Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-02834/USCOURTS-casd-3_11-cv-02834-1/pdf.json

Nature of Suit Code: 130
Nature of Suit: Miller Act
Cause of Action: 40:270 Miller Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, for

the Use and Benefit of Collins

Plumbing, Inc., a California

Corporation; COLLINS PLUMBING,

INC.,

Plaintiffs,

v.

TURNER-PENICK JOINT VENTURE

et al.,

Defendants.

 

AND RELATED COUNTERCLAIMS AND CROSS-CLAIMS

 

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Civil No. 3:11-cv-2834-GPC-MDD

ORDER:

(1) DENYING MOTION FOR

PARTIAL SUMMARY

JUDGMENT BY TURNERPENICK JOINT VENTURE AND

SURETIES, (ECF NO. 124);

(2) DENYING MOTION TO

STRIKE DECLARATION OF

DAVID HOLLAND, (ECF NO.

139); 

(3) GRANTING JOINT MOTION

FOR LEAVE TO FILE

EXTENDED REPLY BRIEF, (ECF

NO. 141)

INTRODUCTION

Before the Court in this construction-defect case is the Motion for Partial

Summary Judgment filed by Turner-Penick Joint Venture (“Turner-Penick”) and its

sureties SafeCo Insurance Company of America, Liberty Mutual Insurance Company,

Zurich American Insurance Company, Fidelity and DepositCompanyofMaryland, and

FederalInsurance Company (all five collectively, “Sureties”). (ECF No. 124.) TurnerPenick and the Sureties’ move for partial summary judgment against California

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Comfort Systems USA, Inc. (“Comfort Systems”) on Comfort Systems’ counterclaims

against Turner-Penick and the Sureties for breach of contract, recovery under Miller

Act payment bond, and quantum meruit. Comfort Systems has filed an opposition to

Turner-Penick and theSureties’Motion for Partial Summary Judgment, (ECF No. 128),

and Turner-Penick and the Sureties have filed a reply, (ECF No. 137). The Court finds 1

Turner-Penick and the Sureties’ Motion for Partial Summary Judgment suitable for

disposition without oral argument. See CivLR 7.1.d.1. Having considered the parties’

submissions and the applicable law, and for the reasons that follow, the Court will

DENY the Motion for Partial Summary Judgment.

BACKGROUND

I. Facts

While the parties disagree as to the materiality of certain facts and/or the

admissibility of certain evidence, the underlying facts of this controversy are largely

undisputed. This case involves a dispute over the design and construction of an

expansion to Camp Pendleton, a U.S. Marine Corps base in San Diego County,

California. The Naval Facilities Engineering Command (“NAVFAC”) administered,

and is considered the “owner,” of the expansion project.

The specific components of the expansion project at issue here are known as

“Package 4” and “Package 7” (together, “Projects”). Each of the Projects consists of

designing and building four, dormitory-style buildings known as “Bachelor Enlisted

Quarters” (“BEQ”) on Camp Pendleton. The Projects are thus sometimes referred to

as “BEQ 4” and “BEQ 7.” Combined, the Projects entail the designing and building

of eight BEQs.

In the fall of 2008, NAVFAC solicited bidsfrom general contractors who would

both design and build the Projects. As is the case with design-build contracts,

NAVFAC set forth the requirements for each of the Projects in a “Request for

The Court GRANTS the parties’Joint Motion for Leave to File Extended ReplyBrief, (ECF 1

No. 141). 

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Proposal” (“RFP”). NAVFAC issued an RFP for BEQ 4 and an RFP for BEQ 7.2

In mid to late 2009, Turner-Penick was awarded the general contracts for both

BEQ 4 and BEQ 7. As was required to accept the award, Turner-Penick secured the

proper performance and payment bonds through the Sureties. Turner-Penick also set

about hiring the various architects, engineers, and other subcontractors needed to

design and build the Projects. Among those with whomTurner-Penick contracted, was

Comfort Systems.

In October and December of 2009, Comfort Systems entered into subcontracts

with Turner-Penick for the design and construction of the heating, ventilation, and air

conditioning (“HVAC”) systems for BEQ 4 and BEQ 7 (“Subcontracts”). There are

generally two types of HVAC systems: (1) a “through-wall” system, which provides

conditioned air via small mechanical units that pass through an exterior wall of each

room or unit in a building; and (2) a “central-air” system, which provides conditioned

air from one large mechanical unit that is pumped through ducting to each room or unit

in a building. 

The core issue for purposes of this Motion for Partial Summary Judgment is

whether Comfort Systems is entitled to additional payment for having to redesign the

HVAC systems for BEQ 4 and BEQ 7. Comfort Systems initially designed a throughwall system but was later required to change its design to include a central, make-up

air system. Comfort Systems claims it is entitled to additional compensation for having

to redesign the HVAC systems. Comfort Systems contends the Project requirements

were ambiguous with regard to whether a central-air system was required. Comfort

Systems bases its ambiguity argument on the following undisputed facts.

First, prior to Turner-Penick being awarded the BEQ 4 and BEQ 7 general

contracts, Turner-Penick representatives were required to participate in a mandatory

“job walk.” During this job walk, Turner-Penick representatives were shown BEQ 1,

An RFP was first issued for BEQ 7 in January 2009, and an amended RFP was issued in July 2

2009. See n.5, infra.

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told BEQ 1 was a “Best of Breed Winner,” and encouraged to use BEQ 1 as a starting

point for any response to the RFPs for BEQ 4 and BEQ 7. BEQ 1 has a through-wall

HVAC system.

Second, Holland—the Turner-Penick project director for both BEQ 4 and BEQ

7—has stated that, at the time Turner-Penick and Comfort Systems were entering into

the BEQ 4 Subcontract, everyone agreed thatComfort Systems’ proposed through-wall

HVAC system should satisfy the RFP requirements for BEQ 4. Turner-Penick agreed

the RFP requirementsfor BEQ 4 did not clearly communicate a requirement to provide

a central-air system. And Holland later testified that, indeed, Comfort Systems had a

“very compelling case” for why its through-wall system would satisfy the RFP

requirements.

Third, Eugene Walsh of Walsh Engineering, Inc. believed Comfort Systems’

proposed through-wall system would satisfy the RFP requirements. Walsh, who had

been involved in nine federal projects similar to the Projects here, was asked by

Turner-Penick to consult on whether Comfort Systems’ initial HVAC design satisfied

the RFP requirements.

Fourth, Jonathan Lundstrom (Comfort Systems’ own mechanical engineer)

reviewed the RFP requirements and concluded Comfort Systems’ proposed throughwall system would satisfy the RFP requirements.

Fifth, when the NAVFAC issued its RFP for BEQ 8, NAVFAC made clear that

a central-air HVAC system was required. This clarity distinguished the BEQ 8 RFP

from the BEQ 4 and BEQ 7 RFPs.

Sixth, prior to NAVFAC’s award of the BEQ 4 and BEQ 7 general contracts,

other general contractors had requested information from NAVFAC regarding the

required HVAC systems. Holland agreed that NAVFAC’s response to these pre-bid

requests for information were “[n]ot as clear as we would have liked.”

Seventh, while drafting the BEQ 4 Subcontract, Comfort Systems crossed out

requirements that were pertinent to central-air systems. The initial draft of the BEQ 7

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Subcontract contained none of the requirements pertinent to central-air systems that

Comfort Systems had crossed out in the BEQ 4 Subcontract. The final version of both

Subcontracts, however, incorporated the requirements of their respective RFPs.

Eighth, shortly after the Subcontracts were executed, Turner-Penick sent

NAVFAC a letter requesting that the BEQ 4 general contract be modified to permit

Comfort Systems’ to install its initially designed through-wall HVAC system. This

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letter was based on: (1) NAVFAC’s representations about BEQ 1 on the mandatory job

walk, (2) Walsh’s belief that Comfort Systems’ initial design complied with the RFP,

(3) Lundstrom’s belief thatComfort Systems’ initial design complied with the RFP, (4)

the additional clarification NAVFAC provided in the BEQ 8 RFP as compared to the

BEQ 4 and BEQ 7 RFPs, and (5) the deficient responses to the other general

conrtractors’ pre-bid requests for information. NAVFAC denied Turner-Penick’s

request.

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Turner-Penick and the Sureties now contend the contract documents were clear

all along and that Comfort Systems is not entitled to any additional payment for its

redesign of the HVAC systems for BEQ 4 and BEQ 7. Turner-Penick and the Sureties

base their position on the contract documents themselves.

The Subcontracts each contain an “Attachment ‘B,’” which in turn requires the

HVAC systems for each of the Projects to be designed and built in accordance with,

among other things, the RFPs for each of the Projects.

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Turner-Penick and the Sureties object to the admissibility of this letter on authentication and 3

hearsaygrounds. The objections areOVERRULED. The letter is properlyauthenticated as an exhibit

to Holland’s deposition, and it is excluded from the definition of hearsay as an opposing party’s

statement.

Comfort Systems’ objection that the NAVFAC denial letter is inadmissible hearsay is 4

SUSTAINED. The Court will not, therefore, consider the stated reasons for NAVFAC’s denial. 

Holland, however, provides his own declaration that NAVFAC rejected Turner-Penick’s request for

a modification. (ECF No. 149, Holland Decl. ISO Reply ¶ 22.) The Court finds this undisputed

evidence is sufficient to establish the fact that NAVFAC rejected Comfort Systems’ initial design.

The Subcontract for BEQ 7 was based on the January 2009 RFP—not the July 2009 RFP. 5

Turner-Penick, however, was awarded the BEQ 7 general contract based on the July 2009 RFP. Thus,

Turner-Penick and the Sureties provided only the July 2009 RFP in support of their Motion for Partial

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The RFPsfor BEQ 4 and BEQ 7 each contain “General Requirements.” Section

01 33 10.05 20 of the General Requirements contains “Design Submittal Procedures.” 

The Design Submittal Procedures incorporate, and require compliance with, the U.S.

Department of Defense United FacilitiesCriteria (“UFC”)for Mechanical Engineering,

which is designated as UFC 3-400-10N.

In addition to the General Requirements, the RFPs each contain “Project

Program Requirements.” Like the Design Submittal Procedures, the Project Program

Requirements also require compliance with UFC 3-400-10N.

Section 2-5 of UFC 3-400-10N pertains to “TERMINAL & PACKAGE

UNITS.” Section 2-5.1 states: 6

Do not provide room fan coil units or packaged terminal units, such as

individual through-wall heat pumps, for facilitiessuch as office buildings

and Bachelor Quarters or for any facility larger than 465 square meters

(5000 square feet), unless conditioned make-up air is provided to each

space through a central, continuously operating, dedicated make-up air

system. Conditioned make-up air shall be ducted to each room or to the

return side of each fan coil or terminal unit.

Summary Judgment. Comfort Systems argues in opposition that the failure to provide the January

2009 RFP is a sufficient basis to deny Turner-Penick and the Sureties’ Motion for Partial Summary

Judgment, given that the BEQ 7 Subcontract incorporated the January 2009 RFP—not the July 2009

RFP. In reply, Turner-Penick and the Sureties offer undisputed evidence, in the form of Holland’s

Declaration, that the relevant provisions of the January2009 RFP were unaltered in the July 2009 RFP. 

(ECF No. 149, Holland Decl. ISO Reply ¶¶ 6-13, 16.) 

The Court DENIES Comfort Systems’ Motion to Strike this Holland Declaration because the

Declaration and the exhibits attached thereto are a reasonably foreseeable response to Comfort

Systems’ arguments in opposition to the Motion for Partial Summary Judgment. Further, the Court

OVERRULES Comfort Systems’ objection to this Holland Declaration on authentication/personal

knowledge grounds because the Court finds Holland—as the Turner-Penick project director for BEQ

7 who has reviewed the January 2009 and July 2009 RFPs—has sufficient knowledge of the January

2009 and July 2009 RFPs to testify to their contents.

The Court DENIES Turner-Penick and the Sureties’ request that the Court take judicial 6

notice of Section 2-5 of UFC 3-400-10N because UFC 3-400-10N itself states: “UFC are living

documents and will be periodically reviewed, updated, and made available to users . . . .” (ECF No.

125-3 at 39.) Given the evolving nature of the UFC, the Court finds their provisions may be subject

to reasonable dispute. And contrary to Turner-Penick and the Sureties’ position, the UFC are not

published in the Code of Federal Regulations but are instead “distributed onlyin electronic media from

the . . . Whole Building Guide Design web site.” (Id.) This makes judicial notice of the UFC

inappropriate. See Fed. R. Evid. 201. Nevertheless, the Court finds the UFC attached to Holland’s

Declaration, along with Holland’s undisputed statement that the attached UFC is a true and correct

copy, to be sufficient evidence of the UFC 3-400-10N’s provisions.

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(ECF No. 125-4 at 124. ) Thus, both the General Requirements (through the Design

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Submittal Procedures) and the Project ProgramRequirementsrequire compliance with

UFC 3-400-10N.8

Turning to provisions of the Subcontracts themselves, Article I of the

Subcontracts provides that Comfort Systems “shall perform and furnish all the work,

labor, services, materials, . . . and other things necessary for . . . the Work . . . at . . .

BEQ Package 4 . . . in strict accordance with the Additional Provisions and contract

documents as listed Page 2, Attachment B, Additional Provisions, annexed hereto and

made a part hereof.” (ECF Nos. 125-1 at 10, 111 (emphasis added).)

Article II of the Subcontracts provides that Comfort Systems

represents and agrees that it has carefully examined and understands this

Agreement and the other Contract Documents, has investigated the nature,

locality and site of the Work and the conditions and difficulties under

which it is to be performed and that it enters into this Agreement on the

basis of its own examination, investigation and evaluation of all such

matters and not in reliance upon any opinions or representations of

Turner-Penick, or of the Owner [i.e., NAVFAC], or of any of their

respective officers, agents, servants, or employees.

(Id. (emphasis added).) Article II further provides that Comfort Systems “agrees to be

bound to Turner-Penick by each and all of the terms and provisions of the General

Contract and the other Contract Documents, and to assume toward Turner-Penick all

of the duties, obligations and responsibilities that Turner-Penick by those Contract

Documents assumes toward the Owner . . . .” (Id.) Article II finally provides:

When the Court cites to a page of a pleading or document filed with the Court, the Court 7

refers to the CM/ECF page number.

The Design Submittal Procedures for each of the RFPs also set forth an order of precedence

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to be applied if a conflict or inconsistency between the RFPs’ various provisions arises. (ECF No.

125-3 at 15-16.) The provision, entitled “THE CONTRACT AND ORDER OF PRECEDENCE,”

provides: “The contract consists of the solicitation, the approved proposal, and the final design.” The

provision continues, “In the event of conflict or inconsistency between any of the below described

portions of the conformed contract, precedence shall be given in the following order . . . .” (Id. at 16

(emphasis added).) Because the Order of Precedence applies only to the “conformed contract”—and

because the “contract” is defined as including onlythe solicitation, the approved proposal, and the final

design—it is clear that the Order of Precedence has no bearing on requirements contained in

documents other than the “conformed contract.” The Subcontracts are documents other than the

“conformed contract.” Thus, the Order of Precedence has no bearing on the Subcontracts.

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This Subcontract Agreement, the provisions of the General Contract and

the other Contract Documents are intended to supplement and

complement each other and shall, where possible, be thus interpreted. If,

however, any provision of this Subcontract Agreement irreconcilably

conflicts with a provision of the General Contract and the other Contract

Documents, the provision imposing the greater duty or obligation on the

Subcontractor shall govern.

(Id. (emphasis added).)

Article XXVIII of the Subcontracts provides:

The Subcontractor hereby guaranteesthe Work to the full extent provided

in the Plans, Specifications, General Conditions, Special Conditions and

other Contract Documents.

The Subcontractorshall expeditiously remove, replace and/or repair at its

own expense and at the convenience of the Owner any faulty, defective

or improper Work, materials or equipment existing or discovered within

one (1) year from the date of the acceptance of the Project as a whole by

the Architect and the Owner or for such longer period as may be provided

. . . .

Without limiting the generality of the foregoing, the Subcontractor

warrants to the Owner, the Architect and Turner-Penick, and each of

them, . . . that the Work performed pursuant to this Agreement will be free

from defects and that the Work will strictly conform with the

requirements of the Contract Documents. Work not conforming to such

requirements, including substitutions not properly approved and

authorized, shall be considered defective.

(ECF No. 125-1 at 19, 120 (emphasis added).)

II. Procedural History

Plaintiff Collins Plumbing, Inc. (“Collins”) commenced this action when it filed

its Complaint on December 5, 2011, against Turner-Penick and the Sureties. (ECF No.

1.) The next day, Collins filed its First Amended Complaint. (ECF No. 2.) And, on

February 12, 2012, Collins filed its Second Amended Complaint. (ECF No. 14.)

On May 22, 2012, Turner-Penick and the Sureties filed their Answer to Collins’

SAC, along with a counterclaim complaint against Collins and a third-party complaint

against Comfort Systems and Walsh Engineering, Inc. (ECF No. 26.) 

On July 19, 2012, Comfort Systems filed its Answer to Turner-Penick and the

Sureties’ Third-Party Complaint, along with a counterclaim complaint against TurnerPenick and the Sureties. (ECF No. 35.) On October 1, 2012, Comfort Systems filed

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its currently operative First Amended Counterclaim Complaint against Turner-Penick

and the Sureties for: (1) breach of BEQ 4 Subcontract against Turner-Penick, (2)

recovery under Miller Act payment bond for BEQ Package 4 against the Sureties, (3)

quantum meruit for BEQ Package 4 against Turner-Penick, (4) negligence in

connection with BEQ Package 4 against Turner-Penick, (5) breach of BEQ 7

Subcontract against Turner-Penick, (6) recovery under Miller Act payment bond for

BEQ Package 7 against the Sureties, (7) quantum meruit for BEQ Package 7 against

Turner-Penick, (8) negligence in connection with BEQ Package 7 against TurnerPenick, (9) implied indemnity against Turner-Penick, (10) contribution against TurnerPenick. (ECF No. 62.)

On January 15, 2013, Turner-Penick filed its Answer to Comfort Systems’ First

Amended Counterclaim Complaint. (ECF No. 76.) On February 8, 2013, the Sureties

filed their Answer to Comfort Systems’ Counterclaim Complaint. (ECF No. 81.)

Turner-Penick and the Sureties now move for partial summary judgment on the

discrete issue of whether Comfort Systems is entitled to additional compensation for

its redesign of the BEQ 4 and BEQ 7 HVAC systems. If not, then Comfort Systems’

redesign of the HVAC systems cannot serve as a basis for Comfort Systems’ first,

second, third, fifth, sixth, or seventh counterclaims against Turner-Penick and the

Sureties. Though, because Comfort Systems bases these causes of action on alleged

costs other than those incurred for the HVAC system redesign (e.g., the costs of

repairing duct work that was damaged by other trades and the cost of applying anticorrosion paint to all condensers), Turner-Penick and the Sureties’ Motion will not

fully dispose of any of Comfort Systems’ counterclaims. The costs associated with the

HVAC system redesign, however, represent the majority of damages claimed by

Comfort Systems in its First Amended CounterclaimComplaint against Turner-Penick

and the Sureties.

LEGAL STANDARD

Summary judgment is appropriate where the moving party demonstrates the

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absence of a genuine issue of material fact and entitlement to judgment as a matter of

law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact

is material when, under the governing substantive law, it could affect the outcome of

the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v.

Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is genuine

if “the evidence is such that a reasonable jury could return a verdict for the nonmoving

party.” Anderson, 477 U.S. at 248. 

A party seeking summary judgment always bears the initial burden of

establishing the absence of a genuine issue of material fact. See Celotex, 477 U.S. at

323. The moving party may satisfy this burden in two ways: (1) by presenting evidence

that negates an essential element ofthe nonmoving party’s case or(2) by demonstrating

that the nonmoving party failed to make a showing sufficient to establish an element

essential to that party’s case on which that party will bear the burden of proof at trial. 

Id. at 322-23. 

Where the party moving for summary judgment does not bear the burden of

proof at trial, it may show that no genuine issue of material fact exists by demonstrating

“there is an absence of evidence to support the non-moving party’s case.” Id. at 325. 

The moving party is not required to produce evidence showing the absence of a

genuine issue of material fact, nor is it required to offer evidence negating the moving

party’s claim. Lujan v. National Wildlife Fed’n, 497 U.S. 871, 885 (1990); United

Steelworkers v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989). “Rather,

the motion may, and should, be granted so long as whatever is before the District Court

demonstrates that the standard for the entry of judgment, as set forth in Rule 56(c), is

satisfied.” Lujan, 497 U.S. at 885 (quoting Celotex, 477 U.S. at 323). If the moving

party fails to discharge this initial burden, summary judgment must be denied and the

court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress &

Co., 398 U.S. 144, 159-60 (1970).

If the moving party meets the initial burden, the nonmoving party cannot defeat

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summary judgment merely by demonstrating “that there is some metaphysical doubt

as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475

U.S. 574, 586 (1986); see also Anderson, 477 U.S. at 252 (“The mere existence of a

scintilla of evidence in support of the nonmoving party’s position is not sufficient.”). 

Rather, the nonmoving party must “go beyond the pleadings and by her own affidavits,

or by the depositions, answers to interrogatories, and admissions on file, designate

specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324

(quoting Fed. R. Civ. P. 56(e)) (internal quotations omitted).

“Disputes over irrelevant or unnecessary facts will not preclude a grant of

summary judgment.” T.W. Elec. Serv., Inc. v. PacificElec. Contractors Ass’n, 809 F.2d

626, 630 (9th Cir. 1987). “The district court may limit its review to the documents

submitted for purpose of summary judgment and those parts of the record specifically

referenced therein.” Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1030

(9th Cir. 2001). Therefore, the court need not “scour the record in search of a genuine

issue of triable fact.” Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996) (citing

Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995)).

The court may not make credibility determinations, and inferences to be drawn

from the facts must be viewed in the light most favorable to the party opposing the

motion. Masson v. New Yorker Magazine, 501 U.S. 496, 520 (1991); see Anderson,

477 U.S. at 255; Matsushita, 475 U.S. at 587.

DISCUSSION

Turner-Penick and the Sureties argue they are entitled to partial summary

judgment on the issue of whether Comfort Systems is entitled to additional

compensation for its redesign of the HVAC systems for BEQ 4 and BEQ 7 because the

Subcontracts unambiguously required Comfort Systems to design and build a centralair system. In other words, Turner-Penick and the Sureties argue Comfort Systems is

not entitled to additional compensation for complying with what the Subcontracts

already required. More specifically, Turner-Penick and the Sureties argue the

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Subcontracts’ terms require strict compliance with the RFPs, that the RFPsincorporate

the UFC, the UFC require installation of a central-air system, and that—because the

Subcontracts are integrated documents—the parol evidence rule bars consideration of

any extrinsic evidence to vary or add to the Subcontracts’ written terms.

In response, Comfort Systems does not take issue with Turner-Penick and the

Sureties’ explanation of the Subcontracts, RFPs, and UFC. Instead, Comfort Systems

argues the “relevant provisions” of the RFPs are ambiguous as to whether a central-air

system was required for BEQ 4 and BEQ 7. Comfort Systems also argues NAVFAC

breached the implied warranty of correctness as to the required HVAC system, which

in turn allows Comfort Systems to sue Turner-Penick for breach of contract. Comfort

Systems further argues that, under the rule of practical construction, the Court should

interpret Comfort Systems’ obligations under the Subcontracts in accordance with the

parties’ conduct. Finally, Comfort Systems argues that, even if there were no

ambiguity asto the required HVAC system, Comfort Systems entered the Subcontracts

based upon a mistake of fact and that the Court should therefore reform the

Subcontracts to reflectComfortSystems’ understanding ofthe required HVAC system.

I. Ambiguity & Parol Evidence

“[P]arol evidence is properly admitted to construe a written instrument when its

language is ambiguous.” Winet v. Price, 4 Cal. App. 4th 1159, 1165 (1992). 

The decision whether to admit parol evidence involves a two-step process. 

First, the court provisionally receives (without actually admitting) all

credible evidence concerning the parties’ intentions to determine

“ambiguity,” i.e. whether the language is “reasonably susceptible” to the

interpretation urged by a party. If in light of the extrinsic evidence the

court decides th language is “reasonably susceptible” to the interpretation

urged, the extrinsic evidence is then admitted to aid in the second

step—interpreting the contract.

Id. The threshold determination of ambiguity is a question of law, while any conflict

amongst competent parol evidence is an issue of fact. Id. at 1165-66. The Court thus

proceeds to determining whether, as Comfort Systems contends, the “relevant terms”

of the RFPs are ambiguous. (ECF No. 128 at 17.)

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Comfort Systems relies on the following facts in support of its argument that the

RFPs are ambiguous as to the required HVAC system: (1) Holland’s deposition

testimony that the RFPs did not clearly communicate a requirement for a central-air

system and that Comfort Systems had a “very compelling case” for why its initial

design complied with the RFPs, (2) Turner-Penick’s agreement that Comfort Systems’

initial design should meet the RFP requirements, (3) Walsh’s and Lundstroms’ belief

that Comfort Systems’ initial design met the RFP requirements, (4) NAVFAC’s

subsequent clarification in the BEQ 8 RFP that a central-air system was required, and

(5) Comfort Systems insistence that the Subcontracts not contain provisions related to

a central-air system.

Notwithstanding the foregoing facts, Comfort Systems fails to identify any

language in the Subcontracts, RFPs, or UFC that is ambiguous. Comfort Systems

states only that the “relevant terms” of the RFPs are ambiguous. It is therefore

impossible for the Court to determine whether the language of the RFPs is susceptible

to Comfort Systems’ interpretation. 

Assuming Comfort Systems is arguing that Section 2-5.1 of UFC 3-400-10N is

ambiguous, the Court disagrees. Section 2-5.1 states:

Do not provide room fan coil units or packaged terminal units, such as

individual through-wall heat pumps, for facilitiessuch as office buildings

and Bachelor Quarters or for any facility larger than 465 square meters

(5000 square feet), unless conditioned make-up air is provided to each

space through a central, continuously operating, dedicated make-up air

system. Conditioned make-up air shall be ducted to each room or to the

return side of each fan coil or terminal unit.

The plain language of Section 2-5.1 thus conditions the use of a through-wall system

on providing a central make-up air system. Comfort System would nonetheless have

the Court interpret this language as not requiring a central-air system where a throughwall system is used. In other words, Comfort Systems does not argue this language is

ambiguous, as much as it argues the Court should ignore the provision entirely. Yet

none of the extrinsic facts Comfort Systems relies on to create an ambiguity in this

provision make this provision “reasonably susceptible” to Comfort Systems’

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interpretation. This is because Comfort Systems’ interpretation expressly contradicts

the language of the provision. See Cont’l Baking Co. v. Katz, 68 Cal. 2d 512, 522

(1968) (“[E]xtrinsic evidence is not admissible in order to give the terms of a written

instrument a meaning of which they are not reasonably susceptible.”). Accordingly,

the Court concludes Comfort Systems has not established an ambiguity in the

Subcontracts, RFPs, or UFC.

II. Implied Warranty of Correctness

In the context of government contracts, the Supreme Court has recognized that,

“[w]here one agreesto do, for a fixed sum, a thing possible to be performed, he will not

be excused or become entitled to additional compensation, because unforseen

difficulties are encountered.” United States v. Spearin, 248 U.S. 132, 136 (1918). “But

if [a] contractor is bound to build according to plans and specifications prepared by the

owner, the contractor will not be responsible for the consequences of defects in the

plans and specifications.” Id. This is the so-called Spearin doctrine, which the

California Supreme Court articulated as follows:

A contractor of public works who, acting reasonably, is misled by

incorrect plans and specifications issued by the public authorities as the

basis for bids and who, as a result, submits a bid which is lower than he

would have otherwise made may recover in a contract action for extra

work or expenses necessitated by the conditions being other than as

represented.

Souza & McCue Constr. Co. v. Super. Ct. San Benito Cnty., 57 Cal. 2d 508, 510 (1962)

(citing, e.g., Spearin, 248 U.S. at 136-37). “This rule is mainly based on the theory that

the furnishing of misleading plans and specifications by the public body constitutes a

breach of an implied warranty of their correctness.” Souza, 57 Cal. 2d at 510-11. “In

order to recover on such an action, the contractor must prove that the agency

affirmatively misrepresented, or actively concealed, material facts which rendered the

bid documents misleading, and that the contractor reasonably relied on such

misrepresentations in preparing its bid.” Thompson Pac. Constr., Inc. v. City of

Sunnyvale, 155 Cal. App. 4th 525, 551 (2007) (citing Jasper Constr., Inc. v. Foothill

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Junior College Dist., 91 Cal. App. 3d 1, 10 (1979)).

As set forth above, Comfort Systems has not demonstrated that an ambiguity

exists in the Subcontracts, RFPs, or UFC. And Comfort Systems has offered no

evidence that NAVFAC or Turner-Penick (to the extent that a subcontractor may

recover against a general contractor for breach of the implied warranty of correctness)

affirmatively misrepresented or actively concealed material facts. Accordingly,

Comfort Systems may not base its breach-of-contract claims against Turner-Penick on

a breach of the implied warranty of correctness.

III. Practical Construction

“[W]hen a contract is ambiguous, a construction given to it by the acts and

conduct of the parties with knowledge of its terms, before any controversy has arisen

asto its meaning, is entitled to great weight, and will, when reasonable, be adopted and

enforced by the court.” Crestview Cemetery Ass’n v. Dieden, 54 Cal. 2d 744, 753

(quoting Universal SalesCorp. v. California etc. Mfg. Co., 20Cal. 2d 751, 761 (1942)). 

In other words, a “practical construction” may be “placed upon the contract by the

parties themselves, which renders it immaterial to consider what might be the literal

construction of its terms.” Crestview, 54 Cal. 2d at 754 (quoting Mitau v. Roddan, 149

Cal. 1, 14 (1906)). In such cases, the “ambiguity” arises from the parties’ actions. 

Crestview, 54 Cal. 2d at 754.

While Comfort Systems has offered evidence demonstrating that it and TurnerPenick initially agreed that the RFPs did not clearly require a central-air system and

that Turner-Penick sent NAVFAC a letter to that effect, Comfort Systems has offered

no evidence demonstrating that—once NAVFAC rejected Comfort Systems’ initial

design shortlyafter ComfortSystems and Turner-Penick entered the Subcontracts—the

parties’ performance of the Subcontracts created any ambiguity in the contract

documents. To the contrary, when Comfort Systems proceeded to install the HVAC

systems in BEQ 4 and BEQ 7, it installed the required central-air system. In other

words, Comfort Systems’ performance ultimately complied with the plain language of

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the contract documents. The Court thus concludes that Comfort Systems has failed to

offer evidence demonstrating that the parties’ performed the Subcontracts in a way that

created an ambiguity in the Subcontracts’ terms.

IV. Mistake of Fact

Comfort Systems argues it is entitled to have the Subcontracts reformed to reflect

Comfort Systems’ interpretation of the HVAC systemrequirements. Comfort Systems

argues that Turner-Penick and the Sureties should be estopped from taking a position

that contradicts Turner-Penick’s initial agreement that the RFPs did not clearly require

a central-air system.

California Civil Code Section 3399 provides:

When, through fraud or a mutual mistake of the parties, or a mistake of

one party, which the other party at the time knew or suspected, a written

contract does not truly express the intention of the parties, it may be

revised on the application of a party aggrieved, so as to express that

intention, so far as it can be done without prejudice to rights acquired by

third persons, in good faith and for value.

“[T]he mistake of one party is a sufficient basis for reformation only when the mistake

is known or suspected by the other party and, as a result, the writing does not truly

express the intention of the parties.” La Mancha Dev. Corp. v. Sheegog, 78 Cal. App.

3d 9, 16 (1978). “In the absence of actual knowledge or suspicion or, at the very least,

actual knowledge or suspicion of a duly authorized agent imputed to the other party,

there is no inequitable conduct on which to predicate an estoppel.” Id. at 17. “[T]he

knowledge necessary to constitute an estoppel must be actual knowlege [as opposed

to constructive knowledge].” Id. (emphasis added).

Comfort Systems has offered no evidence that Turner-Penick had actual

knowledge that Comfort Systems’ initial design would not comply with the RFPs. 

Rather, the undisputed evidence demonstrates Turner-Penick wasitself initiallywrong

about the required HVAC design. It was not until the Subcontracts were executed that

NAVFAC rejected Comfort Systems’ initial design. Thus, it cannot be said that

Turner-Penick induced Comfort Systems into entering the Subcontracts, knowing

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Comfort Systems’ initial design was mistaken.

While there is no evidence of Turner-Penick inducing a unilateral mistake by

ComfortSystems,there is evidence demonstrating Comfort Systems and Turner-Penick

were mutually mistaken as to the required HVAC design at the time they entered the

Subcontracts, such that the Subcontracts “do[] not truly reflect the intention of the

parties.” See Cal. Civ. Code § 3399. Turner-Penick’s letter, outlining the parties’

reasons for why Comfort Systems’ initial design complied with the BEQ 4 RFP, is the

most notable evidence demonstrating the parties were mutually mistaken as to the

HVAC requirements. Thus, it may be appropriate to reform the Subcontracts to reflect

the parties’ apparent understanding of the HVAC requirements at the time they entered

the Subcontracts. This conclusion is a sufficient basis on which to deny Turner-Penick

and the Sureties’ Motion for Partial Summary Judgment on the issue of whether

Comfort Systems is entitled to additional compensation for having to redesign the

HVAC systems for BEQ 4 and BEQ 7.

CONCLUSION & ORDER

Based on the foregoing, IT IS HEREBY ORDERED that:

1. Turner-Penick and the Sureties’ Motion for Partial Summary Judgment,

(ECF No. 124), is DENIED; 

2. Comfort Systems’ Motion to Strike Declaration of David Holland, (ECF

No. 139), is DENIED;

3. The parties’ Joint Motion for Leave to File Extended Reply, (ECF No.

141), is GRANTED;

4. The hearing currently set for March 28, 2014, is VACATED.

DATED: March 27, 2014

HON. GONZALO P. CURIEL

United States District Judge

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