the two duct banks in reinforcing steel, constructed new concrete forms, and poured concrete into the forms around the reinforcing steel. Comtrol alleged that this work was unnecessary to cope with the subsidence of the soil because these two duct banks were not affected by the subsidence of the soil. FAA further directed Comtrol to insert permanent subsurface supports under all three duct banks, including the damaged duct bank. Comtrol alleged that the work it performed on the undamaged duct banks constituted unnecessary improvements, and that the work it performed on the damaged duct bank exceeded what was necessary to repair the damage.

4. Change Orders

Throughout the work, FAA issued 142 Proposed Contract Changes ("PCCs") modifying the plans and specifications. FAA paid Comtrol the direct costs of these change orders. The parties differ as to whether the indirect costs were resolved.

5. Breach of Contract

Finally, Comtrol alleged that FAA breached its implied contractual duties of cooperation, non-interference with work, and good faith and fair dealing.

On December 22, 1997, Comtrol certified a claim for equitable adjustment that it had presented to FAA in October 1997. The FAA contracting officer issued final decisions on Comtrol's claims on May 27, 1998, and October 15, 1998, granting partial relief.

PROCEEDINGS BELOW

On May 24, 1999, Comtrol filed a complaint with the Court of Federal Claims, seeking compensation for the five items described above. The parties filed cross-motions for summary judgment as to all claims except the breach of contract claim. The Court of Federal Claims granted summary judgment that the soil and water conditions did not constitute Type I differing site conditions, finding that the documents did not represent that quick conditions would not be encountered, and that, in any event, Comtrol did not reasonably rely on an engineering report because it did not review that report. Comtrol, 49 Fed. Cl. at 302-03. For the same reasons, the...