Opinion ID: 170933
Heading Depth: 2
Heading Rank: 3

Heading: Fireman's Fund Costs

Text: The jury awarded GIT $51,719 for its [a]ccounting, legal, clerical costs and other expenses associated with the termination of, and settlement with the following lower-tier subcontractors: ... Fireman's Fund. MK filed a Rule 59 motion to amend the judgment and eliminate the $51,719 award related to GIT's settlement with Fireman's Fund. The district court denied the motion. MK argues that the jury improperly classified Fireman's Fund, GIT's surety, as a subcontractor. Although GIT is entitled to recover its reasonable costs for settling with subcontractors, MK asserts Fireman's Fund was a bonding company, not a subcontractor. MK, however, fundamentally mischaracterizes this award. Fireman's Fund, in acting as a surety, incurred legal costs associated with GIT's settlement with its subcontractors, including Robinson, Keers Environmental, and Bogue Construction. GIT was liable to Fireman's Fund for the cost of these legal fees. Although the jury verdict appears to classify Fireman's Fund as a subcontractor, the jury was in fact awarding GIT damages incurred in settling with its subcontractors. These costs are quintessential damages recoverable under the FAR. 48 C.F.R. § 52.249-2(g)(3)(i)-(ii) (stating under a termination for convenience, contractor is entitled to recover the reasonable costs of settlement, including [a]ccounting, legal, clerical, and other expenses reasonably necessary for the preparation of termination settlement proposals and supporting data and for the termination and settlement of subcontracts). MK also erroneously claims GIT's obligations to Fireman's Fund were discharged in GIT's bankruptcy. Fireman's Fund, like Robinson, entered into an agreement exchanging its claims against GIT for a percentage of the award in this litigation. Thus, for the reasons stated above, MK's challenge is without merit.