DPR Constr. v. Shire Regenerative Med., Inc.

• Decision Date: 29 August 2016
• Docket Number: Civil No. 14-cv-2399-JAH (MDD)
• Parties: DPR CONSTRUCTION, a general partnership, Plaintiff, v. SHIRE REGENERATIVE MEDICINE, INC., a Delaware corporation; and Does 1 through 100, inclusive, Defendants.
• Court: U.S. District Court — Southern District of California

204 F.Supp.3d 1118

DPR CONSTRUCTION, a general partnership, Plaintiff,

v.SHIRE REGENERATIVE MEDICINE, INC., a Delaware corporation; and Does 1 through 100, inclusive, Defendants.

Civil No. 14-cv-2399-JAH (MDD)

United States District Court, S.D. California.

Signed August 29, 2016

Richard E. McCarthy, Curtis G. Carll, Solomon Ward Seidenwurm & Smith, LLP, San Diego, CA, for Plaintiff.

Benjamin L. Wagner, Mintz Levin Cohn Ferris Glovsky and Popeo PC, San Diego, CA, for Defendants.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (DOC. # 21)

HON. JOHN A. HOUSTON, United States District Judge

INTRODUCTION

Pending before the Court is Defendant Shire Regenerative Medicine, Inc.'s ("Defendant") motion for summary judgment or, in the alternative, summary adjudication on all claims alleged in Plaintiff DPR Construction's ("Plaintiff") first amended complaint ("FAC"). (Doc. # 21). For the reasons set forth below, the Court GRANTS Defendant's motion for summary judgment in its entirety.

FACTUAL BACKGROUND

Plaintiff is a general contractor with offices in San Diego, California. Defendant is a wholly owned subsidiary of Shire Plc, a pharmaceutical company based in Dublin, Ireland. In 2012, Defendant hired Plaintiff to build a large life sciences campus in San Diego (the "Project"). The Project included construction of two buildings spanning over 240,000 square feet. The Project was estimated to cost more than $150 million and would require approximately eighteen months of preparation and two years of construction to complete.

Between June and November of 2012, the parties negotiated the contract for the Project ("Contract") by revising and exchanging drafts of the Contract via email. To form the Contract, the parties customized various model contract forms published by the American Institute of Architects ("AIA"), including AIA forms A195 and A295.¹

A. Pertinent Contract Provisions

Form A195, entitled Standard Form of Agreement Between Owner and Contractor for Integrated Project Delivery, governs the agreement for the Project between only Plaintiff and Defendant. (See Doc. # 21-15, pg. 2).² Article 7 of form A195 is entitled "Termination or Suspension," and is further split into two sections. Id. at 14. Section 7.1 of form A195 governs termination or suspension of the Contract prior to the establishment of the Guaranteed Maximum Price³ ("GMP"), and section 7.2 governs termination or suspension of the Contract after the GMP is established. Id. at 14–15. Both sections 7.1 and 7.2 are divided into additional subsections. Section 7.1.5 sets forth parameters if the Project owner (Defendant) terminates the Contract with the contractor (Plaintiff) for convenience prior to the establishment of the GMP. Id. at 15. Section 7.1.5 states:

The Owner may terminate this Agreement upon not less than seven days' written notice to the Contractor for the Owner's convenience and without cause in accordance with the terms and conditions of Section 12.13.1 of the Project General Conditions.

Id. Sections 7.2.4.1 and 7.2.4.3 of form A195 apply if Defendant terminates the Contract with Plaintiff for convenience after the GMP is established. Id. Section 7.2.4.1 states:

The Owner may, at any time, terminate the Contract...for the Owner's convenience and without cause in accordance with the terms and conditions of Section 12.13.1 of the Project General Conditions.

Id. at 17. Section 7.2.4.3 states:

In case of such termination for the Owner's convenience, the Contractor shall be entitled to receive payment for Work executed, and costs incurred by reason of such termination, along with reasonable overhead and profit on the Work not executed.

Id.

Form A295 governs the agreement between Plaintiff, Defendant, the Project architect, the Project engineer, and the ground lessor. (See Doc. # 21-16, pg. 2). Section 12.13 of form A295 is entitled "Owner's Rights to Terminate This Contract." Id. at 66. Section 12.13.1, which is referenced in sections 7.1.5 and 7.2.4.1 of form A195, governs Defendant's termination of the Contract for convenience and reads in pertinent part:

The Owner may terminate this Contract with respect to any or all of the Contractor, Architect and Engineer for convenience at any time for reasons other than for cause, without prejudice to any claims that the Owner may have against any of them so terminated, by giving the terminated party at least 7 days prior written notice thereof. In the event a terminated party is the Contractor, and such termination occurs after the establishment of the GMP, the Owner shall pay the Contractor such portions of the [GMP] as are due and properly invoiced for Work performed prior to the effective date of such termination, together with reasonable termination expenses necessarily incurred by Contractor, and Contractor shall comply with the requirements for final payment with respect to Owner's payment of such amount. In the event a terminated party is the Architect or the Engineer, or the Contractor prior to the establishment of the GMP, the Owner shall pay the terminated party for the services performed pursuant to the Services Contract of the terminated party prior to termination, together with any Reimbursable Expenses then due and a termination fee equivalent to two (2) weeks of compensation based on the weekly average of fees for professional services provided by the terminated party (as averaged over the 6-week period immediately preceding termination)....Neither Contractor, Architect nor Engineer shall be paid their anticipated profits or revenues for Work not performed or for economic losses relating to the termination of the Contract by Owner with respect to any of them.

Id. (emphasis added).

B. Contract Revision

To assist in drafting and negotiating the Contract, Defendant hired contract negotiator Jim Winiarski and retained the law firm of Mintz Levin. Frank Jones, a DPR project executive, was primarily responsible for negotiating the Contract on behalf of Plaintiff. Jones was assisted by a contract administrator and Plaintiff's risk assessor.

Plaintiff and Defendant revised the Contract numerous times.⁴ On August 19, 2012, Defendant sent Plaintiff a draft containing sections 7.1.5 and 7.2.4.1 of form A195 (the pre- and post-GMP termination for convenience clauses) and section 12.13.1 of form A295 (the universal termination clause incorporated into sections 7.1.5 and 7.2.4.1). (See Doc. # 21-20; Doc. # 21-21, pg. 59–60; Doc. # 21-22; Doc. # 21-23, pg. 12, 14). Notably, this draft did not contain section 7.2.4.3, the provision providing that Plaintiff would receive its profit on unperformed work if Plaintiff terminated the Contract for convenience post-GMP, because Defendant had deleted that provision in light of adding section 12.13.1. (Doc. # 21-1, pg. 11). The parties continued to circulate drafts of the Contract from August 19, 2012, until October 24, 2012, none of which included section 7.2.4.3 in form A195. On October 24, 2012, and on behalf of Plaintiff, the DPR contract administrator emailed Winiarski a Contract draft in which section 7.2.4.3 had been reinserted, but section 12.13.1 remained. (See Doc. # 21-48; Doc. # 21-49). This reinsertion of section 7.2.4.3 was not made evident in tracked changes despite the parties' prior use of tracked changes to mark revisions to the Contract.⁵ (See Doc. # 21-49, pg. 5). Instead, the contract administrator noted in the email, to which the Contract draft was attached, that the following changes had been made:

Section 1.2—reference to Exhibit C deleted.

Section 1.2.1 and 1.2.2—Indemnification language transferred from A295.

Section 1.4.2—Approved LD language added specifying dollar amount per day.

Section 7.2.4.3—Original AIA language had been deleted. Did not strike the language.

Exhibits C—Insurance requirements are no longer applicable as insurance outlined in Article 11 of the Project General Conditions and Appendix 3. Exhibit C has been intentionally omitted.

(Doc. # 21-48, pg. 2). Aside from the email notation, Plaintiff's and Defendant's representatives never discussed the reinsertion of section 7.2.4.3 into form A195. (Doc. # 21-1, pg. 14). The final Contract was executed on November 28, 2012, and included both section 7.2.4.3 in form A195 and section 12.13.1 in form A295. (See Doc. # 21-15, pg. 17, 20–21; Doc. # 21-16, pg. 66).

Plaintiff began construction in October, 2012, with a target completion date in December, 2014. (Doc. # 1-9, ¶ 14; Doc. # 26-20, ¶ 8, 11). However, in October, 2013, Defendant notified Plaintiff that it was suspending the Contract for convenience. (Doc. # 21-3, pg. 2). Later, on April 24, 2014, Defendant terminated the Contract with Plaintiff. (Doc. # 21-7). Defendant paid Plaintiff for work completed, but Plaintiff sought to collect from Defendant the overhead and profit Plaintiff would have received had Defendant not terminated the Project early. Defendant refused. (Doc. # 1-9, ¶ 16–23). Plaintiff then initiated the instant lawsuit. (Doc. # 1-9).

PROCEDURAL BACKGROUND

On July 10, 2014, Plaintiff filed a complaint against Defendant in San Diego Superior Court, Case No. 37-2014-00022796-CU-BC-CTL. (See Doc. # 1-5). On September 5, 2014, Plaintiff filed the operative FAC asserting claims for breach of contract, quantum meruit, and declaratory relief. (See Doc. # 1-9). On October 6, 2014, Defendant filed its answer to the FAC. (See Doc. # 1-10). Then, on October 8, 2014, Defendant removed the action to this Court based on diversity jurisdiction. (See Doc. # 1). On April 8, 2015, Defendant filed a motion for summary judgment or, in the alternative, summary adjudication on all claims alleged in the FAC. (Doc. # 21). Plaintiff filed its opposition brief on May 19, 2015, and Defendant filed its reply brief on June 23, 2015. (See Docs. # 26, 32). On September 1, 2015, this Court heard oral argument and took Defendant's motion for summary judgment or adjudication under submission. (See Doc. # 38).

LEGAL STANDARD

Summary judgment is appropriate under Rule...