## United States Court of Appeals for the Federal Circuit

2006-5127

RENDA MARINE, INC., Plaintiff-Appellant,

v.
UNITED STATES, Defendant-Appellee. Terry L. Salazar , Quilling Selander Cummiskey Lownds, of Dallas, Texas, argued for plaintiff-appellant. John E. Kosloske , Senior Trial Counsel, Comme rcial Litigation Branch, Civil Division, United States Departm ent of Justice, of Washi ngton, DC, argued for defendantappellee. With him on the brief were Peter D. Keisler , Acting Attorney General and Jeanne E. Davidson , Director. Of counsel on the brief was P. Alex Petty , Assistant District Counsel, Office of Counsel, United States Army Corps of Engineers, of Galveston, Texas. Appealed from: United States Court of Federal Claims Judge Emily C. Hewitt

## United States Court of Appeals for the Federal Circuit

2006-5127 RENDA MARINE, INC., Plaintiff-Appellant,

v.
UNITED STATES, Defendant-Appellee.

DECIDED: December 11, 2007

Before SCHALL, Circuit Judge , PLAGER, Senior Circuit Judge , and MOORE, Circuit Judge

. SCHALL, Circuit Judge

. This is a government contract case. Renda Marine, Inc. (“Renda”), entered into Contract No. DACW64-99-C-0001 (“contract”) with the United States Army Corps of Engineers (“Corps”) for the dred ging of a portion of the H ouston-Galveston Navigation Channel (“navigation channel”). The contract was gover ned by the Contract Disputes Act of 1978, as amended (“CDA”). 41 U.S.C. §§ 601–13 (2000). Upon completion of the dredging work, Renda submitted various clai ms to the contracting officer (“CO”) seeking additional compensatio n under the contract. Following the denial of thoseclaims, Renda filed suit in the United States Court of Federal Claims pursuant to 41 U.S.C. § 609(a)(1). On July 28, 2005, following a trial, the Court of Federal Claims issued a decision holding that Renda was not entitled to recover on its claims. Renda Marine, Inc. v. United States , 66 Fed. Cl. 639 (2005) (“ Merits Decision ”). Subsequently, on June 30, 2006, the court issued a decision denying Renda’s motion for reconsideration of certain prior rulings of the court. Renda Marine, Inc. v. United States , 71 Fed. Cl. 782 (2006) (“ Reconsideration Decision ”). In those prior rulings, the court had denied Renda’s motion for leave to amend it s complaint to challenge a decision of the CO asserting government claims against Renda. The court did so on the ground that Renda’s challenge to the CO’s decision was untimely. Following its denial of Renda’s motion for reconsideration, the Cour t of Federal Claims entered final judgment in the case in favor of the United Stat es. Renda has timely appealed from that judgment. We affirm. BACKGROUND I. Renda is a marine dredging contractor. U nder the contract, it was required to increase the depth of the navig ation channel to -45 feet Mean Low Tide (“MLT”). Merits Decision at 657. This means that the channel had to be dredged to a depth 45 feet below its level at MLT. During the period between January and October of 2001, Renda submitted various claims to the CO, including seven differing site condition claims. Reconsideration Decision at 784. After its claims were denied, on April 11, 2002, Renda filed suit in the C ourt of Federal Claims. Id. In its suit, Renda challenged the

2006-5127 2CO’s denial of its seven diffe ring site condition claims, as we ll as the CO’s denial of an additional claim that was based upon the Corps’ alleged constr uctive modification of the
contract. See Merits Decision at 642. Based upon its claims, Renda sought additional compensation under the contract in the total amount of $14,244,848. Id. During the period between February 28, and April 7, 2005, the Court of Federal Claims conducted a trial on Renda’s eight claims. Id. at 643. Thereafter, on July 28, 2005, the court issued a decision in favor of the government, holding that Renda was not entitled to recover on any of its claims. Id. at 721. II. On November 26, 2002, whil e Renda’s suit was pending in the Court of Federal Claims, the CO issued a fi nal decision under the contra ct asserting six separate government claims against Renda, in the total amount of $11,860,016. Reconsideration Decision at 784. In his final decision, the CO informed Renda that it had the right to appeal the decision to the Armed Services Board of Contract Appeals (“ASBCA”) within 90 days of receipt of the decision, see 41 U.S.C. § 606, or to initiate an action in the Court of Federal Claims within twelve months of receipt of the decision, see id. § 609(a)(3). Reconsideration Decision at 784. Renda received the CO’s final decisi on on or about No vember 26, 2002. Id. at 784–85. Thus, it had until Februar y 24, 2003 to challenge the decision in the board of contract appeals and until Novem ber 26, 2003 to do so in the Court of Federal Claims. Renda, however, did not pursue either cour se. Instead, on July 1, 2004, roughly nineteen months after the appr oximate date on which it received the final decision, it sought leave to amend its complaint in the ongoing Court of Federal Claims litigation in

2006-5127 3order to challenge the validity of the decision there. Id. at 785. The Court of Federal Claims denied Renda’s motion on July 30, 2004, on the ground that Renda’s challenge to the CO’s decision was untimely. Id. Subsequently, on Ap ril 19, 2005, the court denied a second motion by Renda to amend it s complaint to challenge the CO’s decision, again on the ground that Renda’s c hallenge to the decisio n was untimely. Id. On June 1, 2005, following the completion of trial, but pr ior to the issuance of the Merits Decision , Renda sought reconsiderat ion of the Court of Federal Claims’ decision denying its motion for leave to amend its complaint. Id. at 786. In its motion, Renda asserted that the government claims in t he CO’s November 26, 2002 decision were related to the claims in Renda’s suit in the Court of Federal Claims. Starting from this premise and relying upon our decision in Sharman Co. v. United States , 2 F.3d 1564 (Fed. Cir. 1993), overruled on other grounds by Reflectone, Inc. v. Dalton , 60 F.3d 1572 (Fed. Cir. 1995) (en banc), Ren da argued that its suit divest ed the CO of authority to render a final decision on th e government’s claims, t hereby rendering the CO’s November 26, 2002 decision a nul lity inasmuch as it issued after the initiation of litigation by Renda. Reconsideration Decision at 786. On June 30, 2006, the court denied Renda’s motion, holding that, because R enda had failed to appeal the CO’s final decision within the twelve-month period set forth in the CDA, 41 U.S.C. § 609(a)(3), Renda was precluded from challengi ng the validity of the decision. Reconsideration Decision at 797. On June 30, 2006, based upon the Merits Decision and the Reconsideration Decision , the court entered final judgment in fa vor of the United States. As noted,

2006-5127 4Renda has timely appealed from that judgment. We have ju risdiction pursuant to 28 U.S.C. § 1295(a)(3). DISCUSSION On appeal, Renda challenges both the Merits Decision and the Reconsideration Decision . As far as the former is concerned, Renda argues that the Court of Federal Claims erred insofar as it denied Renda compensation for one of its seven differing site condition claims. That claim involved a se ction of the navigation channel known as the “Flare Area.” Turning to the Reconsideration Decision , Renda argues that the Court of Federal Claims erred in denying it leave to amend its complaint in order to challenge the CO’s November 26, 2002 final decision. We address these contentions in turn. I. A. We consider first Renda’s differing site condition claim. The Flare Area was a portion of the navigation chann el where the width of the channel “flare[d] out” from 400 to 600 feet to permit safe passage of ships. Merits Decision at 685 n.52. While performing dredging work in the Flare Area, R enda encountered “stiff clays” in locations where it claimed it expected to encounter “soft clays.” Id. at 686. The presence of stiff clays allegedly increased Renda’s cost of performing under the contract, leading Renda to seek some $4.7 million in additional co mpensation and approxim ately 100 additional days in contract performance time. Id. Ultimately, the Co rps awarded Renda an additional $3.1 million and extended the time for contract performance by 56 days. Id. at 687. After the CO deni ed Renda’s claim for the $1. 6 million difference between Renda’s original claim and what the Corps had awarded it, Renda included the Flare

2006-5127 5Area claim in its suit in the Court of Federal Claims, where it soug ht to recover $900,000 additional compensation for the claim. Id. In the Court of Federal Claims, Renda pr esented the Flare Area claim as based upon an alleged Type I differing site condition. A Type I differing site condition arises when the conditions encountered differ from what was indicated in the contract documents. See FAR 52.236-2, 48 C.F.R. § 52.236-2(a)–(b) (2006). It is distinguished from a Type II differing site condition, whic h arises when the c onditions encountered are of an unusual nature and differ materially from those normally encountered in the kind of work contemplated by the contract. See id. In order to be eligible to recover for a Type I differing site condition, a contractor must fi rst prove, as a threshold matter, that the contract contained some identification of the conditions to be encountered at the site. H.B. Mac, Inc. v. United States , 153 F.3d 1338, 1345 (Fed. Cir. 1998); P.J. Maffei Bldg. Wrecking Corp. v. United States , 732 F.2d 913, 916 (Fed. Cir . 1984). The contractor must then prove by a preponderance of the ev idence that the conditions encountered during the contract performance differed materia lly from the conditi ons indicated in the contract. To carry this burden, the contra ctor must demonstrate that the conditions encountered were not reasonably foreseeable in light of all information available to the contractor when bidding, that the cont ractor reasonably relied upon its original interpretation of the contract, and that the c ontractor suffered damages as a result of the material variation between the conditi ons expected and those encountered. H.B. Mac , 153 F.3d at 1345; Stuyvesant Dredging Co. v. United States , 834 F.2d 1576, 1581 (Fed. Cir. 1987).

2006-5127 6The Court of Federal Claims held that Re nda had failed to esta blish that it was entitled to additional compensation based upon the Flare Area Claim. Merits Decision at 687–90. The court found that Renda’s inte rpretation of the contract documents was not reasonable. Id. at 687–88. Renda purportedly relied solely upon two boring logs to predict the character of the material that it would encounter in the Flare Area. Id. at 687. Those two boring logs, logs 93-62 and 92-63, were located in the Flare Area, and the court acknowledged that “t hey would be the first borings that a contractor would examine to determine the character of soils in the vicinity.” Id. Those logs did not indicate the presence of stiff clays. Id. at 686. The court determined, however, that those boring logs, whose uppermo st elevations were at dept hs of -33 feet MLT and -44 feet MLT, respectively, reflected subsurfa ce conditions at depths considerably below where Renda would be required to do most of its dredging. Id. at 687. Under these circumstances, the court found, those logs gave an incomplete account of the materials to be dredged in the Flare Area, and Renda shoul d have considered boring logs 3ST-4, 3ST-5, and 3ST-6. Id. at 688. The court stated that th ose logs, although from locations on the opposite side of the navigation channel from the Flare Area, provided “a more complete picture of the soils to be dredged in the vicinity of t he Flare Area than 93-62 and 93-63. The tops of each of these logs is [sic] located between 0 feet MLT and +10 feet MLT.” Id. Continued the court, “[e]ach of these logs shows stiff or hard clay at approximately -35 feet MLT through at least - 45 feet MLT. These contract indications are consistent with the conditions plaintiff encountered in the Flare Area.” Id. (internal citations omitted). The court concluded: “To the extent that plaintiff disregarded these boring logs entirely and decided to rely so lely upon logs 93-62 and 93-63 to predict the

2006-5127 7character of materials to be dredged in the Flare Area, plaintiff did not act as a reasonably prudent contractor.” Id. Second, the Court of Federal Claims determined that the existence of stiff clays was reasonably foreseeable to Renda. The court stated that, “prior to its bid, [Renda] expected to encounter stiff clays in the Flar e Area—and, in fact, relied on its estimates concerning the quantity of such materials when preparing it s levee construction plan.” Id. at 689. The court noted t hat a Renda employee, in s ubmitting information to the Corps during contract performance, presented a spreadsheet prepared by Renda during the bid preparation process. Id. at 688. On the spr eadsheet, the Flare Area was included within a larger area in which there wa s shown the likelihood of the existence of stiff clays. Id. The court further noted that the same Renda employee indicated to the Corps that medium to stiff clays from the Fl are Area would be utilized in constructing the levies required under the contract. Id. In the court’s view, this evidence strongly suggested that Renda was aware of the likelihood of encountering stiff cl ays in the Flare Area. Id. at 689. Third, the court determined that Renda had not proven that the damages it suffered as a consequence of enc ountering stiff clays were solely attributable to the clays and not to other causes. Id. at 689–90. Renda challenges each of the Court of Feder al Claims’ findings. First, it asserts that its belief that stiff clays were unlikely in the Flare Area was reasonable, noting that it relied solely on the two borings within the Flare Ar ea precisely because those borings would presumably provide the most accurate pi cture of clay consis tency within the Flare Area. Second, it maintains that the discovery of stiff clays was indeed unforeseeable,

2006-5127 8asserting that the items of ev idence upon which the court relie d to find to the contrary, including the spreadsheet that placed the Flare Area within a region wherein stiff clays were expected, concerned a very large ar ea and were not intended to be particularly precise analyses of where sti ff clays were expected. R enda also argues that the unforeseeability of stiff cla ys is supported by the CO’s decision to award Renda an additional $3.1 million under the contract. Third, Renda contends that, by their very nature, stiff clays have the effect of slo wing dredging work, regardless of the existence of additional factors that mi ght slow contract performance further. For these reasons, Renda argues that it did in fact prove the marginal harm it incurred as a consequence of stiff clays, thereby entitling it to appropriate damages. B. Following a trial, we review factual findi ngs by the Court of Federal Claims for clear error. See Columbia Gas Sys., Inc. v. United States , 70 F.3d 1244, 1246 (Fed.Cir.1995) . “A finding is ‘clearly erroneous’ wh en although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co. , 333 U.S. 364, 395 (1948) . We review the court's legal conclusions de novo

. See Columbia Gas , 70 F.3d at 1246

. We see no error in the Court of Federal Claims’ findings that stiff clays were foreseeable in the Flare Ar ea and should reasonably have been anticipated, and that, therefore, Renda was not entitled to additional compens ation under the contract by reason of a Type I differing site condition. Under these circumstances, it is not

2006-5127 9necessary for us to address the issue of whether Renda estab lished the costs it incurred on account of the stiff cl ays it encountered in the Flare Area. The pertinent findings of the Court of Feder al Claims are set fo rth above. Having reviewed the record, we cannot say that those findings are clearly erroneous. Boring logs 93-62, 93-63, 3ST-4, 3ST-5, and 3ST-6 are in the re cord, and their contents are undisputed. As noted, the latter three logs s how the presence of stiff clays. At the same time, while the latter three boring logs are, as the court no ted, from locations across the navigation channel from the Flare Area, those locati ons are aligned so that if one extends the borders of the Flare Area to across the c hannel, each of those logs falls within the Flare Area. This is reflec ted on page 3 of Exhibit 5, a prebid drawing prepared by the Corps showin g the dredging plan for the navigation channel. In addition, Mr. Robert Lofgren, the government’s expert in hydraulic dredging, including the preparation of bid estimates for hydrau lic dredging work, test ified that it was unreasonable to rely upon the two borings within the Fl are Area to the exclusion of other borings in adjacent areas that provided additional information. Finally, we think that Renda’s claim that it was reas onable in not anticipat ing stiff clays in the Flare Area is belied by the fact that, as the Court of Federal Claims noted, t he spreadsheet prepared by Renda showed the Flare Area as being within an ar ea in which there was the likelihood of encountering stiff cl ays, as well as by the fact that Renda indicated to the Corps that medium to stiff clays drawn from the Flare Area would be utilized in

2006-5127 10constructing levies required under the contrac t. For these reasons, we will not disturb the Court of Federal Claims’ re jection of the Flare Area claim. 1
II. A. We turn now to Renda’s challenge to the Reconsideration Decision . In that decision, the Court of Feder al Claims declined to alter its two prior rulings denying Renda’s motion for leave to amend its comp laint to challenge the November 26, 2002 final decision of the CO asserti ng government claims against Renda. Reconsideration Decision at 797. As seen, the co urt did so on the ground t hat Renda’s challenge to the CO’s decision was untimely because it was not brought within the twelve-month period set forth in the CDA. Id. We review a ruling by the C ourt of Federal Claims deny ing a motion for leave to amend a complaint for an abuse of discretion. E.W. Bliss Co. v. United States , 77 F.3d 445, 450 (Fed. Cir. 1995). The same standard of review applies to the court’s denial of a motion for reconsideration. Mass. Bay Transp. Auth . v. United States , 254 F.3d 1367, 1378 (Fed. Cir. 2001). An abuse of discreti on occurs when a court misunderstands or misapplies the relevant law or makes clearly erroneous findings of fact. PPG Indus., Inc. v. Celanese Polymer Specialties Co. , 840 F.2d 1565, 1572 (Fed. Cir. 1988). Renda asserts that the Court of Federal Cla ims erred in its determination that the CDA bars any challenge to the CO’s final decision. Relying upon Sharman , Renda

1 As support for its claim that the parti es did not foresee encountering stiff clays in the Flare Area, Renda notes that the Corps agreed to provide Renda additional compensation when Renda first reported its discovery of stiff clays in the Flare Area. However, a CO’s decision to award additi onal compensation is not binding upon the agency in subsequent CDA litigation. See Wilner v. United States , 24 F.3d 1397, 1401 (Fed. Cir. 1994).

2006-5127 11argues that its pending suit in the Court of Federal Claim s divested the CO of his authority to issue a final decision on the gover nment claim. Under these circumstances, Renda urges, even though it did not seek to do so within the twelve-month period set forth in the CDA, it should have been allowed to amend its complaint to challenge the decision, so as to permit the Court of F ederal Claims to issue a declaratory judgment with respect to the validity of t he November 26, 2002 final decision. B. We consider first Renda’s reliance upon Sharman . Sharman was a party to a CDA contract with the Navy. Sharman , 2 F.3d at 1566. The contract was for the construction of steel water tanks. Id. On August 7, 1989, the contracting officer terminated the contract for default. Id. On February 2, 1990, Sha rman filed suit in what was then the United St ates Claims Court. Id. at 1567. In its su it, Sharman sought to invalidate the default termination. Id. In addition, it sought to recover alleged uncompensated costs incurred in performing the contract. Id. Subsequently, on October 18, 1990, while Sharman’s suit was pending in the Claims Court, the contracting officer issued a final decisi on asserting a government claim against Sharman in the amount of $1,391,240 for the return of unliquidated progress payments. Id. On January 6, 1992, Sharman filed an amended complaint in the Claims Court, to which the government responded on Februar y 18, 1992, by filing a counterclaim seeking the return of unliquidated progre ss payments in the amo unt of $1,391,240, the matter that had been the subject of the October 18, 1990 final decision. Id. at 1567–68. In due course, after a trial, the Claims Cour t ruled that the defaul t termination was valid and that the government wa s entitled to recover on the full amount of its counterclaim.

2006-5127 12Id. at 1568. After judgment was entered in favor of the United States, Sharman appealed. Id. On appeal, this court held that the Claim s Court had lacked jurisdiction over the government’s counterclaim. Id. at 1572. The court started fr om the premise that “[o]nce a claim is in litigation, the Department of Justice gains excl usive authority to act in the pending litigation[,] . . . [a ]nd that exclusive author ity divests the contracting officer of his authority to issue a final decision on the claim.” Id. at 1571 (internal citations omitted). Viewing the government’s counterclaim for unliquidated progress payments as “effectively the same claim” as Sharman’s claim for uncompensated performance costs, “but made by the other party,” id. at 1570, the court reasoned that the government’s progress payments claim was in litigation a nd therefore could not be the subject of a valid contracting officer’s decision: “Because the progress payment claim was the subject of litigation at the outset, the contra cting officer had no authority to issue a final decision on the claim after the complaint wa s filed. Therefore, the October 1990 final decision letter was issued without author ity and consequently is a nullity.” Id. at 1572. Accordingly, the court reversed the money judgment in favor of the United States. Id. Renda’s reliance on Sharman is misplaced. In Sharman , this court ruled that the Claims Court lacked jurisdiction over the government’s claim because it was the product of an invalid contracting officer’s decision. Id. However—and this is the critical point— the government’s claim and the underlying contracting officer’s decision were properly before the Claims Court and this court because the government had put them in issue by asserting its counterclaim. The Claims Court and this court thus were both in a position to rule on the validity of the contracting officer’s final decision. That is not the

2006-5127 13case here. Renda did not timely appeal the November 26, 2002 final decision, and the government did not put the decision in iss ue by filing a counterclaim based upon the decision. Renda’s argument that the CO’s fi nal decision is invalid because, in the words of Sharman , it involves a claim that is the “mirror image” of a claim already in litigation,

see id. at 1573, is thus beside the point. Only a court, after hearing argument from both a contractor and the government, may declar e a contracting officer’s final decision invalid—for whatever reason. A contractor ma y not do so unilaterally. In this case, the Court of Federal Claims was no t in a position to consider the validity of the November 26, 2002 final decision because Renda did not timely appeal the decision and the government did not put it in issue. That brings us to the basic issue in the case: whether the Court of Federal Claims abused its discretion when it denied Renda’s moti on for leave to amend its complaint. We hold that it did not. T he statutory language is clear and unambiguous. Pursuant to 41 U.S.C. § 605(a) , “[a]ll claims by the gover nment against a contractor relating to a contract shall be the subject of a decision by the contracting officer.” When dissatisfied with a contracting o fficer’s final decision, a contra ctor has a choice. “Within ninety days from the date of receipt of . . . [the] decision,” it “may appeal [the] decision to an agency board of contract appeals.” 41 U.S. C. § 606. Alternativ ely, the contractor “may bring an action directly on the claim in t he United States Court of Federal Claims.” Id. § 609(a)(1). If the contractor chooses th is latter option, any action in the Court of Federal Claims “shall be filed within twelve m onths from the date of the receipt by the contractor of the decision of the cont racting officer concerning the claim.” Id. § 609(a)(3). The statute further provides t hat “[t]he contracting officer’s decision on the

2006-5127 14claim shall be final and conclusi ve and not subject to review by any forum, tribunal, or Government agency, unless an appeal or suit is timely commenced as authorized by this chapter.” Id. § 605(b); see United States v. Kasler Elec. Co. , 123 F.3d 341, 346 (6th Cir. 1997) (“[T]he statute clear ly states that a contractor may seek review of a final decision only in a board of contract appeals or in the Court of Federal Claims. Absent commencement of such review within the prescribed period of time, the decision becomes impervious to any substantive review.” (internal citations omitted) (emphasis in original)). Here, it is undisputed that Renda received the CO’s final decision on or about November 26, 2002, and t hat it was informed of its appeal rights at the time. It further is undisputed that Renda did not appeal to the ASBCA within 90 days of receipt of the decision, and that it was not until July 1, 2004, approximat ely nineteen months after receipt of the decision, that Renda sought to amend its complaint in the Court of Federal Claims in order to challenge the decision. In denying Renda’s motion to amend its complaint on the ground that the motion was untimely, the Court of Federal Claims simply applied the clear language of the CDA to the undisputed facts of the case. See, e.g. , Cosmic Constr. Co. v. United States , 697 F.2d 1389, 1391 (Fed. Cir. 1982) (upholding dismissal of an ap peal filed outside of the 90- day statutory period for appealing a final decision to a board of contract appeals); Handel v. United States , 16 Cl. Ct. 70, 73 (1988) (denying juri sdiction on the basis of plaintiff’s failure to file appeal in Claims Court within one year of final decision). The C ourt of Federal Claims neither erred as a matter of law nor acted arbitrarily or capriciously. In short, it did not abuse its discretion.

2006-5127 152006-5127 16 CONCLUSION For the foregoing reasons, we see no error in the Merits Decision and no abuse of discretion in the Reconsideration Decision . Accordingly, we affirm both decisions. We also affirm the final judgment of the Court of Federal Claims based upon those two decisions. AFFIRMED