Court Opinion

ID: 9496903
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:38:30.028223+00
Date Added: 2024-06-11T17:57:52.864643
License: Public Domain

LINN, Circuit Judge,
concurring-in-part and dissenting-in-part.
I concur with the majority’s affirmance of the Board’s determination that the $40 zone charge in the formula contained in the SFO Amendment was intended to be an hourly charge per zone rather than a one-time charge per occurrence, ante at 1333; the affirmance of the Board’s conclusion that the term “zone” as used in the lease is ambiguous, id. at 1334; and the conclusion that the ambiguity is not patent, id. at 1334-35. I also concur with the majority’s conclusion that, contrary to the Board’s opinion, the terms of the SFO Amendment were not negotiated and that the government was wholly responsible for the drafting and issuance of the SFO Amendment. Id. at 1337. However, I find no basis to extrapolate and apply a variant of the rule in Perry & Wallis to the facts of this case and, therefore, respectfully dissent from that part of the majority opinion. Because contra profer-entum applies to the interpretation of the zone-based overtime formula in this case, I would reverse the decision of the Board, find for HPI, and remand for determination of an appropriate remedy against the government.
In considering the application of contra proferentum, the majority questions whether HPI had knowledge of the government’s understanding of “zone” when the contract was formed and whether that knowledge binds HPI to that understanding. The majority looks to Perry & Wallis for guidance.
As the majority correctly states, the facts of this case do not fall within Perry & Wallis, because at the time the lease was signed, the HVAC system had not yet been designed. At that time, Jackson-Kiley “could not have understood a ‘zone’ to be an air-handling unit, which is the interpretation to which the Board binds HPI under the Perry & Wallis rule.” See ante at 1335. Because Jackson-Kiley’s understanding of the meaning of “zone” was too abstract to support the rule of Perry & Wallis, HPI cannot be bound by such an interpretation. Id. The majority then articulates a variant of the Perry & Wallis rule based on Jackson-Kiley’s “repeated explanations of the purpose underlying” the contract term. Id. at 1336. It is on this point that I respectfully disagree.
If Jackson-Kiley’s understanding of what “zone” meant was simply an abstract concept, as the Board found and the majority accepts, her “repeated explanations of the purpose” could not have given HPI any greater insight into her understanding. While HPI might have speculated any number of things from Jackson-Ki-ley’s explanations of the purpose of the formula, without more, those speculations are just that. HPI cannot be bound by what it speculates the government might be thinking. Moreover, Jackson-Kiley’s statements of purpose were not necessarily inconsistent with HPI’s interpretation.
To bind a contractor to a government interpretation, there must be some evidence that the government actually had an interpretation contrary to the interpretation of the contractor and that the contractor knew or had reason to know of such contrary interpretation. In Perry & Wallis, the same contractor had challenged a similar clause on a separate occasion and was therefore on actual notice of the Government’s interpretation of the provision when it entered into the contract at issue. *1339Id. at 1335. The majority extends Perry & Wallis to hold contractors responsible not only for contrary interpretations known to be held by the government, but also for contrary interpretations that the government might have.
With all due respect, such an extension is unwarranted. The rule of Perry & Wallis, in its truest sense, is a form of estop-pel. “A party who willingly and without protest enters into a contract with knowledge of the other party’s interpretation of it is bound by such interpretation and cannot later claim that it thought something else was meant.” Perry & Wallis, 427 F.2d at 725 (emphasis added). While, in dicta, the Perry & Wallis court remarks that it would be unreasonable for a contractor to assert a contrary interpretation, the reason for the unreasonableness is basically estoppel. Id. at 726. Here, the majority extends an essentially estoppel-based rule to cover not only an interpretation of which the contractor was aware, but one: (a) that the government had not formed, and (b) that the contractor simply might have speculated from a contracting officer’s statements of “purpose.” I see no justification for such a variant of the rule of Perry & Wallis.
While it is apparent that the amount openly bid by HPI for the zone rate was extremely favorable to it, and while it is not surprising to think that HPI played its bid close to the vest in not wanting to draw attention to the high dollar figures it used, the unfavorable financial consequences of the government’s acceptance of those figures is not alone sufficient to find against HPI. On the facts of this case, I believe the doctrine of contra proferentum applies and that the government must bear the consequences of the bargain it struck.