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 2019-06

Gilbane Federal v. United Infrastructure Projects ( 2019 )


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  •                                                                             FILED
NOT FOR PUBLICATION
JUN 25 2019
UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
GILBANE FEDERAL, FKA ITSI Gilbane                No.   17-16814
Company,
D.C. No. 3:14-cv-03254-VC
Plaintiff-counter-
defendant-Appellee,
MEMORANDUM*
v.
UNITED INFRASTRUCTURE
PROJECTS FZCO, a foreign corporation;
UNITED INFRASTRUCTURE
PROJECTS SAL (OFFSHORE)
LEBANON, a foreign corporation,
Defendants-counter-
claimants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Vince Chhabria, District Judge, Presiding
Argued and Submitted June 13, 2019
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: GOULD and IKUTA, Circuit Judges, and PEARSON,** District Judge.
United Infrastructure Projects FZCO and United Infrastructure Projects
Lebanon (collectively “UIP”) appeal the district court’s ruling that Gilbane Federal
was entitled to terminate UIP for a default, as defined in the Federal Acquisition
Regulation 52.249-10, 48 C.F.R. § 52.249-10.1 We have jurisdiction under 28
U.S.C. § 1291.
We first reject UIP’s arguments that the original contract deadline of
December 4, 2014, should be extended due to excusable delays. See 48 C.F.R.
§ 52.249-10(b). The district court did not clearly err in finding that UIP was not
entitled to an extension of the deadline due to Kinney allegedly being a sole source
provider. The record supports the district court’s finding that UIP refused to deal
with Kinney because of Kinney’s prices, rather than due to UIP’s concern about
ethical improprieties. Further, the district court did not clearly err in rejecting
UIP’s argument that it was entitled to an extension of the deadline under United
States v. Spearin,
    248 U.S. 132 
    (1918), due to the Navy’s requirement that the
**
The Honorable Benita Y. Pearson, United States District Judge for the
Northern District of Ohio, sitting by designation.
1
We analyze this issue under federal law because both parties assume that
federal law applies to the interpretation of the contract’s definition of default. See
Glickman v. Collins,
    13 Cal. 3d 852
    , 857 n.1 (1975), disapproved of on other
grounds by In re Marriage of Dawley,
    17 Cal. 3d 342 
    (1976); Wells v. Wells,
    74 Cal. App. 2d 449
    , 453 (1946).
2
switchgear include a fourth position indicator. Although this was subsequently
determined to be an erroneous requirement, Gilbane did not know that when it
terminated the contract. See McDonnell Douglas Corp. v. United States,
    323 F.3d 1006
    , 1019 (Fed. Cir. 2003) (courts consider only what the parties knew at the time
of termination). The district court did not clearly err when it determined that, at
the time of termination, Gilbane knew only that UIP refused to contract with
providers who could comply with the fourth position indicator requirement, and
the requirement remained in place as of the date Gilbane terminated the contract.
Lastly, the district court did not clearly err in finding that programming was not on
the project’s critical path. Although Gilbane subsequently told the Navy that
programming was a critical path item, the district court’s conclusion that this
statement was false was not clearly erroneous.
Because UIP was not entitled to an extension of the contract deadline for
excusable delays, the district court did not err in determining that Gilbane was
justifiably insecure that there was “no reasonable likelihood that the [contractor]
could perform the entire contract effort within the time remaining for contract
performance,” namely December 4, 2014. Lisbon Contractors, Inc. v. United
States,
    828 F.2d 759
    , 765 (Fed. Cir. 1987). The record establishes that the
switchgear was on the project’s critical path, including evidence that the Navy,
3
UIP, and Gilbane all identified the switchgear as such a critical path item.
Because the switchgear had a lead time of six to nine months for delivery, and UIP
had failed to submit a compliant switchgear submittal that met the Navy’s
specifications as of June 2014, Gilbane was justified in believing there was no
reasonable likelihood that UIP could complete the contract by December 4, 2014.
    Id. Because the 
    record clearly establishes that UIP could not complete the work
within the required time, Gilbane was not required to complete a time impact
analysis before reaching such a conclusion.2 Cf.
    id. AFFIRMED. 2 
           Because we affirm on this ground, we need not consider Gilbane’s
argument that UIP has waived the right to argue that it is entitled to an excusable
delay under Greg Opinski Construction, Inc. v. City of Oakdale,
    199 Cal. App. 4th 1107 
    (2011).
4