Court Opinion

ID: 4260236
Source: CourtListenerOpinion
Date Created: 2018-04-02 18:00:06.673556+00
Date Added: 2024-06-11T14:28:51.524519
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                  )
                                             )
Merrick Construction, LLC                    )      ASBCA No. 60906
                                             )
Under Contract No. W912P8-08-D-0038          )

APPEARANCE FOR THE APPELLANT:                       Michael S. Blackwell, Esq.
                                                     Shields Mott L.L.P.
                                                     New Orleans, LA

APPEARANCES FOR THE GOVERNMENT:                     Thomas J. Warren, Esq.
                                                     Acting Engineer Chief Trial Attorney
                                                    William G. Meiners, Esq.
                                                     Engineer Trial Attorney
                                                     U.S. Army Engineer District, New Orleans

      OPINION BY ADMINISTRATIVE JUDGE D' ALESSANDRIS ON THE
          GOVERNMENT'S MOTION FOR SUMMARY JUDGMENT

       Appellant, Merrick Construction, LLC. (Merrick), appeals from a contracting
officer's final decision denying its claim in the amount of $203,015.82 for rental costs
for a bypass pumping system installed pursuant to a government change order.
Respondent, the United States Army Corps of Engineers (government or Corps) moves
for summary judgment, asserting that Merrick's claim is precluded by the general
release signed by Merrick's vice president. The Corps additionally argues that there is
an accord and satisfaction based upon a modification to the contract and that Merrick's
claim is precluded because it was filed after final payment on the contract. For the
reasons set forth below, we grant the Corps' motion for summary judgment.

           STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

       On 8 April 2008, the Corps awarded Multiple Award Task Order Contract
(MATOC) No. W912P8-08-D-0038 for construction services to Merrick (R4, tab 17).
No construction services were actually procured at the time of award, but, as one of
multiple awardees of the MATOC, Merrick was eligible to submit offers in response to
subsequent task order solicitations issued under the contract. On 10 April 2009, the
Corps awarded MATOC Task Order 0002, to Merrick (R4, tab 16). The task order
involved construction work on a hurricane protection levee near New Orleans,
Louisiana (id.). The contract contains the Federal Acquisition Regulation
(FAR) 52.243-4(f), CHANGES (JUN 2007) clause, providing that "[n]o proposal by the
Contractor for an equitable adjustment shall be allowed if asserted after final payment
under this contract" (R4, tab 17 at 104-05).

        On 25 March 2011 the Corps issued a unilateral change order, designated as
C0-013 (Modification No. lZ), for the installation of a 300 cubic feet per second
bypass pumping system at the construction site. The change order required the
installation, operation and monitoring of a temporary "bypass pumping system." The
change order provided that the "Bypass Pumping System Rental" would be paid for on
a "unit price per month" and, that the contract price was presently unchanged, but that a
formal modification would later be issued with an agreed-to price. (R4, tab 8 at 1, 5, 9)

       The pumping equipment was delivered to the job site on 6 July 2011, and was
operational by 18 July 2011 (R4, tabs 9-10). Following testing of the flow rate, the
pumps were provisionally accepted on 10 August 2011, and fully accepted on
11 August 2011 (R4, tab 12).

        On 19 July 2011, the Corps issued Modification No. 03, partially settling the
change order for the bypass pumping system. Modification No. 03 included contract
line item numbers (CLINs) for Mobilization and First Month's Rent (CLIN 0045), two
months rental of the pumping system (CLIN 0046), and provided that the monthly
rental for the bypass pumping system, would be $208,015.82 (R4, tab 13). On
30 March 2012, Modification No. 10 (also known as VEQ-004) added seven months
rental of the bypass pumping system (gov't mot., ex. A). The rental of the bypass
pumping system ended on 11 September 2012, when Merrick was directed by the
Corps to shut down the bypass pumping system (R4, tab 3 at 5).

       On 3 January 2013, the Corps issued Modification No. 18 (VEQ 005). It was
signed on behalf of Merrick by Mr. Lemoine, and by Cynthia A. Nicholas, the
government contracting officer. Modification No. 18 added an additional three
months rental to the bypass pumping system. (R4, tab 14) Modification No. 18
included the following settlement language:

             This adjustment constitutes compensation in full on behalf
             of the contractor and its subcontractors and suppliers for all
             costs and markups directly or indirectly attributable to
             Variations in Estimated Quantities, and for all delays,
             impacts and extended overhead relative thereto and for
             performance of the change within the time frame stated.

(Id. at 2)

      At some point after the bypass pumping system was removed, Max Merrick, the
owner of Merrick, became aware of an "accounting discrepancy" regarding the

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monthly rental charges from its subcontractor, Associated Pump & Supply Co., L.L.C.
(APS) and the amounts Merrick received from the Corps (app. opp'n, ex. G).
Mr. Merrick attributed the discrepancy to an overpayment by Merrick to APS.
Mr. Merrick contends that the Corps agreed that the accounting discrepancy was due
to APS overbilling Merrick. On 22 April 2014, Merrick filed suit against APS for
return of the amount Merrick believed had been overbilled. (Id.)

       On 23 January 2015, Mr. Lemoine, the project manager, ended his employment
with Merrick, and Mr. Clay Juneau, Merrick's vice president, began overseeing
completion of the project, although he had not been involved in negotiating the
modifications of the contract with the Corps (app. opp'n, ex. G at 3). On 6 July 2015,
Merrick submitted its final payment request in the amount of $39,496.51 (gov't mot.,
ex. C). On 10 July 2015, Merrick's vice president, Mr. Juneau, signed a general
release document, which read as follows:

             The undersigned contractor under Contract
             W912P8-08-D-0038-0002 dated 4/10/2009 between the
             United States and the said contractor, for WBV-15b.2 Lake
             Cataouatche PS Fronting Protection, PS fronting
             protection, modification, floodwall tie-ins to the 100 year
             protection level., in accordance with Contract Clause,
             PAYMENTS UNDER FIXED-PRICE CONSTRUCTION
             CONTRACTS, paragraph, hereby releases the United
             States, its officers, agents, and employees from any and all
             claims arising under or by virtue of said contract or any
             modification or change thereof, except with respect to
             those claims, if any, listed below ....

The release document did not list any exceptions or reservations below the quoted
language. (R4, tab 15) The Corps made final payment under the task order on 17 July
2015, in the amount of$39,496.51 (gov't mot., ex. F).

        On 24 September 2015, during negotiations with APS, Mr. Merrick concluded
that the accounting discrepancy was due to an underpayment by the Corps, rather than
overbilling by APS (app. opp'n, ex. G). On 4 May 2016, Merrick filed a claim for an
additional month's rent of the bypass pumping system under CLIN 0046, at the
contract unit price of $208,015.82 (R4, tab 3). In a final decision dated 31 August
2016, contracting officer Michelle R. Dalmado denied Merrick's claim in its entirety
based upon a finding that Merrick had released any potential claims regarding the
bypass pumping system through the release in Modification No. 18, as well as the
general release at final payment (R4, tab 2). Merrick subsequently timely appealed to
this Board.

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                                       DECISION

        We will grant summary judgment if there is no genuine issue as to any material
fact, and the moving party is entitled to judgment as a matter of law. Celotex Corp. v.
Catrett, 4 77 U.S. 317, 322 ( 1986). A material fact is one that may affect the outcome
of the decision. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). The
moving party bears the burden of establishing the absence of any genuine issue of
material fact, and all significant doubt over factual issues must be resolved in favor of
the party opposing summary judgment. Mingus Constructors, Inc. v. United States,
812 F.2d 1387, 1390-91 (Fed. Cir. 1987). Once the moving party has met its burden
of establishing the absence of disputed material facts, then the non-moving party must
set forth specific facts, not conclusory statements or bare assertions, to defeat the
motion. Pure Gold, Inc. v. Syntex (US.A.), Inc., 739 F.2d 624, 626-27 (Fed. Cir.
1984).

        The Corps asserts that it is entitled to summary judgment in its favor because
the general release signed by Merrick's authorized representative bars Merrick's
claim. In a related argument, the Corps asserts that the final release was signed as part
of the contract close-out process resulting in final payment to Merrick and that
Merrick's claim is also barred because it was submitted after final payment. (Gov't
mot. at 7, 12) A release is a type of contract where the party granting the release
"abandons a claim or relinquishes a right that could be asserted against another."
Clean by Lucy, Inc., ASBCA No. 58432 et al., 16-1BCA136,287 at 176,969.
Accordingly, we interpret the terms of the release like any other contract by examining
the plain language of the release. Id. Here, Merrick released "the United States, its
officers, agents, and employees from any and all claims arising under or by virtue of
said contract or any modification or change thereof' and did not reserve any claims by
listing them as exceptions to the release (R4, tab 15). "As a rule, a general release,
whether associated with final payment or not, which is not qualified on its face, bars
any claims based upon events occurring before execution of the release." Clean by
Lucy, 16-1BCA136,287 at 176,970 (citing Mingus, 812 F.2d 1387). Thus, we find
that the Corps has met its burden of making a prima facie case of release; however,
there are exceptions to the release, such as fraud, mutual mistake, economic duress, or
consideration of a claim after release. Id.

       Merrick asserts that the general release does not bar its claim because of the
Corps' superior knowledge regarding the discrepancy in rental payments, and because
of mistake (app. opp'n at 10-13). Merrick's superior knowledge claim is premised on
the fact that the Corps knew the duration of the rental for the bypass pumping system,
was longer than the amount of time for which the Corps had compensated Merrick.
Additionally, Merrick asserts that the Corps knew that the project was still being
performed when Merrick's project manager left and that the Corps knew that the
Merrick official that signed the release was not involved in the negotiations regarding

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     the bypass pumping system (id. at 11). Merrick's argument is entirely speculative and
     does not cite to any evidence that the Corps "knew or should have known" Merrick's
     version of the facts. Here, Merrick relies upon its proposed interpretation of the
     contract and modifications as establishing a "fact" that it is owed another month of
     rental costs, and that this "fact" was known to the Corps at the time the general release
     was signed. However, Merrick's own declaration in opposition to the motion for
     summary judgment asserts that it was not aware of the fact that the accounting
     discrepancy was due to alleged underpayment by the Corps until 24 September 2015 -
     two and one-half months after Merrick signed the general release. Thus, Merrick's
     argument is that the Corps must have known that it undercompensated Merrick even
     though Merrick itself was unaware of this fact at the time. Moreover, Merrick's
     argument is supported solely by unsworn statements of counsel. Merrick does not cite
     to any documents or communications between Merrick and the Corps, or within the
     Corps, demonstrating knowledge on the part of the Corps, that the Corps has not
     compensated Merrick fully for Merrick's rental costs for the bypass pumping system.
     Instead, Merrick asserts that the Corps' knowledge that Merrick was bringing suit
     against APS must mean that the Corps knew or should have known that Merrick had a
     claim against the Corps that it intended to preserve. We find that Merrick has not
     established a genuine issue of material fact with regard to the Corps' knowledge
     regarding the rental payments.*

             We similarly reject Merrick's assertion that summary judgment is inappropriate
     due to mutual or unilateral mistake. First, Merrick's ignorance of its own claim is not
     the type of "mistake" that establishes an exception to the binding nature of general
     releases. "[W]here it is shown that, by reason of a mutual mistake, neither party
     intended that the release cover a certain claim, the court will reform the release." J. G.
     Watts Construction Co. v. United States, 161 Ct. Cl. 801, 806 (1963). However, here,
     Merrick's own declaration demonstrates that it did not know of the potential claim
     against the Corps and, thus, could not have intended to except it from the general
     release. Instead, Merrick's "mistake" argument is the type of defense that the court
     rejected in JG. Watts, holding that "unilateral ignorance of one's legal rights where
     'all the facts bearing on the existence of the injury were known' does not suffice to
     relieve one of the consequences of having released the claim." Id. at 810 (quoting
     Shepherd v. United States, 125 Ct. Cl. 724, 742 (1953)). Here, all the facts necessary
     to support Merrick's claim were known prior to the date of the general release, yet
     Merrick did not except the claim from the release it signed. Moreover, Merrick argues
     that the Corps knew or should have known of the potential claim. In so arguing, it
     seems clear that Merrick, the owner of the potential claim, also knew or should have

     * Merrick did not file a motion pursuant to Federal Rule of Civil Procedure 56(d)
            seeking to obtain discovery in order to obtain facts to support its opposition to
            the Corps' motion.

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\,
known of its own potential claim because the government's knowledge is based on
facts known equally by Merrick. Merrick is the party with the obligation to assert its
own claim, not the Corps, and its failure to reserve the claim does not relieve it of the
consequences of that decision.

        Similarly, the Federal Circuit held in Mingus that the "failure by the contractor
to keep adequate records to at least know the source and the amounts of its cost
overruns is not a sufficient reason to entertain suits on claims otherwise released,
especially when the terms of the contract require such information on the mandatory
release at the end of the project." Mingus, 812 F.2d at 1395. Moreover, as discussed
above, Merrick cites to no evidence that the Corps was aware of Merrick's potential
claim. To the extent Merrick is asserting unilateral mistake as a defense (app. opp'n
at 12), such a claim is essentially a claim for rescission of the release. G.M Shupe Inc.
v. United States, 5 Cl. Ct. 662,675 (1984). In the rare instances where rescission has
been granted there were defects in the release language not present here. Inland
Empire Builders Inc. v. United States, 191 Ct. Cl. 742, 756 (1970). Accordingly,
Merrick has not asserted facts sufficient to demonstrate entitlement to an equitable
remedy for unilateral mistake. Thus, we find that Merrick has not established mistake
and enforce the general release.

        As an alternative basis for our holding, we additionally hold that Merrick's
claim is barred because it was submitted after final payment. As the general release
discussed above was a prerequisite to the Corps making final payment a few days
later, the facts here overlap with the arguments above. Pursuant to the Changes clause,
FAR 52.243-4(f), "[n]o proposal by the Contractor for an equitable adjustment shall be
allowed if asserted after final payment under the contract" (R4, tab 17 at 104-05).
Claims for equitable adjustment submitted after final payment are barred. See, e.g.,
Jo-Bar Manufacturing Corp. v. United States, 210 Ct. Cl. 149, 157 (1976). Here, the
Corps demonstrated that it made final payment on 17 July 2015 (gov't mot., ex. F),
before Merrick discovered that it had a potential claim against the Corps (app. opp'n,
ex. G), and before Merrick submitted its claim by letter dated 4 May 2016 (R4, tab 3).

        Merrick argues that its claim is not barred by final payment where the
"Contracting Officer knows or should know that the contactor is asserting a legal right
to additional moneys under the contract" (app. opp'n at 12 (citing Historical Services,
Inc., DOT CAB Nos. 72-8, 72-8A, 72-2 BCA 19592 at 44,838)). In Historical
Services, the Department of Transportation Board found that the government had
required additional performance from the contractor after the purported final payment,
meaning that the contract was not completed as of the date the government contended
was the final payment. Historical Services, 72-2 BCA 19592 at 44,839-40. Here,
Merrick does not allege that it performed pursuant to the contract after the date of final
payment. Additionally, as discussed above, we hold that Merrick has not established
that the contracting officer knew or should have known of Merrick's claim. To the

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extent Merrick is arguing that the contracting officer knew of Merrick's claim against
APS, such knowledge would be irrelevant to establishing that the contracting officer
knew of an intent by Merrick to assert a claim against the Corps, rather than APS.
Accordingly, we hold that Merrick's claim is barred by final payment. As we have
determined that the Corps is entitled to summary judgment, we need not address the
arguments regarding the specific release contained in Modification No. 18.

                                       CONCLUSION

      For the reasons stated above, we grant the Corps' motion for summary judgment.
The appeal is denied.

      Dated: 22 March 2018

                                                 DAYID D' ALESSANDRIS
                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

 I concur                                        I concur

                                                ~ ·
RICHARD SHACKLEFORD                              J'.~Y
Administrative Judge                             Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals

      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 60906, Appeal of Merrick
Construction, LLC, rendered in conformance with the Board's Charter.

      Dated:

                                                 JEFFREY D. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals

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