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KINGSTON CONSTRUCTORS, INC. v. WASHINGTON METRO. A

August 22, 1994

KINGSTON CONSTRUCTORS, INC., Plaintiff,
v.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Defendant.



The opinion of the court was delivered by: STANLEY S. HARRIS

 Before the Court are plaintiff's motion for partial summary judgment, defendant's opposition thereto and its cross-motion for summary judgment, and the parties' responses and replies to those pleadings. Summary judgment may be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering a summary judgment motion, all evidence and the inferences to be drawn from it must be considered in a light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Summary judgment cannot be granted "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Upon consideration of the entire record, the Court denies plaintiff's motion for partial summary judgment and grants defendant's motion for summary judgment. Although "findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56," the Court nonetheless sets forth its analysis. See Fed. R. Civ. P. 52(a).

 Plaintiff Kingston Constructors, Inc., ("Kingston") and defendant Washington Metropolitan Area Transit Authority ("WMATA") entered into three separate contracts (Nos. 1Z1049, 1Z7041, and 1Z704A, hereinafter, "the Kingston Contracts") between February 23, 1988, and April 4, 1991. These contracts were for the design, procurement, fabrication, and installation of traction power equipment and cabling for traction power substations and tiebreaker stations. Throughout the performance of these contracts, plaintiff performed extra work and incurred additional costs. In an effort to recover the additional costs from defendant under the "Changes" and "Differing Site Conditions" clauses in the above-mentioned contracts, Kingston submitted claims to WMATA, and appealed the denial of these claims to the Corps of Engineers Board of Contract Appeals ("BCA").

 On August 11, 1992, Kingston and WMATA met to negotiate a settlement of the outstanding claims docketed by the BCA as ENG BCA Nos. 5836, 5963, 5954, and 5955. A handwritten contract agreement ("Settlement Agreement") was prepared whereby WMATA agreed to pay Kingston a liquidated sum of $ 554,000.00 for settlement of the claims. George Schlesinger, president of Kingston, negotiated and signed the Settlement Agreement on behalf of Kingston, and Francis "Buddy" Watson negotiated, signed, and executed the Settlement Agreement on behalf of WMATA. At the bottom of the Settlement Agreement was written "Pay within 90 days." With the 90 days running from August 11, 1992, payment was due by November 10, 1992.

 At the negotiations, Watson represented that he was authorized by WMATA to negotiate a settlement amount with Kingston. However, Watson understandably informed Schlesinger that he was required to submit the settlement amount to WMATA's internal funding and review process in order to obtain approval by WMATA's Board of Directors.

 On August 20, 1992, Jeffrey Wharton, Kingston's Vice President and Managing Partner, signed and forwarded to WMATA a document entitled "MEMORANDUM OF CONTRACT CLOSEOUT AND OTHER CONTRACT ACTIONS" which formalized the Settlement Agreement for the Kingston contracts. The Memorandum included language stating that WMATA agreed "to make payments to [the] Contractor on or before November 10, 1992." However, WMATA declined to sign the Memorandum. Thereafter, a second "MEMORANDUM OF CONTRACT CLOSEOUT AND OTHER CONTRACT ACTIONS" was drafted to memorialize the Settlement Agreement of August 11, 1992. This version was virtually identical to the August 20, 1992, proposed Memorandum (some of the numbers were slightly changed), except that the line indicating when payment was to be made was changed to require WMATA to "make every reasonable effort to make payments to [the] Contractor by November 10, 1992." Both parties signed the Memorandum on September 2, 1992.

 Defendant paid the settlement amount to plaintiff in three installments on May 14, 1993 ($ 479,000.00), June 4, 1993 ($ 50,000.00), and June 11, 1993 ($ 25,000.00). On August 27, 1993, plaintiff filed suit claiming that defendant breached the Settlement Agreement by failing to make payment within 90 days of executing the Settlement Agreement (by November 10, 1992). Plaintiff seeks to recover $ 33,240.00 in prejudgment interest from defendant WMATA.

 Plaintiff now moves for partial summary judgment on the grounds that defendant WMATA is liable for prejudgment interest for defendant's breach of the Settlement Agreement under both federal and District of Columbia law. Defendant moves for summary judgment on all claims on the ground that WMATA is shielded from awards of prejudgment interest by sovereign immunity, or, alternatively, that there is no contractual basis for liability. *fn1"

 The dispositive issue is whether defendant WMATA is liable for awards of prejudgment interest. In denying plaintiff's motion for partial summary judgment and granting defendant's motion for summary judgment, the Court holds that WMATA has sovereign immunity against awards of prejudgment interest for actions taken in its contract negotiating capacity.

 WMATA is an instrumentality of each of the signatories -- Maryland, Virginia, and the District of Columbia -- to the Compact that created WMATA. D.C. Code Ann. § 1-2431 (1981) ("WMATA Compact"). WMATA's sovereign immunity exists because the signatories have successfully conferred their respective sovereign immunities upon it. Morris v. WMATA, 781 F.2d 218 (D.C. Cir. 1986). It is well-settled that a sovereign is immune from liability for interest unless it has waived its immunity by statute or contract. Library of Congress v. Shaw, 478 U.S. 310, 106 S. Ct. 2957, 92 L. Ed. 2d 250 (1986). See George Hyman Constr. Co. v. WMATA, 259 U.S. App. D.C. 449, 816 F.2d 753 (D.C. Cir. 1987).

 There are two exceptions to sovereign immunity from awards of prejudgment interest. Spawn v. Western Bank-Westheimer, 989 F.2d 830, 833 (5th Cir. 1993), cert. denied, 114 S. Ct. 1048 (1994). First, sovereign immunity can be waived when there is an express contractual or statutory provision consenting to awards of prejudgment interest. Shaw, 106 S. Ct. at 2960. Second, agencies are liable for interest when the legislature sheds the cloak of immunity by giving a governmental agency the status of a private commercial enterprise. Loeffler v. Frank, 486 U.S. 549, 108 S. Ct. 1965, 100 L. Ed. 2d 549 (1988). See Shaw, 106 S. Ct. at 2963 n.5. Plaintiff has failed to show that either of the exceptions to sovereign immunity applies.

 First, defendant WMATA has made no express contractual or statutory waiver of its immunity from awards of interest. There is no provision in the Settlement Agreement which constitutes a waiver of WMATA's sovereign immunity from awards of prejudgment interest. Moreover, nowhere in the WMATA Compact does WMATA consent to liability for such awards. See WMATA Compact § 80. In creating WMATA, the signatories, with congressional authorization, expressly provided that ...


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