Kiska Const. Corp.-U.S.. v. Wash. Metro. Area Transit Auth.

• Decision Date: 09 September 2010
• Docket Number: Civil Action No. 09-817 (CKK)
• Citation: 736 F.Supp.2d 171
• Parties: KISKA CONSTRUCTION CORPORATION-U.S.A. and Kajima Engineering and Construction, Inc., a Joint Venture, Plaintiff, v. WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Defendant.
• Court: U.S. District Court — District of Columbia

736 F.Supp.2d 171

KISKA CONSTRUCTION CORPORATION-U.S.A. and Kajima Engineering and Construction, Inc., a Joint Venture, Plaintiff,

v.WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Defendant.

Civil Action No. 09-817 (CKK).

United States District Court,

District of Columbia.

Sept. 9, 2010.

Jerome Reiss, Boca Raton, FL, Nick R. Hoogstraten, Peckar & Abramson, P.C., Washington, DC, for Plaintiffs.

Donald A. Laffert, Washington Metropolitan Area Transit Authority, Washington, DC, for Defendant.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, District Judge.

This action is brought by Plaintiff Kiska Construction Corporation-U.S.A. and Kajima Engineering and Construction Inc., a Joint Venture ("Kiska") for review of an administrative determination issued by the Armed Services Board of Contract Appeals ("ASBCA") relating to a contract dispute between Kiska and Defendant Washington Metropolitan Area Transit Authority ("WMATA"). On February 19, 2009, the ASBCA rendered a decision granting in part and denying in part Kiska's contract appeals, and Kiska now seeks confirmation in part and reversal in part of the ASBCA's decision. Kiska has filed a [12] Motion for Summary Judgment, and WMATA has filed a [14] Cross-Motion for Summary Judgment. The motions have been fully briefed and are now ripe for decision. Based on the parties' briefs, the administrative record, the relevant authorities, and the case as a whole, the Court shall GRANT-IN-PART and DENY-IN-PART the parties' motions for summary judgment. For the reasons explained below, the Court shall affirm the ASBCA's decision with respect to all of the issues contested by the parties.

I. BACKGROUND

A. The Contract and the First Federal Action

On February 25, 1994, the Washington Metropolitan Area Transit Authority ("WMATA") awarded Contract No. 1E0023 (the "Contract") to Kiska Construction Corp. USA and Kajima Engineering and Construction, Inc., a Joint Venture ("Kiska") for the construction of twin single-track earth tunnels, an access shaft, fan shaft, vent shaft, and related work as part of the Metrorail system. Pl.'s Stmt.¹ ¶ 1. During performance of the Contract, there were a number of disputesabout various terms of the Contract and the performance required. Id. ¶ 2.

On November 10, 1997, Kiska filed a lawsuit against WMATA in this Court. See J.A. vol. 3, tab 10 (Complaint, KiSKA Constr. Corp.-U.S.A. v. Wash. Metro. Area Transit Auth., Civ. No. 97-2677 (D.D.C. filed Nov. 10, 1997)). In that lawsuit, Kiska alleged that WMATA had made material misrepresentations regarding what would be required for the Contract and that WMATA had failed to perform its obligations as promised. Kiska asserted claims for (1) fraudulent misrepresentation, (2) negligent misrepresentation, (3) quantum meruit, (4) unilateral mistake, and (5) material breach of contract. See id.; Pl.'s Stmt. ¶ 2. This Court dismissed the first two causes of action, granted summary judgment for WMATA on the quantum meruit claim, and allowed the last two causes of action to be tried by a jury. Pl.'s Stmt. ¶ 2.

The complaint in the First Federal Action included a number of allegations that the parties believe are material to the claims before the ASBCA. For example, in Count IV of the complaint, for "Material Breach of Contract," Kiska alleged as follows:

248. WMATA materially breached the Contract, including express and implied warranties, in at least the following ways:

a. WMATA failed to disclose necessary and vital information to KiSKA-Kajima relating to the performance and safety of the work to be performed;

b. The Contract plans and specifications and directed construction methods prepared by WMATA were defective, misleading, incomplete and unfit for their intended purpose;

c. WMATA breached its duty to cooperate with KiSKA-Kajima and not hinder or interfere with KiSKA-Kajima's performance;

d. WMATA failed and refused to grant time for extensions for excusable and/or compensable delays encountered by KiSKA-Kajima;

e. WMATA directed that extra work beyond the scope of the Contract be performed and has failed and/or refused to pay for such extra work;

f. WMATA failed and refused to administer the Contract in accordance with its terms and with good faith and fair dealing;

g. WMATA failed to coordinate the Project with the numerous Washington, D.C. utility companies and permit-granting agencies;

h. WMATA failed to coordinate the work of its other contractors, including Blake Construction;

i. WMATA failed to obtain necessary permits for construction in a timely manner;

j. WMATA failed and refused to review and approve shop drawings in a timely manner;

k. WMATA failed to provide timely and complete access to the jobsite;

l. WMATA directed the acceleration of the work without compensating KiSKA-Kajima;

m. WMATA arbitrarily and unreasonably directed pervasive changes to the Contract which constituted a cardinal change.

AR, vol. 3, tab 10 (Complaint) ¶ 248. Although subparagraph (e) referenced "extra work beyond the scope of the Contract," Kiska's complaint did not identify the alleged extra work to which it was referring. Kiska also alleged the following: "Despite repeated requests by KiSKA-Kajima throughout Contract performancefor change orders and appropriate time extensions to compensate KiSKA-Kajima for the additional costs and delays to the Project schedule caused by WMATA, WMATA continuously refused to accept responsibility for its numerous acts and omissions." Id. ¶ 185. Kiska did not specifically allege in its complaint that WMATA wrongfully withheld the balance of the contract price or that it had breached the contract by failing to pay the contract retainage. See generally id.; Pl.'s Stmt. ¶ 3.

During the trial, the Court allowed Kiska to present evidence of damages based on the "modified total cost" method, which calculates the amount of damages as the total actual costs incurred the contractor (Kiska) in performing the contract minus the contractor's bid price, adjusted to account for the costs of harms for which the contractor is itself responsible. See AR, vol. 3, tab 28 (Mem.Op. Nov. 1, 2000); Def.'s Stmt. ¶ 5. One of Kiska's experts, Mr. Kelley, testified at the trial that Kiska's damages had to be calculated using the modified total cost method because, in his opinion, the breaches involved in the litigation were so complex and "inextricably intertwined" that there was no other method available to compute damages. AR, vol. 3, tab 23 (Trial Tr.) at 2258-64. Mr. Kelley testified that in his calculations, he subtracted amounts for contract modifications paid by WMATA. See id. at 2421. Another of Kiska's experts, Mr. Jeffrey E. Fuchs, also testified about the modified total cost method of calculating damages. In his calculation of damages, Mr. Fuchs added $650,000 retainage, explaining it as "monies that have been earned by the contractor during the course of its work that the owner withholds and gives back at the end of the project." Id. at 2609. Mr. Fuchs testified that the retainage was an "accounting adjustment that occurs at the end of any job" and testified that there was no dispute that WMATA owed that amount for work already performed by Kiska. Id. at 2640-41. Based on this testimony, Kiska's counsel argued during closing arguments that the jury should award damages based on the modified total cost method, including the amount for retainage withheld by WMATA. Id. at 4666-69.

The Court instructed the jury that it could award damages to Kiska using the modified total cost method if the jury found that it was impossible or impracticable for Kiska to calculate specific damages resulting from each separate impact or delay for which WMATA was responsible. Id. at 4592. The Court instructed the jury to reduce its award by any amounts which WMATA had shown were unreasonable or were the responsibility of Kiska. Id. The Court provided no instructions regarding a claim for the wrongful withholding of retainage or WMATA's failure to pay certain equitable adjustments. Pl.'s Stmt. ¶ 5. The Court also gave the following general instruction regarding Kiska's two causes of action:

In its Complaint, the Plaintiff, KiSKA-Kajima, has filed two causes of action or claims against the Defendant, Metro [WMATA]:

(1) First, KiSKA-Kajima claims that Metro materially breached the contract by, among other things, failing to provide design plans and specifications that were accurate, complete and fit for their intended purpose, failing to disclose vital information that Metro possessed regarding the adequacy of its Contract plans and specifications, and failing to cooperate and not interfere with KiSKA-Kajima and otherwise act in good faith in its administration of the Contract.

(2) Second, KiSKA-Kajima claims that it entered into the contract with Metroon the basis of a unilateral mistake regarding the adequacy of Metro's plans and specifications and the ability to safely and efficiently perform the work as required in the Contract.

AR, vol. 3, tab 12 (Instruction No. 33). With respect to the breach of contract claim, the Court instructed the jury as follows:

There is agreement between the parties that a valid and enforceable contract existed pursuant to which KiSKA-Kajima agreed to perform the construction work necessary to complete the 14th Street Tunnels for the agreed price of $42,920,000.00. KiSKA-Kajima claims that Metro [WMATA] materially breached the Contract in a number of ways that I will explain to you in separate instructions.

Under the law, if one party, without legal excuse fails to fully perform a duty owed under a contract, then that party has breached the contract.

If you find, by a preponderance of the evidence, that Metro breached any of its contractual duties that I describe to you related to KiSKA-Kajima's claims that Metro failed to provide design plans and specifications that were accurate, complete and fit for their intended purpose or that Metro failed to disclose vital information, then you must return a verdict in favor of

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