Zafer Construction Company v. United States ( 2020 )

No. 19-673C
(Filed: December 30, 2020)
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ZAFER CONSTRUCTION COMPANY, Contracts; Contract
Disputes Act, 41 U.S.C.
Plaintiff, §§ 7101-7109 (2018);
delay; disruption;
v. changes; limitations
period for making claims.
THE UNITED STATES,
Defendant.
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Sam Z. Gdanski, Teaneck, NJ, for plaintiff.
Robert R. Kiepura, Trial Counsel, United States Department of
Justice, Civil Division, Commercial Litigation Branch, Washington, DC,
with whom were Ethan P. Davis, Acting Assistant Attorney General, Robert
E. Kirschman, Jr., Director, and Steven J. Gillingham, Assistant Director, for
defendant. James D. Stephens, United States Army Corps of Engineers,
Engineer Trial Attorney, of counsel.
OPINION
BRUGGINK, Judge.
This is an action brought by plaintiff, Zafer Construction Company
(“Zafer”), a government contractor, pursuant to the Contract Disputes Act
(“CDA”). 41 U.S.C. §§ 7101-7109 (2012). Pending is defendant’s motion
to dismiss plaintiff’s complaint for failure to state a claim upon which relief
can be granted. The motion is fully briefed. Oral argument is unnecessary.
For the reasons explained below, we grant the government’s motion to
dismiss because plaintiff did not present its claim to the contracting officer
for decision within the limitations period of the CDA.
BACKGROUND
On June 24, 2008, the United States, acting through the Army Corps
of Engineers (“USCE”) entered into a contract with Zafer Construction
Company for the Bagram Public Works Utilities Contract on the Bagram Air
Base in Bagram, Afghanistan (“project”). 1 Under the project, Zafer was to
design and build base-wide public work utilities including storm water
collection systems, wastewater collection transmission systems, and water
distribution and transmission systems for a contract price of $40,720,493.00.
Following completion of the project, Zafer submitted to the
Contracting Officer (“CO”) a Request for Equitable Adjustment (“REA”) on
September 10, 2013, and an amended REA on December 17, 2014, seeking
additional payments in the total amount of $6,791,155.63. Four years later,
on February 7, 2018, Zafer filed a certified claim with the CO. Complaint
Ex. 4 at 1 (ECF No. 1-4 at 1). The CO’s final decision (“COFD”), submitted
on May 9, 2018, denied the relief requested because the officer found that
the claim was time-barred under 41 U.S.C. § 7103(a)(4)(A), which requires
that claims must be submitted to the CO within six years of accrual.
Zafer filed its complaint here on May 7, 2019, basing its claim on the
CDA. The government has filed a motion to dismiss under Rule 12(b)(6),
alleging that Zafer failed to meet the presentment requirement of the CDA
because it neglected to submit a certified claim within six years of claim
accrual.
Zafer has extensive experience with other contracts in Bagram,
Afghanistan. In its complaint, Zafer describes the unique difficulties of
working on projects there. The timing of construction and the shipment of
materials had to be perfect to avoid going over budget. The materials were
often shipped from the United States, and once the materials entered
Afghanistan, had to make their way through border and base security, a
process could take weeks or months. Zafer alleges that it suffered damages
in the current contract for similar delays, along with constructive changes
attributable to the United States.
Zafer divides its claimed delays into four different periods,
corresponding to its Critical Path Method (“CPM”) schedule updates or
project milestone events. The four periods are as follows:
1
The contract number is W917ER-08-C-0027.
2
1. Period 1: September 24, 2009 Baseline Schedule through April 13,
2010 CPM schedule update. Zafer alleges that delays in this period
added 10 days to the schedule.
2. Period 2: April 13, 2010 CPM schedule update through September 24,
2010 CPM Project status update. Zafer alleges that delays during this
period added 178 days to the schedule;
3. Period 3: September 24, 2010 CPM Project status through June 29,
2011. Zafer alleges that delays in this period added 207 days to the
schedule; and
4. Period 4: June 29, 2011 through July 3, 2012, actual Project
completion. Zafer alleges that delays in period 4 added 224 days to
the schedule.
Complaint at 4. 2
In total, the four periods embraced an additional 619 days of claimed
delay to the project. Zafer contends that the government agreed in writing to
time extensions totaling 378 days covering the period from October 23, 2010
to November 22, 2011. These time extensions were incorporated in the
contract through three separate Contract Modifications: Modification B0006
(Bilateral) for 133 days, Modification B0014 (Bilateral) for 98 days, and
Modification P0002 (Unilateral) for 147 days.
According to Zafer, the USCE issued the modifications to add time to
the schedule while specifically reserving for a later date the parties’
negotiating positions concerning pricing of overhead and other delay costs.
Zafer attached Modifications B0006 and B0014 as exhibits to its complaint.
Although Zafer alleges that Modification B0006 states that “related impacts
costs . . . will be negotiated at a later date,” Complaint at 6, the page with this
statement is not included in the exhibit. Modification B0014 does include
language stating that related impacts costs will be negotiated at a later date.
Zafer states that Modification P0002 also included language that the parties
would negotiate overhead costs at a later date, although that modification is
not included as an exhibit.
Zafer alleges that there were further delays, for which Zafer is not
responsible, and which were not covered by the contract modifications listed
above. Many of these delays allegedly took place in period four and are
blamed on the government’s failure to accept the turnover of the project at
2
Neither the complaint nor the attached materials explain what triggers the
ends and the beginnings of these four periods.
3
completion or to outside causes including terrorism and protests, for which
Zafer alleges the government is contractually responsible.
Zafer also alleges in its complaint that constructive changes arose as
a result of the government’s direction that Zafer perform additional change
order work which required Zafer to adhere to government demands which
were not within the scope of the contract. In Zafer’s amended REA, these
constructive changes have been listed under the following categories, among
others: utility diggings, relocation of sewer main, repair of damages by others
to completed works, additional works beyond contract scope, additional
travel and extended service durations by supervisors, additional
communication line, PVC Air distribution pipes, operation and maintenance
of completed construction.
Zafer initially submitted an REA on September 10, 2013 3 and then an
amended one on December 17, 2014. Zafer explains that the amended REA
“combines the initial REA documents and all subsequent revisions,
documents, backups, further clarifications/analysis prepared and submitted
by Zafer.” Complaint Ex. 1 at 9 (December 2014 REA). 4 The September
and December REA both included the following language, “This REA is
submitted so that the parties can engage in immediate discussions and
negotiations to mutually amicably resolve this request” to resolve the
extended overhead costs for the delays and constructive changes. Complaint
Ex. 1 at 9. 5 Both REAs contain the following certification, “I, Önder Tümer,
certify this REA of $6.791.155,63 submitted in a Request for an Equitable
Adjustment under Contract No. W912ER-08-C-0027 is made in good faith;
that the supporting data are accurate and complete to the best of my
knowledge and belief; that the amount requested accurately reflects the
contract adjustment for which the Contractor believes the Government is
liable; and that I am duly authorized to certify the claim on behalf of the
Contractor.” Complaint Ex. 1 at 167.
3
Serial Letter No: 0143.
4
Zafer did not attach the September 2013 REA as an exhibit with its
complaint. Zafer only attached a copy of the amended REA submitted in
December 2014.
5
Because Zafer stated that the initial REA document submitted as the 2013
REA was included in the amended 2014 REA, we can assume that the same
language was included in both REAs.
4
It is undisputed that for the next four and a half years, from December
29, 2013, to May 9, 2018, the parties engaged in negotiations and
communicated back and forth over requests by the government for additional
information. The government also conducted an audit of Zafer. Complaint
at 14-19.
Zafer eventually filed a certified claim, which the government
received on February 7, 2018. 6 As characterized in the complaint, the
certified claim “consists of a single-page narrative and CDA claims
certification.” Complaint Ex. 4 at 2. Attached to the certified claim,
however, was the December 17, 2014 amended REA along with serial
contract letters between the parties. On May 9, 2018, the COFD denied the
relief requested in the certified claim because the officer concluded that the
claim was time barred.
The CDA requires a contractor to file a claim against the Federal
Government within 6 years after accrual of the claim. Any claim that accrues
outside of this limitations period is barred. 41 U.S.C. § 7103(a)(4)(A). The
COFD determined that Zafer had not filed a certified CDA claim until
February 7, 2018 and that the previous submissions had merely been requests
for equitable adjustments. The COFD stated that any claim that accrued prior
to February 7, 2012, six years prior to submitting the claim, would be barred.
The COFD found that out of the 619 days of alleged delay described
in Zafer’s claim, the first 479 days accrued before February 7, 2012.
Therefore, the COFD found, however, that because Zafer did not file a
certified CDA claim relating to these alleged delays until February 7, 2018,
the claim for these first 479 days was time-barred. The CO found that the
remaining 140 days of the alleged delay period were barred due to
untimeliness because Zafer failed to provide a proper time impact analysis
and schedule updates, and thus, the CO was unable to evaluate whether the
government caused any delay to critical path activities.
In addition, the COFD found that the claims regarding constructive
changes were also barred. 7 Although the COFD found that the continuing
6
Zafer submitted the certified claim on February 6, 2018. Gov’t Reply Brief
Ex. 1.
7
The CO found that only one claim of constructive changes, involving four
alleged repairs completed by Zafer, was not time-barred, as the alleged
repairs were completed within six years of Zafer’s submission of the
5
claim doctrine applied to Zafer’s constructive changes claim, the COFD still
found that the statute of limitations had run on each individual “liability-
creating event” listed in Zafer’s certified claim. Complaint Ex. 4 at 15. The
COFD also found that the time-barred portion of Zafer’s claim was not
subject to equitable tolling because Zafer failed to demonstrate that it pursued
its claim diligently or that it had alleged any extraordinary circumstance
preventing it from filing its CDA claim on a timely basis.
DISCUSSION
I. The Accrual Date of Zafer’s Claim
Plaintiff’s claim is separated into two categories of damages: delay
and constructive changes. The limitations period for any type of CDA claim
is set by the claim’s accrual date: “Each claim by a contractor against the
Federal government relating to a contract . . . shall be submitted within 6
years after the accrual of the claim.” 41 U.S.C. § 7103(a)(4)(A). Thus,
plaintiff’s claim is timely either if it accrued within six years of February
2018, when it filed what the government concedes is a proper CDA claim, or
if the 2013 and 2014 REAs constitute claims. To address the first possibility,
we must first determine the accrual date of plaintiff’s claim, the date “when
all events that fix the alleged liability of either the Government or the
contractor and permit assertion of the claim, were known or should have been
known. For liability to be fixed, some injury must have occurred. However,
monetary damages need not have been incurred.” 48 C.F.R. § 33.201 (2019).
Plaintiff’s argues that its 2018 claim was timely asserted because it
did not accrue until Zafer received the COFD in May 2018, which refused
compensation of plaintiff’s claims. Zafer contends that prior to receiving the
COFD, plaintiff and the government were involved in negotiations to resolve
plaintiff’s claims through the REA process, and thus, no claim accrued
during negotiations because there was not yet any live dispute giving rise to
a cause of action. Zafer asserts that it worked together with the government
from December 29, 2013, to May 9, 2018, to negotiate compensation of
plaintiff’s claims and that it complied with the contract and the government’s
modifications during this time. 8
February 7, 2018 certified claim. The CO, nevertheless, denied this claim on
the merits.
8
Zafer argues that it was lulled into negotiations through the REA process
because it anticipated payment, as the government’s modification letters
agreed to negotiation of Zafer’s time impact related costs at a later date.
6
Defendant responds that both types of claims accrued in 2009 or 2010,
when the circumstances outlined in the two REAs began what plaintiff claims
was government-caused delay. For reasons set out below, we agree with the
government.
With respect to delay damages, although the complaint separates the
delay into four continuous periods of time, for aught that appears, they are
separated arbitrarily, as each period relies on the same initial triggering
events, namely that the government had not “(1) demined Coyote Creek, (2)
provided Zafer flight line access, or (3) removed obstacles from the storm
water system route of construction; and as a result, storm water system work
delayed completion of the Project by 10 calendar days from 23 October 2010
to 2 November 2010.” Complaint Ex. 1 at 26. Even though the delay
damages here cumulate through each period, they do not constitute
subsequent new events.
Plaintiff suggests that the continuing claim doctrine applies to its
delay claim. We disagree. The continuing claim doctrine “operates to save
parties who have pled a series of distinct events - each of which gives rise to
a separate cause of action - as a single continuing event.” Ariadne Fin. Servs.
Pty. v. United States, 133 F.3d 874, 879 (Fed. Cir. 1998). It “does not apply
to a claim based on a single distinct event which has ill effects that continue
to accumulate over time.” Id. at 879. Instead, a cause of action accrues when
at the first point that all the events that fix liability are apparent and entitle
the plaintiff to institute an action. See id. The doctrine only applies if the
claim is “inherently susceptible to being broken down into a series of
independent and distinct events or wrongs, each having its own associated
damages.” Brown Park Estates-Fairfield Development Co. v. U.S., 127 F.3d
1449, 1456 (Fed. Cir. 1997). The continuing claim doctrine does not apply
here to plaintiff’s delay damages because the REAs make plain that the
events triggering delay were fixed by September 24, 2009, which is the date
on which plaintiff’s period one delay began. Moreover, even if we applied
the doctrine, it would not save plaintiff’s delay claim from being barred by
the statute of limitations because the fourth period still began before February
7, 2012, which is too late, given our conclusion below that the REAs did not
constitute claim submissions, as will be discussed further below. 9
9
We find it unnecessary to rely on the government’s alternative waiver
theory that plaintiff’s failure to challenge the government’s assertions of the
accrual date resulted in a waiver of the argument.
7
With respect to plaintiff’s assertion of ten categories of constructive
changes, although the complaint does not provide dates regarding the
asserted changes, the December 2014 REA shows that all were ordered prior
to February 7, 2012. 10 Each event accrued as soon as Zafer knew or should
have known of alleged damages and by its own admission, as reflected in the
REAs, 11 the most recent accrual date for any of the constructive changes was
August 1, 2011.
II. Statute of Limitations
Having determined that the accrual date for plaintiff’s claim of delay
damages was September 24, 2009, and that the accrual date for constructive
changes was no later than August 1, 2011, the CDA statute of limitations for
either claim ended no later than August 1, 2017. See 41 U.S.C. §
7103(a)(4)(A). The next issue involves resolving when plaintiff submitted
a CDA claim.
It is clear that Zafer’s February 7, 2018 submission meets the
requirements of a CDA claim. It included the proper certification under 48
C.F.R. § 52.233-1(d)(2)(iii) (2019). It stated a sum certain ($6,791,155.63),
and it provided the basis for the claim by attaching the December REA and
all other relevant serial letters discussing the matters for contract adjustment.
Finally, and crucially, the 2018 submission demanded a final decision: “I
hereby request a contracting officer's final decision on this Contract Disputes
Act Claim.” Def’s Reply Ex. 1 at 2. Thus, the 2018 claim satisfies the
requirements for submission of a CDA claim. Based on the accrual dates we
arrived at above, however, it came too late.
The only remaining question is whether Zafer’s December 17, 2014
REA should be treated as a CDA claim. To qualify as a claim under the
10
In the COFD, the CO found that all of the constructive changes occurred
prior to February 7, 2012, except for four repairs which were completed later.
It appears that the CO considered the completion date of these latter four
repairs as the accrual date of the claims covering them instead of the date
when Zafer knew or should have known of its cause of action for them, i.e.,
the date they were ordered.
11
Each constructive change listed in the 2014 REA details an event in which
plaintiff notifies the government by letter or meeting of an issue which
presented a constructive change to the contract. For example, the most recent
event that occurred shows that plaintiff sent a letter to the government
addressing a constructive change to the contract on August 1, 2011.
8
CDA, there must be “a written demand or written assertion by one of the
contracting parties seeking, as a matter of right, the payment of money in a
sum certain, the adjustment or interpretation of contract terms, or other relief
arising under or relating to the contract.” M. Maropakis Carpentry, Inc. v.
U.S., 609 F.3d 1323, 1327 (Fed. Cir. 2010) (internal quotation omitted). The
written demand must be nonroutine and contain a “clear and unequivocal
statement that gives the contracting officer adequate notice of the basis and
amount of the claim.” Contract Cleaning Maint., Inc. v. U.S., 811 F.2d 586,
592 (Fed. Cir. 1987). Although a contractor is not required to explicitly
request a final decision, to qualify as a claim under the CDA, the contractor
must show that “what the contractor desires by its submissions is a final
decision.” Maropakis, 609 F.3d at 1327-28 (quoting James M. Ellett Constr.
Co. v. U.S., 93 F.3d 1537, 1543 (1996)).
Zafer argues that the December 2014 REA is a CDA claim because it
“was for specific amounts of compensation with a sworn statement attesting
to the truth of its submission and included detailed factual bases for its
alleged losses which were for a sum certain.” Pl’s Response at 6 (ECF 16 at
6). Zafer’s support for this allegation is the following language from the
REA, “I, Önder Tümer, certify this REA of $6.791.155,63 . . . is made in
good faith; that the supporting data are accurate and complete to the best of
my knowledge and belief; that the amount requested accurately reflects the
contract adjustment for which the Contractor believes the Government is
liable; and that I am duly authorized to certify the claim on behalf of the
Contractor.” Complaint Ex. 1 at 167. We agree in part: Zafer’s 2014 REA
includes an amount certain, a sworn statement, and a factual basis for its loss.
What was missing, however, was any indication that Zafer was expecting a
final decision. Indeed, the wording and the parties’ subsequent conduct is
inconsistent with treating the REA as a final demand for a decision and
payment.
The December 17, 2014 REA (which incorporates the 2013 request),
lacks a request for a final decision. Instead, it asks for negotiations and is
void of any indication that Zafer was asserting a claim: “[t]his REA is
submitted so that the parties can engage in immediate discussions and
negotiations to mutually amicably resolve this request.” Complaint Ex. 1 at
9. This language plainly is not a current demand for payment but is a
proposal for negotiations. This is further emphasized when Zafer “requests
the opportunity to meet with and negotiate this matter so it may be resolved
amicably by the parties without the necessity of pursuing additional avenues
of relief available.” Complaint Ex. 1 at 16 (stated in both the 2013 and 2014
REA). Zafer explains the purpose of the REA when it discusses the REA
preparation costs: “Government contract principles have long recognized
9
that REA preparation costs incurred for the purpose of materially furthering
the negotiation process is allowable.” Complaint Ex. 1 at 167. In closing,
Zafer reiterates that the REA’s purpose is to negotiate the matter further, “As
stated in the outset we trust that immediate negotiations will ensue. ZAFER
is prepared to engage in meaningful dialogue on site to further this process.
ZAFER knows that the USACE is committed to use good faith in resolving
a REA.” Complaint Ex. 1 at 167 (ECF No. 1-1 at 167). Finally, the actions
of the parties for more than three years following the submission of the
amended REA show that the REA’s intent was to trigger negotiations.
Zafer responds to this by relying on the Federal Circuit decision in
Hejran Hejrat Co. v. United States Army Corps of Eng’rs, 930 F.3d 1354,
1358-59 (Fed. Cir. 2019), for the proposition that any deficiency in the
styling of the REA does not disqualify it as a CDA claim. In Hejran, the
contractor had submitted an REA, which the contracting officer treated as a
final decision and denied. Hejran appealed to the Board of Contract Appeals,
which found that it lacked jurisdiction because it could not conclude that the
REA was not submitted as a request for a final decision. On appeal, the
Federal Circuit reversed, finding no statute of limitations issue. Hejran was
still well within the six-year limitations period and any defect could be cured
on remand. Moreover, the court found that the REA did seek a final decision.
The contractor had submitted a previous REA and had subsequently let the
contracting officer know that it would resubmit the REA with the proper
certification to convert it to a CDA claim. Once the contractor provided the
missing certification, the contracting officer treated the submission as a
request for a final decision.
The controlling rule of Hejran, however, is that although “a CDA
claim need not be submitted in any particular form or use any particular
wording,” the claim must still “indicate to the contracting officer that the
contractor is requesting a final decision.” Id. Hejran emphasized that a
claim “must indicate to the contracting officer that the contractor is
requesting a final decision” to qualify as a CDA claim. Id. Here, Zafer went
to some lengths to emphasize that it wanted negotiations, not a final decision.
Nor can Zafer cure any defect on remand.
In sum, while the February 7, 2018 submission met the requirements
for a CDA claim, the earlier REAs did not. Zafer’s claims accrued no later
than August 1, 2011, and thus a CDA claim must have been filed within six
years, on August 1, 2017, for the claim to be timely. The 2018 submission
to the CO came too late.
10
CONCLUSION
For the reasons stated above, we find that Zafer’s claim did not
comply with the requirements of the CDA, and thus the complaint fails to
state a claim upon which this court may grant relief. Therefore, we grant the
government’s motion to dismiss. The Clerk is directed to enter judgment
accordingly. No costs.
s/Eric G. Bruggink
ERIC G. BRUGGINK
Senior Judge
11