# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted March 27 , 2020 Decided June 19, 2020

No. 19

- 7010

U NITED S TATES OF A MERICA

, FOR THE USE AND BENEFIT OF
A MERICAN C IVIL C ONSTRUCTION

, LLC,

A PPELLEE

v.

H IRANI E NGINEERING & L AND S URVEYING

, PC,

A PPELLEE

C OLONIAL S URETY C OMPANY

, A PPELLANT

Consolidated with 19

- 7011, 19

- 7015

Appeals from the United States District Court

for the District of Columbia (No. 1:14

- cv

- 00745)

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.2

Before: H ENDERSON

, R OGERS and G ARLAND

, Circuit Judges

.

Opinion for the Court by Circuit Judge R OGERS

.

R OGERS

, 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 contrac t 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 ag ainst 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 t he 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 cour t will r emand

the case without deciding whether the accrual of the Miller Act

cause of action stems from the termination of the P rime

C ontract or the S ubcontract

. Otherwise, th e court affirms the award of restitution against Hirani and defer s ruling on ot her

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. 3d3

11 , 22 (D.D.C. 2018) (“ Hirani I I ”), ⁋⁋ 4

– 9. Under the P rime

C ontract, 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 c ontract anticipated that the Project would be completed within on e year, by October 12, 2011. Id. ⁋ 10. The contract also required

Hirani to o btain a s urety b ond and it did so f rom 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 w ould 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” a rose about its interpretation

, ACC would not stop

work ing 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, 20 13, the Corps terminated Hirani

for default

. Id. ⁋ 92. T he 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,” Hirani4

“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 termi nation 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 work ing on the Project because it ( Hirani ) was fighting the termination. Id. ⁋ 100. In accordance with Hirani’s direction, ACC b ackfill ed 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 cour t noted it “therefore need not consider [ACC’s] alternative
argument s 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 comp ensable tasks under the Subcontract and thus

occurred within the one

- year limitations period.”) I d. at 40 n.8.

ACC filed s uit against Hirani and Colonial on April 29,

2014

. I n a second amended complaint, ACC requested $2.075

million in damages from each defendant

. Colonial counterclaimed, alleging among other things that ACC had

breached the Subcontract by failing to perform and caused

Colonia l to incur substantial costs.

The district court denied Hirani and Colonial’s motion for summary judgmen t

. 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 f

ive

- day bench trial,

t he 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 law suit was timely because it was filed within one year of the last compensable work A CC 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 t herefore entered judgment

on the breach of contract claim in favor of AC C, id ., and directed the parties to brief how damages should be calculated

, i d. at 56.

The district court awarded $1,544,957.29 in quantum
meruit damage s on A CC’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 ”)

. O n ACC’s contract claim against Hirani, the district court construed ACC’s request

for quantum meruit damages as seek ing restitution because

Hirani had breached a written contract. Id. Citing the

R ESTATEMENT (T HIRD ) OF R ESTITUTION AND U NJUST
E NRICHMENT 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 nearly6

$150,000 in prejudgment interest

, inasmuch as ACC had already been paid over $2.5 million for i ts work

. Id. at * 4

– 5.

II.

Hirani and C olonial appeal. In their joint brief, they

contend that the district court erred in interpret ing the Miller

Act , arguing that ACC was not entitled to recover any damages because ACC failed to bring it s Miller Act cl a im within one year after the last day ACC performed compensable work on the Project. They also contend that the district cour t erred by awarding quantum meruit damages because breach of contract damages could be calculated

, by inadequately explain ing the damages award

, by allowing double recovery to ACC, and by

a dmitting documents containing hearsay.

ACC cross appeal s , contending that it was entitled to Miller Act damages for the services performed by Ed Hollander, its field s uperintendent

, and to quantum meruit damages against Hirani.

A.

Th e 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 ).7

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)

. “ Th e 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 i nto public projects.” Clifford F. MacEvoy Co. v. U.S. ex rel. Calvin Tomkins Co. , 322 U.S. 102, 107 (1944). T he Miller Act requires government contractors

to obtain both a p erformance b ond to protect the government

a nd a p ayment b ond to protect “all persons supplying labor and material in carrying out the work provided for in the contract.” 40 U.S.C. § 3131(b). The Act also provides that a

subcontractor who is not paid by the contractor may file an

action on the P ayment B on d :

Every person that ha s furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131 of this title and that has not been paid in full within 90 days after the day on which the person did or performed t he last of the labor or furnished or supplied the material for which the claim is made may bring a civil action on the payment bond for the amount unpaid at the time the civil action is brought and may prosecute the action to final execution and judgm ent for the amount due.

Id. § 3133(b)(1)

. But Miller Act claims must be brought with in

a one

- year statute of limitations: “ A n action brought under this subsection must be brought no later than one year after the day on which the last of the labor was performed or material was8

supplied by the person bringing the action .” Id. § 3133(b)(4) (emphasis added)

.

Neither th e Suprem e Court nor this court have addressed

when a Miller Act cause of action accrues. Upon canvass ing

federal district and appellate court cases, the district court

observed that the “courts have taken three approaches in determining when the statute of limita tions begins to run on a
claim under the Miller Act.” Hirani I , 263 F. Supp. 3d at 109. The majority of courts had held that only labor and materials furnished for the original contract (as opposed to corrective or repair work performed after final inspection) were “labor” or “materials” for purposes of the statute of limitations. Id. at
109

– 10. Other cou rts had held that the statute of limitations began to run when the contract was substantially completed.

Id. at 110. And a third group of courts had “applied a multi

factor analysis” to determine when the statute of limitations began to run. Id. This c ourt need not resolve th e Miller Act

issue at this time.

T he district court , considering the approaches in light of the text of the Miller Act and its broad remedial purpose,

concluded that in order to avoid engaging in a “ subjective line

drawing exercis e, ” it would “ simply look to the contract to

determine ” the tasks for which “ the parties agreed the subcontractor would be compensated, then determine the last date on which the subcontractor supplied materials or labor for
one of those tasks.” Id. at 110

– 11 (citing U.S. ex rel. GE Supply v. C & G Enters., Inc. , 212 F.3d 14, 17

– 18 (1st Cir. 2000))

. The district court rejected Colonial’s proposed interpretation , under which the last labor performed or materials supplied before the April 26 date of the Corps’ termination letter triggered the statute of limitations. Id. at
111

– 12. The court reasoned that the “relevant contract” under § 3133(b)(1) was “the subcontract

— the contract that9

obligated th e prime contractor to secure a bond under Section

3131.” Id. at 111. U pon reviewing conflicting evidence and making credibility determinations

, the court found that ACC

last worked on the Project on May 1, 2013. Hirani II

, 345 F. Supp. 3d at 31, ⁋⁋ 10 1

– 02. T he refore

, ACC’s Miller Act claim

was timely because it was filed on April 29, 2014, which was within a year of when ACC last furnished labor and materials

for the Project

. Id. at 43.

B.

On appeal

, Colonial renews its position

, contending t hat the district court misinterpreted when the Miller Act ’s statute

of limitations is triggered

. Because the one year limitations period begins to run on the last day that the subcontractor

carried out work provided for in the bonded contract

, Colonial

maintains that c annot be after the bonded contract ( here, the Prime Contract) has been terminated and so ACC’s suit was untimely . In Colonial’s view, AC C’s last day of work was April 26, 2013 , the day Colonial asserts that the Corps

terminated the Prime Contract

. For its part , ACC acknowledges, but offers nothing to defend, the district court’s interpretation of the Miller Ac t

. Rather than explaining ho w it

thinks the st atute should be interpreted , ACC contends only
that Colonial’s position is unsupported , relying primarily on the factual argument that the Prime Contract was not terminated on April 26.

“The statute of limitations is an affirmative defense that [a] defendant must prove.” Firestone v. Firestone , 76 F.3d 1205, 1210 (D.C. Cir. 1996). Her e, even assuming for the sake of argument that Colonial’s interpretation of when the Miller

Act claim ac crues is correct

, Colonial has not carried its burden to prove that the last da y ACC performed labor or supplied materials under the Prime Contract was prior to April 29, 2013.10

Contrary to Colonial’s assertion, it is far from “undisputed that

. . . the Go vernment terminated the Prime Contract on April 26,

2013.” See Appellant s’ Br. at 26. Although the Corps’

termination letter was indeed dated April 26

, that is not the end of the inquiry.

T he Federal Acquisition Regulations require that the government’s notice of termination include the “effective date
of termination.” 48 C.F.R. § 49.102(a) (2)

. T he Corps’ termination purported to be “effective immediately.” See

Hirani I , 263 F. Supp. 3d at 106. T he applicable regulations provide , how ever, that “[i]f the contractor receives the termination notice after the date fixed for termination, then the

effective date of termination means the date the contractor
receives the notice.” 48 C.F.R. § 2.101

. T he district court expressly declined to f

ind when Hirani received the Corps’

termination letter. S e e Hirani II , 345 F. Supp. 3d at 30, ⁋ 92

n.5. Not until April 30 did Hirani attempt to reject the Corps’

termination by letter or ACC learn through its field superintendent Hollander that Hirani been terminated

. Thus

, the record is consistent with Hirani having received the

termination letter

— and hence the Prime Contract being

terminated

— on any of the five days spanning April 26 to 30.

The court need not resolve the disagreement over when

ACC’s Miller Act claim accrue d because, depending on further

factual findings by the district court upon remand , “[i ]f we do not decide it now, we may never need to.” Nat’l Treasury Emps

. Union v. United States , 101 F.3d 1423, 1431 (D.C. Cir. 1996) ; c f. VanderKam v. VanderKam , 776 F.3d 883, 888

– 89 (D.C. Cir. 2015). For instance, if Hirani received the Corps’

terminati on letter of Friday, April 26, 2013, on Monday or Tuesday, April 29 or 30 , and ACC furnished labor or materials on those days , then ACC’s lawsuit (which was filed on April

29 of the following year ) is timely regardless whether the11

Miller Act ’s statu t e of l imitations is tied to the Prime Contract

or the S ubcontract. On the other hand, if Hirani received the termination letter on April 26, 27, or 28, then the interpretation

of the Miller Act will determine whether ACC’s suit was timely

. G iven that timeliness may turn on the unresolved factual question s of when the Prime Contract was terminated and whether ACC performed labor or supplied material s on that day , t h e court need not reach a novel issue of statutory interpretatio n

. Rather

, it suffic es to remand the case t o the

district court for additional fact

- finding, where Hirani and

Colonial , as proponents of the statute of limitations defense, will bear the burden of showing that Hirani received the termination letter before Monday, April 29 or that ACC performed no labor and supplied no materials on April 29 and

30.

Deferring a decision on the statutory question is particularly appropriate given the lack of helpful authority cited by the parties. Colonial argues that United States ex rel. T.M.S.

Mechanical Contractors, Inc. v. Millers Mutual Fire Insurance Co. of Texas , 942 F.2d 946 , 953 (5th Cir. 1991)

, establishes

that a subcontractor cannot recover on the payment bond for work performed after the government terminates the prime

contract. But th e statute of limitations was no t at issue in that

case ; instead, th at case concerned whether the subcontractor could recover on the payment bond for costs it incurred due to

the termination

. See id. In addition, Colonial relies upon

Unit ed States ex rel. American Bank v. C.I.T. Construction Inc. of Texas , 944 F.2d 253 , 256 (5th Cir. 1991)

, for the proposition

that the Miller Act cause of action accrued when the prime

contract was terminated

. But i n that case, unlike here , the government had not terminated the prime contract , and thus the

discussion of the statute of limitations is dict um having little persuasive value

. See id. Furthermore , in a case not cited by

any party, the Ninth Circuit held t hat the statute of limitations12

was not triggered until the prime contractor terminated the agreement with its subcontractor. See U.S. ex rel. Pippin v. J.R. Youngdale Const r . Co. , 923 F.2d 146, 150 (9th Cir. 1991). In sum, the authority that the parties have presented to the court

is of little aid in resolving a novel statutory question.

Therefore, t he court remands the case to the district court to make finding s of fact as to when the Prime Contract was

terminated and whether ACC performed labor or supplied material on April 29 and/or April 30. In the event that Colonial

and Hirani cannot meet their burden to show that ACC’s Miller

Act claim was un timely

, then t his court can resolve the parties’

other Miller Act contentions : those by Hirani and Colonial that quantum meruit damages were improper, that ACC obtained double recovery, and that admitting documents containing hearsay was an abuse of discretion , and that by ACC that Ed Hollander’s services were compensable. To the contrary, if

Hirani and Colonial show that termination occurred before April 29 or that ACC performed no labor or supplied no material on April 29 or 30

, the court can then address the Miller

A ct statute of limitations issue

.

III

.

On cross appeal, ACC contends that it was entitled to quantum meruit relief totaling more than $2 million against Hirani, instead of the restitution damages that the district court

awarded. The court affirms the award o f restitution damages to compensate ACC for the services it provided to Hirani

.

Damage awards are “findings of fact governed by Federal Rule of Civil Procedure 52(a), which will not be disturbed unless clearly erroneous.” Bucheit v. P alestine Liberation Org. , 388 F.3d 346, 350 (D.C. Cir. 2004) (internal quotations omitted) . That said

, “an appellate court has the ‘power to13

correct errors of law, including those that may infect a so

- called mixed finding of law and fact, or a finding of fact that is predicated on a misunderstanding of the governing rule of
law.’” United States v. Castle , 825 F.3d 625, 635 (D.C. Cir. 2016) (quoting Bose Corp. v. Consumers Union of
U.S., Inc.

, 466 U.S. 485, 501 (1984)).

The parties and the district court assum ed that District of Columbia law applies to ACC’s breach of contract cause of

action against Hirani , as will this court

. Hirani III , 2019 WL 162019, at *3 n.3; see also Ideal Elec. Sec. Co. v. Int ’ l Fid. Ins.

Co. , 129 F.3d 143, 147 (D. C. Cir. 1997). Three terms , as defined by D.C. law, are pertinent : quantum meruit

, unjust enrichment, and restitution. First, “[q]uantum meruit may refer to either an implied contractual or a quasi

- contractual duty requiring compensation for services ren dered.” TVL Assocs. v.

A & M Const r . Corp. , 474 A.2d 156, 159 (D.C. 1984). A plaintiff’s “request for quantum meruit

. . . is a measure of damages and not a legal theory of recovery.” Fred Ezra Co. v.

Pedas , 682 A.2d 173, 176 (D.C. 1996) (internal quotation omitted) . Second , “[u]njust enrichment occurs when a person

retains a benefit

. . . which in justice and equity belongs to
another.” Harrington v. Trotman , 983 A.2d 342, 346 (D.C. 2009) (quoting Jordan Keys & Jessamy, LLP v. St. Paul Fire

& Marine Ins. Co.

, 870 A.2d 58, 63

– 64 (D.C. 2005)) . Unjust enrichment is an equitable claim that typically lie s when there

is not a valid contract between the parties

. See Falconi

- Sachs v. LPF Senate Square, LLC , 142 A.3d 550, 556 (D.C. 2016);

see also In re APA Assessment Fee Litig. , 766 F.3d 39, 45

– 46 (D.C. Cir. 2014). Third, “ [a] lthough the phrases restitution

and quantum meruit are sometimes used interchangeably in regard to the measure of recovery, since both refer to unjust enrichment, restitution is properly limited to recovery where there is an express contract.” Lee v. Foote , 481 A.2d 484, 486 n.4 (D.C. 1984). “ [A] n action for restituti on is an alternative14

remedy to an action for damages when there has been a repudiation or material breach of the contract.” Ingber v. Ross

, 479 A.2d 1256, 1263 (D.C. 1984). Thus, “ [r] estitution is

available [under D.C. law] for partial performance by a

p laintiff of services under an express contract which has been breached by a defendant.” Lee , 481 A.2d at 486 ; see also Harrington , 983 A.2d at 347

– 48.

ACC contends that the district court “ignored the election made by ACC to seek restitution (quantum me ruit) based on the reasonable value of the performance without regard to the limitations of the contract.” Appellee’s Br. at 67. It re lies on W.F. Magann Corp. v. Diamond Manufacturing Co. , 775 F.2d 1202 (4th Cir. 1985), several articles written by its o wn counsel , and, in reply

, Blake Construction Co. v. C.J. Coakley

Co ., 431 A.2d 569 (D.C. 1981)

. ACC does not explain why the ability of the subcontractor in W.F. Magann Corp. to recover
in quantum meruit on its Miller Act claim provide s a basis to displace the district court’s conclusion that D.C. law does not

allow ACC to recover in quantum meruit on its contract claim

. And i n Blake , the D.C. Court of Appeals allowed the

subcontractor to recover damages for delay despite a contractual clause prohi biting such damages because the delays

were due to the contractor’s “active interference” with the

contract

, al though the court declined to distinguish between

contract and quantum meruit theories of recovery because the

result was the same

. Blake Const r . Co. , 431 A.2d at 578

– 79

, 579 n.8

. Here, by contrast, ACC points to no finding of active

interference and , more fundamentally, the theories lead to different amounts of damages

. In shor t

, ACC has not provided

the court with any basis to deviate from the principle of D.C. law that restitution, not quantum meruit , is the proper remedy where there is an express contract between the parties. See Lee

, 481 A.2d at 486. The court therefore af firms the district court’s

award of contract damages against Hirani.15

Accordingly, t he court remands the case to the district

court for additional fact

- finding on ACC’s Miller Act claim against Colonial

, affirms the restitution damages award against

Hirani on ACC’s contract claim , and defers addressing other issues raised by the parties.