Team Sys. Int'l LLC v. Aquate Corp.
| Decision Date | 17 March 2017 |
| Docket Number | No. 16-11476,16-11476 |
| Parties | TEAM SYSTEMS INTERNATIONAL LLC, Plaintiff - Counter Defendant - Appellant - Cross Appellee, v. AQUATE CORPORATION, Defendant - Counter Claimant - Appellee - Cross Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
[DO NOT PUBLISH]
Non-Argument Calendar
D.C. Docket No. 5:13-cv-00427-CLS
Appeals from the United States District Court for the Northern District of Alabama Before MARTIN, JULIE CARNES, and ANDERSON, Circuit Judges.
This appeal requires us to review certain aspects of the district court's damages award following a bench trial in Plaintiff's breach-of-contract action. After careful review, we conclude that the district court's findings of fact and conclusions of law respecting damages were thorough and well-reasoned, and we AFFIRM each contested portion of the final order.
The underlying breach-of-contract action arose from a subcontract agreement between plaintiff Team Systems International, LLC, and defendant AQuate Corporation. The parties were successful bidders on a joint proposal to provide security services onboard a maritime radar station under the supervision of the Military Sealift Command, a division of the United States Navy. Under the terms of the winning bid, Defendant would serve as the prime contractor on the project and would assist Plaintiff in acquiring "Secret"-level facility security clearance ("FCL"), which the Government required both parties to hold beforeundertaking the project. In turn, Plaintiff would supply the personnel needed to perform security services under the prime contract. After winning the bid, the parties entered into a subcontract agreement (the "Subcontract") detailing this division of responsibilities. The Subcontract obligated Defendant—as a matter of contract as well as regulatory law—to sponsor Plaintiff in applying for the required FCL, and to do so early enough to allow clearance to be granted before work under the prime contract was to begin.
Defendant made a perfunctory effort to begin the FCL application on Plaintiff's behalf, but the parties' relationship began to sour shortly after the Subcontract was signed. A series of strategic errors and intentional miscommunications by Defendant brought the FCL approval process to a halt until just days before performance of the prime contract was intended to begin. Defendant maintained that Plaintiff's failure to obtain a FCL constituted a default under the Subcontract and exercised its right to terminate the agreement. Plaintiff responded by filing suit against Defendant in the Eastern District of Virginia, alleging (among other things) that Defendant had breached the Subcontract by actively preventing it from obtaining the required FCL and by improperly terminating the Subcontract on that basis.
In spite of Defendant's efforts to stymie the approval process, the Government finally granted Plaintiff both an interim FCL and a final FCL on the day performance of the prime contract was scheduled to begin. Plaintiff received notice of the interim FCL that same day; delivery of the final FCL arrived three days later. No performance under the prime contract had begun at that point in time. With this clearance in hand, Plaintiff was fully authorized to perform under the Subcontract as the parties had originally planned. Nonetheless, Plaintiff did not ask Defendant to reinstate it on the Subcontract—in fact, Plaintiff presented no credible evidence at trial that it ever directly notified Defendant of the final FCL after its delivery.2 As the district court found, Defendant was not aware that the final FCL had been granted until it was disclosed through discovery several months later. Thus, instead of attempting to resurrect the Subcontract and resume its work on the military contract once it received its final clearance, Plaintiff focused its efforts on its lawsuit—which hinged on its contention that Defendant had precluded it from obtaining clearance in time for it to perform.
Approximately one month later, Plaintiff voluntarily dismissed its Virginia suit and re-filed in the Northern District of Alabama. Plaintiff asserted the same breach-of-contract claims and represented that the allegations in its complaint had been verified by Deborah Mott, Plaintiff's CEO. Importantly, the complaint stated in unambiguous terms that Plaintiff had received an interim FCL—but it entirely failed to mention that Plaintiff also received its final FCL shortly thereafter. Elsewhere in the complaint, Plaintiff stated that Defendant "has actively prevented [Plaintiff] from obtaining an FCL through unreasonable delay." This statement—while truthful at the time the Virginia suit was filed—was no longer correct when Plaintiff initiated the Alabama suit. The same misleading representations pervaded Plaintiff's filings in support of its motion for a preliminary injunction. As the district court summarized: "twenty-eight days after . . . [Plaintiff] had been issued both an interim and a final FCL," Plaintiff's Alabama filings "repeatedly represented to this court and opposing counsel that the company had not only failed to receive a final FCL, but also that the [Government] indicated that it might suspend a full investigation into [Plaintiff's] suitability for a final FCL." (Emphases in original.) Neither representation was accurate.
Plaintiff did not correct these inaccuracies until sixteen months into the Alabama proceeding, after the parties had progressed through a substantial portionof discovery. And Plaintiff did not outwardly acknowledge to the district court that it had received a final FCL for another five months, when it made passing reference to the FCL in a brief supporting a motion for summary judgment.
Following a bench trial, the district court found that Defendant breached the Subcontract by failing to sponsor Plaintiff for a final FCL in a timely manner and by terminating the Subcontract on those grounds. In accordance with this assignment of liability, the district court granted Plaintiff expectation damages equal to the revenue the Subcontract was intended to yield, less Plaintiff's costs of performance, for the initial year of the project.3 The baseline damages award totaled $575,132.66.
However, after significant and thorough discussion, the district court concluded that this baseline damages award should be "scaled to reflect [Plaintiff's] failure to mitigate" its damages under the Subcontract by promptly disclosing its receipt of the final FCL. In its final analysis, the court determined that Plaintiff was entitled to compensation only for the period from February 1, 2013 (the date on which performance was due to begin) to March 1, 2013 (the dayon which Plaintiff filed its first set of misleading pleadings before the district court). The court ultimately awarded Plaintiff $68,928.14 in damages, representing the expected net value of the one-year Subcontract for the twenty-nine days for which Plaintiff was entitled to recover.
On appeal, Plaintiff seeks review of the district court's decision to limit damages for Plaintiff's failure to mitigate. Defendant cross-appeals, challenging several aspects of the district court's baseline damages calculation. Neither party argues that the district court erred in finding Defendant liable on two of Plaintiff's three substantive claims; our review focuses solely on the court's damages analysis.
Damages calculations are factual determinations committed to the sound discretion of the factfinder. See, e.g., Bravo v. United States, 532 F.3d 1154, 1170 (11th Cir. 2008) (Wilson, J., concurring in part and dissenting in part). Where, as here, the district court has acted as factfinder, we review its award of damages and any pertinent factual findings for clear error. Simmons v. Conger, 86 F.3d 1080, 1084 (11th Cir. 1996). See also Treibacher Industrie, A.G. v. Allegheny Techs., Inc., 464 F.3d 1235, 1237 (11th Cir. 2006) (); AvcoFin. Servs., Inc. v. Ramsey, 631 So. 2d 940, 942 (Ala. 1994) (). In examining a court's award of damages, we "afford considerable deference to the district court." Hiatt v. United States, 910 F.2d 737, 742 (11th Cir. 1990). As such, this Court will not reverse an award "simply because it may conclude that it would have computed damages differently." Bunge Corp. v. Freeport Marine Repair, Inc., 240 F.3d 919, 923 (11th Cir. 2001).
By contrast, we review the court's legal conclusions de novo. Sea Byte, Inc. v. Hudson Marine Mgmt. Svcs., Inc., 565 F.3d 1293, 1300 (11th Cir. 2009).
Plaintiff's sole argument on appeal is that the district court erred in reducing its award by finding that Plaintiff failed to mitigate its damages. We do not find that the district court erred as a matter of law or in its factual determinations.
The Subcontract is governed by Alabama law. Alabama courts recognize "the long-standing rule that the law imposes upon all parties who seek recompense from another a duty to mitigate their losses or damages." Avco, 631 So. 2d at 942. Under this rule, "a plaintiff can recover only for that damage or loss that would have been sustained if the plaintiff had exercised such care as a reasonably prudentperson would have exercised under like circumstances to mitigate the damage or loss." Id. The reasonableness of the plaintiff's efforts to mitigate damages is a question of fact. Id.
Defendant in this case asserted as an affirmative defense that Plaintiff failed to mitigate its damages by failing to notify Defendant of its final FCL and to explore the possibility of resuming work under the Subcontract. Upon close examination of the evidence presented at trial, the district court agreed. It found that,...
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