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American Civil Construction, LLC v. Fort Myer Construction Corp.

United States District Court, District of Columbia

February 20, 2018

AMERICAN CONSTRUCTION, LLC, Plaintiff,
v.
FORT MYER CONSTRUCTION CORPORATION, Defendant.

          MEMORANDUM OPINION RE DOCUMENT NO. 38

          RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE

         Denying Defendant's Motion for Partial Summary Judgment

         I. INTRODUCTION

         Plaintiff American Civil Construction, LLC (“ACC”) has sued Defendant Fort Myer Construction Corporation (“Fort Myer”) for breaching a subcontract relating to the construction of the District of Columbia's streetcar line in Anacostia. The subcontract at issue had stated that Fort Myer could only terminate the subcontract with ACC for convenience if the District had similarly terminated the prime contract for convenience. Fort Myer claims that the District terminated the prime contract for convenience, and that therefore, the company was within its rights to terminate its subcontract with ACC. As such, it moved for partial summary judgment on ACC's breach of contract claim. ACC opposed the motion, countering that the District had never terminated its contract with Fort Myer for convenience. For the reasons set forth below, the Court finds that Fort Myer has not met its burden of demonstrating that its contract with the District was terminated for convenience, and therefore denies its motion for partial summary judgment.

         II. FACTUAL AND PROCEDURAL BACKGROUND

         In late 2008, the District of Columbia Department of Transportation (“DDOT”) contracted with Fort Myer to construct a segment of a new streetcar line in Anacostia. Statement of Undisputed Facts Supp. Def.'s Mot. Partial Summ. J. (“Def.'s SUF”) ¶ 1, ECF No. 38-2. While a copy of this contract has not been produced to the Court, Fort Myer claims that it “incorporated the Standard Contract Provisions For Use with Specifications for District of Columbia Government Construction Projects, a published set of provisions common to all DDOT construction contracts.” Id. ¶ 2. These Standard Specifications govern how the scope of a project may be changed, how all or part of a project may be suspended or delayed, and how all or part of a project may be terminated at the convenience of the District. Id.

         ACC subcontracted with Fort Myer to perform a portion of the work Fort Myer was contracted to do, and began work, along with Fort Myer, in 2009. Id. ¶ 3. The subcontract specified that Fort Myer could only terminate ACC for convenience if DDOT had similarly terminated Fort Myer for convenience. See Ex. A, Pl.'s Mem. Opp'n Def.'s Mot. Partial Summ. J. (“Pl.'s Opp'n”), ECF No. 39-2 at 54. By September 2010, both Fort Myer and ACC had completed and had been paid for a portion of the work, but still had additional work in their contracts to complete. Def.'s SUF ¶ 4. Then, on October 12, 2010, Fort Myer received an “Article 3 Letter” from DDOT explaining that “[t]he remaining scope of the work of this Contract is limited to the work identified in this Article 3 Letter, and the Contractor shall not perform any other work, unless it receives written authorization from the Contracting Officer.” Ex. 5 at 1, Def.'s Mot. Partial Summ. J (“Def.'s Mot.”), ECF No. 38-3. “Two attachments to the Article 3 Letter identified work that remained to be performed under a new scope of work: ‘Attachment A' identified remaining work that was part of the original Contract” and “‘Attachment B' identified remaining work that had been added to the Contract by change orders after work had begun . . . . Together, these Attachments describe[d] all of the unterminated work that was to be completed under the Contract.” Def.'s SUF ¶ 5. The Letter explained that “[a] change order [would] be processed for an equitable adjustment to the Contract Price for the prospective work” that was not included in the Attachments. Ex. 5 at 1, Def.'s Mot. The letter further stated that “DDOT reserve[d] the right to amend the scope of work to include additional work, or to modify previously authorized work.” Id. at 2. There was no indication in the letter of why DDOT was deleting items from the contract.

         After receiving the Article 3 Letter, on or about October 22, 2010, Fort Myer sent a letter confirming their “verbal notification to [AAC] of DDOT's desire to ‘shut-down'” the project. Ex. 6 at 1, Def.'s Mot., ECF No. 38-3. It explained that there was a “possibility that the Owner [would] reaffirm its intent to delete the work indicated, and thus to wrap up this Contract in the near term.” Id. The letter also asked ACC to submit a proposal for compensation for its costs resulting from “the early termination of work.” Id. Subsequently, Fort Myer and ACC completed the work that remained in the Attachments in Spring 2011. Def.'s SUF ¶ 8.

         Then, over a year later, on or about May 23, 2012, DDOT sent Fort Myer another letter (“the Completion Letter”) revealing that DDOT had sent the Article 3 Letter because it had been unable to secure a particular permit from the Department of Consumer and Regulatory Affairs. Ex. 7 at 1, Def.'s Mot., ECF No. 38-3. Having resolved the permit issue, DDOT “intend[ed] to amend the Contract . . . to complete the” project. Id. The letter explained that DDOT was sending a new Scope of Work plan with the letter describing the remaining work for Fort Myer to complete. Id. The new Scope of Work plan “included some of the original tasks that Fort Myer had agreed to perform under the Contract, and in turn included tasks . . . that had been in ACC's subcontract.” Def.'s SUF ¶ 9. Fort Myer was directed to “verify that the current Contract Unit Price Schedule of Items (Bid Schedule)” was still “applicable.” Ex. 7 at 1, Def.'s Mot. The letter further explained that “[a] change order [would] be processed for an adjustment of contract time, adding 800 calendar days for a revised contract completion date of February 15, 2013, ” which would “reflect an adjustment in Contract Price for the prospective work and cost.” Id. at 2. “By accepting this change order, the contractor agree[d] that as of the date[] of change order execution, all claims due to the original contract [would be] resolved and there [would] be no additional claims by the contract[or] and its subcontractor.” Id.

         Fort Myer now claims that it treated this letter as an invitation to bid on the project. Def.'s SUF ¶ 12. It claims to have “evaluated its ability and the ability of its subcontractors to perform the work described in the Completion Letter, and it determined that it could complete the work beginning in the latter half of 2012.” Id. However, it decided that it would not use ACC as a subcontractor on this portion of the project. Id. Fort Myer explains that it considers the work in ACC's subcontract that had not been completed before the issuance of the Article 3 Letter and was not listed in the Attachments to the Article 3 Letter to have been terminated for convenience by the DDOT, though it does not specify when it made its determination that the prime contract had been terminated for convenience. Id. ¶ 13. As such, in a letter dated October 26, 2012, Fort Myer informed ACC that despite the fact that DDOT had “recently directed Fort Myer Construction Corporation to resume work on the Project, ” Fort Myer was exercising its contractual right to terminate ACC's subcontract for convenience. See Ex. 8, Def.'s Mot., ECF No. 38-3. In this letter, Fort Myer referred to DDOT as having “suspended [the prime contract] and [having] deleted portions of its scope.” Id.

         ACC responded two weeks later that it did not believe that the Article 3 Letter had terminated Fort Myer's contract with the District for convenience, and therefore, that Fort Myer could not terminate its subcontract with ACC for convenience either. See Ex. A at 1, Def.'s Statement of Undisputed Facts, ECF No. 20. After the exchange of additional correspondence, ACC filed this action against Fort Myer claiming that Fort Myer had wrongfully terminated its subcontract because the subcontract had specified that Fort Myer could only terminate it if DDOT had similarly terminated the prime contract, which it had not done. See Compl., ECF No. 1.[1] To remedy the alleged wrongful termination of the contract, ACC seeks “overhead or profit on the work not performed due to the termination.” Id. ¶ 13.

         Following discovery, Fort Myer moved to dismiss the case for lack of jurisdiction, and also moved for summary judgment; in response, ACC moved for partial summary judgment. Only ACC's motion for partial summary judgment asked the Court to adjudicate the question of whether Fort Myer had breached its subcontract with ACC when it terminated it for convenience. See generally Am. Civ. Constr., LLC v. Fort Myer Constr. Corp, 246 F.Supp.3d 309 (D.D.C. 2017). The Court found that ACC had not presented sufficient evidence to prove that Fort Myer's contract with DDOT had not been terminated for convenience to meet its burden on summary judgment. Am. Civ. Constr., 246 F.Supp.3d at 325. The Court also found that “Fort Myer ha[d] presented evidence purporting to show that DDOT, in fact, constructively terminated the prime contract, ” raising questions of fact that prevented the Court from granting partial summary judgment to ACC. Id. Fort Myer subsequently moved for partial summary judgment, asking this Court to find that it “had the right to terminate ACC's subcontract for convenience” without paying ACC for lost overhead and profits. Def.'s Mem. at 2-3. Its motion is now ripe for decision.

         III. LEGAL STANDARD

         Fed. R. Civ. P. 56 provides that a court must grant summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Material” facts are those capable of affecting the substantive outcome of the litigation, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986), and a dispute regarding those facts is “genuine” if ...


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