Kiska Construction corporation-u.S.A. v. Washington Metropolitan Area Transit Authority

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
KISKA CONSTRUCTION
CORPORATION - U.S.A. and KAJIMA
ENGINEERING AND CONSTRUCTION,
INC., a Joint Venture,
Plaintiff,
Civil Action No. 09–817 (CKK)
v.
WASHINGTON METROPOLITAN AREA
TRANSIT AUTHORITY,
Defendant.
MEMORANDUM OPINION
(September 9, 2010)
This action is brought by Plaintiff Kiska Construction Corporation - U.S.A. and Kajima
Engineering and Construction Inc., a Joint Venture (“Kiska”) for review of an administrative
determination issued by the Armed Services Board of Contract Appeals (“ASBCA”) relating to a
contract dispute between Kiska and Defendant Washington Metropolitan Area Transit Authority
(“WMATA”). On February 19, 2009, the ASBCA rendered a decision granting in part and
denying in part Kiska’s contract appeals, and Kiska now seeks confirmation in part and reversal
in part of the ASBCA’s decision. Kiska has filed a [12] Motion for Summary Judgment, and
WMATA has filed a [14] Cross-Motion for Summary Judgment. The motions have been fully
briefed and are now ripe for decision. Based on the parties’ briefs, the administrative record, the
relevant authorities, and the case as a whole, the Court shall GRANT-IN-PART and DENY-IN-
PART the parties’ motions for summary judgment. For the reasons explained below, the Court
shall affirm the ASBCA’s decision with respect to all of the issues contested by the parties.
I. BACKGROUND
A. The Contract and the First Federal Action
On February 25, 1994, the Washington Metropolitan Area Transit Authority
(“WMATA”) awarded Contract No. 1E0023 (the “Contract”) to Kiska Construction Corp. USA
and Kajima Engineering and Construction, Inc., a Joint Venture (“Kiska”) for the construction of
twin single-track earth tunnels, an access shaft, fan shaft, vent shaft, and related work as part of
the Metrorail system. Pl.’s Stmt.1 ¶ 1. During performance of the Contract, there were a number
of disputes about various terms of the Contract and the performance required. Id. ¶ 2.
On November 10, 1997, Kiska filed a lawsuit against WMATA in this Court. See J.A.
vol. 3, tab 10 (Complaint, KiSKA Constr. Corp.-U.S.A. v. Wash. Metro. Area Transit Auth., Civ.
No. 97-2677 (D.D.C. filed Nov. 10, 1997)). In that lawsuit, Kiska alleged that WMATA had
made material misrepresentations regarding what would be required for the Contract and that
WMATA had failed to perform its obligations as promised. Kiska asserted claims for (1)
fraudulent misrepresentation, (2) negligent misrepresentation, (3) quantum meruit, (4) unilateral
mistake, and (5) material breach of contract. See id.; Pl.’s Stmt. ¶ 2. This Court dismissed the
first two causes of action, granted summary judgment for WMATA on the quantum meruit
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The Court strictly adheres to the text of Local Civil Rule 7(h) (formerly Rule 56.1) when
resolving motions for summary judgment. See Burke v. Gould, 286 F.3d 513, 519 (D.C. Cir.
2002) (finding district courts must invoke the local rule before applying it to the case). The
Court has advised the parties that it strictly adheres to Rule 7(h) and has stated that it “assumes
facts identified by the moving party in its statement of material facts are admitted, unless such a
fact is controverted in the statement of genuine issues filed in opposition to the motion.” [4]
Order at 1 (May 5, 2009). Thus, in most instances the Court shall cite only to one party’s
Statement of Material Facts (“Stmt.”) unless a statement is contradicted by the opposing party, in
which case the Court may cite a party’s Response to the Statement of Material Facts (“Resp.
Stmt.”). The Court shall also cite directly to evidence in the record, where appropriate.
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claim, and allowed the last two causes of action to be tried by a jury. Pl.’s Stmt. ¶ 2.
The complaint in the First Federal Action included a number of allegations that the
parties believe are material to the claims before the ASBCA. For example, in Count IV of the
complaint, for “Material Breach of Contract,” Kiska alleged as follows:
248. WMATA materially breached the Contract, including express and implied
warranties, in at least the following ways:
a. WMATA failed to disclose necessary and vital information to KiSKA-
Kajima relating to the performance and safety of the work to be
performed;
b. The Contract plans and specifications and directed construction methods
prepared by WMATA were defective, misleading, incomplete and unfit for
their intended purpose;
c. WMATA breached its duty to cooperate with KiSKA-Kajima and not
hinder or interfere with KiSKA-Kajima’s performance;
d. WMATA failed and refused to grant time for extensions for excusable
and/or compensable delays encountered by KiSKA-Kajima;
e. WMATA directed that extra work beyond the scope of the Contract be
performed and has failed and/or refused to pay for such extra work;
f. WMATA failed and refused to administer the Contract in accordance with
its terms and with good faith and fair dealing;
g. WMATA failed to coordinate the Project with the numerous Washington,
D.C. utility companies and permit-granting agencies;
h. WMATA failed to coordinate the work of its other contractors, including
Blake Construction;
i. WMATA failed to obtain necessary permits for construction in a timely
manner;
j. WMATA failed and refused to review and approve shop drawings in a
timely manner;
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k. WMATA failed to provide timely and complete access to the jobsite;
l. WMATA directed the acceleration of the work without compensating
KiSKA-Kajima;
m. WMATA arbitrarily and unreasonably directed pervasive changes to the
Contract which constituted a cardinal change.
AR, vol. 3, tab 10 (Complaint) ¶ 248. Although subparagraph (e) referenced “extra work beyond
the scope of the Contract,” Kiska’s complaint did not identify the alleged extra work to which it
was referring. Kiska also alleged the following: “Despite repeated requests by KiSKA-Kajima
throughout Contract performance for change orders and appropriate time extensions to
compensate KiSKA-Kajima for the additional costs and delays to the Project schedule caused by
WMATA, WMATA continuously refused to accept responsibility for its numerous acts and
omissions.” Id. ¶ 185. Kiska did not specifically allege in its complaint that WMATA
wrongfully withheld the balance of the contract price or that it had breached the contract by
failing to pay the contract retainage. See generally id.; Pl.’s Stmt. ¶ 3.
During the trial, the Court allowed Kiska to present evidence of damages based on the
“modified total cost” method, which calculates the amount of damages as the total actual costs
incurred the contractor (Kiska) in performing the contract minus the contractor’s bid price,
adjusted to account for the costs of harms for which the contractor is itself responsible. See AR,
vol. 3, tab 28 (Mem. Op. Nov. 1, 2000); Def.’s Stmt. ¶ 5. One of Kiska’s experts, Mr. Kelley,
testified at the trial that Kiska’s damages had to be calculated using the modified total cost
method because, in his opinion, the breaches involved in the litigation were so complex and
“inextricably intertwined” that there was no other method available to compute damages. AR,
vol. 3, tab 23 (Trial Tr.) at 2258-64. Mr. Kelley testified that in his calculations, he subtracted
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amounts for contract modifications paid by WMATA. See id. at 2421. Another of Kiska’s
experts, Mr. Jeffrey E. Fuchs, also testified about the modified total cost method of calculating
damages. In his calculation of damages, Mr. Fuchs added $650,000 retainage, explaining it as
“monies that have been earned by the contractor during the course of its work that the owner
withholds and gives back at the end of the project.” Id. at 2609. Mr. Fuchs testified that the
retainage was an “accounting adjustment that occurs at the end of any job” and testified that there
was no dispute that WMATA owed that amount for work already performed by Kiska. Id. at
2640-41. Based on this testimony, Kiska’s counsel argued during closing arguments that the jury
should award damages based on the modified total cost method, including the amount for
retainage withheld by WMATA. Id. at 4666-69.
The Court instructed the jury that it could award damages to Kiska using the modified
total cost method if the jury found that it was impossible or impracticable for Kiska to calculate
specific damages resulting from each separate impact or delay for which WMATA was
responsible. Id. at 4592. The Court instructed the jury to reduce its award by any amounts which
WMATA had shown were unreasonable or were the responsibility of Kiska. Id. The Court
provided no instructions regarding a claim for the wrongful withholding of retainage or
WMATA’s failure to pay certain equitable adjustments. Pl.’s Stmt. ¶ 5. The Court also gave the
following general instruction regarding Kiska’s two causes of action:
In its Complaint, the Plaintiff, KiSKA-Kajima, has filed two causes of action
or claims against the Defendant, Metro [WMATA]:
(1) First, KiSKA-Kajima claims that Metro materially breached the contract by,
among other things, failing to provide design plans and specifications that were
accurate, complete and fit for their intended purpose, failing to disclose vital
information that Metro possessed regarding the adequacy of its Contract plans and
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specifications, and failing to cooperate and not interfere with KiSKA-Kajima and
otherwise act in good faith in its administration of the Contract.
(2) Second, KiSKA-Kajima claims that it entered into the contract with Metro
on the basis of a unilateral mistake regarding the adequacy of Metro’s plans and
specifications and the ability to safely and efficiently perform the work as required
in the Contract.
AR, vol. 3, tab 12 (Instruction No. 33). With respect to the breach of contract claim, the Court
instructed the jury as follows:
There is agreement between the parties that a valid and enforceable contract
existed pursuant to which KiSKA-Kajima agreed to perform the construction work
necessary to complete the 14th Street Tunnels for the agreed price of $42,920,000.00.
KiSKA-Kajima claims that Metro [WMATA] materially breached the Contract in a
number of ways that I will explain to you in separate instructions.
Under the law, if one party, without legal excuse fails to fully perform a duty
owed under a contract, then that party has breached the contract.
If you find, by a preponderance of the evidence, that Metro breached any of
its contractual duties that I describe to you related to KiSKA-Kajima’s claims that
Metro failed to provide design plans and specifications that were accurate, complete
and fit for their intended purpose or that Metro failed to disclose vital information,
then you must return a verdict in favor of KiSKA-Kajima on its breach of contract
claim.
Or, if you find, by clear and convincing evidence, that Metro acted in bad
faith in the administration of the Contract or that Metro failed to cooperate with or
prevented, hindered or interfered with KiSKA-Kajima’s performance of the Contract,
then you must return a verdict in favor of KiSKA-Kajima on its breach of contract
claim.
Id. (Instruction No. 40). With respect to the claim for breach of duty of good faith and fair
dealing, the Court instructed the jury as follows:
A party to a contract acts in good faith if the party’s conduct is faithful to the
common purpose of the contract and is consistent with the justified expectations of
the other party to the contract. It is impossible to list every act that violates the duty
of good faith and fair dealing, however, it is generally accepted that a party to a
contract breaches its duty of good faith if it:
1) does not uphold the spirit of the contract,
2) does not exercise diligence in performing its contractual obligations,
3) interferes with the other party’s contract performance, OR
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4) fails to cooperate with the other party during the performance of the
contract.
A party to a contract must perform his or her obligations in good faith even
if the contract does not provide for such a duty in writing. To find that Metro did not
act in good faith requires a finding, by clear and convincing evidence, that Metro
acted with specific intent to injure KiSKA-Kajima, or that Metro took actions which
were motivated by malice or ill-will towards KiSKA-Kajima, or that Metro took
actions that were designedly or intentionally oppressive to KiSKA-Kajima.
Id. (Instruction No. 50).
The jury found that there was no unilateral mistake and no material breach of contract in a
general verdict with no further explanation. Pl.’s Stmt. ¶ 6. The Court entered judgment on the
verdicts for WMATA and denied Kiska’s motion for a new trial; the judgment was affirmed on
appeal. Id. ¶ 7.
B. Kiska’s Appeals to the ASBCA
Following the trial, Kiska continued to have disputes with WMATA. After WMATA
denied Kiska’s claims for relief, Kiska appealed WMATA’s denials to the Armed Services Board
of Contract Appeals (“ASBCA” or the “Board”).2 Pl.’s Stmt. ¶ 8. Prior to filing an answer to
Kiska’s Complaint before the ASBCA, WMATA filed an action in this Court seeking a judgment
declaring Kiska’s ASBCA claims barred by the doctrines of res judicata and/or collateral
estoppel. Id. ¶ 9; see Wash. Metro. Area Transit Auth. v. Kiska Constr. Corp.-U.S.A., No. 04-
1209 (D.D.C. filed July 16, 2004). The ASBCA denied WMATA’s request to suspend Kiska’s
appeals pending this Court’s resolution of the declaratory judgment action, and this Court
ultimately stayed the declaratory judgment action pending a decision by the ASBCA. Pl.’s Stmt.
2
As explained infra in section II of this opinion, the Contract provides that disputes shall
be resolved in the first instance by the ASBCA.
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¶ 9. WMATA moved the Board to dismiss Kiska’s appeals, or, in the alternative, for summary
judgment, based on the grounds of res judicata and/or collateral estoppel. Id. ¶ 10. The ASBCA
denied WMATA’s motion. Id.
Kiska’s Complaint before the ASBCA alleged that WMATA failed to pay: (1) $650,000
retainage owed to Kiska after completion of the Contract; (2) $6042 for work directed by
Contract Modification No. 33; (3) $6994 for work directed by Contract Modification No. 49; (4)
$131,825.64 for work performed by Kiska under Pending Change Order (“PCO”)3 No. 34
relating to barrier modifications at the fan shaft; (5) $192,005.10 for streetcar track quantity
overruns under PCO No. 45; (6) $247,392 for a temporary tunnel safety walk under PCO No. 56;
and (7) $11,759 for grouting weep holes in the tunnel and additional pedestrian railings under
PCO No. 60. See J.A. vol. 1 (ASBCA Opinion by Administrative Judge Jack Delman)
(hereinafter, “ASBCA Opinion”) at 10 (Findings of Fact (“FF”) ¶ 16). The ASBCA eventually
held hearings on the merits of these claims. Pl.’s Stmt. ¶ 11.
C. The ASBCA’s Opinion
The ASBCA issued its Opinion on February 19, 2009, granting in part and denying in
part Kiska’s appeals. Pl.’s Stmt. ¶ 14. The Board found that it had jurisdiction over the matter
pursuant to the Contract. Id. ¶ 12; ASBCA Opinion at 26. The Court shall summarize the
ASBCA’s rulings with respect to the issues that are contested in this case.
1. Res Judicata and Collateral Estoppel
The Board reaffirmed its prior rulings denying WMATA’s motion to dismiss the appeals
3
According to the ASBCA Administrative Law Judge, a PCO was the device used by
WMATA to describe what it considered to be changed work and to seek the contractor’s
proposal for price and/or time to perform it. See ASBCA Opinion at 14 (FF ¶ 31).
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under the doctrines of res judicata and collateral estoppel. ASBCA Opinion at 27-29. With
respect to the defense of res judicata, the Board held this case is governed by the unique contract
disputes framework that existed prior to the enactment of the Contract Disputes Act, 41 U.S.C.
§§ 601-13, wherein a contractor’s various claims under the same contract were required to be
brought in different forums—breach of contract claims brought before a court and requests for
equitable adjustment handled administratively before a board of contract appeals. Id. at 27.
Therefore, the ASBCA held that the adjudication of breach of contract claims in the First Federal
Action did not bar Kiska’s requests for equitable adjustment before the ASBCA. Id.With respect to the affirmative defense of collateral estoppel, the Board applied the
standard that a party is collaterally estopped from raising an issue that was actually litigated and
determined by a valid, final judgment where the determination was essential to that judgment.
ASBCA Opinion at 27-28. The Board determined that WMATA had failed to prove that the
matter of retainage was actually litigated in the First Federal Action. Id. at 28. The Board noted
that the retainage claim was not included in Kiska’s complaint in the First Federal Action, and
the Board also noted that during the trial, Kiska’s damages expert, Jeffrey E. Fuchs, testified that
the matter of retainage was not disputed by the parties. Id. at 4 (FF ¶ 8), 28. Although the Board
acknowledged that Kiska presented evidence at trial seeking payment of the retainage, the Board
found that the record was unclear as to what position WMATA took with respect to the issue. Id.The Board also found that even assuming arguendo that the issue of retainage was
actually contested and litigated in the First Federal Action, WMATA failed to show that the issue
was actually determined by the jury or was necessary to the final judgment. Id. at 28-29. The
Board found that although Kiska’s counsel asked for retainage to be awarded during closing
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arguments, there was no jury instruction that addressed a contractor claim for retainage or the
balance of the contract price. Id. at 28. The Board found that the matter of retainage was not
expressly or impliedly addressed in any of the instructions given to the jury, and therefore the
Board could not conclude that the jury’s general verdicts necessarily decided the issue. Id. The
Board held that even if the retainage claim could be considered to have fallen under Kiska’s
claim for breach of contract as a breach of the duty of good faith and fair dealing, the jury was
instructed that clear and convincing evidence was necessary to find WMATA liable for breach.
Id. at 6-7 (FF ¶ 11), 29. The Board thus concluded that the jury could have believed that
WMATA was responsible for paying the retainage but that there was not clear and convincing
evidence of malice or ill will toward Kiska. Id. at 29. Therefore, the Board ruled that the jury’s
general verdict of non-liability on breach of contract did not necessarily include a determination
that WMATA was not liable for the retainage. Accordingly, the Board rejected WMATA’s
defense of collateral estoppel as to the retainage claim.
The Board also rejected WMATA’s argument that collateral estoppel barred the other
claims contested by Kiska’s appeals. ASBCA Opinion at 30. The Board found that WMATA
had failed to show that these claims were included in the complaint in the First Federal Action or
that the parties presented any evidence as to these claims. Id. The Board found that Kiska’s
damages expert had claimed damages using a modified total cost approach, seeking all contract
costs less adjustments not relevant here, plus overhead, profit, bond premium, interest, and lost
profit. Id. at 4 (FF ¶ 7). However, the Board ruled that this did not constitute the actual litigation
of Kiska’s claims for equitable adjustment. Id. at 30. The Board found that the claims for
adjustment were not included in any of the instructions given to the jury and that WMATA had
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failed to show that these issues were necessary to the jury’s general verdicts. Id. Accordingly,
the Board rejected WMATA’s affirmative defense of collateral estoppel based on the First
Federal Action.
2. Retainage Claim
The Board ruled in favor of WMATA on Kiska’s claim for retainage. ASBCA Opinion
at 29. The Board found that under the Payments to Contractor article of the Contract, Kiska had
the right to the full amount due under the Contract based on the completion and the acceptance of
all contract work and upon the presentation of a properly executed voucher seeking such payment
to WMATA. Id. at 24 (FF ¶ 56), 29; see AR, vol. 4, tab 9 (Construction Contract 1E0023) at 6-7
(“Upon completion and acceptance of all work, the amount due the Contractor under this
Contract shall be paid upon the presentation of a properly executed voucher . . . .”) The Board
concluded that Kiska had failed to show that it fully completed the contract work or that
WMATA finally accepted the contract work as completed or agreed to something less than full
performance. ASBCA Opinion at 29. The Board also found that Kiska had failed to show it
submitted a properly executed voucher for final payment. Id.The Board found that substantial completion of the project occurred on May 22, 1997.
Pl.’s Stmt. ¶ 34. During the hearing, WMATA offered into evidence Certificate No. 003, entitled
“Substantial Completion.” ASBCA Opinion at 11 (FF ¶ 20). The “Description of Work Being
Accepted” was specified in detail in the certificate as follows:
(a) This facility or the integral parts of this facility noted above has been
completed according to the contract documents and all modification as of
May 22, 1997 (Date).
(b) All remaining work is noted on the punch list attached.
(c) All documents submitted are in proper order and all items not submitted are
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listed on attachment B.
(d) I recommend release of all but $ 650,000 in retainage, which the dollar
amount stated is not less than the minimum required to be retained by the
contract.
(e) The current status of all unresolved contract issues is indicated on the
attached contract status sheet (applies only to final certificates).
Id. at 11-12 (FF ¶ 20) (emphasis added); AR vol. 5 (Certificate No. 003). The attachments to this
certificate included the punch list, change order requests, and a document transfer letter, but no
contract status sheet was attached as would apply if the certificate was for final completion.
ASBCA Opinion at 12 (FF ¶ 20); AR vol. 5 (Certificate No. 003). The middle section of the
certificate, which was signed by Kiska’s project manager, Steven Price, on October 9, 1997,
states that Kiska agrees to complete the punch list by October 20, 1997. ASBCA Opinion at 12
(FF ¶ 21); AR vol. 5 (Certificate No. 003). Mr. Price left the project in early 1998. See AR, vol.
6 (ASBCA Tr. vol. 1) at 75.
The Board found that Kiska did not complete the punch list by October 20, 1997.
ASBCA Opinion at 12 (FF ¶ 22). The Board found that the parties continued to discuss the
status of punch list work during contract closeout meetings on December 17, 1997, January 22,
1998, and April 30, 1998. Id. During the hearing before the ASBCA, Mr. Price testified that
most of the punch list work was completed by Kiska but that some items could not be completed
and that negotiations to remove those items from the punch list stopped. Id. at 13 (FF ¶ 23). The
Board found that Kiska did not establish the amount or value of punch list work that remained to
be accomplished, nor did it show that the Contracting Officer waived completion of the balance
of the contract work or backcharged Kiska for the same. Id.The Board also found that there was no certificate evidencing final completion in the
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record, relying on testimony from WMATA’s Resident Engineer that such a certificate would be
marked “FINAL.” ASBCA Opinion at 14 (FF ¶¶ 26-27). The Board found that WMATA
processed Progress Payment No. 39 on or about July 30, 1998, in the amount of $330,380.92 for
work performed through June 23, 1998. Id. (FF ¶ 28). The Board found that there was no
evidence that all of the contract work had been completed as of this date. Id.
3. Removal of Streetcar Tracks (PCO No. 45)
The Board ruled in favor of Kiska’s claim for an equitable adjustment for the removal of
streetcar tracks pursuant to PCO No. 45. The Board found that as part of the base work under the
Contract, Kiska was required to remove streetcar tracks from the project site. ASBCA Opinion
at 15 (FF ¶ 32). The Board found that WMATA had estimated that the quantity of streetcar
tracks to be removed would be 1860 linear feet, to be removed at a unit price of $63 per linear
foot, for an estimated total of $117,180. Id.; AR, vol. 3, tab 21 (Unit Price Schedule). The
Board found that it was undisputed that the amount of track removed by Kiska exceeded the
amount estimated by WMATA in its schedule. ASBCA Opinion at 15 (FF ¶ 34). Article 53 of
the Contract, “Variations in Estimated Quantities,” provides in pertinent part as follows:
a. Where the quantity of a pay item in this Contract is an estimated
quantity and where the actual quantity of such pay item varies more than 15 percent
above or below the estimated quantity stated in this Contract, an equitable adjustment
in the Contract price shall be made upon demand of either party. The equitable
adjustment shall be based upon any increase or decrease in costs due solely to the
variation above 115 percent or below 85 percent of the estimated quantity. . . .
AR, vol. 2, tab 9 (Contract) at GP-35.
The Board found that “[i]t appears that WMATA used the designation PCO No. 45 as the
vehicle to pay [Kiska] for the track removal that exceeded the contract estimate.” ASBCA
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Opinion at 15-16 (FF ¶ 34). The Board found that there was a discussion of PCO No. 45 during
an internal briefing of the Contracting Officer on July 23, 1997. Id. at 16 (FF ¶ 35). The Board
found that the minutes from that meeting indicate that the estimated quantity for track removal in
the Contract schedule was inaccurate and may have been a typographical error, and that “Funding
action” and “Modification” were to be prepared by WMATA to pay Kiska for the quantity
overrun based on the unit price in the bid schedule. Id. The minutes from that meeting, which
are in the administrative record, indicate that the actual quantity removed was 4351 linear feet.
See AR, tab 4 (Minutes of 7/23/1997 Closeout Meeting) at WM 015666.
The Board found that the parties continued to negotiate payment for PCO No. 45 during
the project closeout meetings on November 19, 1997, and April 30, 1998. ASBCA Opinion at
16 (FF ¶ 36). The Board found that on or about May 14, 1998, the parties executed an
“Agreement of Final Quantity” in the amount of 4907.7 linear feet. Id. at 16 (FF ¶ 37). The
agreement was signed on behalf of WMATA by its resident engineer, Mr. Patrick Cummings.
Id. The Board found that WMATA’s resident engineer was assigned by the Contracting Officer
to inspect the work under the contract and to certify the quantities of work performed for
progress payment purposes. Id.; see AR, vol. 2, tab 9 (5/4/1994 Letter from F.X. Watson,
WMATA Contracting Officer, to Patrick Yerdon, WMATA Resident Engineer). The Board
found that Mr. Cummings was authorized to execute this document for purposes of determining
the amount of track actually removed by Kiska. ASBCA Opinion at 16 (FF ¶ 37). The Board
also found that it was undisputed that Kiska was never paid for its removal of streetcar tracks in
excess of the quantity estimated in the Contract. Id.Based on these findings, the Board concluded that Kiska was entitled to an equitable
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adjustment under PCO No. 45 for having removed more than 115% of the Contract’s estimated
quantity of streetcar tracks. Pl.’s Stmt. ¶ 51. The Board found that Kiska had removed 4907.7
linear feet of streetcar tracks, compared to 1860 linear feet estimated quantity provided in the bid
documents. Id. Accordingly, the Board awarded an equitable adjustment of $192,005.10 based
on a unit price of $63.00 per linear foot contained in the bid schedule. Id.
4. Tunnel Safety Walk (PCO No. 56)
The Board rejected Kiska’s claim for an equitable adjustment for the construction of a
tunnel safety walk. The Board found that under the Contract, Kiska was required to comply with
“OSHA [Occupational Safety and Health Administration] provisions pertaining to the safe
performance of the work.” ASBCA Opinion at 17 (FF ¶ 39). The Board identified the relevant
OSHA provisions as 29 C.F.R. § 1926.800(b):
(1) The employer shall provide and maintain safe means of access and egress to
all work stations.
(2) The employer shall provide access and egress in such a manner that
employees are protected from being struck by excavators, haulage machines,
trains and other mobile equipment.
Id. In June 1995, WMATA issued a stop work order because Kiska had not installed a temporary
walkway rail for tunnel access and egress for its employees. Pl.’s Stmt. ¶ 16. Kiska disputed
WMATA’s contention that a temporary tunnel rail walkway was required by OSHA regulations
and, by letter dated June 8, 1995, Kiska requested a change order to do this work. Id. ¶ 17;
ASBCA Opinion at 17 (FF ¶ 40). Kiska contended that it had complied with OSHA
requirements by constructing a “flat invert” in the tunnel that provided safe access for its
employees. Pl.’s Stmt. ¶ 17; ASBCA Opinion at 17 (FF ¶ 40).
WMATA disputed Kiska’s position, and the matter of responsibility for the temporary
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tunnel walkway railing was debated for many months. Pl.’s Stmt. ¶¶ 18-19; ASBCA Opinion at
17 (FF ¶¶ 41-42). Eventually, Kiska agreed to construct the temporary tunnel walkway railing,
and the stop work order was lifted. Pl.’s Stmt. ¶ 20; ASBCA Opinion at 17 (FF ¶ 42). Kiska
filed for an equitable adjustment for the work, designating its claim as Contract Proposal Number
124 and seeking compensation in the amount of $247,392. Pl.’s Stmt. ¶ 20.
During the hearing, witnesses testified that when a claim or a Contract Proposal Number
was acknowledged by WMATA as a payable extra, WMATA would issue a pending change
order (“PCO”). Pl.’s Stmt. ¶ 21. Witnesses also testified that once the parties reached agreement
following a negotiation over any increased payment and time extension for a PCO, WMATA
would issue a contract modification. Id. ¶ 22. However, the record before the ASBCA did not
contain a PCO or contract modification for the tunnel walkway railing. Defs.’ Stmt. ¶¶ 21-22.
The Board found that on July 23, 1997, WMATA conducted a meeting identified as “E2c
Closeout, Contracting Officer’s Briefing.” See ASBCA Opinion at 17 (FF ¶ 43). The minutes of
that meeting, which are part of the administrative record, state in pertinent part as follows:
“PCOs to be issued: CPN 124 - Tunnel Safety Walk: Issue is similar to E4b claim settled around
$50,000.” AR, vol. 4, Ex. A-8 (7/23/2007 Meeting Minutes) at WM 015667. The Board found
that these minutes indicated that WMATA was to issue a PCO on the tunnel walkway. ASBCA
Opinion at 17 (FF ¶ 43). On November 19, 1997, the parties held a closeout meeting. Id. A
document entitled “Agenda Items” for that meeting includes “PCO No. 45 - Temporary Tunnel
Safety Walk - PROC Action” under the heading “Status of Change Order Negotiations &
Contract MODs.” Id. at 18 (FF ¶ 43); AR, vol. 3, tab 18 (12/17/1997 Agenda Items). The
minutes of that meeting also state under a similar heading “PCO-056; WMATA action to review
16
proposal and set up negotiations. PROC action.” ASBCA Opinion at 17-18 (FF ¶ 43); AR, vol.
3, tab 17 (12/19/1997 meeting minutes). A WMATA document entitled “Agenda Items” for a
closeout meeting on April 30, 1998, also refers to “PCO 56 - Temporary Tunnel Safety Walk -
PROC Action/Neg. Required” under the heading “Status of Change Order Negotiations &
Contract MODs.” ASBCA Opinion at 18 (FF ¶ 43); AR, vol. 3., tab 19 (4/30/1998 Agenda
Items).
During the hearing before the Board, Kiska’s project coordinator, Mr. Ulgur Aydin,
testified that the parties entered negotiations on PCO No. 56 and that WMATA made an offer to
Kiska of $77,000, which Kiska did not accept. See AR, vol. 6 (ASBCA Tr. vol. 2) at 42-43. The
Board found that Mr. Aydin’s testimony indicated that no agreement was ever reached regarding
PCO No. 56. See ASBCA Opinion at 18 (FF ¶ 43). WMATA’s resident engineer also testified
during the hearing that the tunnel walkway was required by the Contract and OSHA regulations.
See AR, vol. 6 (ASBCA Tr. vol. 2) at 67-69. The Board found that Kiska’s witnesses did not
address how Kiska’s plans would have complied with OSHA regulations without the tunnel
safety walk. ASBCA Opinion at 18 (FF ¶ 44).
The Board found that Kiska failed to meet its burden to show by a preponderance of the
evidence that its performance provided safe means of access and egress as required by the
Contract and OSHA regulations and therefore that WMATA had directed it to perform additional
work. ASBCA Opinion at 31. The Board found that WMATA’s issuance of PCO No. 56 was
not a binding contract modification, and therefore it did not dispose of Kiska’s burden of proof.
Id. Accordingly, the Board denied Kiska’s claim for an equitable adjustment for the tunnel safety
walk.
17
5. Grouting Weep Holes and Additional Pedestrian Railings (PCO No. 60)
The ASBCA found that Kiska failed to prove that it was entitled to an equitable
adjustment for work relating to PCO No. 60. See ASBCA Opinion at 31. Kiska is not appealing
this decision.4
6. Barrier Modification Around Fan Shaft (PCO No. 34)
The ASBCA found that Kiska was directed to perform a modification around the fan
shaft and that the evidence presented supported Kiska’s claim under PCO No. 34 for an equitable
adjustment in the sum of $115,807. Pl.’s Stmt. ¶ 50. WMATA does not challenge the ASBCA’s
findings as to Kiska’s entitlement to an equitable adjustment for PCO No. 34 or as to the amount
awarded. Def.’s Resp. Stmt. ¶ 50.
7. Contract Modification No. 49
The ASBCA found that WMATA had properly issued a unilateral change order No. 49
for the water connection to the senior citizens’ complex and that the work had been performed,
entitling Kiska to an equitable adjustment in the amount of $6994. Pl.’s Stmt. ¶ 48. WMATA
does not challenge the ASBCA’s findings as to Kiska’s entitlement to an equitable adjustment
for this modification or as to the amount awarded. Def.’s Resp. Stmt. ¶ 48.
8. Contract Modification No. 33
The ASBCA found that both parties had agreed to Modification No. 33 for an equitable
adjustment in the sum of $6042 and that Kiska was entitled to be paid that amount pursuant to
the Contract’s “Changes” provision. Pl.’s Stmt. ¶ 49. WMATA does not challenge the
4
Because Kiska has not contested this finding by the Board, the Court shall grant
WMATA’s Cross Motion for Summary Judgment with respect to the Board’s denial of these
claims.
18
ASBCA’s findings as to Kiska’s entitlement to an equitable adjustment for this modification or
as to the amount awarded. Def.’s Resp. Stmt. ¶ 49.
II. LEGAL STANDARD
The parties have filed cross motions for summary judgment pursuant to Federal Rule of
Civil Procedure 56. Summary judgment is proper when “the pleadings, the discovery [if any]
and disclosure materials on file, and any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(c). Under the summary judgment standard, the moving party bears the “initial responsibility
of informing the district court of the basis for its motion, and identifying those portions of the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks omitted). In
response, the non-moving party must “go beyond the pleadings and by [its] own affidavits, or by
the depositions, answers to interrogatories, and admissions on file, designate specific facts
showing that there is a genuine issue for trial.” Id. at 324 (internal quotation marks omitted). All
underlying facts and inferences are analyzed in the light most favorable to the non-moving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Where there are no disputed facts
and review is based solely on the administrative record, summary judgment is appropriate for the
party entitled to judgment as a matter of law. Young v. Gen. Servs. Admin., 99 F. Supp. 2d 59, 65
(D.D.C.), aff’d, 11 F. App’x 3 (D.C. Cir. 2000).
In this case, the Court is asked to review the judgment of an administrative tribunal, the
Armed Services Board of Contract Appeals. Although the ASBCA has statutory jurisdiction to
19
resolve certain disputes involving government contracts, see 41 U.S.C. § 607, the ASBCA’s
jurisdiction in this case is governed by the parties’ contractual agreement to have disputes
resolved by the ASBCA. The scope of the ASBCA’s jurisdiction to resolve contractual disputes
is essentially a question of contract interpretation. See Breda Transp., Inc. v. Wash. Metropolitan
Area Transit Auth., 164 F. Supp. 2d 677, 679-80 (D. Md. 2001) (finding that the scope of the
ASBCA’s jurisdiction is “essentially a question of contract interpretation”). The Disputes clause,
Article 6 of the General Provisions of the Contract, provides as follows:
a. Except as otherwise provided in this Contract, any dispute concerning a
question of fact arising under this Contract which is not disposed of by agreement
shall be decided by the Contracting Officer, who shall reduce his decision to writing
and mail or otherwise furnish a copy thereof to the Contractor. The decision of the
Contracting Officer shall be final and conclusive unless, within 30 days from the date
of receipt of such copy, the Contractor mails or otherwise furnishes to the
Contracting Officer a written appeal addressed to the Board of Directors. The
decision of the Authority Board of Directors or its duly authorized representative for
the determination of such appeals shall be final and conclusive unless in proceedings
initiated by either party for review of such decision in a court of competent
jurisdiction, the court determines the decision to have been fraudulent, or capricious,
or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or is not
supported by substantial evidence. . . .
b. This DISPUTES article does not preclude consideration of questions of
law in connection with decisions provided for in paragraph a. above. Nothing in this
Contract, however, shall be construed as making final the decisions of the Board of
Directors or its representative on a question of law.
See AR, vol. 4, tab 9 (Construction Contract 1E0023) at 4-5 (emphasis added); ASBCA Opinion
at 22-23. The parties agree that the ASBCA is WMATA’s duly authorized representative for the
determination of contract appeals. Therefore, pursuant to the parties’ agreement, the ASBCA’s
decision regarding questions of fact is final and conclusive unless it is found by a court of
20
competent jurisdiction5 to be “fraudulent, or capricious, or arbitrary, or so grossly erroneous as
necessarily to imply bad faith, or is not supported by substantial evidence.” The ASBCA’s
decisions on questions of law are not final and therefore may be reviewed de novo by this Court.
Because the Disputes clause essentially incorporates the standard of review set forth in
the Wunderlich Act, 41 U.S.C. § 321, courts in this jurisdiction have relied on Federal Claims
Court cases interpreting the Wunderlich Act for guidance. See Granite-Groves v. Wash. Metro.
Area Transit Auth., 845 F.2d 330, 333 (D.C. Cir. 1988); Expressway Constr., Inc. v. Wash.
Metro. Area Transit Auth., 676 F. Supp. 16, 17-18 (D.D.C. 1987) (citing cases). Under
Wunderlich Act review standards, “the scope of judicial review is narrow, and is limited to
whether there was substantial evidence” to support the Board’s conclusion. Titan Pac. Constr.
Corp. v. United States, 17 Cl. Ct. 630, 634 (Cl. Ct. 1989), aff’d, 899 F.2d 1227 (Fed. Cir. 1990);
see also Koppers Co. v. United States, 405 F.2d 554, 558 (Ct. Cl. 1968). Substantial evidence is
“evidence which could convince an unprejudiced mind.” Titan, 17 Cl. Ct. at 634. In cases of
conflicting evidence that could reasonably be resolved in favor of either party, the administrative
tribunal’s decision will not be overturned. Id. The Court will defer to reasonable inferences
drawn from the evidence by the administrative tribunal, and will accept the tribunal’s preference
in cases of conflicting testimony. Id. The Court’s review is limited to the administrative record.
Nello L. Teer Co. v. Wash. Metro. Area Transit Auth., 695 F. Supp. 583, 589 (D.D.C. 1988). On
questions of law, the ASBCA’s interpretation is not binding but nevertheless “is entitled to
careful consideration and accorded due respect in recognition of its special expertise.” Titan, 17
5
This Court has original jurisdiction over all actions brought by or against WMATA. See
D.C. Code § 9-1107.10.
21
Cl. Ct. at 635; Granite-Groves, 845 F.2d at 334 (“[W]here the Board’s interpretation of a
contract is reasonable and based on the Board’s expertise, its determination, while not binding,
will be given careful consideration and accorded great respect.”)
III. DISCUSSION
The parties have filed cross-motions for summary judgment seeking to affirm and/or
reverse the judgment of the ASBCA. WMATA contends that the ASBCA erred by failing to
dismiss Kiska’s appeals under the doctrines of res judicata and collateral estoppel and erred by
finding in favor of Kiska with respect to its claim for an equitable adjustment for PCO No. 45.6
Kiska contends that the ASBCA erred denying its request for its retainage and for an equitable
adjustment for PCO No. 56. The Court shall consider each of these contentions below.
A. Res Judicata
WMATA argues that Kiska’s claims for retainage and equitable adjustment are barred by
the doctrine of the res judicata and that the ASBCA should have dismissed Kiska’s appeals on
that basis. The doctrine of res judicata, also known as claim preclusion, bars litigation of a claim
where there has been prior litigation (1) involving the same claim or cause of action (2) between
the same parties or their privies, (3) where there has been a final, valid judgment on the merits
(4) by a court of competent jurisdiction. Porter v. Shah, 606 F.3d 809, 813-14 (D.C. Cir. 2010).
The doctrine bars relitigation of both claims that were actually asserted in the prior litigation and
6
Although WMATA argues that the ASBCA should have dismissed all of Kiska’s claims
under the doctrines of res judicata and collateral estoppel, WMATA does not dispute the Board’s
findings with respect to Kiska’s entitlement to equitable adjustments for PCO No. 34 or Contract
Modification Nos. 33 and 49. Because the Court finds that WMATA’s arguments regarding res
judicata and collateral estoppel are without merit, the Court shall affirm the ASBCA’s award of
equitable adjustments for PCO No. 34 and Contract Modification Nos. 33 and 49.
22
claims that could have been asserted. Capitol Hill Group v. Pillsbury, Winthrop, Shaw, Pittman,
LLC, 569 F.3d 485, 491 (D.C. Cir. 2009). Courts have followed a transactional approach to
defining a cause of action, generally “requiring that a plaintiff present in one suit all the claims
for relief that he may have arising out of the same transaction or occurrence.” U.S. Indus., Inc. v.
Blake Constr. Co., 765 F.2d 195, 205 (D.C. Cir. 1985) (citation omitted). The question, then, is
whether the claims asserted by Kiska before the ASBCA could have been asserted in the First
Federal Action.7
The ASBCA held that res judicata did not bar Kiska’s claims because of the unique
framework that governs the resolution of contract disputes in cases where the parties have agreed
in a disputes clause to resolve certain disputes through an administrative tribunal. “The disputes
clause is a standard feature of government contracts, and arguments concerning their scope an
appropriate function are not novel.” Rohr Indus., Inc. v. Wash. Metro. Area Transit Auth., 720
F.2d 1319, 1322 (D.C. Cir. 1983). As the D.C. Circuit has explained the framework, “claims
which are adjustable under contractual provisions must be submitted for the administrative
determinations prescribed by the contract, while claims for breach of contract—those not
adjustable in that fashion—may be litigated in a court of competent jurisdiction without previous
resort to that procedure.” Bethlehem Steel Corp. v. Grace Line, Inc., 416 F.2d 1096, 1101 (D.C.
Cir. 1969). Accordingly, the disputes clause requires administrative exhaustion of claims before
they may be presented to a federal court. See Crown Coat Front Co. v. United States, 386 U.S.
503, 512 (1967) (“It is now crystal clear that the contractor must seek the relief provided for
7
The parties do not dispute that the First Federal Action involved the same parties, that
there was a valid, final judgment, or that this Court had jurisdiction over the matter.
23
under the contract or be barred from any relief in the courts.”) Although this framework no
longer governs most government contracts following the passage of the Contract Disputes Act
(“CDA”), the ASBCA’s jurisdiction in this case was not based on the CDA.8 Instead, the
ASBCA’s jurisdiction was based on the parties’ agreement in the Disputes clause, and therefore
the traditional framework applies. “[T]he test to be employed in distinguishing claims ‘arising
under’ the contract, and therefore within the disputes clause procedure, from breach of contract
claims outside that procedure is whether the controversy is fully redressable under a specific
contract adjustment provision other than the disputes clause itself.” District of Columbia v.
Savoy Constr. Co., 515 A.2d 698, 702 (D.C. 1986).
Kiska’s claims for retainage and equitable adjustment clearly fall under the Disputes
clause of the Contract. Therefore, the parties agreed to litigate those claims before the ASBCA
subject to limited judicial review. As a result, Kiska was required to exhaust these claims
administratively before it could seek relief from this Court in the First Federal Action. Indeed,
WMATA recognized this distinction when it moved this Court to dismiss the First Federal
Action as precluded by the parties’ agreement under the Disputes clause to present their claims to
the ASBCA. See ASBCA Opinion at 4 (FF ¶ 6) (“Prior to trial WMATA filed a motion to
dismiss the suit, contending that [Kiska’s] claims should not be before the court because they
were disputes ‘under’ the contract for which the Disputes article of the contract provided an
administrative remedy.”) This Court ruled that the First Federal Action could proceed because it
8
The Contract Disputes Act allows a contractor to appeal a contracting officer’s decision
in the U.S. Court of Federal Claims. See 41 U.S.C. § 609(a). The CDA generally applies to
contracts entered into by executive agencies. Id. § 602(a). WMATA is not an executive agency
within the meaning of the statute.
24
was styled as a breach of contract claim that was outside the scope of the Disputes clause. See id.
If WMATA’s view were to prevail, a party could render the disputes clause in a contract
nugatory merely by filing a breach of contract action in federal court, since any claims “under”
the contract would be part of the same transaction. Such a result is not consistent with the
judicial policy behind the doctrine of res judicata. In light of the established dichotomy between
claims arising under the Contract and those for breach of contract, the Court finds that Kiska
could not have asserted its claims for retainage and equitable adjustment during the First Federal
Action.
WMATA alternatively argues that res judicata should bar Kiska’s appeals because the
claims for retainage and equitable adjustment were in fact litigated during the First Federal
Action, despite the requirement that such claims be presented first to the ASBCA. However, the
Court is not persuaded that Kiska’s breach of contract claim in the First Federal Action
encompassed its claims for the retainage and for equitable adjustments. As explained more
thoroughly below in the discussion of collateral estoppel, the fact that certain language in Kiska’s
complaint could be read expansively to cover those claims does not establish that those claims
were actually litigated. Similarly, the inclusion of the retainage amount in the calculation of
damages under the modified total cost method does not establish that a claim for the retainage
was actually presented to the jury. At most, these facts establish that the costs sought by Kiska
from the ASBCA could have been obtained in the alternative as damages for Kiska’s breach of
contract claim. Although the doctrine of res judicata would ordinarily preclude subsequent
litigation of an alternative claim, the parties’ agreement to submit disputes arising under the
Contract to the ASBCA provides the basis for a different outcome here. Accordingly, the Court
25
finds no error in the ASBCA’s failure to dismiss Kiska’s appeals as res judicata.
B. Collateral Estoppel
WMATA argues that the doctrine of collateral estoppel precludes Kiska from litigating its
claims before the ASBCA because those claims were litigated during the First Federal Action.
“Under the judicially developed doctrine of collateral estoppel, once a court has decided an issue
of fact or law necessary to its judgment, that decision is conclusive in a subsequent suit based on
a different cause of action involving a party to the prior litigation.” United States. v. Mendoza,
464 U.S. 154, 158 (1984). In order for an issue to be precluded under the doctrine, the issue
must have been contested by the parties and submitted for judicial determination in the prior
case. Yamaha Corp. of Am. v. United States, 961 F.2d 245, 254 (D.C. Cir. 1992). Because the
jury in the First Federal Action found that there was no breach of contract, WMATA argues that
the jury also necessarily rejected Kiska’s claims for the retainage and the equitable adjustments
for pending change orders and contract modifications.
In support of its argument, WMATA points to the following facts: (1) in paragraph 185 of
the complaint in the First Federal Action, Kiska alleged that WMATA failed to accept
responsibility for additional costs and delays despite Kiska’s requests for change orders and time
extensions; (2) in paragraph 248(e) of the complaint, Kiska alleged that “WMATA directed that
extra work beyond the scope of the Contract be performed and has failed and/or refused to pay
for such extra work”; (3) and Kiska included the costs for the retainage, the change orders, and
the contract modifications in its presentation of damages under the modified total cost method,
which it argued to the jury at the end of the trial. For a variety of reasons, however, these facts
are insufficient to establish that the jury’s verdict in the First Federal Action necessarily decided
26
the issues that were presented to the ASBCA.
First, although the parts of the complaint cited by WMATA could be interpreted to
encompass Kiska’s claims for retainage and equitable adjustment, they need not be construed in
that manner. There are no specific allegations in the complaint pertaining to the retainage or to
the specific equitable adjustments at issue here. Moreover, as Kiska points out, the complaint in
the First Federal Action was filed on November 10, 1997, but the parties continued to negotiate
the pending change orders and contract modifications after that date, and WMATA’s last
payment to Kiska (in which the retainage of $650,000 was withheld) occurred in July 1998.
Indeed, Modification No. 49 was issued by WMATA on February 18, 1998. See ASBCA
Opinion at 20 (FF ¶ 54). Therefore, Kiska could not have intended to include all of its claims for
relief in its complaint in the First Federal Action.
Second, WMATA has not shown that there was any evidence presented at the trial
relating to the contract modifications or pending change orders at issue before the ASBCA. This
undermines WMATA’s expansive reading of Kiska’s claim for “extra work” in the complaint as
including these items. With respect to issue of retainage, Kiska’s damages expert testified that
the retainage was an accounting adjustment and that it was undisputed that it was owed to Kiska.
The Board found that the record was unclear as to “what position, if any, WMATA took with
respect to this testimony or on the issue of retainage in general.” See ASBCA Opinion at 4 (FF ¶
8). WMATA has not presented any evidence to challenge this finding by the Board. Therefore,
it is unclear whether the retainage was actually a matter that was contested by WMATA during
the First Federal Action. The doctrine of collateral estoppel precludes only those issues “actually
litigated, that is, contested by the parties and submitted for determination by the court.”
27
Otherson v. Dep’t of Justice, 711 F.2d 267, 273 (D.C. Cir. 1983); id. (noting that the doctrine
applies “only as to those matters in issue or points controverted” (quoting Cromwell v. County of
Sac, 94 U.S. 351, 353 (1877)).
Third, the testimony regarding the modified total cost method is distinct from testimony
regarding the specific claims that Kiska presented to the ASBCA. As this Court explained in a
ruling in the First Federal Action, the modified total cost method is a way to estimate the
damages for breach of contract by taking the total cost incurred in performing the contract minus
the contractor’s bid price and excluding any costs for which the contractor is itself responsible.
See AR, vol. 3, tab 28 at 12-13 (Mem. Op., Nov. 1, 2000). Kiska’s expert testified that this
method was being used despite its inherent limitations because there was no other reasonable
way to calculate the damages from WMATA’s alleged breaches of the Contract. Therefore,
although the testimony regarding the modified total cost method may have included some of the
same amounts that were later disputed before the ASBCA, they were only included as a means of
estimating the total damages to Kiska for its breach of contract claim. The fact that Kiska might
have recovered damages for these amounts under its alternative breach of contract theory does
not establish that its claims for retainage and equitable adjustment were actually before the jury.
Fourth, WMATA concedes that the Court provided no instructions to the jury regarding a
claim for the wrongful withholding of retainage or WMATA’s failure to pay equitable
adjustments. See Pl.’s Stmt. ¶ 5; Def.’s Resp. Stmt. ¶ 5. Therefore, these issues can only have
been decided as part of the breach of contract claim submitted to the jury. The Court instructed
the jury that it could find a breach based on WMATA’s failure to provide accurate design plans
and specifications, WMATA’s failure to disclose vital information, or WMATA’s acting in bad
28
faith or interfering with Kiska’s performance of the Contract. If the jury was to have decided
Kiska’s claims for the retainage or the equitable adjustments, it can only have done so in finding
that WMATA breached its duty of good faith and fair dealing. However, as the ASBCA noted in
its opinion, the Court instructed the jury that it could only return a verdict for Kiska if it found by
clear and convincing evidence that WMATA acted with specific intent to injure Kiska or took
actions that were motivated by malice or ill-will or were intentionally oppressive. Therefore, the
jury could have concluded that WMATA improperly withheld the retainage or denied payment to
Kiska but that there was not clear and convincing evidence that they did so in bad faith.
Consequently, WMATA has failed to show that the jury’s verdict in favor of WMATA
necessarily decided Kiska’s claims for the retainage and equitable adjustments.
The ASBCA concluded that the doctrine of collateral estoppel did not preclude Kiska’s
claims because WMATA failed to show that the issues before it were actually litigated,
submitted to the jury, or necessarily decided by the judgment in the First Federal Action. For the
reasons explained above, the Court finds no error with the Board’s refusal to dismiss Kiska’s
appeals under the doctrine of collateral estoppel.
C. Claim for Retainage
Kiska contends that the Board’s denial of its claim for the retainage is arbitrary and
capricious, not supported by substantial evidence, and erroneous as a matter of law. Under the
terms of the Contract, Kiska was entitled to payment of the retainage “[u]pon completion and
acceptance of all work” and “upon the presentation of a properly executed voucher . . . .” The
Board found that Kiska had failed to prove that it had completed all of the work under the
Contract and present a voucher for payment. Kiska argues that the evidence before the Board
29
clearly shows that it had completed all of the work by July 1998 and that presentation of a
voucher would have been futile. The Court shall determine whether the Board’s findings are
supported by substantial evidence.
The Board found, and the parties do not dispute, that following “substantial completion”
of the project on May 22, 1997, there were items on the punch list that were left to be completed.
The “Substantial Completion” certificate indicated that the punch list items would be completed
by October 20, 1997, but the Board found that the punch list items were not completed as of that
date, citing minutes from project closeout meetings in December 1997, January 1998, and April
1998. The Board relied on testimony from Kiska’s program manager, Mr. Price, that there were
work items on the punch list that could not be completed and that negotiations to complete them
stopped. The Board also noted that there was no final completion certificate in the record, and
Kiska was not able to quantify the amount of punch list work that remained to be completed.
Based on that evidence, the Board found that Kiska had not met its burden of proof with respect
to the completion of all work under the Contract.
In attacking the Board’s conclusion, Kiska points to the fact that Mr. Price, the program
manager who testified that some of the punch list work could not be finished, left in early 1998
before the project was completed. Kiska also points to the fact that Progress Payment No. 039
was signed by Mr. Price’s replacement, Mr. Aydin, who did not testify that any work remained to
be performed on the Contract. Kiska asks the Court to take judicial notice of the fact that
Kiska’s contract work has been in use by WMATA for years. Kiska also argues its work must
have been completed because WMATA never pleaded an affirmative defense that the work of the
project remained incomplete and never sought damages for the costs of incomplete work in a
30
counterclaim. See Pl.’s Mem. at 16.
Kiska has identified evidence in the record that might support a finding that all of the
work required by the Contract was completed by Kiska. However, Kiska’s evidence does not
compel that conclusion. If anything, Kiska’s arguments demonstrate that the record is unclear as
to whether Kiska ever completed all the work on the punch list. Indeed, Kiska concedes in its
reply brief that “there is nothing in the record to indicate what punch list work remained as of
June or July, 1998.” Pl.’s Reply at 18. Kiska attempts to shift the burden to WMATA to come
forward with evidence that the punch list work was not completed by arguing that WMATA
never raised this as an “affirmative defense.” But Kiska bears the burden of proof on its claim
that WMATA improperly withheld the retainage; WMATA’s argument that the work was never
completed by Kiska is simply a defense on the merits, not an affirmative defense for which it
bears the burden of proof. Since the completion of “all work” under the Contract is a
prerequisite to the payment of the retainage, Kiska’s failure to prove that all the work was
completed means it failed to meet its burden of proof before the Board. Therefore, the Court
finds no error in the Board’s denial of Kiska’s claim for retainage. In light of this finding, there
is no need to address Kiska’s claim that the presentation of a properly executed voucher for
payment would have been a futile act.
D. Removal of Streetcar Tracks (PCO No. 45)
WMATA contends that the Board erred in awarding an equitable adjustment to Kiska for
the removal of streetcar tracks in excess of the quantity estimated by the Contract. Specifically,
WMATA contends that the Board erred in relying on the parties’ “Agreement of Final Quantity”
as proof that Kiska removed 4907.7 feet of streetcar tracks because Mr. Cummings, the Resident
31
Engineer who signed the document on behalf of WMATA, lacked authority to enter into such a
binding agreement. See Defs.’ Mem. at 26-28. WMATA also contends that “Kiska failed to
offer any additional evidence to support the alleged overrun on the estimated quantity of street
car tracks.” Id. at 26. Notwithstanding this conclusory assertion, WMATA does not dispute the
Board’s other factual findings regarding PCO No. 45—that the Contract requires an equitable
adjustment when the actual quantity varies by more than 15% above the estimated quantity, that
WMATA apparently made an error in estimating the quantity of streetcar tracks to be removed,
that Kiska removed substantially more streetcar tracks than the estimated quantity, and that PCO
No. 45 was intended to compensate Kiska for the quantity overrun. Therefore, the only disputed
issue is the precise quantity of streetcar tracks removed by Kiska.
There are only two items in the administrative record that provide some indication as to
the amount of streetcar tracks actually removed by Kiska. The first is the minutes from the July
23, 1997 meeting at which PCO No. 45 was discussed, which stated that the actual quantity
removed by the contractor (Kiska) was 4351 linear feet. The second item is the “Agreement of
Final Quantity” document signed by Mr. Cummings on May 14, 1998, which states that the
parties agree that the final quantity of streetcar tracks removed is 4907.7 linear feet. Using either
figure, Kiska is clearly entitled to an equitable adjustment under the Contract for the excess
quantity removed. The Board chose the latter, finding that Mr. Cummings did have authority to
sign that document based on his authority to certify quantities of work performed for progress
payment purposes. WMATA argues that Mr. Cummings’s authority was limited to making
recommendations to the Contracting Officer. Even if WMATA is correct, however, the Board
could have justifiably relied on the “Agreement of Final Quantity” as evidence that Kiska had
32
actually removed 4907.7 linear feet of streetcar tracks. WMATA is bound by the Contract to pay
Kiska for the overrun regardless of whether an authorized representative signed a binding
agreement as to the quantity overran. The fact that Mr. Cummings might not have been
authorized to sign the agreement on behalf of WMATA does not diminish the fact that the
agreement is an acknowledgment by WMATA’s resident engineer that the quantity of streetcar
tracks removed by Kiska was 4907.7 linear feet. That agreement, combined with the other
evidence in the record, provides substantial evidence to support the ASBCA’s award of an
equitable adjustment. Moreover, WMATA did not present any evidence to the Board suggesting
that the figure of 4907.7 linear feet was incorrect. Therefore, the Court finds no error in the
ASBCA’s decision to award Kiska $192,005.10 for PCO No. 45.
E. Tunnel Safety Walk (PCO No. 56)
Kiska contends that the ASBCA erred by failing to award an equitable adjustment for its
tunnel safety walk claim. The Board found that Kiska had not proven that the tunnel safety walk
was not required by the Contract or that WMATA had agreed to pay Kiska for the tunnel safety
walk. Kiska does not argue that the Board erred in its first finding but claims that the Board
wrongly concluded that WMATA did not agree to pay for the tunnel safety walk through PCO
No. 56.
Kiska argues that the evidence before the Board clearly demonstrates that WMATA had
issued PCO No. 56 to Kiska, acknowledging that the tunnel safety work was extra work not
required by the Contract. However, the record before the ASBCA is not so clear. Although PCO
No. 56 is referenced in the agenda items and minutes for several closeout meetings, there is no
copy of either PCO No. 56 or a contract modification for the tunnel safety walk in the record.
33
WMATA’s resident engineer testified that the parties had negotiations over the tunnel safety
walk claim but that Kiska did not accept WMATA’s offer of $77,000. Kiska has not pointed to
any evidence in the record showing that the parties ever reached a final agreement as to this
issue. Therefore, the Court finds that the Board’s finding that WMATA never entered a binding
agreement to pay Kiska for the tunnel safety walk claim is supported by substantial evidence.
Kiska argues that the Contracting Officer and his staff decided that the general language
of the OSHA regulations did not require a temporary walkway safety railing, which is why they
began negotiations with Kiska over the amount of the claim. However, it is not clear from the
record that WMATA ever conceded liability with respect to Kiska’s claim. Although the Board
might have drawn that conclusion from the record before it, the opposite conclusion—that
WMATA continued to dispute Kiska’s claim that OSHA regulations did not require a safety
walkway—can also be drawn from the record. Under the standard of review applicable to this
case, the Court cannot set aside the Board’s choice between two plausible interpretations of the
record. The fact that WMATA negotiated with Kiska in an effort to resolve the claim—making
an offer that was substantially less than Kiska’s demand of $247,392—does not establish that
WMATA agreed that the tunnel safety walk was extra work under the Contract. In fact, it is
contrary to judicial policy to assume a party’s liability based on their willingness to settle a claim.
See, e.g., Fed. R. Evid. 408 (excluding evidence of settlement offers to prove liability).
Therefore, the Board did not err in finding that WMATA had not conceded Kiska’s entitlement
to an equitable adjustment.
Kiska also argues that the Board’s finding with respect to PCO No. 56 is inconsistent
with its award of equitable adjustments based on PCO Nos. 34 and 45. However, WMATA did
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not dispute that Kiska performed extra work relating to the subject matter of PCO Nos. 34 and
45, and the Board’s award of equitable adjustments for those PCOs was not based solely on
WMATA’s issuance of a PCO. Accordingly, there is no inconsistency in the Board’s rulings.
The Board was justified in concluding that the issuance of PCO No. 56 did not excuse Kiska’s
burden to prove that the tunnel safety work was extra work under the Contract.
IV. CONCLUSION
For the foregoing reasons, the Court shall affirm the ASBCA’s decision with respect to
all of the issues contested by the parties. The Court shall GRANT-IN-PART Plaintiff’s [12]
Motion for Summary Judgment with respect to confirmation of the ASBCA’s award of
$320,848.10 to Plaintiff and DENY-IN-PART Plaintiff’s motion with respect to ASBCA’s
denials of its claim for retainage in the amount of $650,000 and its claim for $247,392 for the
cost of installing the temporary tunnel safety walkway. The Court shall GRANT-IN-PART
Defendant’s [14] Cross Motion for Summary Judgment with respect to the ASBCA’s denial of
Plaintiff’s claims for retainage in the amount of $650,000, grouting weep holes in the tunnel in
the amount of $5920, additional pedestrian railings in the amount of $5839, and temporary tunnel
safety walkway in the amount of $247,392 and DENY-IN-PART Defendant’s motion with
respect to its argument that the ASBCA should have dismissed Plaintiff’s claims as barred by the
doctrines of res judicata and collateral estoppel. An appropriate Order accompanies this
Memorandum Opinion.
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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