Teg-Paradigm Environmental, Inc. v. U.S.

• Citation: 465 F.3d 1329
• Decision Date: 29 September 2006
• Docket Number: No. 06-5007.,06-5007.
• Parties: TEG-PARADIGM ENVIRONMENTAL, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

465 F.3d 1329

TEG-PARADIGM ENVIRONMENTAL, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 06-5007.

United States Court of Appeals, Federal Circuit.

September 29, 2006.

Robert C. Haase, Jr., Robins, Kaplan, Miller & Ciresi L.L.P., of Los Angeles, CA, argued for plaintiff-appellant. With him on the brief was Edward D. Lodgen. Of counsel was David C. Veis.

Andrew P. Averbach, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, and Donald E. Kinner, Assistant Director.

Before MICHEL, Chief Judge, RADER, and SCHALL, Circuit Judges.

SCHALL, Circuit Judge.

TEG-Paradigm Environmental, Inc. ("TEG") entered into a contract with the United States Department of Housing and Urban Development ("HUD"). Pursuant to the contract, TEG agreed to perform asbestos abatement work at the Geneva Towers, an apartment complex, in San Francisco. After the contract work was completed, TEG submitted a claim to the contracting officer in which it sought an equitable adjustment in the contract price. In support of its claim, TEG asserted that it had been required to perform excessive cleaning and that it had been required to remove excessive quantities of asbestos. After the contracting officer denied the claim, TEG filed suit in the United States Court of Federal Claims under the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-613 (2000).

TEG's complaint in the Court of Federal Claims contained three counts. In Count One, TEG alleged breach of contract based upon HUD not permitting TEG to perform the contract work in accordance with its original work plan. In Count Two, TEG alleged that HUD breached the contract by requiring what it characterized as extraordinary and unnecessary cleaning of the surfaces of the buildings. Finally, in Count Three, TEG alleged that it was entitled to additional compensation under the contract based upon its removal of excessive quantities of asbestos. TEG sought a combined breach of contract and equitable adjustment recovery in the amount of approximately $4 million.

In due course, the parties filed cross-motions for summary judgment. The court granted summary judgment for the government on Counts One and Two of the complaint and for TEG on Count Three of the complaint. Teg-Paradigm Envtl., Inc. v. United States, No. 00-507C, slip op. at 26 (Fed.Cl. Aug. 30, 2002). TEG now appeals from the court's decision granting the government's motion for summary judgment on its two claims of breach of contract. Finding no error in the Court of Federal Claims's decision, we affirm.¹

BACKGROUND

I.

The Geneva Towers were two high-rise apartment buildings in San Francisco. HUD acquired the buildings in 1991 and decided to implode them to make way for new development. Id., slip op. at 2. However, the buildings contained asbestos, which had to be removed before implosion. Id. HUD solicited bids on a contract for asbestos abatement and TEG was awarded the contract on May 8, 1997, for a fixed price of $5,153,625.00. The contract required that the abatement be complete on or by December 31, 1997, and provided for liquidated damages of $5,000 per day of delay. After several extensions, the deadline for finishing the abatement was changed to February 15, 1998. Id., slip op. at 7. However, TEG did not finish the abatement work until March 31, 1998, causing HUD to assess $220,000 in liquidated damages against it. Id., slip op. at 8. This delay was purportedly caused at least in part by disagreements between TEG and HUD over contract requirements. Specifically, the parties disagreed as to (i) whether the contract required TEG to abate asbestos in the pores and cracks of the Geneva Towers' surfaces and (ii) whether TEG was required to comply with the contract specifications rather than TEG's work plan.

A.

We begin with the facts relevant to the first point of contention between the parties, which concerns the level of asbestos abatement required by the contract (Count Two of the complaint).

The original contract specifications provided two separate abatement standards, one for friable and one for non-friable asbestos-containing materials. Friable materials are capable, when dry, of being crumbled, pulverized, or reduced to powder by hand pressure. Id., slip op. at 2. The original asbestos abatement standard was set forth at Section 2080, 4.3C of the contract, which provided as follows:

Friable materials applied to concrete, masonry, wood and nonporous surfaces, including but not limited to, steel structural members (decks, beams and columns), pipes and tanks, shall be cleaned to a degree that no traces of debris or residue are visible. Nonfriable materials applied to concrete, masonry, [or] wood shall be cleaned until no residue is visible other than that which is embedded in the pores, cracks, or other small voids below the surface of the material.

Thus, the original specifications established a stringent visibility standard for friable materials and a less stringent standard, one which allowed the contractor to leave asbestos in the pores and cracks, for non-friable materials. The original Section 2080, 4.3C likely provided the stringent visibility standard for friable asbestos-containing materials because they are more likely to become airborne and thus pose a health risk.

In the course of the bidding process, prospective bidders, including TEG, raised questions about which standard applied to the concrete on the exterior of the buildings. During a conference call concerning the prospective contract, TEG's representative noted, "It's a significant difference, because on one it has to be clean to a degree there's no trace; on the other, it's clean to a degree that material can still be embedded in pores, cracks and voids."

In response to the questions raised during the bidding process about the original asbestos abatement standard, the government modified the standard. The revised section 2080, 4.3C set forth a single standard for all asbestos-containing materials and provided as follows:

Asbestos-containing materials applied to concrete, masonry, wood and nonporous surfaces, including, but not limited to, steel structural members (decks, beams and columns), pipes and tanks, shall be cleaned to a degree that no traces of debris or residue are visible by the Observation Services Contractor.

Thus, the revised Section 2080, 4.3C abolished the old standard applicable for non-friable materials that stated that it was acceptable to leave asbestos-containing materials in pores and cracks. Instead, a standard requiring that there be no visible asbestos, similar to the original standard for friable asbestos-containing materials, was adopted for all asbestos-containing materials.²

As noted by the Court of Federal Claims, trade practice and custom in the asbestos abatement field includes presuming that any "debris and residue" contains asbestos. Id., slip op. at 13. The court based its finding on the American Society for Testing Material ("ASTM") standard for asbestos abatement, which provides, "Any residue, dust, or debris found during the inspections is assumed to contain asbestos. ..." Id.

B.

The parties' second disagreement concerns whether the contract's specifications or TEG's work plan controlled the terms of TEG's performance (Count One of the complaint).

Section C of the contract specifications states that the contractor will provide a work plan for approval. The relevant portion of Section C provides:

Contractor[']s Work Plan: Submit for approval a detailed plan of engineering controls and the work procedures to be used in the removal, repair, clean-up or encapsulation of materials containing Asbestos.

1. For all projects submit:

a. Names of Superintendent, Foremen, Project Manager and other key personnel, and their day time and emergency telephone and pager numbers.

b. Detailed description of the method to be employed in order to control pollution, including negative air equipment calculations.

c. Personal air monitoring procedures.

d. Safety Plan in accordance with Contract Document requirements.

(MATERIAL OMITTED)

e. Location of Asbestos Work Areas.

f. Layout and construction details of Decontamination Enclosure Systems.

g. Project schedule including important milestones, critical paths and interface of trades involved in the Work.

h. Security Plan including sketches necessary to clearly describe the plan.

i. Emergency evacuation plan for injured workers, compressor failure, fire and other emergencies.

j. Firewatch Plan including names, telephone and pager numbers, and qualifications of personnel, firewatch duties, sketches necessary to clearly describe the plan and, when applicable, specific requirements of local building/fire department regulations.

k. A contingency plan, in the event of a major contamination incident caused by fire (on or off the floor being abated), a large breech in the Work area containment barrier, the opening of stairwell doors, breakage of the buildings['] exterior windows or sabotage. Such a plan will focus on how to maintain safety and order when the building is occupied by building occupants, the public and other building users.

Pursuant to this provision, HUD requested that TEG submit its work plan on April 21, 1997. On April 25, 1997, TEG submitted a first version of its work plan. In response to deficiencies pointed out by HUD and ATC Associates, Inc. ("ATC"), HUD's asbestos engineer and technical advisor for the contract, TEG revised the work plan several times in late April and early May of 1997. Two weeks after the initial submittal of the work plan, TEG was awarded the contract.

Disputes arose during contract performance as to whether the work plan or the contract specifications governed performance. TEG pointed out discrepancies between...