Case: 22-1740 Document: 46 Page: 1 Filed: 12/11/2023
United States Court of Appeals
for the Federal Circuit
______________________
NOVA GROUP/TUTOR-SALIBA,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2022-1740
______________________
Appeal from the United States Court of Federal Claims
in Nos. 1:15-cv-00885-MCW, 1:16-cv-00925-MCW, Senior
Judge Mary Ellen Coster Williams.
______________________
Decided: December 11, 2023
______________________
G. SCOTT WALTERS, Smith, Currie & Hancock LLP, At-
lanta, GA, argued for plaintiff-appellant. Also represented
by ROBERT O'NEAL FLEMING, JR.; SARAH CARPENTER, Char-
lotte, NC; ALEXANDER GORELIK, Tysons, VA.
ANDREW JAMES HUNTER, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for defendant-appellee. Also
represented by BRIAN M. BOYNTON, STEVEN JOHN
GILLINGHAM, PATRICIA M. MCCARTHY.
______________________
Case: 22-1740 Document: 46 Page: 2 Filed: 12/11/2023
2 NOVA GROUP/TUTOR-SALIBA v. US
Before CHEN, CUNNINGHAM, and STARK, Circuit Judges.
STARK, Circuit Judge.
Nova Group/Tutor-Saliba (“NTS”) appeals from the
judgment of the United States Court of Federal Claims
that NTS failed to demonstrate it was entitled to recover
additional compensation for alleged differing site condi-
tions it encountered during the performance of a construc-
tion contract. We affirm.
I
In May 2008, the United States Department of the
Navy, acting through the United States Naval Facilities
Engineering Command (collectively, the “government”),
awarded NTS a contract to build a new aircraft carrier
maintenance pier at Naval Base Kitsap in Bremerton,
Washington. The contract required NTS to demolish an old
pier; design and build a replacement pier (“Pier B”); and
build a new structure, known as the Mole Quaywall, that
would be designed by the government. The Mole Quaywall
would be integrated with the adjacent Pier B to create a
contiguous surface.
Construction of both the Mole Quaywall and Pier B in-
volved driving supporting concrete piles into the subsur-
face soils until they reached certain “pile tip elevations.” 1
The pile tip elevations for the government-designed Mole
Quaywall were prescribed in the solicitation for bids. In
particular, that solicitation included a geotechnical engi-
neering report, known as the Geotechnical Engineering
Baseline Survey (“GEBS”). The GEBS supplied infor-
mation about the subsurface soil conditions at the Mole
1 Here, the “pile tip elevation” refers to the depth be-
low ground, not the altitude above ground, to which the
successful bidder would be required to drive the concrete
piles.
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NOVA GROUP/TUTOR-SALIBA v. US 3
Quaywall construction site and the adjacent Pier B site. It
was anticipated, then, that the successful bidder for the
contract, which included both the Mole Quaywall and the
Pier B sites, would use the information provided in the
GEBS to formulate its design for the pile tip elevations at
Pier B. The successful bidder would also be responsible for
calculating the length and required materials for the piles
to be installed at the Mole Quaywall and Pier B.
NTS was awarded the contract. During NTS’ construc-
tion of the Mole Quaywall according to the government’s
design, NTS encountered subsurface soil conditions that
made it difficult to drive some of the piles to reach the tip
elevations prescribed by the government. This required
NTS to cut off greater lengths of those piles than planned,
adding to the expense of the project. The subsurface con-
ditions also caused some piles to move during installation
and fall outside the specified levels of tolerance for varia-
tions.
In December 2009, NTS submitted a request for equi-
table adjustment (“REA 5”), seeking additional costs in-
curred due to the site conditions it encountered at the Mole
Quaywall, in the amount of over $1 million. In response,
the government issued Contract Modification No. A00057
(“Mod. A00057”). Mod. A00057 was entered into pursuant
to the authority of “FAR 52.236-2 Differing Site Conditions
(APR 1984)” and provided for “settlement of contractor[’]s
Request for Equitable Adjustment Number 5 for differing
site conditions encounter[ed] at the [M]ole [Quaywall].”
J.A. 17959-61. Under Mod. A00057, the total cost of the
contract was increased by $675,000.
Based on its experience with the site conditions at the
adjacent Mole Quaywall, NTS made multiple modifications
to its Pier B design, including revising the pile tip eleva-
tions. NTS encountered pile-driving problems at Pier B
just as it had at the Mole Quaywall. Some Pier B piles
Case: 22-1740 Document: 46 Page: 4 Filed: 12/11/2023
4 NOVA GROUP/TUTOR-SALIBA v. US
could not reach the designed tip elevations, forcing longer-
than-expected cutoffs, and numerous piles fell outside of
the specified tolerance levels.
In October 2011, NTS submitted another request for
equitable adjustment (“REA 9”), this one for the additional
costs incurred due to the Pier B site conditions. REA 9,
which alleged differing site conditions at Pier B, sought
more than $10 million of additional payments, which the
government denied. NTS then filed suit in the Court of
Federal Claims. NTS alleged that it had encountered
“Type I differing site conditions” at the Pier B site due to
conditions and obstructions not disclosed in the contract
documents, or alternatively a “Type II differing site condi-
tion” due to “unknown physical condition.” 2 J.A. 36.
During discovery, the government produced a pre-ne-
gotiation business clearance memorandum pertaining to
REA 5 and Mod. A00057. The memo stated that while the
government did “not see” the condition at the Mole Quay-
wall “as being a differing site condition,” it agreed it was
responsible for the additional costs NTS had incurred
“[d]ue to the Government providing the [Mole Quaywall’s]
pile tip elevations.” J.A. 8633. NTS sought to exclude the
memo from being introduced into evidence in the Court of
Federal Claims trial on its Pier B-related claim, invoking
the parol evidence rule. The Court of Federal Claims de-
nied NTS’ motion in limine and, over NTS’ objection,
2 A Type I differing site condition arises “when the
conditions encountered differ from what was indicated in
the contract documents.” Renda Marine, Inc. v. United
States,
509 F.3d 1372, 1376 (Fed. Cir. 2007). A Type II dif-
fering site condition arises “when the conditions encoun-
tered are of an unusual nature and differ materially from
those normally encountered in the kind of work contem-
plated by the contract.”
Id.
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NOVA GROUP/TUTOR-SALIBA v. US 5
admitted the memo and then permitted witness testimony
supporting the government’s contention that it did not ac-
tually believe the situation in REA 5 constituted a differing
site condition at the Mole Quaywall. J.A. 7309-15.
The Court of Federal Claims issued its post-trial opin-
ion in March 2022. See Nova Grp./Tutor-Saliba v. United
States,
159 Fed. Cl. 1 (2022). It found that NTS failed to
demonstrate that it was entitled to relief on its Pier B dif-
fering site condition claim. See
id. at 34-44. Specifically,
the Court of Federal Claims held that NTS had not estab-
lished a Type I differing site condition because, among
other things, the contract documents disclosed that NTS
would encounter unpredictable subsurface conditions and
possible obstructions, and indicated that “[h]ard [d]riving
[w]as to be [e]xpected.”
Id. at 39. NTS had failed to prove
a Type II differing site condition because it had “not demon-
strated that any of [the] potential causes for hard driving
. . . were unknown or unusual in the region or materially
different from comparable work.”
Id. at 44.
NTS timely appealed. The Court of Federal Claims had
jurisdiction pursuant to
28 U.S.C. § 1491(a)(2) and we have
jurisdiction under
28 U.S.C. § 1295(a)(3).
II
We review the Court of Federal Claims’ legal determi-
nations de novo and its fact findings for clear error. See
Ind. Mich. Power Co. v. United States,
422 F.3d 1369, 1373
(Fed. Cir. 2005). Contract interpretation is a question of
law, which we review de novo. See Nw. Title Agency, Inc.
v. United States,
855 F.3d 1344, 1347 (Fed. Cir. 2017).
The parol evidence rule precludes the admission of ex-
trinsic evidence “to modify, supplement, or interpret the
terms of an integrated agreement.” Barron Bancshares,
Inc. v. United States,
366 F.3d 1360, 1375 (Fed. Cir. 2004).
Our precedent has not explicitly set out the standard of
Case: 22-1740 Document: 46 Page: 6 Filed: 12/11/2023
6 NOVA GROUP/TUTOR-SALIBA v. US
review of a trial court’s application of the parol evidence
rule. We have, however, recognized that the parol evidence
rule is “a rule of substantive law,” not a rule of evidence.
Id.; see also David Nassif Assocs. v. United States,
557 F.2d
249, 256 (Ct. Cl. 1977). We have further explained that
certain issues preliminary to the application of the parol
evidence rule, including whether a contract is completely
integrated and whether an ambiguity exists in a contract,
are questions of law subject to de novo review. See
Rumsfeld v. Freedom NY, Inc.,
329 F.3d 1320, 1328 (Fed.
Cir. 2003) (whether contract is completely integrated);
Gardiner, Kamya & Assocs., P.C. v. Jackson,
467 F.3d
1348, 1353 (Fed. Cir. 2006) (whether ambiguity exists in
contract). It follows that we review the trial court’s appli-
cation of the parol evidence rule de novo. In so holding, we
join our sister circuits that have addressed this issue. See,
e.g., GTE Wireless, Inc. v. Cellexis Int’l, Inc.,
341 F.3d 1, 4
(1st Cir. 2003); Simmons Foods, Inc. v. Hill’s Pet Nutrition,
Inc.,
270 F.3d 723, 726 (8th Cir. 2001); Day v. Am. Seafoods
Co.,
557 F.3d 1056, 1057 (9th Cir. 2009); McCurdy Grp.,
LLC v. Am. Biomedical Grp., Inc.,
9 F. App’x 822, 830 (10th
Cir. 2001).
III
NTS raises two issues on appeal. First, it argues that
the Court of Federal Claims erred in considering parol evi-
dence that, it asserts, contradicted the government’s
“stated basis” for issuing Mod. A00057. Appellant’s Br. at
2. Second, it contends that the Court of Federal Claims
erred in denying its Pier B differing site condition claim
based on the design-build nature of the contract. We ad-
dress each issue in turn.
A
We begin with the parol evidence rule issue. There is
no dispute that Mod. A00057, by which the government
granted NTS’ REA 5 seeking additional payments for a
Case: 22-1740 Document: 46 Page: 7 Filed: 12/11/2023
NOVA GROUP/TUTOR-SALIBA v. US 7
differing site condition at the Mole Quaywall, is a fully in-
tegrated agreement. NTS argues that since the terms of
Mod. A00057 provided that the contract modification was
issued under the authority of “FAR 52.236-2 Differing Site
Conditions (APR 1984)” to settle “contractor[’]s Request for
Equitable Adjustment Number 5 for differing site condi-
tions encounter[ed] at the [M]ole [Quaywall],” J.A. 17959-
61, the admission of evidence demonstrating that the gov-
ernment did not actually believe there was a differing site
condition at the Mole Quaywall violated the parol evidence
rule. We disagree.
“[T]he parol evidence rule does not, per se, foreclose
consideration of matters external to the parties’ written
agreement.” David Nassif, 557 F.2d at 256. Instead, the
rule “prohibits the use of external evidence to add to or oth-
erwise modify the terms of a written agreement . . . [that]
has been adopted by the parties as an expression of their
final understanding.” Barron,
366 F.3d at 1375 (emphasis
added); see also Rumsfeld,
329 F.3d at 1327 (“[B]arring cer-
tain limited exceptions (e.g., fraud), a party to a written
contract cannot supplement or interpret [an integrated]
agreement with oral or parol statements that conflict with,
supplant, or controvert the language of the written agree-
ment itself.”). Here, the evidence NTS challenges was not
introduced by the government “to add to or otherwise mod-
ify” the terms of Mod. A00057. The government moved the
memo into evidence and elicited trial testimony relating to
it not to modify its contractual obligation to pay NTS an
additional $675,000 on REA 5 but, instead, to support its
collateral contentions as to why it settled (i.e., because it
was the government that prescribed the pile tip elevations
for the Mole Quaywall project). See J.A. 8633; see also J.A.
7309-15 (testimony that government did not agree there
was differing site condition at Mole Quaywall). An agree-
ment to settle a claim alleging a differing site condition un-
der a clause governing differing site conditions is different
Case: 22-1740 Document: 46 Page: 8 Filed: 12/11/2023
8 NOVA GROUP/TUTOR-SALIBA v. US
from an agreement that the alleged differing site condition
actually existed. As we see no provision in Mod. A00057
that actually binds the government to an agreement that a
differing site condition existed (as opposed to Mod. A00057
unambiguously binding the government to settle a differing
site condition claim), the memo and related testimony do
not modify any term of the contract. The trial court, there-
fore, did not violate the parol evidence rule.
NTS’ contention fails for the additional reason that the
parol evidence rule does not prevent a party to a contract
from presenting evidence that “‘a recital of fact in an inte-
grated agreement may be . . . untrue.’” United Pac. Ins. Co.
v. Roche,
401 F.3d 1362, 1365 (Fed. Cir. 2005) (quoting Re-
statement (Second) of Contracts § 218). In United Pacific,
we held that the government was not obligated to pay the
surety balance referenced in a takeover agreement’s
“[w]hereas” clause because the “[w]hereas” clause is merely
“a recital of fact.” Id. at 1365-66.
Here, the provisions of Mod. A00057 on which NTS re-
lies are, at best for NTS, “a recital of fact.” See Black’s Law
Dictionary 1524 (11th ed. 2019) (defining “recital” as “pre-
liminary statement in a contract or deed explaining the
reasons for entering into it or the background of the trans-
action”); see also 17A C.J.S. Contracts § 420 (stating recit-
als are “explanations of the circumstances surrounding the
execution of the contract”). We know the provisions on
which NTS relies are recitals because they do not them-
selves create promises, obligations, or substantive rights;
therefore, they are not operative terms that are protected
against alteration by the parol evidence rule. See, e.g., Pop-
plewell v. Stevenson,
176 F.2d 362, 363 (10th Cir. 1949)
(holding that parol evidence rule “has application to actions
where the enforcement of an obligation created by the writ-
ing is substantially the cause of action”). Therefore, again,
the trial court’s admission of the memo and testimony re-
lating to it did not violate the parol evidence rule.
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NOVA GROUP/TUTOR-SALIBA v. US 9
B
We next turn to NTS’ argument that the Court of Fed-
eral Claims erred in denying its differing site condition
claim on the basis that it was a design-build contract. This
contention provides no basis to reverse the Court of Federal
Claims because it mischaracterizes the trial court’s analy-
sis.
According to NTS, the Court of Federal Claims “ex-
plained [its] ruling in a footnote.” Appellant’s Br. at 27.
That footnote, in its entirety, reads:
NTS suggests that because the Government
granted an equitable adjustment of $675,000
for differing site conditions at the adjacent
Mole Quaywall under Contract Modification
A00057, NTS is entitled to an equitable ad-
justment for pile driving difficulties at Pier B.
However, the Government did not deem the
situation at the Mole Quaywall to be a differ-
ing site condition. There is a significant dif-
ference in what transpired at the Mole – the
Government provided the design and pile tip
elevations for the Mole Quaywall, while NTS
designed and chose the pile lengths and ar-
rangement for Pier B.
Nova Grp., 159 Fed. Cl. at 35 n.17.
This footnote, at most, addressed why NTS was not au-
tomatically entitled to an equitable adjustment for pile-
driving difficulties at Pier B just because the government
had granted an equitable adjustment at the Mole Quay-
wall. To suggest that this footnote constitutes the entire
explanation of the Court of Federal Claims’ ruling, or even
an alternative, independent basis for its judgment, is incor-
rect. The Court of Federal Claims devotes approximately
a dozen pages of its opinion to a thorough, element-by-
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10 NOVA GROUP/TUTOR-SALIBA v. US
element analysis of NTS’ Type I and Type II differing site
condition claims, carefully reviewing the entirety of the
record evidence and applying the appropriate legal stand-
ards. See id. at 34-44. The court’s conclusion that NTS
failed to establish a differing site condition at Pier B is
clearly based on the totality of that analysis, not simply on
the design-build nature of the Pier B project.
Thus, while NTS is correct that the design-build nature
of a contract does not place the risk of error in the govern-
ment’s representations on the contractor, see Metcalf Con-
str. Co. v. United States,
742 F.3d 984, 995-96 (Fed. Cir.
2014), the Court of Federal Claims simply did not make a
mistake on this issue here.
IV
We have considered NTS’ remaining arguments and
find them unpersuasive. 3 For the foregoing reasons, then,
we affirm the judgment of the Court of Federal Claims.
AFFIRMED
3 In its reply brief on appeal, NTS faults the trial
court for failing to consider extrinsic evidence NTS argues
“[r]efuted the [i]mproperly [a]dmitted [p]arol [e]vidence.”
Reply Br. at 4-5. This issue is forfeited. See United States
v. Ford Motor Co.,
463 F.3d 1267, 1276 (Fed. Cir. 2006)
(“Arguments raised for the first time in a reply brief are not
properly before this court.”).
