[00:00:00] Speaker 03:
The first one is docket number 22-1740.

[00:00:02] Speaker 03:
This is Inova Group Tudor Saliba versus United States.

[00:00:10] Speaker 03:
Mr. Walters?

[00:00:12] Speaker 03:
Good morning, Your Honor.

[00:00:14] Speaker 03:
Let's see here.

[00:00:15] Speaker 03:
You've reserved four minutes for rebuttal?

[00:00:17] Speaker 03:
Yes, sir.

[00:00:18] Speaker 03:
Okay.

[00:00:18] Speaker 03:
Feel free to begin.

[00:00:20] Speaker 00:
Thank you.

[00:00:22] Speaker 00:
May it please the Court.

[00:00:23] Speaker 00:
This case involves one contractor.

[00:00:26] Speaker 00:
with two immediate adjacent facilities.

[00:00:29] Speaker 00:
One facility was designed by the government and built by Nova Tudor Saliba, or the plaintiff.

[00:00:34] Speaker 00:
I'm going to call them NTS for short.

[00:00:36] Speaker 00:
That's the mole key wall.

[00:00:37] Speaker 00:
One facility was designed and built by NTS.

[00:00:40] Speaker 00:
That's Pier B. This was all part of one contract.

[00:00:43] Speaker 00:
These structures were immediately adjacent.

[00:00:45] Speaker 00:
They were effectively the same structure.

[00:00:47] Speaker 00:
The government furnished and used geotechnical information and provided that to the bidders on this project for both the Mole Key Wall and Pier B. And that information applied equally to both of the facilities.

[00:00:59] Speaker 00:
Both the government and the contractor read and interpreted this baseline survey in the same exact manner.

[00:01:06] Speaker 00:
The pile tip elevations, the piles that had to be driven for the Pier and the Mole Key Wall, the depth to which they had to be driven, had to be into glacially overridden soil in the Pacific Northwest in the Puget Sound.

[00:01:17] Speaker 00:
The government included these design pile tip elevations in the bid package for the mole key wall.

[00:01:22] Speaker 00:
In designing the mole key wall, the government relied upon the same data and interpreted it in the same manner as NTS did in designing Pier B. The actual conditions that NTS encountered, however, at both structures were the same.

[00:01:37] Speaker 03:
My understanding is we're reviewing the Court of Federal Claims decision, and we have to give some deference to the claims court's fact findings.

[00:01:47] Speaker 03:
And in reviewing the contract materials and geotechnical documents, there was a lot of information in there about how a lot of the layers, beached layer, the glacial soil layer, were going to be dense, very dense.

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There were going to be all kinds of obstructions in there, like boulders and cobbles.

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And so it was going to be difficult work to do the pile driving.

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And so for that reason, she ultimately found

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that the conditions were foreseeable, not unforeseeable, and as reflected in the documents.

[00:02:24] Speaker 03:
So what's wrong with that fact-finding?

[00:02:26] Speaker 03:
Why was that an unreasonable fact-finding that were forced to, therefore, reverse your findings?

[00:02:33] Speaker 00:
We're challenging it on legal error in her interpretation.

[00:02:38] Speaker 00:
The lower court placed more emphasis on the fact that NTS had the responsibility for designing and building Pier B, but it only had the responsibility for building the mole key wall.

[00:02:48] Speaker 03:
What if we didn't read her analysis that way?

[00:02:53] Speaker 03:
I mean, I understand there's footnote 17.

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But aside from that, this opinion is a pretty lengthy, thorough opinion, really analyzing all the documents and coming to certain fact findings.

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And putting aside footnote 17, I don't see anything in her analysis that lends itself to the idea that

[00:03:19] Speaker 03:
She based her findings on the foreseeability of these difficult conditions on whether this was a design and build versus just a build contract.

[00:03:30] Speaker 00:
Well, she said that in the footnote that the distinction was that NTS was responsible for designing Pier B and it was not responsible.

[00:03:38] Speaker 03:
But are we to discount the many, many pages of analysis that she went through?

[00:03:43] Speaker 00:
No, but that analysis was tainted by the incorrect legal error, which was to place more risk upon NTS as the design-build contractor, to look at the sculpatory provisions that were in the contract document and apply those in a different manner as to NTS in its capacity as a design-build contractor versus its capacity as a design-bid-build contractor, where it wasn't responsible for the design.

[00:04:06] Speaker 01:
So your legal error claim, I believe, is that there's a purported violation of the criminal evidence rule.

[00:04:11] Speaker 00:
That's one of our two issues on appeal.

[00:04:13] Speaker 00:
Yes, Your Honor.

[00:04:14] Speaker 01:
So not saying that I agree with that, but even assuming that I would agree, why is that error not harmless in this case?

[00:04:21] Speaker 00:
That error is not harmless because it tanks the court's analysis and it tanks the court's factual findings.

[00:04:27] Speaker 00:
That is a key piece of evidence.

[00:04:29] Speaker 00:
Modification 57, which was issued for differing site conditions at the Mulkey Wall,

[00:04:36] Speaker 00:
It's based on the same exact conditions that were encountered.

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It's immediately adjacent to the pier.

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And the conditions that were encountered caused the differing site condition.

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It caused increased variability in the building, unanticipated and unreasonable amounts of variability in driving the piles.

[00:04:51] Speaker 00:
How is this an argument about an error of law?

[00:04:53] Speaker 00:
It sounds like you're arguing the facts to us.

[00:04:56] Speaker 00:
It's an argument about an error of law because the court interpreted, in response to Judge Cunningham's question, the court interpreted and allowed parole evidence to modify and alter the terms of the contract modification.

[00:05:09] Speaker 00:
What term of the contract modification was altered?

[00:05:14] Speaker 00:
The contract modification was issued under the authority of the differing site conditions clause, which is at FAR 52-236.2.

[00:05:20] Speaker 00:
Right.

[00:05:21] Speaker 04:
It was issued under that FAR without the parole evidence.

[00:05:25] Speaker 04:
It was issued under that FAR with the parole evidence.

[00:05:27] Speaker 00:
Without the parole evidence.

[00:05:28] Speaker 00:
No.

[00:05:28] Speaker 04:
The basis for the issuance of the modification 57 was the same with or without the parole evidence.

[00:05:38] Speaker 04:
I write it as just a citation, just a reference

[00:05:43] Speaker 04:
Here's the authority that we're acting under.

[00:05:45] Speaker 04:
It's not an admission that there is an actual... But the modi... I'm sorry, I didn't mean to interrupt you.

[00:05:50] Speaker 00:
The modification included language in there that it was entered into based on the request for equitable adjustment due to or caused by differing site conditions at the Malt Keywalk.

[00:05:59] Speaker 04:
Is there anywhere in the modification where the government says, we are hereby agreeing that there is a differing site condition at the Malt Keywalk?

[00:06:08] Speaker 00:
I think there is in the language of the modification, the supporting documentation, and the fact that there's an accord and satisfaction provision in the modification.

[00:06:17] Speaker 03:
I thought the modification forms make it quite clear that it's a settlement for a claim for an equitable adjustment, or a request for equitable adjustment.

[00:06:30] Speaker 03:
So when the government settles

[00:06:33] Speaker 03:
a claim for an equal adjustment.

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Does that necessarily mean that the government is conceding?

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is completely valid for everything that it's arguing for?

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Or is it just the settlement of a dispute?

[00:06:52] Speaker 00:
It's a contract document.

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It's a modification to the contract.

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It's modifying the terms.

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It's allowing for the contractor to seek relief under a FAR provision, and it's giving them the right to recover that.

[00:07:02] Speaker 00:
It becomes a contract document.

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It's integrated into the contract.

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So I think it is compelling evidence.

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It's not the only evidence.

[00:07:10] Speaker 00:
We're not arguing.

[00:07:10] Speaker 03:
I guess what I'm trying to figure out is, are you suggesting that

[00:07:15] Speaker 03:
Because the government agreed to settle a disputed claim with respect to the Mulkey wall, that somehow the government was forever stopped from disputing whether there was a different site condition over at Pier B.

[00:07:34] Speaker 00:
That's not what we're arguing.

[00:07:35] Speaker 00:
What we're arguing is almost the opposite of that.

[00:07:38] Speaker 00:
The government cannot, after the fact, come back and seek to inter-parole evidence to modify or alter the terms of that agreement to show that there were no differing site conditions at Pier B. And we believe, we believe.

[00:07:50] Speaker 03:
Well, I guess the argument is, whatever happened at multi-wall and this settlement of your equity adjustment plan,

[00:08:00] Speaker 03:
Pier B is still something different.

[00:08:03] Speaker 03:
And if you're agreeing that the government's not stopped from doing a separate analysis and taking a different position with Pier B, then what was wrong with the Court of Federal Claims engaging in a purely independent analysis of the conditions of Pier B and reaching the findings that she reached?

[00:08:20] Speaker 00:
Respectfully, that analysis wasn't independent, because it was tainted by the fact that the court found the evidence at the mole key wall, allowed parole evidence to modify the terms of that.

[00:08:32] Speaker 00:
And the government didn't have the ability, the government didn't come forward with any evidence to show that those conditions were different in defense of that.

[00:08:39] Speaker 03:
I'm not sticking to the connection between the two.

[00:08:43] Speaker 03:
I think you would agree that if,

[00:08:45] Speaker 03:
this thing called Moe Key Wall never existed, then this is a straightforward case.

[00:08:52] Speaker 03:
And there really isn't any serious way that we could reverse the claims court decision here as to peer D. Do you agree with that?

[00:09:00] Speaker 00:
I don't, respectfully, Your Honor.

[00:09:01] Speaker 00:
Because I think the other issue that's on appeal is the way that the court interpreted NTS's responsibility as a design-build contractor.

[00:09:09] Speaker 00:
The court implied.

[00:09:12] Speaker 00:
I'm sorry.

[00:09:12] Speaker 03:
I understand the design-build thing.

[00:09:14] Speaker 03:
But let's put that to the side.

[00:09:15] Speaker 03:
Okay, so you have the design and build theory, but now you're trying to make some connection to whatever happened in resolving the dispute with the mole to how to analyze pure B. And I'm trying to understand why is there a nexus between the two.

[00:09:34] Speaker 00:
There's a nexus, a physical nexus, that the structures are immediately adjacent to each other.

[00:09:38] Speaker 00:
The piles are being driven in the same area within feet of each other.

[00:09:43] Speaker 00:
and the conditions that manifest themselves, that gave rise to the claim for differing site condition, which is variability and significant variability in driving the product.

[00:09:52] Speaker 03:
But this gets to my question to you before, because it seems like you're trying to say that the government has somehow conceded that there was a different site condition at the mole.

[00:10:02] Speaker 03:
And therefore, through that settlement, is necessarily bound by that

[00:10:07] Speaker 03:
ruling as to the mall, and that position on different site condition of mall necessarily transfers to Pier B as well.

[00:10:16] Speaker 00:
We're not saying it transfers.

[00:10:17] Speaker 00:
We're saying it's persuasive and compelling evidence of the existence at the immediately adjacent facility.

[00:10:22] Speaker 00:
And what the court did, and we contend is legal error, is the court took that off the table by allowing the introduction of parole evidence over our objection

[00:10:31] Speaker 00:
to modify the terms of that agreement, to say, okay, it says it was issued under the authority of the differing site conditions clause, and it's a settlement of a claim or an REA for different site conditions, but based on parole evidence, a government document, it's no longer, I find that it's not differing site conditions.

[00:10:50] Speaker 00:
She didn't say what she thought it was, so she took that off the table.

[00:10:55] Speaker 00:
She prohibited us from arguing that that was compelling evidence, and we contend that was legal error.

[00:11:04] Speaker 01:
So even accepting your argument that you're making about moral evidence, what about restatement second of contract, section 218, where it talks about how a recital of a fact in an integrated agreement may be shown to be untrue?

[00:11:18] Speaker 01:
Why wouldn't that rebut the arguments that you're making before us here?

[00:11:23] Speaker 00:
Our position on that, I understand, and that the government cited to that the case in its brief.

[00:11:28] Speaker 00:
The contract still has to be viewed as a whole.

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And this is not a situation.

[00:11:34] Speaker 00:
similar to the case that was cited by the government, where there was a calculation error in the recital provision.

[00:11:41] Speaker 00:
This goes to the essence of the contract modification.

[00:11:44] Speaker 00:
It goes to the very heart of it.

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And we contend that that's exactly what the parole evidence rule was intended to avoid, is an after-the-fact reinterpretation of the contract to benefit one party here, the government.

[00:11:58] Speaker 04:
Mr. Judge Cunningham, I think, is pointing out

[00:12:01] Speaker 04:
The parole evidence rule only applies to operative terms of the agreement and modifications of those operative terms.

[00:12:09] Speaker 04:
I'm still struggling to see where there's any operative term in modification 57 that has anything to do with whether or not the government thinks there's a different site condition at the mall.

[00:12:22] Speaker 00:
I believe that the operative term is that the government acknowledged the existence of these conditions and the variability of that.

[00:12:30] Speaker 04:
I'm not sure.

[00:12:31] Speaker 04:
Maybe on rebuttal you can show me where they say that.

[00:12:34] Speaker 04:
I don't think they acknowledge that they're acting pursuant to the FAR that governs different site conditions and that your claim is based on that.

[00:12:42] Speaker 04:
But I don't know how we'd read that as an admission that there is such a condition.

[00:12:48] Speaker 00:
Again, respectfully, Your Honor, we're not arguing that it's an admission, but we're arguing that it's persuasive.

[00:12:52] Speaker 00:
No, you are arguing it is an admission at the mall.

[00:12:55] Speaker 00:
Are you not?

[00:12:56] Speaker 00:
It's an acknowledgment of those conditions at the mall.

[00:12:59] Speaker 00:
OK.

[00:13:00] Speaker 00:
I'll reserve the rest of the time for you.

[00:13:02] Speaker 01:
Can I ask one more question?

[00:13:04] Speaker 01:
OK.

[00:13:04] Speaker 01:
Are you familiar with the Meridian case?

[00:13:06] Speaker 00:
Yes, you are.

[00:13:06] Speaker 01:
And if so, could you tell me how you would address that case?

[00:13:09] Speaker 00:
So the Meridian case is a recent case from this court.

[00:13:14] Speaker 00:
And it was a contract to build a flood control structure where the contractor claimed it had differing site conditions.

[00:13:21] Speaker 00:
The ultimate conclusion of that was that

[00:13:24] Speaker 00:
Meridian said that.

[00:13:25] Speaker 01:
Does that case though basically make your argument not work?

[00:13:30] Speaker 01:
I want to know how that relates.

[00:13:31] Speaker 01:
You don't have to recite the case to me.

[00:13:33] Speaker 01:
Just tell me how you think you can distinguish that case.

[00:13:35] Speaker 00:
I think Meridian is distinguishable because it says it's not

[00:13:42] Speaker 00:
It's not a presumption.

[00:13:43] Speaker 00:
It does not create a presumption that the conditions encountered and acknowledged by a previous modification occur in a different situation or in a subsequent situation.

[00:13:52] Speaker 00:
That's not what we're arguing here.

[00:13:53] Speaker 00:
We're not arguing a presumption that the government has to come forward and rebut.

[00:13:58] Speaker 00:
We're arguing that it creates compelling evidence of that.

[00:14:02] Speaker 00:
And the court short-circuited that by allowing parole evidence after the fact to modify the plain meaning of modification 57.

[00:14:11] Speaker 00:
I'll reserve the rest of my time.

[00:14:12] Speaker 03:
OK.

[00:14:13] Speaker 03:
We'll give you three minutes on the vote.

[00:14:15] Speaker 00:
Thank you, Your Honor.

[00:14:20] Speaker 02:
Mr. Hunter.

[00:14:20] Speaker 02:
May it please the Court.

[00:14:23] Speaker 02:
Neither of NTS's stated grounds for appeal are valid.

[00:14:26] Speaker 02:
The parole evidence rule does not apply to the evidence challenged nor for the uses that the Court considered.

[00:14:34] Speaker 02:
The footnote that NTS hangs its other argument on does not say what NTS says it does and does not constitute and cannot be properly read as the actual justification for the court's decision.

[00:14:45] Speaker 03:
What is the legal effect of modification 57?

[00:14:49] Speaker 03:
I mean, we understand it's under the authority of differing site conditions.

[00:14:54] Speaker 03:
Why isn't that an acknowledgment, a concession, that there were, in fact, different site conditions than what had been anticipated

[00:15:05] Speaker 03:
And so therefore, the government is willing to go into its purse and pull out an extra $675,000 in light of that different site condition.

[00:15:15] Speaker 02:
Yes, Your Honor.

[00:15:16] Speaker 02:
I think it's available to be weighed as evidence as to whether that does constitute an admission.

[00:15:21] Speaker 02:
Certainly, NTS made the argument, and the court considered the argument at the trial.

[00:15:25] Speaker 03:
Did the court below actually consider it, or did the court below dismiss it out of hand and just do an independent analysis of just focusing on tier B without considering the fact that the very closely neighboring mole was a different psych condition under the modifications that they sought?

[00:15:42] Speaker 02:
Well, I think right there in footnote 17, what the court says is the value of this evidence is we can see that the court didn't actually believe this.

[00:15:50] Speaker 02:
Or not the court, sorry.

[00:15:51] Speaker 02:
we can see that the government didn't actually believe there was a different site condition.

[00:15:54] Speaker 02:
So the court focuses its review instead on the factual documents on the evidence as it existed about the site there.

[00:16:01] Speaker 03:
So that takes us to the parole evidence rule.

[00:16:05] Speaker 03:
And so if claims court was wrong in considering that pre-negotiation memorandum, then she didn't have a basis

[00:16:18] Speaker 03:
To ignore modification 57 as a possible piece of evidence to consider for a different site condition appeared to be given that modification 57 indicates there was a different site condition at the mole.

[00:16:31] Speaker 03:
Am I wrong about that?

[00:16:34] Speaker 02:
Well, Your Honor, I don't think that it fits with the characterization of the opinion as a whole.

[00:16:38] Speaker 02:
Because it's very clear from the footnote that the court considered the modification and was aware of the modification.

[00:16:43] Speaker 02:
We can see that from the text of the opinion.

[00:16:45] Speaker 02:
So the court certainly weighed it with the rest of the evidence.

[00:16:49] Speaker 02:
It does appear.

[00:16:49] Speaker 03:
But where else did she weigh the modification 57 other than in footnote 17, where she ultimately dismissed its value?

[00:16:59] Speaker 02:
She doesn't appear to speak about it very much otherwise.

[00:17:01] Speaker 02:
I think there's some up in the fact section, but not very much.

[00:17:04] Speaker 03:
But that's why I'm a little confused when you opened by saying, yes, of course, modification 57 can be used as evidence to consider whether there was likewise a different site condition at Pier B. But footnote 17, she ultimately dismissed the modification in light of what was said in the pre-negotiation memo, which necessarily relies on

[00:17:28] Speaker 03:
allowing this in in potential violation before a evidence rule.

[00:17:31] Speaker 02:
It's true, footnote 17 does not include the rest of the opinion, but it comes in context of the rest of the opinion.

[00:17:36] Speaker 02:
So I don't think her dismissal of it can only be read as being tied to just the pre-negotiation memorandum.

[00:17:43] Speaker 02:
It's clear that she makes

[00:17:44] Speaker 02:
a legion of factual findings about the conditions of the site as to whether there was a difference.

[00:17:49] Speaker 02:
Which site?

[00:17:49] Speaker 02:
You mean Pier B?

[00:17:50] Speaker 02:
At Pier B, yes, Your Honor.

[00:17:53] Speaker 02:
That there was not a different site condition present at the Pier B site.

[00:17:56] Speaker 02:
And so her ruling comes as an aside, as a footnote to that longer section.

[00:18:01] Speaker 02:
It's the first footnote in that section where she is addressing the different site condition claim.

[00:18:05] Speaker 02:
And so read in context, I don't think that her dismissal of the modification argument can be read totally divorced from the rest of her analysis.

[00:18:16] Speaker 03:
Do you think in an unstated way she was thinking about and considering the value of the modification 57 in her analysis of peer B?

[00:18:28] Speaker 02:
No, I mean, I don't know that she's holding it very high as weight, but the trial court is weighing the evidence.

[00:18:34] Speaker 02:
And she certainly described how she weighed this evidence.

[00:18:36] Speaker 02:
But then she spends most of her time clearly demonstrating the weight of the rest of the evidence.

[00:18:45] Speaker 01:
Now, even assuming that there were a violation of law evidence rules and not saying there is, is that error harmless in this case?

[00:18:52] Speaker 02:
Yes, the error is definitely harmless.

[00:18:54] Speaker 01:
OK, and why do you think that's the case?

[00:18:56] Speaker 02:
Because NTS has not challenged the court's factual findings that the contract documents, the pre-existing geotechnical studies, that other information available to NTS all put it on notice of the exact site conditions it would later encounter at the site.

[00:19:11] Speaker 02:
They knew about hard driving.

[00:19:12] Speaker 02:
They knew about boulders, cobbles, riprap, the presence of densified soils, the presence of a pier that they demolished.

[00:19:18] Speaker 02:
They knew all the piles were down there.

[00:19:20] Speaker 02:
There's no mystery that they were gonna run into hard driving conditions.

[00:19:24] Speaker 02:
Exactly what they ran into.

[00:19:26] Speaker 02:
And so the court makes, frankly, brutal and lengthy discussion of these facts, and NTS has not challenged any of it.

[00:19:35] Speaker 02:
So the reason it's harmless error is because an essential element of both type one and type two differing psych condition claims are that you didn't know.

[00:19:42] Speaker 02:
The psych conditions have to be different.

[00:19:44] Speaker 02:
They cannot be the same as what you were told.

[00:19:45] Speaker 02:
They have to be different.

[00:19:47] Speaker 02:
But NTS hasn't challenged that.

[00:19:49] Speaker 02:
So if this court were to vacate

[00:19:52] Speaker 02:
the decision on remand, NTS would be faced with the court saying, well, I still find that you cannot prove, you cannot establish a different site condition claim.

[00:20:04] Speaker 04:
Why aren't they entitled to have the court have to go through that on remand given that, as Judge Shen has pointed out, we don't really know

[00:20:14] Speaker 04:
how carefully the trial court judge went through modification 57 and how she weighed it against everything else.

[00:20:22] Speaker 04:
Your friend on the other side said it tainted all of her analysis.

[00:20:25] Speaker 04:
How could we reject that possibility?

[00:20:28] Speaker 02:
Well, the court's opinion, I don't think demonstrates any taint.

[00:20:31] Speaker 02:
The court is not citing back or saying,

[00:20:33] Speaker 02:
But this modification, the court's not citing back to it.

[00:20:36] Speaker 02:
It doesn't appear to show any taint.

[00:20:38] Speaker 02:
In fact, the court's analysis of the contract documents is entirely independent of modification.

[00:20:43] Speaker 02:
It's not clear that there's any taint at all.

[00:20:46] Speaker 02:
Right.

[00:20:46] Speaker 03:
The other side is arguing that she needed to also weigh on the other side of the ledger modification 57 and what that could teach her in terms of understanding whether there was a different site condition of Pier B.

[00:21:02] Speaker 03:
you are right that her analysis is bereft of any consideration of what is the meaning and value of modification 57.

[00:21:11] Speaker 03:
So I think that's the point that we are now wondering, can it really be said to be harmless error if there was a violation of the parole evidence rule here to consider the pre-negotiation memo?

[00:21:25] Speaker 03:
Because she didn't ever incorporate any

[00:21:30] Speaker 03:
analysis of modification 57 into her fact finding.

[00:21:35] Speaker 02:
I can only say, I won't belabor the court with the argument I've already made, but I believe that the court does, in two of note 17, weigh the evidence.

[00:21:42] Speaker 02:
She doesn't spend a lot of time on it, because she clearly doesn't weigh it very heavily.

[00:21:46] Speaker 02:
That is what the trial court does, is weigh factual findings.

[00:21:50] Speaker 04:
On the parole evidence issue, what's our standard of review for determining whether there was error in parole evidence treatment?

[00:21:58] Speaker 02:
Parole evidence has to be offered to vary operative terms of the contract, words of promise, payment, transfer, release, purchase, something that actually alters or affects the obligations of the parties to the agreement.

[00:22:14] Speaker 02:
Even if this is clearly extrinsic evidence, but it's not being offered to vary any of those terms of commitment that are in the modification.

[00:22:21] Speaker 04:
Is that a question we resolve de novo?

[00:22:27] Speaker 02:
I'm sorry, the legal standard?

[00:22:28] Speaker 04:
Yeah, what standard, when I sit down to decide who's right here as to whether the parole evidence rule was violated, am I doing that de novo all for myself, or am I doing it with some deference to the trial court?

[00:22:40] Speaker 02:
I believe it's a question of law, so it's de novo, Your Honor.

[00:22:42] Speaker 04:
okay and and so you're saying as a matter of law we can read modification 57 as having certain operative terms and certain things that are not operative terms and and why are the references to different site conditions not operative terms

[00:22:59] Speaker 02:
Yes, Your Honor, the references to the differing site condition clause don't contain or affect any obligation of the parties.

[00:23:06] Speaker 02:
The government was not agreeing to characterize further claims as a different site condition.

[00:23:10] Speaker 02:
And it changes nothing about the modification for the justification to be the different site condition clause.

[00:23:17] Speaker 02:
What mattered there was the transfer of money.

[00:23:19] Speaker 02:
We agreed to give them money, and the money was paid.

[00:23:22] Speaker 02:
So there's nothing operative left to challenge in the agreement.

[00:23:25] Speaker 04:
What if it were somehow wrong that the government

[00:23:29] Speaker 04:
was saying it was operating pursuant to the FAR that applies to different site conditions.

[00:23:33] Speaker 04:
If that's wrong, the government really didn't have the power to act under that FAR.

[00:23:41] Speaker 04:
Wouldn't that undermine the binding nature somehow of the modification?

[00:23:47] Speaker 02:
I'm not sure how, Your Honor.

[00:23:48] Speaker 02:
You mean if they selected an incorrect justification for the modification?

[00:23:55] Speaker 04:
I suppose that would be the argument, yes.

[00:23:57] Speaker 02:
I guess I haven't briefed that point, but I'm not aware of any party challenging it.

[00:24:01] Speaker 02:
Everybody's happy with what happened.

[00:24:03] Speaker 02:
They asked for money.

[00:24:04] Speaker 02:
They got money.

[00:24:06] Speaker 02:
That agreement is concluded, and no terms were ever before the trial court or this court being challenged.

[00:24:11] Speaker 03:
But the basis for them getting their money was the conclusion that there was a different site condition at the mall.

[00:24:21] Speaker 03:
I mean, wouldn't it be illegal for the government to transfer an extra $675,000 if the government didn't believe there was a different site condition?

[00:24:31] Speaker 02:
I don't know that it would be illegal, Your Honor.

[00:24:34] Speaker 02:
It's certainly the justification.

[00:24:35] Speaker 02:
It doesn't seem to match up with the pre-negotiation memorandum.

[00:24:39] Speaker 02:
But I don't know that it would be illegal for them to transfer, especially when normally things are considered illegal on judicial review.

[00:24:46] Speaker 02:
And the court would look at the whole of the justification and determine what's the government's reasoning for it.

[00:24:50] Speaker 02:
Now, it's true that the modification contains a justification that we later cite and say, we didn't actually believe there was a

[00:24:58] Speaker 02:
a different site condition there.

[00:24:59] Speaker 02:
But that's something that the court can suss out on review, which is why we provided the pre-negotiation memorandum for the court to look at.

[00:25:05] Speaker 02:
It's also why we cite to the sections of the restatement regarding factual recitals.

[00:25:11] Speaker 02:
To the extent the modification contained an admission or could be characterized as making a factual claim, here's a different site condition, parties can always challenge factual recitals because the trial court is the finder of fact, not the contracting officer, not the government agents.

[00:25:29] Speaker 04:
In the reply brief, NTS talks about some other request for one-time authority in June of 2015.

[00:25:38] Speaker 04:
This is another government document that apparently they put in front of the trial court.

[00:25:42] Speaker 04:
And they suggest that this is further evidence that I think they're arguing that the court of claim should have

[00:25:49] Speaker 04:
considered and weighed in and it goes to whether or not the government really believed there was a different site condition or not.

[00:25:54] Speaker 04:
You didn't have a chance to brief this, but I assume you're familiar with what they are doing about this one-time authority.

[00:26:02] Speaker 02:
It is slipping my mind.

[00:26:03] Speaker 02:
OK.

[00:26:04] Speaker 04:
I don't know that I have it.

[00:26:06] Speaker 04:
It's cited at page 5 of the gray brief of June 30, 2015 Navy request for one-time authority from the contract officer to resolve the QB claim, which they characterize as the government agreeing that the resistance to the pile penetration at the mole key wall was substantially greater than had been anticipated.

[00:26:28] Speaker 04:
It's more extrinsic evidence.

[00:26:30] Speaker 04:
that I think their argument seems to be if the court below is going to allow your extrinsic evidence, I think she did also allow this evidence, but she's never talked about it and that that's somehow a problem.

[00:26:45] Speaker 04:
Do you have a response to that argument?

[00:26:47] Speaker 02:
Well, Your Honor, coming down to the grounds for appeal that they've actually stated,

[00:26:50] Speaker 02:
counsel even up here said, we're arguing that parole evidence isn't properly admitted.

[00:26:54] Speaker 02:
There's no argument, at least maybe until the appeal brief here, that other facts should have been considered.

[00:27:00] Speaker 02:
Well, the standard for that is clear error, and it's something that should have appeared in the opening brief, so we would have a chance to respond to it.

[00:27:07] Speaker 02:
But to the extent that they're concerned that the court hasn't weighed all of the evidence, NTS is not showing that concern with its attention to what the court actually said, because it's ignoring the bulk of the court decision.

[00:27:20] Speaker 01:
Do you believe the Meridian case helps you, and if so, tell me how?

[00:27:25] Speaker 02:
Yes, Your Honor.

[00:27:25] Speaker 02:
The Meridian case is the Federal Circuit stating that modifications don't establish a presumption or history of modifications, don't establish a factual presumption moving forward.

[00:27:36] Speaker 02:
The basic principle there is that trial court always conducts de novo review of facts.

[00:27:43] Speaker 02:
That is the statement of the Federal Circuit.

[00:27:45] Speaker 02:
It's not our mischaracterization.

[00:27:46] Speaker 02:
It's not something that is easily distinguishable on facts, because it's a legal principle that is the statement of this court, not the statement of the government.

[00:27:53] Speaker 02:
And so Meridian Engineering just simply stands for the principle that modifications are not binding on the trial court.

[00:28:01] Speaker 02:
The trial court's entitled to weigh them

[00:28:03] Speaker 02:
as evidence, perhaps going in the fact book, the way them as evidence.

[00:28:08] Speaker 02:
They're not legally binding.

[00:28:09] Speaker 02:
They are not preclusive on the trial court's conditions.

[00:28:11] Speaker 02:
And so the Meridian Engineering case simply stands for that principle, which does support our case.

[00:28:16] Speaker 03:
In your last minute, could you speak a little bit to the appellant's second argument about Peer B being contractor designed and somehow at that, unfairly weighing it against the contractor?

[00:28:28] Speaker 02:
Yes, Your Honor.

[00:28:29] Speaker 02:
I think first that is a mischaracterization of what's being said in the footnote.

[00:28:33] Speaker 02:
If you read the, what NTS focuses on is the very last statement, the very last sentence in the footnote that says there's a significant difference in what transpired in the mole, the government provided the design and pile tip elevations while NTS designed and chose the pile lengths.

[00:28:46] Speaker 02:
NTS ignores the rest of the paragraph.

[00:28:48] Speaker 02:
The sentence right before that says, however, the government did not deem the situation of the mole key wall to be a differing site condition.

[00:28:55] Speaker 02:
The normal way of reading a paragraph is you'd think the next sentence is relevant to the first sentence.

[00:28:59] Speaker 02:
What she's talking about is why the government might have a reason, a rationale for making its decision.

[00:29:04] Speaker 02:
That's the subject of the paragraph.

[00:29:06] Speaker 02:
And T.S.

[00:29:07] Speaker 02:
says, they gave us one over here.

[00:29:08] Speaker 02:
They should have to give us one over here.

[00:29:10] Speaker 02:
And what she says is, well, that's not actually what they believed.

[00:29:13] Speaker 02:
And then this last sentence.

[00:29:14] Speaker 02:
is a description of what might be going on in the government's mind.

[00:29:18] Speaker 02:
Now, it's not very clear.

[00:29:19] Speaker 02:
I will say that I don't think the court's statement here is very clear, although I don't think that that really speaks well for NTS's argument, because the, I'm gonna continue.

[00:29:30] Speaker 02:
Please let me know.

[00:29:31] Speaker 02:
But the footnote itself does not have a lot of citation or support or argument to the,

[00:29:41] Speaker 02:
the contrary of the recipe opinion, which is sub-headed and lengthily supported.

[00:29:46] Speaker 02:
And so it's not clear what the footnote is saying, but what I think it's talking about, the factual situation, is that, this is gonna take a second, sorry, but I can stop if you want.

[00:29:58] Speaker 02:
The beach layer is where the contract said, is where the piles meant refusal.

[00:30:02] Speaker 02:
The glacial till is right below.

[00:30:04] Speaker 02:
Now, Council said when he was up here that the piles were supposed to go to the glacial till.

[00:30:07] Speaker 02:
Well, the contract said glacial till or practical pile refusal.

[00:30:10] Speaker 02:
Why are they supposed to know?

[00:30:11] Speaker 02:
Well, the contract required them to do a test file program.

[00:30:13] Speaker 02:
All the test files met refusal in the beach layer, and then NTS set its pile elevations, its pile lengths.

[00:30:20] Speaker 02:
That matters, right?

[00:30:21] Speaker 02:
You set your pile lengths.

[00:30:22] Speaker 02:
If your piles aren't gonna go down this far, then maybe this works if the water line's here.

[00:30:28] Speaker 02:
But if you set your piles like they're gonna go all the way down to here, and they actually stop here, and you knew that beforehand, they're gonna be sticking out of the water very far, and that is the conditions they ran into.

[00:30:39] Speaker 02:
And that appears to me to be the factual situation she's referencing here.

[00:30:42] Speaker 03:
Sorry for going over the point.

[00:30:45] Speaker 03:
That's a lot easier.

[00:30:45] Speaker 03:
Put note 17.

[00:30:46] Speaker 03:
OK, thanks very much.

[00:30:50] Speaker 03:
Let's give the appellant the full four minutes.

[00:30:53] Speaker 00:
Thank you, Your Honor.

[00:30:54] Speaker 00:
Three points.

[00:30:56] Speaker 00:
One, in no particular order.

[00:30:58] Speaker 00:
In response to Meridian, I believe the government's attorney said that Meridian stands for the proposition that the contracting officer is not bound by the contract modification.

[00:31:07] Speaker 00:
Why do we have contract modifications?

[00:31:09] Speaker 00:
If the government's not bound by a provision in the contract modification, that puts a federal government contractor at significant risk and uncertainty.

[00:31:16] Speaker 00:
How do they price their work?

[00:31:18] Speaker 00:
How do they bid their work?

[00:31:19] Speaker 00:
If they happen to realize going in that if a contract modification is issued under one of the accepted remedy granting provisions of the contract,

[00:31:27] Speaker 00:
There's no – there's no guarantee that a court reviewing that can't change its mind and find that there's a different basis for that.

[00:31:35] Speaker 00:
That kind of tips contract – just contract interpretation provisions on its head.

[00:31:39] Speaker 00:
If Meridian does stand for that, then I think that gives this Court an opportunity to clarify that.

[00:31:44] Speaker 00:
So I don't think that's what Meridian says.

[00:31:48] Speaker 00:
The second – the second point I would like to point out is – Mr. Hunter mentioned the indicator pile program.

[00:31:57] Speaker 00:
and how the contractor was required to perform that indicator pile program to determine where it would set its piles, how far down it could drive this.

[00:32:06] Speaker 00:
That was post-award.

[00:32:07] Speaker 00:
That was after award.

[00:32:08] Speaker 00:
That was a contract obligation that they had to perform.

[00:32:12] Speaker 00:
And the Court found that there were, you know, there were difficulties in that PILE program.

[00:32:16] Speaker 00:
That should not have interfered or in any way influenced the Court's decision on whether there was a differing site condition clause.

[00:32:23] Speaker 00:
Differing site condition clause is a no-fault provision.

[00:32:26] Speaker 00:
It's not – it does not – should not be reviewed based on what the contractor knew after a contract.

[00:32:32] Speaker 00:
It's based on the conditions at the time of bid.

[00:32:35] Speaker 00:
And any obligations, exculpatory provisions in the contract that require the contractor to take certain actions after award should not influence the contracting officers or the court's decision on how that different site condition was encountered.

[00:32:50] Speaker 00:
The contractor should be entitled to review that based on the – or determine that, address the foreseeability of that risk based on the information it had at the time of bid.

[00:33:03] Speaker 00:
And that's not what the court found here.

[00:33:04] Speaker 00:
The court found that the conditions that were encountered and the obligations that the contractor had after award influenced this decision on whether NTS could establish a differing site condition at the mall.

[00:33:15] Speaker 00:
I believe that violates fundamentally this court's decision in Metcalfe construction.

[00:33:21] Speaker 00:
In that case, the court was looking at whether the allegations as to whether the government had breached its implied covenant of good faith and fair dealing.

[00:33:29] Speaker 00:
And they were looking at it in section B of that decision.

[00:33:33] Speaker 00:
The court viewed that through the lens of the site investigation clause, which is a post-award obligation, and the differing site conditions clause.

[00:33:41] Speaker 00:
And the court there said you cannot look at an exculpatory provision that exists post-award and read out the differing site conditions clause.

[00:33:49] Speaker 00:
It violates a fundamental rule of contract interpretation.

[00:33:52] Speaker 00:
You have to read the contract as a whole.

[00:33:54] Speaker 00:
We contend, respectfully, that that's what the court did here on our differing site conditions analysis.

[00:33:58] Speaker 00:
on its different expense analysis of the different site conditions clause.

[00:34:02] Speaker 00:
And there are other examples that we believe that flow throughout the Court's opinion that are tainted by its statement in footnote 17.

[00:34:15] Speaker 00:
I mentioned the PILETIP program.

[00:34:17] Speaker 00:
Another example of that is the baseline survey.

[00:34:20] Speaker 00:
The Court found that the baseline survey did not represent how far the piles could be driven down.

[00:34:27] Speaker 00:
But

[00:34:28] Speaker 00:
The baseline survey, and that we would need to make sure that we would achieve practical pile refusal.

[00:34:39] Speaker 00:
But the baseline survey is something that applied to both projects.

[00:34:44] Speaker 00:
And where the contracting officer and the government found there was differing site conditions at the mole key wall, it was based on the same information.

[00:34:52] Speaker 00:
The government used the same information to develop its design in the baseline survey.

[00:34:58] Speaker 00:
Thank you.