Stevens Aviation Inc. v. Dyncorp Int'l Llc

• Decision Date: 13 October 2011
• Docket Number: No. 4857.,4857.
• Citation: 394 S.C. 300,715 S.E.2d 655
• Court: South Carolina Court of Appeals
• Parties: STEVENS AVIATION, INC., Respondent,v.DYNCORP INTERNATIONAL LLC, and Science Applications International Corporation, Defendants,of whom DynCorp International LLC is, Appellant.

394 S.C. 300

715 S.E.2d 655

STEVENS AVIATION, INC., Respondent,

v.DYNCORP INTERNATIONAL LLC, and Science Applications International Corporation, Defendants,of whom DynCorp International LLC is, Appellant.

No. 4857.

Court of Appeals of South Carolina.

Heard June 22, 2011.Filed July 27, 2011.Rehearing Denied Oct. 13, 2011.

C. Mitchell Brown, A. Mattison Bogan, and Michael J. Anzelmo, all of Columbia; and William S. Brown, Lane W. Davis, and Steven E. Buckingham, all of Greenville, for Appellant.Keith D. Munson and Catherine R. Atwood, both of Greenville; and Linda L. Shapiro, Kathy A. Wisniewski, and John W. Rogers, all of St. Louis, MO, for Respondent.THOMAS, J.

In this action, DynCorp International LLC (DynCorp) appeals a circuit court's grant of partial summary judgment to Stevens Aviation, Inc. (Stevens) on the interpretation of a contract between DynCorp and Stevens. DynCorp argues the circuit court erred in (1) granting partial summary judgment on grounds not before it; (2) incorporating a prior agreement between Stevens and DynCorp into a later agreement between them; (3) holding the later agreement was an enforceable requirements contract; and (4) ruling on these issues without permitting DynCorp to conduct further discovery. We reverse.

FACTS & PROCEDURAL HISTORY

Sometime before March 2000, the United States federal government issued a request for bids on an aviation maintenance contract for C–12, RC–12, and UC–35 airplanes owned by the United States Army and Navy (the Prime Contract). The Prime Contract provides that the contractor shall conduct “strip and paint” services, “aircraft condition inspection” (ACI), “site organizational maintenance,” and “over and above maintenance” of C–12s, RC–12s, and UC–35s.

On March 16, 2000, DynCorp and Stevens entered a “Teaming Agreement” that imposed certain duties on each party to coordinate a proposal to secure the Prime Contract, with DynCorp as the contractor and Stevens as the subcontractor. The Teaming Agreement also explicitly incorporated two attachments. First, it incorporated an attachment titled “Statement of Work,” which provided that Stevens “shall be proposed to perform” ACIs, “strip and paint requirements,” and “depot level maintenance for the C–12/RC–12 aircraft fleet” above DynCorp's capabilities. Second, it incorporated an attachment titled “Proprietary Data Provisions,” which limited both parties' rights to disclose each other's proprietary business information.

DynCorp was subsequently awarded the Prime Contract, and on March 20, 2001, the parties entered a “Subcontract” that governs their relationship in performing the Prime Contract. Two provisions of the Subcontract's “Preamble” provide the following:

WHEREAS, the parties entered into a Teaming Agreement (“TA”) executed on 16 March, 2000, which identifies the roles and responsibilities of the parties as Prime and Subcontractor in a cooperative effort to perform the requirements of U.S. Army Contract DAAH23–00–C–0226 (“Prime Contract”);

WHEREAS, this Subcontract supersedes all prior written or oral agreements between the parties, excluding the Proprietary Data Exchange Agreement executed on March 16, 2000, and constitutes the entire agreement between the parties hereto with respect to this Subcontract;

....

NOW THEREFORE, in consideration of the promises, mutual covenants and agreements contained herein, the parties hereto agree as follows:

Two pages later, the Subcontract defines “Aircraft” as “all Army RC/C–12 and UC–35 aircraft covered under the Prime Contract.”

Section C of the Subcontract specifically addresses Stevens's duties regarding the work to be performed for DynCorp:

C.1 STATEMENT OF WORK/TECHNICAL SPECIFICATION

A. The work shall be performed in accordance with the [Prime Contract's Statement of Work] (Contract DAAH23–00–C–0226; Attachment 1).

B. C–12/RC–12 STRIP AND PAINT. [Stevens] shall provide all labor, services, facilities, equipment, and direct and indirect parts and materials required to strip and completely repaint aircraft (for other than ACI requirements), at the direction of DynCorp. Such work will be performed in accordance with the [Prime Contract's Statement of Work], Section 4 (4.1.3)....

C. AIRCRACT CONDITION INSPECTION (ACI). [Stevens] shall provide all labor, services, equipment, tools, facilities, tooling, lubricants, excluding engine oil, direct and indirect parts and material, fuel, and strip and repaint services required to perform all the requirements of Appendix P [the Prime Contract's] Statement of Work.... Items found defective beyond those addressed by Appendix P will be handled on an Over–and–Above basis.

D. OVER AND ABOVE MAINTANENCE. [Stevens] shall perform both Depot and Non–Depot Maintenance in accordance with Sections 4.0 AND 5.0 of the [Prime Contract's Statement of Work]. DynCorp will reimburse [Stevens] for the labor required for:

....

(3) Other over and above tasks, as directed by DynCorp.

....

E. SITE ORGANIZATIONAL MAINTENANCE. As directed by DynCorp, [Stevens] shall accomplish work, at [Stevens]'s facility, that would normally be performed at the site by the site personnel.

In August 2009, Stevens filed a complaint against DynCorp, alleging DynCorp breached the Subcontract by diverting C–12s, RC–12s, and UC–35s to other businesses for maintenance work covered by the Subcontract. After the parties filed numerous motions, the circuit court granted partial summary judgment to Stevens. The circuit court held the Subcontract incorporated the Teaming Agreement and constituted an enforceable requirements contract for specified maintenance of the C–12s, RC–12s, and UC–35s covered by the Prime Contract. This appeal followed.

ISSUES ON APPEAL

1. Did the circuit court err in granting partial summary judgment on grounds not before it?

2. Did the circuit court err in incorporating the Teaming Agreement into the Subcontract?

3. Did the circuit court err in finding the Subcontract created an enforceable requirements contract as a matter of law?

4. Did the circuit court err in granting partial summary judgment without permitting DynCorp to conduct discovery?

STANDARD OF REVIEW

When reviewing the grant of summary judgment, “this Court applies the same standard as that required for the circuit court under Rule 56(c), SCRCP. Summary judgment is proper where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Wallace v. Day, 390 S.C. 69, 73, 700 S.E.2d 446, 448 (Ct.App.2010) (per curiam) (citations and internal quotation marks omitted).

A contract or provisions within it are unambiguous if they are not “susceptible to more than one reasonable interpretation....” ¹ TEG–Paradigm Envtl., Inc. v. U.S., 465 F.3d 1329, 1338 (Fed.Cir.2006). “When the contract's language is unambiguous it must be given its plain and ordinary meaning and the court may not look to extrinsic evidence to interpret its provisions.” Id. (internal quotation marks omitted).

I. Grounds Not Before the Circuit Court

DynCorp asserts it lacked notice the circuit court would consider whether the Subcontract incorporated the Teaming Agreement. However, DynCorp did not make this argument in its Rule 59(e) motion or memorandum supporting that motion. Therefore, the issue is not preserved for our review. See In re Estate of Timmerman, 331 S.C. 455, 460, 502 S.E.2d 920, 922 (Ct.App.1998) ( “When a party receives an order that grants certain relief not previously contemplated or presented to the circuit court, the aggrieved party must move, pursuant to Rule 59(e), SCRCP, to alter or amend the judgment in order to preserve the issue for appeal.”).

II. Incorporating the Teaming Agreement

DynCorp next argues the circuit court erred in incorporating the Teaming Agreement into the Subcontract. We agree.

To incorporate the terms of extrinsic material, a contract need not use “magic words.” Northrop Grumman Info. Tech., Inc. v. United States, 535 F.3d 1339, 1346 (Fed.Cir.2008) (internal quotation marks omitted). However, the contract “must explicitly, or at least precisely, identify the written material being incorporated and must clearly communicate that the purpose of the reference is to incorporate the referenced material into the contract (rather than merely to acknowledge that the referenced material is relevant to the contract, e.g., as background law or negotiating history).” Id. at 1345.

Here, the Subcontract identifies the Teaming Agreement with sufficient particularity to incorporate the entire document, but it does not sufficiently communicate an intention to incorporate the Teaming Agreement as a whole. The provision is contained in one of the preamble's “whereas” clauses, and generally, “whereas” clauses “are not considered ‘contractual’ and cannot be permitted to control the express provisions of the contract....” KMS Fusion v. United States, 36 Fed.Cl. 68, 77 (1996). Read in its entirety, moreover, the Subcontract reveals that the parties did not intend to incorporate the Teaming Agreement as a whole. Although incorporation does not require magic language, the Subcontract incorporated other items by using language with such clarity that it is obvious the parties understood how to incorporate substantive provisions of the document into the Subcontract. First, the Subcontract explicitly provides that over fifty federal regulations were “hereby incorporated.” Second, the integration clause in the Preamble immediately before the Teaming Agreement language provides that the Subcontract supersedes prior written agreements except for the “Proprietary Data Exchange Agreement executed by the parties on 16 March 2000.” ²See TEG–Paradigm Envtl., 465 F.3d at 1339 (“One common way to incorporate extrinsic evidence is through an integration clause that expressly incorporates the extrinsic evidence.”).

If the Subcontract does not incorporate the entire Teaming Agreement, Stevens claims the Subcontract's reference to the...