[00:00:00] Speaker 01:
Our next case is E&I Global Energy Services versus the United States, 2022-1472.

[00:00:10] Speaker 01:
Good morning, Your Honors.

[00:00:12] Speaker 04:
Good morning.

[00:00:13] Speaker 04:
May it please the Court?

[00:00:14] Speaker 04:
I'm Patrick Kernan here on behalf of E&I Energy Services, Inc.

[00:00:20] Speaker 04:
We were before the Court on several issues before the Court.

[00:00:25] Speaker 04:
This contract was undermined by lack of good faith and fair dealing by the government on this contract.

[00:00:33] Speaker 04:
As you all know, this contract started

[00:00:35] Speaker 04:
with a contract that was terminated for default by Isolux, by the government.

[00:00:41] Speaker 04:
He and I took over the contract.

[00:00:44] Speaker 04:
First, I did a completion agreement with Assurity, and then they did a tender agreement with the government.

[00:00:49] Speaker 04:
Within those agreements, there was a provision that Assurity would pay outstanding debts and deal with the subcontractors and suppliers on the contract.

[00:00:58] Speaker 04:
My client relied on that contract and began

[00:01:04] Speaker 04:
performing on his contract and the fact that the suppliers and the sureties, suppliers and the subcontractors were not paid, it hindered his performance on the contract.

[00:01:14] Speaker 04:
It would be similar to a situation where the government had entered into a contract with another contractor to remove boulders and they did nothing and the government just sat by and did nothing.

[00:01:25] Speaker 04:
go ahead, perform the contract, get it done, completed whatever way you want.

[00:01:29] Speaker 04:
There was only two options in this case for E&I.

[00:01:32] Speaker 04:
It was either to pay off those subcontractors and suppliers in order to get them to perform and finish the contract or default on the contract.

[00:01:41] Speaker 04:
My client went forward and paid those subcontractors, acting in good faith, and moved forward on the contract.

[00:01:49] Speaker 00:
Did you reach out to the sureties before paying the creditors?

[00:01:53] Speaker 04:
Yes, Your Honor.

[00:01:53] Speaker 04:
There was efforts to get the surety to pay, but it was the government's responsibility.

[00:02:00] Speaker 04:
The government had the contract with the surety.

[00:02:02] Speaker 04:
My client didn't have that agreement with the surety to be able to force them to pay the subcontractors and suppliers.

[00:02:09] Speaker 04:
So my client was in a position having to rely on the government, yet the government did not do anything other than default my client.

[00:02:17] Speaker 03:
What would be the consequence if this termination for default were converted to a termination for convenience, the financial consequence of that?

[00:02:27] Speaker 04:
The details of the financials have not been worked out because we haven't got to that point.

[00:02:31] Speaker 03:
I'm not asking for specifics.

[00:02:35] Speaker 03:
Just in general, what would you recover that you wouldn't otherwise recover?

[00:02:41] Speaker 04:
Well, the T for C costs would be any costs incurred on the contract, direct costs, overhead costs that would have been incurred on the contract.

[00:02:50] Speaker 04:
So that would include the payments made to the subcontractors and suppliers on the contract, other direct labor and costs on the contract.

[00:03:00] Speaker 04:
The main thing for my client, though, is conversion of T for C. As you know, it's based, a termination for default is a death penalty for a contractor without even being able to present any evidence on it.

[00:03:10] Speaker 04:
The termination for default was sustained on a summary judgment motion, which is most unusual without any factual analysis.

[00:03:17] Speaker 03:
Well, one of your theories is that the failure of the sureties to pay the subcontractors and suppliers led to your default, right?

[00:03:27] Speaker 04:
It's one factor.

[00:03:28] Speaker 04:
Our position is that we did substantially complete the contract.

[00:03:31] Speaker 03:
As you know, the contract was not... That issue wasn't raised, Paul.

[00:03:34] Speaker 03:
Just stick with the one I'm asking you about.

[00:03:37] Speaker 03:
Yes, Your Honor.

[00:03:39] Speaker 03:
You raised the theory that the default was caused by the failure of the sureties, right?

[00:03:47] Speaker 04:
the failure of the government to force the surety to make the surety pay the suppliers.

[00:03:52] Speaker 03:
Well, also the failure of the sureties to do it, right?

[00:03:55] Speaker 03:
To perform their obligation.

[00:03:57] Speaker 04:
Right.

[00:03:57] Speaker 03:
Which wasn't your responsibility.

[00:04:00] Speaker 04:
Yes, Your Honor.

[00:04:01] Speaker 03:
I don't see that theory as having been addressed by the Court of Federal Claims.

[00:04:08] Speaker 04:
Well, in respect to rejecting that theory, they dismissed the account for failure to

[00:04:16] Speaker 04:
to fulfill the good faith and fair dealing on the contrary.

[00:04:18] Speaker 03:
Yes, but that's a different issue, it seems to me, than whether the default, whether the failure to perform on time was excusable because it wasn't your responsibility, but rather the cause by the sureties, failure to perform their responsibilities.

[00:04:35] Speaker 04:
Correct.

[00:04:36] Speaker 04:
That was one of our arguments.

[00:04:38] Speaker 04:
beyond our control and was excusable termination, excusable delay on the contract.

[00:04:45] Speaker 04:
But the court of federal claims basically just

[00:04:49] Speaker 04:
you know, dismissed it out of hand.

[00:04:51] Speaker 04:
There wasn't a lot of analysis on how I would agree in the decision by the court.

[00:04:55] Speaker 04:
And our position is that the lack of analysis by the Court of Federal Claims is something that this court should reverse, the Court of Federal Claims, because of the lack of analysis and send it back to the court for further analysis of the factual circumstances presented to my client.

[00:05:13] Speaker 00:
So that the... Give me your best citation in the record for where you raised that argument below that Judge Dyke was just...

[00:05:20] Speaker 04:
Well, the factual analysis in the case, it was limited trial below.

[00:05:28] Speaker 04:
It was just minor issues that were presented to the court.

[00:05:30] Speaker 04:
There was only two witnesses presented.

[00:05:32] Speaker 04:
The main area where we presented, we did a motion for summary judgment, and in the motion for summary judgment,

[00:05:39] Speaker 04:
we presented that issue of substantial... If you can just give me a page, whether it's now or on your rebuttal.

[00:05:47] Speaker 00:
If you need to do a rebuttal, that's fine.

[00:05:49] Speaker 00:
That would be helpful.

[00:05:50] Speaker 04:
I don't have the hard copies of the record.

[00:05:52] Speaker 04:
I have the electronic copies.

[00:05:54] Speaker 00:
Wherever... I don't care if it's electronic, I don't care if it's in paper, just a page site would be wonderful.

[00:05:59] Speaker 04:
Okay.

[00:06:00] Speaker 04:
Thank you, Your Honor.

[00:06:02] Speaker 04:
With respect to the termination of the default, we also raised two other issues that the substantial completion

[00:06:09] Speaker 04:
that we completed 95% of the contract.

[00:06:12] Speaker 04:
The substation was powered at the time the contract was terminated.

[00:06:17] Speaker 04:
There was innuendo that my client had abandoned the project and was no longer proceeding, but that's not the case.

[00:06:24] Speaker 04:
They were continuing to perform.

[00:06:26] Speaker 04:
There was no record evidence that they were not continuing to perform on the contract.

[00:06:31] Speaker 04:
And there was no analysis by the Court of Federal Claims as to whether or not they substantially completed the contract.

[00:06:37] Speaker 04:
They also, court of federal claims failed to address whether or not the government waived the completion date of the contract.

[00:06:46] Speaker 04:
The contract was terminated 45 days after the completion date of the contract, and no completion date was reset by the government.

[00:06:56] Speaker 04:
Prior to termination, the contract was terminated.

[00:06:59] Speaker 04:
And my client continued to perform during that 45-day period.

[00:07:05] Speaker 04:
The court federal claims did not address either of those issues in its analysis before upholding the termination from default.

[00:07:14] Speaker 04:
There are two other areas in the contract that we address in our briefs.

[00:07:23] Speaker 04:
The first is dismissal of invoices, 1346, 1391.

[00:07:28] Speaker 04:
1420 and 1422.

[00:07:29] Speaker 04:
The Court of Federal Claims said that my client could not recover on those invoices because the plans and specifications were provided to my client publicly.

[00:07:43] Speaker 04:
As we address in our brief, the public providing of the plans was under a different contract number, which would have been impossible for my client to obtain that information or have knowledge that those plans and specifications were out there.

[00:07:58] Speaker 04:
for the government to then say that my client is responsible for plans and specifications that they never presented to them and we're under a different contract number publicly.

[00:08:08] Speaker 04:
It should not be sustained by this court and it's an error by the court below.

[00:08:17] Speaker 04:
Moreover, there was other invoices that my client submitted related to

[00:08:23] Speaker 04:
changes in the contract.

[00:08:25] Speaker 04:
They were dismissed by the court because there was not proper notice given of those invoices.

[00:08:34] Speaker 00:
When you said it was a different contract number, are you referring to the contract number for the isolate contract?

[00:08:39] Speaker 00:
What are you referring to when you say it's a different contract?

[00:08:41] Speaker 04:
Even before the isolate contract, it was a solicitation number.

[00:08:43] Speaker 04:
So when the solicitation is issued,

[00:08:46] Speaker 04:
The plans of specification on the solicitation number, that was different than the contract number for the isolist contract.

[00:08:54] Speaker 04:
So my client was aware of the isolist contract number.

[00:08:56] Speaker 04:
They were not aware of the solicitation number in order to pull up the plans and specifications.

[00:09:03] Speaker 04:
The court, in their only finding, was that my client was responsible because the plans were publicly available.

[00:09:10] Speaker 04:
And that's the only basis for the decision that my client could not recover on those invoices.

[00:09:16] Speaker 04:
If you look at the invoice with respect to the changes, the court below said that my client could not recover on those changes because they did not provide proper notice to the government.

[00:09:30] Speaker 04:
But the Court of Federal Claims provided no analysis of whether or not my client

[00:09:38] Speaker 04:
where the government could have done anything else or could have done that work less expensively or through another method.

[00:09:49] Speaker 04:
Lineancy has been allowed by this court for notice requirements for changes if the government is not detrimentally affected by the lack of notice.

[00:10:00] Speaker 04:
Despite the fact that there was no evidence that the government was detrimentally affected,

[00:10:06] Speaker 04:
My client was out those costs.

[00:10:07] Speaker 04:
The government didn't, or the court of federal claims did not analyze whether or not the lack of notice impacted the government and should bar my client from recovery.

[00:10:20] Speaker 00:
But accurate that you represented that you'd read the entirety of the isolates contract, including any amendments?

[00:10:26] Speaker 00:
Yes, Your Honor.

[00:10:27] Speaker 04:
That was part of the contract.

[00:10:28] Speaker 04:
It's standard part of any government contract that

[00:10:32] Speaker 04:
you review the contract and amendments.

[00:10:35] Speaker 04:
But as a boilerplate language, if something was in the public record under a different contract number, my client wouldn't be able to, you know, would have thought they had the complete record presented to them based on the contract numbers.

[00:10:49] Speaker 04:
And if you look at the information on page 136, I think it is, of the contract where they referenced the prior contracts, there is no documents

[00:11:01] Speaker 04:
prior to 2016 in that reference.

[00:11:04] Speaker 04:
So my client would have been unaware of any prior amendments prior to that date.

[00:11:09] Speaker 04:
The date of the Amendment 2, which is the one at issue here, was July 24, 2015.

[00:11:13] Speaker 04:
And the reference in the contract to amendments and specifications on page 136 was everything after 2016.

[00:11:26] Speaker 04:
So there was nothing directly

[00:11:28] Speaker 04:
in evidence other than the apparent reference to the public record, which was under a different contract number.

[00:11:35] Speaker 04:
For these reasons, the error in the dismissal of the account for lack of good faith and fair dealing on the contract, for the error in sustaining a termination for default on a summary judgment with no factual analysis of the major issues for termination for default, for the error in dismissing the invoices for

[00:12:04] Speaker 04:
the work done under plans and specifications they weren't aware of, and for the invoices, error in the invoices for the work that was done with, in the government's opinion, not proper notice, we would ask that this court reverse on those four issues and present, to remand the case to the Court of Federal Claims for further findings.

[00:12:30] Speaker 00:
One housekeeping question.

[00:12:32] Speaker 00:
You said page 136.

[00:12:33] Speaker 00:
Are you talking about appendix page 136?

[00:12:36] Speaker 04:
No, the contract, contract page 136.

[00:12:38] Speaker 04:
And I'll give you the appendix reference when we go back.

[00:12:40] Speaker 00:
Please, please give it to me on our bottle.

[00:12:42] Speaker 04:
Thank you, ma'am.

[00:12:44] Speaker 02:
Mr. Hollow, good morning.

[00:12:46] Speaker 02:
May it please the court?

[00:12:48] Speaker 02:
Chris Harlow for the United States.

[00:12:50] Speaker 02:
I'll start with the reimbursement claim.

[00:12:51] Speaker 03:
Well, it seems to me there's an issue that you don't respond to in your brief.

[00:12:57] Speaker 03:
One of the counts of the complaint is improper termination for default.

[00:13:03] Speaker 03:
And they've argued that it wasn't there

[00:13:07] Speaker 03:
failure that led to the default in the performance of the contract, but the failure of the sureties to, as required, pay the suppliers and subcontractors.

[00:13:19] Speaker 03:
So why isn't that a legitimate theory that needed to be addressed by the Court of Federal Law and couldn't be resolved on summary judgment?

[00:13:29] Speaker 02:
So the reason that they explained for failing to perform was that they had essentially run out of money because they had given it to the predecessor contractor or subcontractors.

[00:13:39] Speaker 02:
And once they ran out of money, their employees and their subcontractors stopped coming to work.

[00:13:44] Speaker 02:
And when that happened, they blamed that on the surety, yes.

[00:13:48] Speaker 02:
But what they told the court was it shouldn't be a default termination because that's beyond our control.

[00:13:54] Speaker 02:
What we explained to the court at the summary judgment stage and what Judge Tapp found as well is that if you look at these contract documents, they spell out the procedures for which the surety and ENI to work out these problems.

[00:14:07] Speaker 02:
ENI didn't do any of that.

[00:14:08] Speaker 03:
There are... I'm not understanding.

[00:14:10] Speaker 03:
Maybe there were procedures under the contract for them to force the sureties to pay.

[00:14:16] Speaker 03:
But when it gets to a default termination, they're saying the failure of the sureties to pay was what caused our default.

[00:14:24] Speaker 03:
And it caused our financial problems and led to the default.

[00:14:29] Speaker 02:
It's a little bit more nuanced than that, because it's not the sureties

[00:14:33] Speaker 02:
didn't pay, it's that E&I took it on their own to make these payments.

[00:14:37] Speaker 02:
That's why they went out of business.

[00:14:39] Speaker 03:
That's because the sureties failed to pay.

[00:14:42] Speaker 02:
By not following the procedures that are in the contract, we don't know that.

[00:14:47] Speaker 03:
They alleged that the sureties... If they ended up in default, because the sureties didn't perform their obligation, wouldn't that be an excusable situation?

[00:14:57] Speaker 02:
If they had raised that argument, but that's not what happened here and it's not how they raised it.

[00:15:02] Speaker 02:
It's the act of E&I making these payments.

[00:15:06] Speaker 02:
It's independent of the sureties, because E&I never followed those procedures.

[00:15:10] Speaker 03:
How is it independent of the sureties?

[00:15:11] Speaker 03:
They're saying, we have to pay because the sureties didn't.

[00:15:15] Speaker 02:
But that's not the actual argument that they're making.

[00:15:18] Speaker 02:
They're arguing that they made these payments, and that's why they went out of business, or why they could no longer perform.

[00:15:25] Speaker 02:
The sureties never had this opportunity.

[00:15:26] Speaker 03:
They're not arguing that they have to pay because the sureties defaulted in their obligation.

[00:15:31] Speaker 02:
No, there's no evidence that they followed any of those procedures.

[00:15:35] Speaker 02:
So what?

[00:15:36] Speaker 02:
Because I think we get to a core aspect of what the counsel here said, which was he didn't have a contract.

[00:15:42] Speaker 02:
He and I didn't have a contract with Liberty Mutual.

[00:15:44] Speaker 02:
They did.

[00:15:45] Speaker 02:
That's the completion agreement.

[00:15:46] Speaker 02:
What the government bargained for here was to take this dispute and put it

[00:15:50] Speaker 02:
between E&I and Liberty Mutual.

[00:15:52] Speaker 02:
Whatever problems or debts existed with the predecessor contract, the specific thing that the Department of Energy and WAPA contracted for here was for them to resolve those disputes.

[00:16:02] Speaker 02:
And that contract sets out how that's supposed to work.

[00:16:05] Speaker 00:
What did E&I have done besides pay these contractors directly?

[00:16:09] Speaker 00:
Can you tell us exactly what they have done and give us some citations too to help with that?

[00:16:13] Speaker 02:
Well, I don't mean, as a practical matter, what they needed to do was bring suit against liberty mutual.

[00:16:18] Speaker 02:
And you know what happened?

[00:16:19] Speaker 02:
That's exactly what they did after they brought this lawsuit and explained to them what these contract documents provided for.

[00:16:25] Speaker 02:
They brought suit against liberty mutual in the district court in South Dakota.

[00:16:29] Speaker 02:
That case is ongoing right now.

[00:16:31] Speaker 02:
That's where everything, they didn't think of the procedures.

[00:16:35] Speaker 03:
and no excuse in the contract because they didn't sue the mutual earlier.

[00:16:40] Speaker 03:
That's bizarre.

[00:16:43] Speaker 02:
They didn't follow the procedures that are outlined in that completion agreement.

[00:16:47] Speaker 03:
Why can't you excuse it before?

[00:16:50] Speaker 03:
Because another party didn't perform its obligation.

[00:16:53] Speaker 03:
Why do you say that your only remedy

[00:16:55] Speaker 03:
is to sue the other party.

[00:16:57] Speaker 02:
Because it's E&I that didn't fulfill their obligations.

[00:16:59] Speaker 02:
That agreement says E&I is not allowed to do what they did.

[00:17:03] Speaker 02:
It says that you cannot make these payments without consent.

[00:17:06] Speaker 03:
Where does it say that?

[00:17:07] Speaker 02:
Section 17 of the completion agreement.

[00:17:08] Speaker 02:
What page?

[00:17:09] Speaker 02:
Section 17.

[00:17:10] Speaker 00:
Give us an appendix page site, please.

[00:17:14] Speaker 01:
0085 and 86?

[00:17:18] Speaker 01:
Yes, that's exactly right, Your Honor.

[00:17:20] Speaker 01:
85 and 86 of the appendix.

[00:17:21] Speaker 01:
And what language will you cite?

[00:17:26] Speaker 01:
It's the third paragraph on 86?

[00:17:29] Speaker 02:
Of 86, yes, Your Honor, and it's the first sentence.

[00:17:32] Speaker 02:
Neither party will consent to the entry of any judgment or enter any settlement with respect to any third-party claim without the prior consent of the other one.

[00:17:38] Speaker 03:
That has nothing to do with preventing them from paying the subcontractor so they could go forward.

[00:17:44] Speaker 03:
You're stating that something is in this contract, which simply isn't there.

[00:17:51] Speaker 02:
Neither party will consent to the settlement of third-party claims.

[00:17:54] Speaker 02:
That's exactly what he and I did here.

[00:17:56] Speaker 03:
They settled third-party claims without the consent of... That is a prohibition on their paying subcontractors?

[00:18:02] Speaker 02:
They cannot settle third-party claims without the consent of Liberty Mutual.

[00:18:06] Speaker 02:
This is exactly what the government contracted for.

[00:18:09] Speaker 02:
They contracted for these two entities to resolve these types of disputes themselves.

[00:18:13] Speaker 02:
Because E&I didn't, they ended up expending this money for their claims, and that they were no longer able to perform because they had ran out of money.

[00:18:22] Speaker 02:
But what the government contracted for here was to not be a part of that.

[00:18:26] Speaker 02:
This puts all of this on E&I.

[00:18:29] Speaker 03:
You may be right that the government's not part of this, but they're saying it's not our fault that we missed the deadline.

[00:18:36] Speaker 03:
because the securities didn't perform their obligation to pay the subcontractors.

[00:18:41] Speaker 03:
The only way we could go forward is to pay the subcontractors ourselves.

[00:18:46] Speaker 03:
And I don't understand why that fails to state a

[00:18:51] Speaker 03:
claim for converting the default termination to a termination.

[00:18:55] Speaker 02:
I think what gets lost here, too, a little bit is there were four different procedures where this claim in pieces was rejected by the chocolate.

[00:19:05] Speaker 02:
This was at summary judgment.

[00:19:06] Speaker 02:
And what you'll notice in Judge Schaap's summary judgment opinion is that they never attached any affidavits or declarations.

[00:19:13] Speaker 02:
The simple point they made was we paid the subcontractors, and we could no longer perform.

[00:19:18] Speaker 02:
They had the opportunity at summary judgment to produce evidence of this, to produce affidavits.

[00:19:23] Speaker 02:
All we're hearing now on appeal is an entirely different story than what we heard in that room at summary judgment.

[00:19:28] Speaker 02:
And in Judge Schaff's opinion, he says, and we talked about it in that hearing, too, is where are the affidavits?

[00:19:33] Speaker 02:
Where are the declarations?

[00:19:34] Speaker 02:
If this is your story, why is there no evidence?

[00:19:38] Speaker 02:
On this point?

[00:19:40] Speaker 02:
Yes, on all of this.

[00:19:42] Speaker 03:
Where do we find that disgust in the summary judgment hearing?

[00:19:48] Speaker 02:
You know, it's on page 15.

[00:19:50] Speaker 02:
Moreover, as the United States pointed out during the royal argument, Ina has not even provided supporting affidavits regarding these invoices.

[00:19:57] Speaker 02:
So he's specifically talking about the invoice part of their claim.

[00:20:02] Speaker 03:
No, we're not talking about the invoice part of that.

[00:20:04] Speaker 02:
The point still holds, because there was nothing attached to anything.

[00:20:07] Speaker 02:
There was no... I'm putting this position where I'm not dealing with evidence anymore.

[00:20:12] Speaker 02:
I'm dealing with things that a litany of attorneys along the way have changed.

[00:20:16] Speaker 02:
I'm dealing with the evidence that we had in this case.

[00:20:18] Speaker 03:
You moved for summary judgment.

[00:20:20] Speaker 03:
You got summary judgment.

[00:20:21] Speaker 02:
They moved for summary judgment, and they explain their version of events.

[00:20:24] Speaker 02:
Ivan Cross moved under 12C, saying that they've told us their story.

[00:20:28] Speaker 02:
They violated the contract.

[00:20:30] Speaker 02:
That doesn't warrant a default.

[00:20:32] Speaker 02:
where it doesn't work in returning the default termination.

[00:20:35] Speaker 03:
Wait a moment.

[00:20:35] Speaker 03:
I'm confused.

[00:20:36] Speaker 03:
I mean, whether or not they were entitled to summary judgment doesn't resolve the claim.

[00:20:47] Speaker 03:
The court of federal claims ruled in your favor, right?

[00:20:51] Speaker 02:
under rule 12C on the default termination, yes.

[00:20:55] Speaker 02:
But it was in response to them.

[00:20:58] Speaker 02:
We had thought of it in terms that you had laid out, but when they laid out their story, their version of that.

[00:21:02] Speaker 03:
12C is the judgment on the pleadings, right?

[00:21:04] Speaker 03:
Yes.

[00:21:05] Speaker 03:
And there's a count in here for improper default termination.

[00:21:10] Speaker 03:
So how can you create judgment on the pleadings when there's a count in the complaint that says it shouldn't have been a termination for default?

[00:21:18] Speaker 02:
Because the complaint was fairly ambiguous with regard to this.

[00:21:24] Speaker 02:
What we got from their motion was how they described their claim, and it illuminated what they thought had actually happened here.

[00:21:33] Speaker 02:
And because, as I said, they were not allowed to do any of this without the consent of Liberty Mutual.

[00:21:37] Speaker 02:
And so the decisions that they made in the performance of this contract is what led them to their inability to perform.

[00:21:44] Speaker 02:
And so what Judge Taft said is, if beyond control is your argument for reversing this default termination, that's not what happened here.

[00:21:53] Speaker 03:
It's not what happened.

[00:21:53] Speaker 03:
They alleged that's what happened.

[00:21:55] Speaker 03:
And you have to have a trial to figure that out.

[00:21:58] Speaker 02:
No, because what we point out to Judge Taft is the contract documents that were all pointed to, that were all attached to the complaint,

[00:22:06] Speaker 02:
They assign responsibility for all this to Liberty Mutual and Unite, and they set out how Unite was formed.

[00:22:13] Speaker 03:
If they didn't perform, and that caused the contractor to default, that's an excuse.

[00:22:18] Speaker 02:
But it's E&I that didn't perform, and it's E&I that breached its promise to the government.

[00:22:22] Speaker 02:
It didn't perform because the sureties didn't trust it.

[00:22:25] Speaker 02:
I'm talking about the idea that they would unilaterally settle these payments to these subcontracts, alleged payments and alleged debts.

[00:22:32] Speaker 02:
But they were not allowed to unilaterally do that.

[00:22:34] Speaker 02:
That's where the problem was.

[00:22:36] Speaker 03:
I don't see that the contract says they can't pay the subcontracts just to get them to perform work.

[00:22:41] Speaker 03:
This provision is a common provision in contracts.

[00:22:46] Speaker 03:
You can't settle claims without the support of the other party.

[00:22:48] Speaker 03:
It's not a question of settling the claims.

[00:22:50] Speaker 03:
It's a question of we've got to pay these people to get them to work.

[00:22:54] Speaker 02:
But they weren't paying them for work that ENI asked them to do.

[00:22:57] Speaker 02:
They were paying off alleged debts that predated ENI's existence.

[00:23:01] Speaker 02:
So I mean, at that point, these are clearly third-party claims.

[00:23:04] Speaker 02:
They have nothing to do with ENI or ENI's performance.

[00:23:07] Speaker 02:
They date back to when Isolux was the prime contractor.

[00:23:09] Speaker 02:
These are debts that Isolux, and thus Liberty Mutual, owed these companies.

[00:23:13] Speaker 01:
Counselor, you're relying on this third paragraph.

[00:23:17] Speaker 01:
Neither party will consent to a settlement.

[00:23:20] Speaker 01:
But there's an unless provision there.

[00:23:23] Speaker 01:
with a couple of qualifications.

[00:23:26] Speaker 01:
Were those met?

[00:23:28] Speaker 02:
Well, that's another problem that we had.

[00:23:30] Speaker 02:
You're talking about specifically the release of liability, right?

[00:23:33] Speaker 02:
We don't know that.

[00:23:34] Speaker 02:
There's no allegations of anything with respect to how they made these agreements, who they made these agreements with.

[00:23:41] Speaker 02:
We don't know anything about that.

[00:23:43] Speaker 02:
But you're right.

[00:23:43] Speaker 02:
That's one of the things that's required there is a release of liability.

[00:23:47] Speaker 02:
That was never alleged.

[00:23:50] Speaker 02:
i don't know how much that they will be applied to the payment of money.

[00:23:53] Speaker 03:
I mean, I regarded your argument that this provision said prevents them from paying the subcontractor.

[00:23:59] Speaker 03:
It prevents them from eliminating the claim.

[00:24:02] Speaker 03:
It prevents them from doing something that has legal effect and binding on the sureties.

[00:24:07] Speaker 03:
But to say, we have to pay these contractors to get them to work, otherwise we can't perform the contract, I don't see that this language remotely prevents them from paying the subcontractors under those circumstances.

[00:24:20] Speaker 03:
It seems to me a completely made up argument.

[00:24:23] Speaker 02:
Well, your honor, I respectfully disagree, because we're talking about the settlement of third party claims.

[00:24:28] Speaker 03:
It's not a question of settlement.

[00:24:29] Speaker 03:
It's not a question of when the claims were settled.

[00:24:32] Speaker 03:
The contractor said, we're not going to work unless you pay us.

[00:24:36] Speaker 03:
And this language doesn't say you can't pay people to get them to work.

[00:24:42] Speaker 02:
Well, right, your honor, but it says you can't settle third party claims without the consent.

[00:24:46] Speaker 02:
It's not about settling the claims.

[00:24:47] Speaker 03:
It's about paying them to get them to work.

[00:24:50] Speaker 02:
We don't have claims between a subcontractor and I selects so and they're neutral So we have a third party claim from Acme, Incorporated that they never even identified any of the subcontractors around

[00:25:01] Speaker 02:
We have a subcontractor third party claim that E&I says that they paid off.

[00:25:07] Speaker 02:
That's clearly settling a claim from a third party that really should have been settled by Liberty Mutual or not at all.

[00:25:13] Speaker 02:
We don't really know if there's any merit to these claims at all, which is part of the problem as well.

[00:25:18] Speaker 02:
We have no real idea of what any of these claims are.

[00:25:22] Speaker 02:
What the government contracted for here was to not have to deal with this dispute.

[00:25:26] Speaker 02:
So whatever E&I and Liberty Mutual, this is the agreement that they tendered.

[00:25:30] Speaker 02:
These are the terms that the United States entered into, which is, if there are these issues out there, the two of you will resolve it.

[00:25:38] Speaker 02:
You asked a question that I think does bear returning to, which is this T for C idea.

[00:25:45] Speaker 02:
This came up at the very beginning of the case.

[00:25:50] Speaker 02:
And I asked them, what is your termination for convenience package look like?

[00:25:54] Speaker 02:
What are the damages?

[00:25:55] Speaker 02:
And they said there aren't any.

[00:25:57] Speaker 02:
And I said, because if there were, we could then remand it back to the agency to figure out if a T4C settlement was possible.

[00:26:03] Speaker 02:
But they said there weren't any.

[00:26:04] Speaker 02:
And so they declined the opportunity to remand it back.

[00:26:06] Speaker 02:
And that's how the termination for default sort of progressed without any damages specifically to it.

[00:26:12] Speaker 02:
All the damages that they claim have to do with other aspects of this.

[00:26:16] Speaker 02:
They specifically terminated it.

[00:26:18] Speaker 03:
Where do they say there was no damage from the termination?

[00:26:20] Speaker 02:
Well, I would have been in the transcript for the motion to dismiss hearing.

[00:26:24] Speaker 03:
Well, you're not pointing me to anything in the journal.

[00:26:28] Speaker 02:
I'm answering your question, Your Honor, of what a termination for convenience would look like.

[00:26:33] Speaker 02:
And we asked that question, and it wouldn't look like anything.

[00:26:35] Speaker 02:
Because there isn't a package.

[00:26:37] Speaker 02:
There was never one submitted.

[00:26:39] Speaker 02:
And they've said there are no independent damages regarding their termination for convenience.

[00:26:45] Speaker 00:
Is it in the Joint Appendix so we can look at it ourselves, or is it not in the Joint Appendix, just to follow up on what Jen's like?

[00:26:50] Speaker 02:
No, it's not, because it was something that they sort of conceded at the motion stage.

[00:26:55] Speaker 02:
And because there wasn't any, there's no evidence of any T for C damages, so we never had anything to pursue.

[00:27:00] Speaker 02:
It was a conversation that we had at the very beginning to see if it made sense to quantify what a T for D conversion would look like.

[00:27:07] Speaker 03:
There's no evidence on this, because it was dismissed by the state of client.

[00:27:13] Speaker 02:
Right, but the 12th C ruling happened at the end of the discovery.

[00:27:17] Speaker 02:
It happened at the summary judgment stage.

[00:27:18] Speaker 02:
So discovery had closed.

[00:27:20] Speaker 03:
But the basis for the ruling is value of state of claim, right?

[00:27:26] Speaker 02:
Correct.

[00:27:27] Speaker 02:
I mean, yes, it's judgment on the pleadings, but they sort of morphed together, right, under Rule 12.

[00:27:32] Speaker 02:
But that said, it did happen years into the case at the end of discovery.

[00:27:35] Speaker 02:
And only after they had sort of illuminated their arguments.

[00:27:39] Speaker 03:
Maybe you're entitled to some re-judgment on this issue.

[00:27:42] Speaker 03:
Maybe you could make a case for that.

[00:27:43] Speaker 03:
But that's not what the court of federal claims did.

[00:27:45] Speaker 03:
That's correct, Your Honor.

[00:27:48] Speaker 02:
And that's one of the questions.

[00:27:49] Speaker 02:
There are a couple other aspects that could have stood for some clarification.

[00:27:53] Speaker 02:
But I see that amount of time.

[00:27:58] Speaker 01:
All right.

[00:27:58] Speaker 01:
Thank you, Mr. Hollow.

[00:28:00] Speaker 01:
Mr. Vernon, here's some rebuttal time.

[00:28:03] Speaker 04:
Yes, Your Honor.

[00:28:04] Speaker 01:
Two and a half minutes.

[00:28:06] Speaker 04:
Your Honor, with respect to the reference in the site to the plans and specifications, I was incorrect.

[00:28:14] Speaker 04:
It is in the appendix 131.

[00:28:15] Speaker 04:
It's a page reference.

[00:28:17] Speaker 04:
You'll see there are chart that labels the specifications and drawings that are applicable.

[00:28:23] Speaker 04:
The first one starts on December 21, 2016.

[00:28:25] Speaker 04:
The plans and specifications that support those invoices were

[00:28:32] Speaker 04:
dated 2015, nowhere referenced in the contract with my client.

[00:28:37] Speaker 04:
The only thing that the Court of Federal Claims referenced was the publicly available, somewhere in cyberspace, my client was to chase them down under a different contract number.

[00:28:47] Speaker 04:
That's not a properly put together contract, and my client should be able to recover under those plans and specifications.

[00:28:55] Speaker 03:
The drawings were part of the original contract with the prior contractor, right?

[00:29:00] Speaker 04:
No, Your Honor.

[00:29:02] Speaker 04:
It was part of the solicitation.

[00:29:05] Speaker 04:
But under a different contract number, they were not provided to my client.

[00:29:08] Speaker 03:
So my client would have to forget about where they were supplied to your client.

[00:29:14] Speaker 03:
The original contract obligated the contractor to comply with those drawings, right?

[00:29:20] Speaker 04:
If you look at the contract, it shows you on page 131 what are the

[00:29:23] Speaker 04:
plans and specifications you're to comply with, and those plans and specifications are not listed there.

[00:29:29] Speaker 04:
So my client would have no way to know.

[00:29:31] Speaker 04:
With respect to the issue of T for C, this will probably be one of the first contracts in history where a contractor terminated from default to convenience did not have any T for C costs, overhead costs, other costs.

[00:29:43] Speaker 04:
There's nowhere on the record where my client says that they don't have any T for C costs.

[00:29:47] Speaker 04:
Some ad hoc conversation isn't in the record that the council may have had with somebody

[00:29:53] Speaker 04:
At some point, there's no record of that.

[00:29:55] Speaker 04:
We would dispute that there's no T for C damages that we would raise somewhere if it got converted to a T for C. It may not be significant damages, but there would be damages.

[00:30:07] Speaker 00:
Do you happen to have a citation in the record where E&I went to the sureties before making these payments?

[00:30:14] Speaker 00:
Is there a page you can give me anything?

[00:30:16] Speaker 04:
Not at this point, Your Honor.

[00:30:17] Speaker 04:
I don't know off the top of my head the back and forth on that.

[00:30:23] Speaker 04:
So for the reason stated, we would ask that this court convert the termination for convenience and remand for further findings.

[00:30:31] Speaker 04:
We would ask that respect to the invoices would be remanded for further findings.

[00:30:36] Speaker 03:
We can't convert this into a convenience termination.

[00:30:40] Speaker 03:
The question is, is there a claim here that needs to be tried?

[00:30:44] Speaker 03:
Correct.

[00:30:44] Speaker 03:
It's not our job to imagine what the facts might be to support that claim.

[00:30:49] Speaker 04:
Yes, Your Honor, I misstated that.

[00:30:50] Speaker 04:
You're correct.

[00:30:52] Speaker 04:
And further, with respect to the claim for good faith and fair dealing, that

[00:30:58] Speaker 04:
dismissal of that claim be remanded for further findings by the court for federal claims.

[00:31:04] Speaker 01:
Thank you.

[00:31:04] Speaker 01:
Thank you to both counsel.

[00:31:05] Speaker 01:
A case is submitted.