United States, for the United Statese & Benefit of Am. Civil Constr., LLC v. Hirani Eng'g & Land Surveying, PC

• Decision Date: 19 June 2020
• Docket Number: No. 19-7010,C/w 19-7011,19-7015,19-7010
• Citation: 962 F.3d 587
• Parties: UNITED STATES of America, FOR the USE AND BENEFIT OF AMERICAN CIVIL CONSTRUCTION, LLC, Appellee v. HIRANI ENGINEERING & LAND SURVEYING, PC, Appellee Colonial Surety Company, Appellant
• Court: U.S. Court of Appeals — District of Columbia Circuit

962 F.3d 587

UNITED STATES of America, FOR the USE AND BENEFIT OF AMERICAN CIVIL CONSTRUCTION, LLC, Appellee

v. HIRANI ENGINEERING & LAND SURVEYING, PC, AppelleeColonial Surety Company, Appellant

No. 19-7010

C/w 19-7011

19-7015

United States Court of Appeals, District of Columbia Circuit.

Submitted March 27, 2020

Decided June 19, 2020

Michael C. Delaney and Laurence Schor were on the joint briefs for appellants/cross-appellees.

Herman M. Braude was on the briefs for appellee/cross appellant.

Before: Henderson, Rogers and Garland, Circuit Judges.

Rogers, Circuit Judge:

American Civil Construction, LLC, ("ACC") the subcontractor on a U.S. Army Corps of Engineers ("Corps") flood protection project, sued the prime contractor, Hirani Engineering & Land Surveying, P.C., ("Hirani") for breach of contract and the providers of Hirani's payment bond, Colonial Surety Company ("Colonial"), under the Miller Act, 40 U.S.C. § 3133, for unpaid labor and materials. Following a bench trial, the district court entered judgment in favor of ACC and awarded damages against both defendants. Hirani and Colonial appeal, and ACC cross appeals. Among the challenges to the judgment, Colonial contends that ACC's lawsuit was untimely under the Miller Act's one-year statute of limitations, pointing to the Corps’ April 26 letter terminating Hirani. But the Federal Acquisition Regulations may render the effective date of Hirani's termination to be later. Because the district court expressly declined to make some relevant findings, the court will remand the case without deciding whether the accrual of the Miller Act cause of action stems from the termination of the Prime Contract or the Subcontract. Otherwise, the court affirms the award of restitution against Hirani and defers ruling on other issues raised by the parties.

I.

In 2010, the Corps awarded Hirani a $3,833,097 contract (the "Prime Contract") to build the "Washington, D.C. and Vicinity, Local Flood Protection Project, 17th Street Closure Structure" (the "Project"). See U.S. ex rel. Am. Civil Constr., LLC v. Hirani Eng'g & Land Surveying, P.C. , 345 F. Supp. 3d 11, 22 (D.D.C. 2018) ("Hirani II "), ¶¶ 4–9. Under the Prime Contract, Hirani was to build a levee flood wall designed to prevent the Potomac River from flooding across the National Mall into downtown Washington, D.C. Id. ¶ 4. The contract anticipated that the Project would be completed within one year, by October 12, 2011. Id. ¶ 10. The contract also required Hirani to obtain a surety bond and it did so from Colonial in the amount of $3,833,097. Id. ¶¶ 11–12. A few months later, the Corps issued Option 1, which required Hirani to install stone cladding on the levee wall and increased the contract price by $641,369. Id. ¶ 57.

On April 4, 2011, Hirani and ACC entered into a written Subcontract for $2,845,600, pursuant to which ACC would perform the "entire scope of work" of the Project, except for management, quality control, and the installation of some specified metal structures and panels. Id. ¶¶ 13, 16–19. The Subcontract provided that if a "dispute, controversy, or question" arose about its interpretation, ACC would not stop working until the dispute or controversy was resolved. Id. ¶ 21 (alteration omitted).

The Project was beset by delays. Briefly, delays were attributable to Hirani's procrastination, change orders by the Corps, bad weather, a misalignment between structural and architectural drawings, and work stoppages due to the National Cherry Blossom Festival. Id. ¶¶ 50–78.

By letter of April 26, 2013, the Corps terminated Hirani for default. Id. ¶ 92. The district court found that Hirani was at fault for the termination. Id. ¶¶ 95–96. The Corps explained that it had "little confidence" that Hirani would finish the Project because Hirani had not taken the steps needed to improve its progress, work had stalled since March 22 "due to subcontractor management and nonpayment issues," Hirani "had not submitted periodic progress schedules" and Hirani had failed to "fulfill commitments to meet milestone deadlines necessary for completing the remainder of the Prime Contract." Id. ¶ 93 (alterations omitted). Hirani responded by letter of April 30, 2013, rejecting the termination and requesting a meeting. Id. ¶ 99. That same day, Ed Hollander, ACC's field superintendent for the Project, learned that the Corps had terminated Hirani. Id. ¶¶ 67, 98. The following day, May 1, Hirani told Hollander that ACC must continue working on the Project because it (Hirani) was fighting the termination. Id. ¶ 100. In accordance with Hirani's direction, ACC backfilled an excavated grass area on May 1. Id. ¶ 102. The following day, May 2, Hirani directed ACC to immediately stop working on the Project. Id. ¶ 104.

The district court expressly declined to find when Hirani received the Corps’ termination letter. Id. ¶ 92 n.5. It did find that the ACC crew did not work on the Project site on Saturday, April 27 or Sunday, April 28, and heavy rains prevented work on Monday, April 29 and Tuesday, April 30. Id. ¶ 97. But the district court did not make a finding of fact whether ACC supplied materials during this time, and it declined to decide if work performed by Ed Hollander or fencing and cleanup work performed by ACC between April 29 and May 1 were compensable under the Subcontract. (Having found that ACC last performed compensable work on May 1, the district court noted it "therefore need not consider [ACC's] alternative arguments that work performed by Ed Hollander on the Project site between April 29, 2013, through May 1, 2013, as well as fencing work and cleanup performed by ACC during that time period are compensable tasks under the Subcontract and thus occurred within the one-year limitations period.") Id. at 40 n.8.

ACC filed suit against Hirani and Colonial on April 29, 2014. In a second amended complaint, ACC requested $2.07 million in damages from each defendant. Colonial counterclaimed, alleging among other things that ACC had breached the Subcontract by failing to perform and caused Colonial to incur substantial costs.

The district court denied Hirani and Colonial's motion for summary judgment. See U.S. ex rel. Am. Civil Constr., LLC v. Hirani Eng'g & Land Surveying, P.C. , 263 F. Supp. 3d 99, 101 (D.D.C. 2017) (" Hirani I "). Following a five-day bench trial, the district court concluded that Colonial's counterclaims failed because it had not shown that ACC breached the Subcontract. See Hirani II , 345 F. Supp. 3d at 39. On ACC's Miller Act claim against Colonial, the district court found that ACC's lawsuit was timely because it was filed within one year of the last compensable work ACC had performed under the Subcontract. Id. at 43. And the court found that "Hirani breached the Subcontract by refusing to pay ACC for the work that it performed." Id. The court therefore entered judgment on the breach of contract claim in favor of ACC, id ., and directed the parties to brief how damages should be calculated, id. at 56.

The district court awarded $1,544,957.29 in quantum meruit damages on ACC's Miller Act claim against Colonial, plus more than half a million dollars in prejudgment interest. U.S. ex rel. Am. Civil Constr., LLC v. Hirani Eng'g & Land Surveying, P.C. , No. 14-CV-00745 (APM), 2019 WL 162019, at *3 (D.D.C. Jan. 10, 2019) (" Hirani III "). On ACC's contract claim against Hirani, the district court construed ACC's request for quantum meruit damages as seeking restitution because Hirani had breached a written contract. Id. Citing the RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT to conclude that performance-based restitution must be limited by expectancy under the contract, the district court awarded $425,319.50 in restitution damages, plus nearly $150,000 in prejudgment interest, inasmuch as ACC had already been paid over $2.5 million for its work. Id. at *4–5.

II.

Hirani and Colonial appeal. In their joint brief, they contend that the district court erred in interpreting the Miller Act, arguing that ACC was not entitled to recover any damages because ACC failed to bring its Miller Act claim within one year after the last day ACC performed compensable work on the Project. They also contend that the district court erred by awarding quantum meruit damages because breach of contract damages could be calculated, by inadequately explaining the damages award, by allowing double recovery to ACC, and by admitting documents containing hearsay.

ACC cross appeals, contending that it was entitled to Miller Act damages for the services performed by Ed Hollander, its field superintendent, and to quantum meruit damages against Hirani.

A.

The court reviews de novo the district court's denial of summary judgment and its statutory interpretation. See Validus Reinsurance, Ltd. v. United States , 786 F.3d 1039, 1042 (D.C. Cir. 2015) ; Draim v. Virtual Geosatellite Holdings, Inc. , 522 F.3d 452, 455 n.3 (D.C. Cir. 2008). "Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court's opportunity to judge the witnesses’ credibility." Fed. R. Civ. P. 52(a)(6) ; see also United States v. AT&T, Inc. , 916 F.3d 1029, 1033 (D.C. Cir. 2019).

In enacting the Miller Act, Congress sought to "place[ ] subcontractors to government contractors on substantially equal footing with subcontractors to private contractors" by providing them with a security interest. See U.S. ex rel. Heller Elec. Co. v. William F. Klingensmith, Inc. , 670 F.2d 1227, 1232 (D.C. Cir. 1982). "The Miller Act, like [its predecessor,] the Heard Act, is highly remedial in nature" and therefore "is entitled to a liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects." Clifford F. MacEvoy Co. v. U.S. ex rel. Calvin Tomkins Co. , 322 U.S. 102, 107, 64 S.Ct. 890, 88 L.Ed. 1163 (194...