Interstate General Government Contractors, Inc. v. Stone, 92-1079

• Decision Date: 03 December 1992
• Docket Number: No. 92-1079,92-1079
• Citation: 980 F.2d 1433
• Parties: 38 Cont.Cas.Fed. (CCH) P 76,446 INTERSTATE GENERAL GOVERNMENT CONTRACTORS, INC., Appellant, v. Michael P.W. STONE, Secretary of the Army, Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1433

980 F.2d 1433

38 Cont.Cas.Fed. (CCH) P 76,446

INTERSTATE GENERAL GOVERNMENT CONTRACTORS, INC., Appellant, v. Michael P.W. STONE, Secretary of the Army, Appellee.

No. 92-1079.

United States Court of Appeals Federal Circuit.

Dec. 3, 1992.

Glen W. Clark, Jr., Palmer, Howard & Clark, Austell, Ga., argued, for appellant.

Franklin E. White, Jr., Attorney, Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., argued, for appellee. With him on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Thomas W. Petersen, Asst. Director. Also on the brief was Major Robert L. Duecaster, Dept. of Army, of counsel.

Before NIES, Chief Judge, SKELTON, Senior Circuit Judge, and LOURIE, Circuit Judge.

LOURIE, Circuit Judge.

Interstate General Government Contractors, Inc. (IGGC) appeals from the August 8, 1991 decision of the Armed Services Board of Contract Appeals, ASBCA No. 42742, 91-3 B.C.A. (CCH) p 24,280, denying IGGC's motion and granting the government's cross-motion for summary judgment on IGGC's claim for an equitable adjustment of $48,186.70. Because IGGC failed to seek clarification of a patent ambiguity in the contract at issue prior to bidding, we affirm.

BACKGROUND

On September 24, 1990, IGGC was awarded contract no. DABT11-90-C-0042 for the replacement of heating and air conditioning equipment and the installation of an air handling system in three buildings at Fort Gordon, Georgia. On November 2, 1990, the contracting officer rejected IGGC's Material Approval Submittal which indicated an intent to use conventional motor starters instead of more expensive variable speed fan power controllers (VSPCs). IGGC then sought clarification of the contract requirements for the first time by letter dated November 20, 1990. In response, the contracting officer advised IGGC that it was required to provide VSPCs in accordance with the contract specifications.

Accordingly, IGGC installed VSPCs and related equipment at an additional cost of $48,186.70, for which it filed a claim for an equitable adjustment. The contracting officer denied the claim and IGGC appealed to the Board. The Board rejected IGGC's argument that the contract called for the installation of motor starters, concluding instead that the contract required VSPCs. The Board denied IGGC's motion for summary judgment and granted the government's cross-motion for summary judgment.

On appeal to this court, IGGC contends that the Board's interpretation of the contract was erroneous. IGGC argues that because the contract makes numerous references to motor starters and VSPCs, it is ambiguous. IGGC maintains that any ambiguity in the contract must be construed against the drafter, the government, and that IGGC's interpretation was a reasonable one. On the other hand, the government contends that the contract clearly and unambiguously required the installation of VSPCs. ^*

DISCUSSION

This appeal is governed by the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-613 (1988), which provides that "the decision of the agency board on any question of law shall not be final or conclusive" and its findings of fact are reviewed for substantial evidence. 41 U.S.C. § 609(b) (1988). Interpretation of a contract is a legal question that we review de novo. Triax-Pacific, A Joint Venture v. Stone, 958 F.2d 351, 353 (Fed.Cir.1992). However, in view of the Board's considerable experience and expertise in interpreting government contracts, its interpretation is given careful consideration. Id.

We disagree with the Board that the contract clearly required VSPCs. We agree with IGGC that the contract at issue is ambiguous regarding the obligation to install motor starters or VSPCs. Taken as a whole, the contract fails to express clearly the intention of the parties. The law is well settled that ambiguities in a contract are to be resolved against the drafter of the contract. See United Pacific Ins. Co. v. United States, 497 F.2d 1402, 1407, 204 Ct.Cl. 938 (1974). "Furthermore, it is well established that if a [contract] is ambiguous and the contractor follows an interpretation that is reasonable, this interpretation will prevail...." Id.

However, an exception to this general rule of contra proferentem exists when the ambiguity is patent. "The existence of a patent ambiguity in the contract raises the duty of inquiry, regardless of the reasonableness of the contractor's interpretation." Fortec Constructors v. United States, 760 F.2d 1288, 1291 (Fed.Cir.1985). That duty requires the contractor to "inquire of the contracting officer the true meaning of the contract before submitting a bid." Newsom v. United States, 676 F.2d 647, 649, 230 Ct.Cl. 301 (1982). The existence of a patent ambiguity is a question of contract interpretation which we decide de novo on a case-by-case basis. See id. 676 F.2d at 649-50.

The record clearly establishes that this contract is ambiguous and that the ambiguity is patent. The parties do not dispute that there are numerous references to both motor starters and VSPCs throughout the contract. For example, several provisions indicate that motor starters were required. Paragraph 8 of Section 15A1 states that "[e]lectrical motor-driven equipment specified shall be provided complete with motor, motor starter, and controls." Paragraph 11.2.3 further provides that "[m]otor starters shall be magnetic type with general-purpose enclosure." Additionally, Control Sequence note # 8 of the contract drawings states "[s]tatic pressure sensor shall modulate inlet guide vane controller for fan modulation" and the EMCS I/O Table appearing on the drawings contains the entry "Supply Air Fan Control"; both of these are considered by the parties to be references to motor starters. The contract drawings themselves also indicate the use of motor starters.

On the other hand, the contract contains twenty-one...