Court Opinion

ID: 4657347
Source: CourtListenerOpinion
Date Created: 2021-02-04 16:00:44.685588+00
Date Added: 2024-06-11T08:01:16.842329
License: Public Domain

Case: 20-1260   Document: 40     Page: 1    Filed: 02/04/2021

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

          P.K. MANAGEMENT GROUP, INC.,
                    Appellant

                            v.

       SECRETARY OF HOUSING AND URBAN
                DEVELOPMENT,
                     Appellee
              ______________________

                       2020-1260
                 ______________________

     Appeal from the Civilian Board of Contract Appeals in
 No. 6185, Administrative Judge Kyle E. Chadwick, Admin-
 istrative Judge Allan H. Goodman, Administrative Judge
 Beverly M. Russell.
                  ______________________

                Decided: February 4, 2021
                 ______________________

    NICHOLAS SOLOSKY, Fox Rothschild LLP, Washington,
 DC, argued for appellant. Also represented by DOUGLAS
 HIBSHMAN, RONNI TWO.

     GEOFFREY MARTIN LONG, Commercial Litigation
 Branch, Civil Division, United States Department of Jus-
 tice, Washington, DC, argued for appellee. Also repre-
 sented by JEFFREY B. CLARK, MARTIN F. HOCKEY, JR.,
 ROBERT EDWARD KIRSCHMAN, JR.; JONATHAN ENGLISH,
Case: 20-1260      Document: 40    Page: 2   Filed: 02/04/2021

 2                        P.K. MANAGEMENT GROUP, INC.   v. HUD

 Office of General Counsel, United States Department of
 Housing and Urban Development, Washington, DC.
                 ______________________

     Before PROST, Chief Judge, LOURIE and HUGHES, Circuit
                            Judges.
 HUGHES, Circuit Judge.
     P.K. Management Group, Inc. appeals a Civilian Board
 of Contract Appeals decision denying its claim that it
 should receive individual payments for inspections of Cus-
 todial properties under a contract with the Department of
 Housing and Urban Development. Because we agree with
 the Board’s determination that the contract terms unam-
 biguously cover routine inspections through a monthly fee
 rather than individual payments, we affirm.
                               I
     Under contract DU204SA-14-D-06 with HUD (the Con-
 tract), P.K. Management Group (PKMG) manages multiple
 types of properties in HUD’s possession, including “HUD-
 Owned Vacant” properties and “Custodial” properties.
 HUD-Owned properties are those that “HUD owns,”
 J.A. 139, while Custodial properties are those of which
 HUD has taken possession but does not yet have title,
 J.A. 143–44.
     The Contract requires PKMG to perform various ser-
 vices related to the properties. For example, for each rele-
 vant property that comes into HUD’s possession, PKMG
 must perform an initial inspection and some initial services
 maintaining the property. As HUD’s possession of the prop-
 erty continues, PKMG must conduct ongoing management
 of the property. The specifics of ongoing management vary
 by property type. HUD does not own Custodial properties,
 so they are “not marketable” and have “limited property
 management tasks.” Id. Relevant here, PKMG must per-
 form bi-weekly inspections of each property type. See
Case: 20-1260     Document: 40     Page: 3    Filed: 02/04/2021

 P.K. MANAGEMENT GROUP, INC.   v. HUD                        3

 J.A. 163, 171. These inspections are more thorough for
 HUD-Owned properties because HUD-Owned properties
 must be in “Ready to Show Condition,” while Custodial
 properties generally do not need to be ready for showing.
 Compare J.A. 163, with J.A. 171.
     The Contract lists the compensation for each contrac-
 tual service in a series of Contract Line Item Numbers
 (CLINs). The Contract requires HUD to pay “as full com-
 pensation for all work required, performed and accepted
 under [the] contract, inclusive of all costs and expenses, the
 fixed-unit-rate for the applicable CLINs and applicable pe-
 riods, as stated in Part I, Section B of [the] contract.”
 J.A. 191. The contract requires some services to be compen-
 sated individually, while others are covered under monthly
 fees.
     The issue here is which CLIN specifies the compensa-
 tion for routine, bi-weekly inspections of Custodial proper-
 ties.
     At first, HUD paid PKMG individually for every bi-
 weekly inspection, applying the per-inspection fee from
 CLIN 0005AA regardless of property type. Later, HUD be-
 gan rejecting invoices for inspections of Custodial proper-
 ties and only providing individual payments for HUD-
 Owned properties. P.K. Mgmt. Grp., Inc. v. HUD, 2019
 CIVBCA Lexis 208, *5 (Aug. 20, 2019). PKMG submitted a
 claim to the HUD contracting officer seeking a determina-
 tion that PKMG is entitled to CLIN 0005AA fees for inspec-
 tions of Custodial properties. Id. The officer denied the
 claim, stating that “the contract is clear that CLIN 0005AA
 applies to HUD-Owned Vacant Properties only.” Id. at *5–
 6. The officer explained the prior payments by noting that
 HUD’s payment system “was erroneously programmed” to
 pay for each inspection individually, and that the change
 in behavior did not signal a change in interpretation. Id. at
 *6. PKMG appealed to the Board, which denied the appeal,
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 4                        P.K. MANAGEMENT GROUP, INC.   v. HUD

 deeming the Contract language unambiguous. See id. at
 *6–14. PKMG now appeals to this court.
                               II
     Pursuant to the Contract Disputes Act, 41 U.S.C.
 § 7107(b)(1), we review the Board’s decisions on questions
 of law de novo. Dai Glob. v. Adm’r of the United States
 Agency for Int'l Dev., 945 F.3d 1196, 1198 (Fed. Cir. 2019).
 However, “we give the Board’s interpretation of govern-
 ment contracts careful consideration given its considerable
 experience and expertise.” Agility Logistics Servs. Co. KSC
 v. Mattis, 887 F.3d 1143, 1148 (Fed. Cir. 2018). Contractual
 interpretation is a pure legal issue.
     PKMG argues that CLIN 0005AA requires HUD to pay
 individually for each inspection of Custodial properties.
 However, for the following reasons, we hold that the plain
 meaning of the contract is that CLIN 0006 covers these in-
 spections through a monthly fee.
      First, the title of CLIN 0005AA indicates that it applies
 only to HUD-Owned properties. CLIN 0005AA is entitled
 “On-Going Property Inspection HUD-Owned Vacant.” J.A.
 278. Although Custodial properties are in HUD’s posses-
 sion, they are not owned by HUD. See J.A. 143 (noting that
 for Custodial properties, “[t]itle is not yet in HUD’s
 name.”). Thus, as the Board noted, “[i]n order to accept
 PKMG’s position that CLIN 0005AA sets the unit price of
 inspections of custodial properties, we would need to read
 the words ‘HUD-owned vacant’ out of CLIN 0005AA . . . .”
 P.K. Mgmt. Grp., Inc., 2019 CIVBCA Lexis 208, at *10. “An
 interpretation that gives meaning to all parts of the con-
 tract is to be preferred over one that leaves a portion of the
 contract useless, inexplicable, void, or superfluous.” NVT
 Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir.
 2004) (citing Gould, Inc. v. United States, 935 F.2d 1271,
 1274 (Fed. Cir. 1991)). PKMG’s argument would make the
 title of CLIN 0005AA inexplicable.
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 P.K. MANAGEMENT GROUP, INC.   v. HUD                      5

      Another indication that CLIN 0005AA only applies to
 HUD-Owned Vacant properties is its connection with
 CLIN 0005. Neither party disputes that CLIN 0005 (enti-
 tled “On-Going Property Management (PM) Fee, HUD-
 Owned Vacant”) applies only to HUD-Owned vacant prop-
 erties, and the two CLINs are linked by both their number-
 ing and titles. See P.K. Mgmt. Grp., Inc., 2019 CIVBCA
 Lexis 208, at *4. Thus, the Board called CLIN 0005AA a
 “sub-CLIN” of CLIN 0005. Id. at *9. PKMG disputes this
 “sub-CLIN” characterization because “sub-CLIN” isn’t a
 term in the Contract, but regardless, the most sensible in-
 terpretation is that provisions with related numbering ap-
 ply to the same properties, particularly when both have
 titles that say “HUD-Owned Vacant.” PKMG’s interpreta-
 tion would require us to deem the CLIN numbering system
 and titles meaningless.
     Only CLIN 0006 refers to Custodial properties, and we
 hold that this CLIN governs the compensation for routine
 inspections of Custodial properties. Entitled “Inspection,
 Initial Services, On-Going [Property Management] For
 Custodial Properties,” CLIN 0006 sets a monthly fee that
 covers a variety of services. J.A. 278. The parties do not
 dispute that all other services associated with Custodial
 properties are covered by this monthly fee, so it would be
 anomalous to interpret this one service, routine inspections
 of Custodial properties, to be covered by a separate provi-
 sion, which by its title only addresses fees for HUD-Owned
 properties. Thus, we agree with the Board that “the fixed
 monthly price in CLIN 0006 includes inspections of custo-
 dial properties.” P.K. Mgmt. Grp., Inc., 2019 CIVBCA Lexis
 208, at *13.
     PKMG raises several arguments to the contrary, but
 we find none of them persuasive. PKMG contends that be-
 cause one section of the Contract lays out criteria for re-
 ceiving “credit” for routine inspections of Custodial
 properties, the inspections must be individually compen-
 sated. See Appellant’s Br. 16 (citing J.A. 163–64). But
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 6                        P.K. MANAGEMENT GROUP, INC.   v. HUD

 “credit” does not equate to payment. One can receive credit
 for a required task without being individually paid for that
 task. In another section, the Contract describes the conse-
 quences of the “failure of the Contractor to perform . . . any
 routine inspection” under CLIN 0005AA. J.A. 125 (empha-
 sis added). PKMG argues that the use of the word “any”
 here indicates that CLIN 0005AA deals with all routine in-
 spections, not just those of HUD-Owned properties. Appel-
 lant’s Br. 12–13. But a more reasonable interpretation is
 that, to the extent this passage discusses CLIN 0005AA, it
 simply refers to any routine inspection under
 CLIN 0005AA, i.e., any inspection of a HUD-Owned prop-
 erty.
      Reading the Contract as a whole, we hold that the plain
 meaning places compensation for routine inspections of
 Custodial properties under CLIN 0006 rather than
 CLIN 0005AA. Because the Contract is unambiguous, we
 follow the plain meaning without considering extrinsic ev-
 idence or related arguments. Nw. Title Agency, Inc. v.
 United States, 855 F.3d 1344, 1347 (Fed. Cir. 2017) (citing
 Coast Fed. Bank, FSB v. United States, 323 F.3d 1035,
 1040 (Fed. Cir. 2003) (en banc)).
                              III
     We have considered PKMG’s remaining arguments
 and find them unpersuasive. Because we agree with the
 Board that CLIN 0006, rather than CLIN 0005AA, governs
 compensation for routine inspections of Custodial proper-
 ties, we affirm.
                         AFFIRMED