[00:00:00] Speaker 03:
Our final case this morning is number 24-1286, ENI Global Energy Services versus United States.

[00:00:08] Speaker 03:
Mr. Whitcomb?

[00:00:09] Speaker 04:
Your Honor, if it pleases the Court, my name is Joe Whitcomb.

[00:00:17] Speaker 04:
I represent ENI Global on its case against the federal government for termination for default.

[00:00:27] Speaker 04:
This is the second time we have been to this court on this particular case.

[00:00:33] Speaker 04:
The first time the court remanded it back down to the trial court.

[00:00:37] Speaker 04:
The trial court, in the second instance, found a different basis for denying BNI's claims.

[00:00:43] Speaker 00:
So what are you seeking?

[00:00:45] Speaker 00:
We all know the history quite well.

[00:00:47] Speaker 00:
What are you seeking here?

[00:00:48] Speaker 00:
I mean, the court granted summary judgment to your friend.

[00:00:51] Speaker 00:
So you're here to vacate the summary judgment.

[00:00:57] Speaker 00:
Are you looking for a trial?

[00:00:59] Speaker 00:
Is your argument that shouldn't have been summary judgment because there are factual disputes, material factual disputes that need to be resolved through trial?

[00:01:09] Speaker 00:
Or are you arguing you should go back and they should award summary judgment in your favor?

[00:01:14] Speaker 04:
So I think that there are factual disputes, Your Honor.

[00:01:16] Speaker 04:
But I also think that there are legal disputes that should be decided to know about this court.

[00:01:22] Speaker 04:
And I've argued that in our briefing specifically as it relates to ENC's

[00:01:27] Speaker 04:
assignment under South Dakota law, because the original completion contract was governed by South Dakota law.

[00:01:33] Speaker 04:
Obviously there's a lot of intersections going on here, your honor, and there's there are multiple names, but Mr. Bruce is the principal and remains the principal, or I'm sorry, not remains, was the principal for ENI and ENC.

[00:01:47] Speaker 04:
The government took the position that it only learned on the eve of trial that ENC and ENI were different companies.

[00:01:56] Speaker 04:
That is just categorically untrue.

[00:01:58] Speaker 03:
The Eighth Circuit case has resolved the argument that ENI was a party to the agreement with the sureties.

[00:02:07] Speaker 03:
That case is on writ, and that was only filed last week.

[00:02:10] Speaker 03:
OK, but that's what the case decides.

[00:02:13] Speaker 03:
So let's assume that that's correct for the moment, or that you're collateral is stopped from arguing otherwise, and that you weren't a part of the surety agreement.

[00:02:24] Speaker 03:
As I understand it, even if we weren't a party to the surety agreement, we could still rely on the fact that the sureties would perform their obligation to pay the subcontractors, and that that was reasonable to rely on that.

[00:02:38] Speaker 03:
And let's assume for the moment that you're right about that, that it was reasonable to expect the sureties to pay to the subcontractors.

[00:02:45] Speaker 03:
I'm not understanding how that caused delay in your performance.

[00:02:52] Speaker 04:
Thank you, Your Honor.

[00:02:54] Speaker 04:
The history of this case is, so E&I gets a notice to proceed in May of 2016.

[00:03:03] Speaker 04:
It gets on the job, by the way, before that time, between the December 2nd termination date and the May notice to proceed, E&I is essentially, and its owners are essentially foreclosed from coming onto the property.

[00:03:16] Speaker 04:
So the court's rulings over and again are that

[00:03:21] Speaker 04:
It was foreseeable for ENI.

[00:03:25] Speaker 03:
Address my question.

[00:03:26] Speaker 03:
What is the evidence that the failure to pay, the sure he's going to pay the subcontractors caused delay to you?

[00:03:35] Speaker 03:
Okay.

[00:03:35] Speaker 04:
So that, thank you.

[00:03:36] Speaker 04:
So in February of 2018, which was two months before the completion date, ENI

[00:03:45] Speaker 04:
Complaint and I it's in 1737 of the appendix and I comply mr. Bruce Complaints to mr. Didler that he is essentially out of cash that that it doesn't have money to pursue all has to do with the fact that you didn't have enough money Which is because you know, yes I'm sorry it all has to do with the fact that you didn't have enough money because you had to pay the subcontract

[00:04:10] Speaker 04:
And the use of the word subcontractors comes up over and over in this case.

[00:04:14] Speaker 03:
Let's try to answer my question.

[00:04:16] Speaker 03:
I want to understand.

[00:04:17] Speaker 03:
Is the argument that the failure to pay the subcontractors caused you delay because it caused you to have to pay the subcontractors to get them to continue and the payment itself caused delay?

[00:04:31] Speaker 04:
Yes, but it's, it's subcontractors and importantly, the word is sort of used interchangeably material.

[00:04:36] Speaker 04:
So there was like a nine, there was over nine, almost a million dollars of excess costs that were not that, that E and I took to, by the way, not in February, but in July, in July of 2016, Mr. Bruce takes the claim to Liberty mutual and says,

[00:04:56] Speaker 04:
Look, at the time, they had recognized something in the tune of a half a million dollars in equipment.

[00:05:02] Speaker 04:
And the lower court uses the term over and over again.

[00:05:05] Speaker 00:
Can we just stick with the subcontractors for a moment, though, please?

[00:05:11] Speaker 00:
My understanding is that you get the contract, and they say, oh my god, these subcontractors have not been paid by the sureties yet.

[00:05:20] Speaker 00:
So they're not going to work for me on this new stuff.

[00:05:23] Speaker 00:
So you feel compelled.

[00:05:25] Speaker 00:
to pay them out because the sureties have failed to pay them.

[00:05:29] Speaker 00:
Is that right?

[00:05:29] Speaker 00:
So far?

[00:05:30] Speaker 04:
That is one thing that's right.

[00:05:32] Speaker 00:
OK.

[00:05:33] Speaker 00:
And then you don't have enough money to continue because you've spent all your money paying them.

[00:05:40] Speaker 00:
And so the court, the Court of Federal Claims, it seems to me that under their opinion, even if it was unforeseeable that the sureties weren't going to pay up the contractors,

[00:05:51] Speaker 00:
What is your, if you paid them, didn't you realize when you were paying them their back pay that you weren't going to have enough money going forward?

[00:05:59] Speaker 00:
The court of federal claims faults you as not being reasonable because you should have known you didn't have any money.

[00:06:05] Speaker 00:
And you're saying that the Zoom subcontractors would be more expensive, but you provide no proof of that.

[00:06:12] Speaker 04:
So there was the, there was the, there's two arguments to advance your honor.

[00:06:16] Speaker 04:
There's the expense and the member, the reason that B and I was terminated

[00:06:21] Speaker 04:
was not for failure to perform.

[00:06:24] Speaker 04:
WAPA has never advanced the idea that E&I did not perform.

[00:06:27] Speaker 04:
Its basis for termination was exceeding the not to exceed date.

[00:06:31] Speaker 04:
In fact, WAPA conceded in February of 2018, two months before the not to exceed date, that E&I was 93% completed.

[00:06:41] Speaker 04:
When WAPA terminated E&I,

[00:06:46] Speaker 04:
That's right.

[00:06:46] Speaker 04:
It was it was it didn't finish that That not to exceed date was called April middle of April of 2017 ENI finished without objection from the government To the reasonableness of ENI's actions when assessing whether there was a excusable delay the

[00:07:13] Speaker 04:
If I understand your question, Your Honor, it's what did the non-payment have to do with that?

[00:07:17] Speaker 04:
So Waffle was aware of the non-payment.

[00:07:20] Speaker 02:
It was the nature of the termination.

[00:07:23] Speaker 02:
You were pointing out that E&I was terminated not because it stopped working or wasn't doing any work.

[00:07:30] Speaker 02:
It's because it didn't perform on time.

[00:07:33] Speaker 02:
And I just don't understand what that has to do with assessing reasonableness when we're looking at whether there was excusable delay.

[00:07:41] Speaker 04:
Okay.

[00:07:42] Speaker 04:
Thank you.

[00:07:43] Speaker 04:
So the excusable delay goes down to, and I've argued this in a brief by the courts, by the lower courts.

[00:07:50] Speaker 04:
analysis.

[00:07:51] Speaker 04:
E&I would have had to anticipate that Liberty Mutual was going to breach its contract with it.

[00:07:56] Speaker 03:
It would have had to accept that you're right about that.

[00:08:00] Speaker 03:
Let's assume that you reasonably expected the sureties to pay.

[00:08:04] Speaker 03:
The sureties didn't pay, and that caused a problem.

[00:08:07] Speaker 03:
Where's the nexus between that and not performing the contract on time?

[00:08:12] Speaker 03:
Because you, in fact, paid the subcontractors, and they started work, right?

[00:08:17] Speaker 03:
There's no allegation that the subcontractor started work late, correct?

[00:08:24] Speaker 04:
No, there's no allegation of that, Your Honor.

[00:08:26] Speaker 04:
You're right.

[00:08:27] Speaker 04:
In February of 2018, which is when this sort of, all of the events sort of crescendoed to economics, is when, so from February, from July until February, he and I had been engaged

[00:08:39] Speaker 04:
in a fight with Liberty Mutual, trying to get payment for material men and subcontractors for $900, almost a million dollars worth of equipment.

[00:08:50] Speaker 04:
To the court's point, it had already paid the subcontractors.

[00:08:55] Speaker 04:
But in paying the subcontractors, it was left flat-footed in its attempt to pay for material men.

[00:09:01] Speaker 04:
So the provision in the contract that Liberty Mutual did not

[00:09:08] Speaker 04:
comport with was materials ordered and not paid for.

[00:09:13] Speaker 03:
You had an option, assuming that you're correct, that the federal to pay the subcontractors delayed your work and that it was reasonable for you to wait until the subcontractors were paid so that they would start working for you.

[00:09:29] Speaker 03:
You made an election, a choice, to pay them.

[00:09:33] Speaker 03:
You weren't obligated to pay them.

[00:09:35] Speaker 03:
You could have sat around and said, you know,

[00:09:38] Speaker 03:
The sureties are delaying us because the subcontractors aren't going to work.

[00:09:44] Speaker 03:
You didn't do that.

[00:09:45] Speaker 04:
No, you're right.

[00:09:46] Speaker 04:
Instead, he pressed forward.

[00:09:48] Speaker 04:
Actually, E&I continued to perform.

[00:09:51] Speaker 04:
They actually did the work.

[00:09:52] Speaker 04:
I mean, the government's argument, and it seems like the court might be advancing this idea that E&I would have been in a better place had it sat on his hands and done nothing.

[00:10:00] Speaker 04:
But instead, Mr. Bruce, wanting very much to impress WAPA and move forward with this contract,

[00:10:06] Speaker 04:
continued to look for a choice it's not a choice that was inflicted on you by the circumstances or by the government but your honor it's a hundred percent true but the point is that he and I did continue to perform until it no it literally no longer could it and

[00:10:26] Speaker 02:
no longer because it didn't have the money to proceed?

[00:10:29] Speaker 04:
In February of 18, that's correct.

[00:10:30] Speaker 02:
In February of 18.

[00:10:32] Speaker 02:
And you're saying it didn't have the money because it paid the subcontract.

[00:10:34] Speaker 04:
And material men.

[00:10:35] Speaker 04:
It had paid subcontractors early on.

[00:10:38] Speaker 04:
It had paid subcontractors in the early performance of the contract back in May.

[00:10:43] Speaker 04:
And what was the other reason besides pay?

[00:10:44] Speaker 04:
Material men, so they were paid for $400,000 worth of steel.

[00:10:48] Speaker 04:
They paid for a lot of other things.

[00:10:50] Speaker 04:
Materials that, again, the court kept saying,

[00:10:53] Speaker 04:
The lower court kept saying, well, he and I should have known that that material was missing.

[00:10:57] Speaker 04:
That misses the point entirely.

[00:10:59] Speaker 04:
The materials were ordered, were purported to have been ordered.

[00:11:04] Speaker 04:
This is a situation we're talking about, a 19-acre electrical substation.

[00:11:09] Speaker 04:
This stuff is not coming from the local Home Depot or Lowe's.

[00:11:13] Speaker 02:
It's being shipped in from...

[00:11:16] Speaker 02:
is where it seems to me like maybe it could have been foreseeable.

[00:11:21] Speaker 02:
It's my understanding, do I remember correctly, that for this particular factual assertion, the claims court was saying this information would have been available had and I looked for the information?

[00:11:34] Speaker 04:
No.

[00:11:35] Speaker 04:
So this is why this is so upside down and backwards.

[00:11:39] Speaker 04:
After this court, or actually the

[00:11:42] Speaker 04:
Moments after the court of federal claims in the first instance, rejected ENI's claims.

[00:11:48] Speaker 04:
We had a trial in November of 2021.

[00:11:52] Speaker 04:
Right after that November 2021 trial, Liberty Mutual comes forward with evidence with four CDs of information that WAPA had given to the surety to hand off to ENI.

[00:12:07] Speaker 04:
And they had not given it to E&I.

[00:12:09] Speaker 04:
So E&I was operating without, based on, again, there were completion contractors.

[00:12:14] Speaker 04:
So the surety provides all of the information to E&I that it's going to rely on to put its bid together.

[00:12:19] Speaker 02:
Is this part in the record?

[00:12:20] Speaker 02:
I mean, like, in the record before us today?

[00:12:23] Speaker 04:
I'm sorry.

[00:12:23] Speaker 02:
Is this what you're talking about in the record before us today?

[00:12:26] Speaker 04:
Yes.

[00:12:26] Speaker 04:
Yes, it certainly is.

[00:12:28] Speaker 04:
So, and it was- Can you mention this in your briefs?

[00:12:30] Speaker 04:
Yes, sure.

[00:12:31] Speaker 04:
We do talk about this in a brief.

[00:12:32] Speaker 04:
So again, there were representations made.

[00:12:34] Speaker 04:
In fact, the reason that E&I lowered its bid from $7.5 million to $5.5 million was because the surety made representations to it that $2 million worth of equipment was already paid for that wasn't.

[00:12:46] Speaker 04:
So when E&I got there and learned that this equipment was actually ordered, which is pursuant to the contract, but was actually not ever paid for, and it did not learn that until after the notice to proceed had been, until the government issued the notice to proceed.

[00:13:01] Speaker 04:
Then it didn't take it up with the government.

[00:13:02] Speaker 04:
It did what it was supposed to do.

[00:13:04] Speaker 04:
It goes to Liberty and says, hey, Liberty, pursuant to your contract, you're supposed to pay for this equipment that was never paid for, that Isolux, this foreign corporation, ordered, put in orders and never paid for it.

[00:13:15] Speaker 04:
But we took it out of our bid because you told us it was paid for.

[00:13:19] Speaker 04:
And Liberty Mutual, if you look at 1737 appendix, Liberty Mutual acknowledges, Liberty Mutual's representative, Ms.

[00:13:26] Speaker 04:
Banks, writes Mr. Dittmer and says,

[00:13:29] Speaker 04:
That exclusion provision in the contract is in the definition section, and it doesn't obligate E&I to anything, or sorry, doesn't obligate Liberty Mutual to anything, which is a complete misreading of the contract, obviously.

[00:13:41] Speaker 04:
But Mr. Bruce, at the time, in February of 18, is under the impression that WAPA withheld the information.

[00:13:48] Speaker 04:
He is in talking to Mr. Dittmer and his staff, believing that it was WAPA that withheld the information.

[00:13:56] Speaker 04:
He only learns later, I mean, three years later.

[00:14:00] Speaker 04:
that it was Liberty Mutual that withheld the information.

[00:14:02] Speaker 04:
And so the whole, I think, idea for the court to decide is whether or not Mr. Bruce behaved reasonably.

[00:14:09] Speaker 04:
He completed the contract.

[00:14:11] Speaker 04:
There is no assertion that he didn't.

[00:14:13] Speaker 00:
What was the delay?

[00:14:14] Speaker 04:
The delay was in February of 18.

[00:14:16] Speaker 04:
He runs out of money.

[00:14:17] Speaker 04:
He is 93% done.

[00:14:19] Speaker 04:
He's trying diligently.

[00:14:21] Speaker 00:
Just tell me the amount of time, the delay.

[00:14:23] Speaker 00:
How long?

[00:14:23] Speaker 04:
Oh, it was about 45 days from.

[00:14:26] Speaker 04:
He completed the contract.

[00:14:28] Speaker 04:
He actually completed the contract by the end of May and the literal moment that he finished the day that they came down from the boom to finish the electrical portion of the contract.

[00:14:38] Speaker 00:
He finished in May.

[00:14:40] Speaker 00:
When was he supposed to finish?

[00:14:42] Speaker 04:
Middle of April.

[00:14:44] Speaker 04:
The middle of April.

[00:14:44] Speaker 04:
He was supposed to finish in the middle of April.

[00:14:46] Speaker 04:
The government said nothing in the middle of April.

[00:14:48] Speaker 04:
The government said something in the middle of February because he had drawn his people down and gave him a notice to cure.

[00:14:53] Speaker 04:
He responded to notice to cure.

[00:14:55] Speaker 04:
He continued to perform.

[00:14:56] Speaker 04:
In the middle of April, they say nothing.

[00:14:58] Speaker 04:
They let him continue to perform.

[00:15:00] Speaker 04:
And when he's finished with the project, when there's nothing left but a punch list, they come on the job on that day and order him and all of his people and all of his equipment off the site.

[00:15:10] Speaker 04:
This is not in the record.

[00:15:11] Speaker 04:
This is a little tangential.

[00:15:12] Speaker 04:
He later comes back in July and finishes the punch list.

[00:15:16] Speaker 04:
But that is actually not in the record before this court.

[00:15:19] Speaker 04:
But the point is.

[00:15:20] Speaker 03:
I think we're out of time on the record.

[00:15:21] Speaker 03:
We'll give you two minutes or a bottle.

[00:15:23] Speaker 03:
Thank you.

[00:15:23] Speaker 03:
I appreciate your time.

[00:15:25] Speaker ?:
Thank you.

[00:15:30] Speaker 03:
Mr. Kerr, or Kerr, which, how do you pronounce it?

[00:15:34] Speaker 03:
I'm sorry?

[00:15:35] Speaker 03:
Is your name pronounced Kerr or Kerr?

[00:15:37] Speaker 01:
Kerr.

[00:15:37] Speaker 03:
Kerr.

[00:15:37] Speaker 01:
Kerr.

[00:15:38] Speaker 01:
Thank you, Your Honor.

[00:15:40] Speaker 01:
May it please the Court?

[00:15:41] Speaker 01:
There is no genuine dispute of material fact in this case.

[00:15:46] Speaker 03:
One of the arguments you make just doesn't make sense to me.

[00:15:48] Speaker 03:
I mean, why is it that they couldn't rely on the sureties to perform their obligations to pay the subcontractors, even if they had no contractual relationship with the sureties?

[00:15:58] Speaker 03:
I mean, surely, under these circumstances, you could say, well, sureties are obligated to pay the subcontractors.

[00:16:04] Speaker 03:
We expect that they do that at a reasonable amount of time.

[00:16:07] Speaker 03:
Why isn't that reasonable?

[00:16:09] Speaker 01:
Well, they allege that the sureties didn't pay the contract.

[00:16:15] Speaker 01:
But to the extent that they're a third party to the contract, then they're trying to rely upon.

[00:16:23] Speaker 03:
So what's it they're not a party?

[00:16:25] Speaker 03:
The situation that they expected to happen, sureties paying the subcontracts, was a reasonable assumption, right?

[00:16:34] Speaker 01:
That's a reasonable assumption.

[00:16:36] Speaker 01:
Um, but they are, um, because they're a third party to that contract, they have to take that.

[00:16:42] Speaker 02:
There's reasons for delay that related to the weather, right?

[00:16:45] Speaker 01:
That's correct.

[00:16:46] Speaker 02:
And so there is no contract between the, uh, appellant and the weather, right?

[00:16:52] Speaker 02:
I mean, so.

[00:16:54] Speaker 02:
A contract isn't required, right?

[00:16:55] Speaker 02:
So why does there have to be a contract between the appellant and the sureties?

[00:17:01] Speaker 01:
The court of federal claims, the point I read its opinion to be making is that that has some bearing.

[00:17:07] Speaker 01:
That fact that they're a third party has some bearing on how much they can rely upon.

[00:17:11] Speaker 02:
But we're asking you, your view, and what law you have to support that.

[00:17:17] Speaker 02:
We're suggesting we think that's wrong.

[00:17:19] Speaker 02:
So what is your response to that?

[00:17:22] Speaker 01:
I mean, I agree with the Court of Federal Claims, but this court has held that that's not dispositive.

[00:17:28] Speaker 03:
uh... that you're a third party to a contract but it is a data point on how much a little reasonable okay so i assume that it was reasonable for them to rely on uh... they alleged maybe a trial would show different but there was uh... uh... facially there's an allegation that they relied on the sureties that it was reasonable to rely on the sureties let's assume that's a sufficient allegation okay and uh... there's evidence to support that so

[00:17:54] Speaker 03:
So, what argument do you have left under those circumstances as to why their Fed to perform on time was not excusable?

[00:18:04] Speaker 01:
Well, as the Court of Federal Claims said, it was, they did not, E&I did not take reasonable steps once they realized that the subcontractors were unhappy.

[00:18:17] Speaker 01:
Did not take reasonable steps to find new subcontractors.

[00:18:20] Speaker 01:
It did not take reasonable steps to find another way of performance.

[00:18:24] Speaker 01:
And this court remanded for development of the factual records.

[00:18:30] Speaker 01:
And in our interrogatory questions, in our interrogatories, we asked.

[00:18:34] Speaker 02:
Are you suggesting that it was unreasonable for them to pay?

[00:18:40] Speaker 01:
Your Honor, under the completion agreement.

[00:18:45] Speaker 02:
Don't we look at the reasonableness of what they did, not whether other actions would have been reasonable?

[00:18:50] Speaker 01:
under the completion agreement that they weren't supposed to pay.

[00:18:55] Speaker 02:
No, I know.

[00:18:56] Speaker 02:
But what is your argument for why it was unreasonable?

[00:18:59] Speaker 02:
Why what they did was unreasonable?

[00:19:03] Speaker 01:
With the fact that it's a voluntary payment that they made.

[00:19:12] Speaker 01:
And it's unreasonable because they weren't

[00:19:16] Speaker 03:
uh... they weren't supposed to make that question and they weren't like they have got they they're facing a situation there's uh... reasonable reliance on the fact that uh... surety's and pay the subcontractors doesn't happen what what are they supposed to do well this court pointed out one thing they could have done

[00:19:35] Speaker 01:
is find other subcontractors.

[00:19:38] Speaker 01:
And that's what we asked them in discovery.

[00:19:39] Speaker 01:
Did you look for other subcontractors?

[00:19:41] Speaker 01:
And they said no efforts were made to look for other subcontractors.

[00:19:45] Speaker 01:
They didn't even inquire.

[00:19:46] Speaker 02:
How does that show that what they did was unreasonable?

[00:19:51] Speaker 02:
I mean, what is the legal inquiry we're supposed to make?

[00:19:54] Speaker 02:
Are we supposed to say, hey, you could have done something else, so what you did is per se unreasonable?

[00:19:58] Speaker 02:
Or are we supposed to look at what they did and determine whether it's unreasonable?

[00:20:02] Speaker 01:
The law does require them to make reasonable steps to avoid the default.

[00:20:07] Speaker 02:
So you have to show that it's unreasonable what they did?

[00:20:10] Speaker 01:
Not looking for an alternative.

[00:20:12] Speaker 02:
Do the Court of Federal Claims find that what they did was unreasonable?

[00:20:18] Speaker 01:
I'm trying to think of the way it was worded, but that's what the Court of Federal Claims was getting at when it said that E&I admits that no attempts were made

[00:20:28] Speaker 01:
to locate alternatives.

[00:20:31] Speaker 02:
That was... So is that a matter of law that proves that what they did was unreasonable?

[00:20:35] Speaker 01:
Right.

[00:20:36] Speaker 01:
The law requires them to... I mean, that's what we have to conclude, right?

[00:20:39] Speaker 01:
Well, that's correct, Your Honor.

[00:20:40] Speaker 01:
The law requires them to take reasonable steps.

[00:20:43] Speaker 01:
We've pointed out that they didn't take any steps.

[00:20:46] Speaker 00:
Well, what the Court of Federal Claims says is tellingly, E&I provides no evidence that replacing subcontractors

[00:20:53] Speaker 00:
would actually have been more costly.

[00:20:55] Speaker 00:
The court cannot grant relief based on conjecture.

[00:20:59] Speaker 00:
Well, we didn't have a trial.

[00:21:00] Speaker 01:
Well, that's correct, but that's responding to an argument in their briefs.

[00:21:05] Speaker 01:
We made the argument, we pointed out, in an interrogatory, we asked E&I, what steps did you take to locate other subcontractors?

[00:21:12] Speaker 00:
Well, what did we do to locate other subcontractors?

[00:21:15] Speaker 00:
They paid out the others.

[00:21:17] Speaker 00:
As things turned out, they were delayed only a couple months, but they were using the same contractors, right?

[00:21:22] Speaker 01:
That's correct, Your Honor.

[00:21:24] Speaker 00:
So your position is they acted unreasonably because they should have hired new subcontractors, and that would have meant that there was no delay in completion?

[00:21:32] Speaker 01:
They should have looked for new subcontractors when the other subcontractors, ENI claims, refused to respond.

[00:21:41] Speaker 01:
Now, that's not even part of the record.

[00:21:42] Speaker 01:
There are no details about these subcontractors refusing to perform.

[00:21:47] Speaker 01:
That's just E&I's allegation.

[00:21:49] Speaker 03:
So that was their excuse.

[00:21:51] Speaker 03:
They're not even, it seems to me, alleging that the subcontractors' refusal to perform delayed them.

[00:21:57] Speaker 03:
As I understand it, the sole argument is that because they had to spend money to pay the subcontractors, they couldn't finish the job on time, right?

[00:22:07] Speaker 01:
That's my understanding of their argument.

[00:22:09] Speaker 01:
Yes, Your Honor.

[00:22:10] Speaker 01:
So the question is, is it reasonable that they paid that money?

[00:22:15] Speaker 01:
It was a voluntary payment.

[00:22:16] Speaker 02:
Was there any evidence that it was foreseeable that they would run out of money if they paid the subcontractors?

[00:22:22] Speaker 02:
Any evidence in the record?

[00:22:24] Speaker 02:
Any evidence that it's not foreseeable?

[00:22:31] Speaker 01:
Well, that they'd run out of money?

[00:22:33] Speaker 01:
Yeah, I don't know.

[00:22:35] Speaker 01:
I mean, E&I claims that they lowered their bid

[00:22:41] Speaker 01:
I'm sorry, that's on the equipments argument, so I'm confused.

[00:22:47] Speaker 02:
I'm just trying to figure out whether it's reasonable or unreasonable as a matter of law, since it's a fact question.

[00:22:52] Speaker 02:
Do you agree that whether a party behaves reasonably would normally be considered a fact?

[00:22:58] Speaker 01:
It is a fact question, but there's a legal standard that they have to, E&I has to take reasonable steps.

[00:23:04] Speaker 02:
Oh, wait.

[00:23:05] Speaker 02:
I understand.

[00:23:06] Speaker 02:
There's a legal standard that you have to take reasonable steps.

[00:23:08] Speaker 02:
So whether something is reasonable is a factual question.

[00:23:11] Speaker 01:
Yes, yeah.

[00:23:13] Speaker 02:
And so do you have a legal standard on when something's reasonable?

[00:23:16] Speaker 02:
I don't think so.

[00:23:23] Speaker 01:
Yeah, I don't, Your Honor.

[00:23:27] Speaker 01:
This court remanded to the Court of Federal Claims to develop a full record.

[00:23:33] Speaker 01:
And E&I has not done that.

[00:23:35] Speaker 01:
They haven't developed an argument about the subcontractors

[00:23:41] Speaker 01:
refusing to perform because they weren't being paid.

[00:23:44] Speaker 01:
Have they even identified which subcontractors?

[00:23:47] Speaker 03:
That's not in the record.

[00:23:48] Speaker 03:
You're saying they shouldn't get a trial on them.

[00:23:51] Speaker 03:
They shouldn't be able to prove their case.

[00:23:52] Speaker 01:
We're saying there are no facts in dispute that would allow them to prevail at a trial.

[00:23:59] Speaker 02:
They're saying it's unreasonable to hire subcontractors, right?

[00:24:06] Speaker 02:
And you're saying it's reasonable to hire new subcontractors.

[00:24:10] Speaker 01:
It was unreasonable to make.

[00:24:12] Speaker 01:
It was a voluntary payment.

[00:24:14] Speaker 01:
And they didn't have to make that payment.

[00:24:18] Speaker 00:
Was there a cross motion for summary judgment?

[00:24:21] Speaker 01:
I don't believe so, Your Honor.

[00:24:23] Speaker 00:
Well, if they hadn't made the payment, what would have happened to the contract?

[00:24:27] Speaker 01:
Well, the Court of Federal Claims points out that E&I put forth no evidence that they took steps to enforce the sorority provisions.

[00:24:36] Speaker 01:
Party to the contract with a sorority.

[00:24:37] Speaker 01:
Well, at the time, they were claiming they were.

[00:24:39] Speaker 01:
And they filed a lawsuit against the sororities.

[00:24:43] Speaker 00:
So you said they took no steps.

[00:24:44] Speaker 00:
They did take steps.

[00:24:45] Speaker 00:
They filed a lawsuit.

[00:24:47] Speaker 01:
But Your Honor, the lawsuit was in 2020, two years after their default.

[00:24:52] Speaker 01:
Why didn't they file the lawsuit back in the day when they wanted to enforce the

[00:24:57] Speaker 00:
And you don't think filing a lawsuit would have caused delay?

[00:25:01] Speaker 00:
They would have never gotten close to completion date if they had filed a lawsuit trying to get the money back, right?

[00:25:09] Speaker 01:
If the lawsuit went to fruition, you're correct, Your Honor.

[00:25:12] Speaker 01:
But maybe the sororities would have settled early.

[00:25:15] Speaker 01:
Why was that a reasonable alternative?

[00:25:17] Speaker 01:
That would be a step that they could point to, that they were getting the sororities to do what they allege wasn't being done.

[00:25:25] Speaker 01:
is filing a lawsuit.

[00:25:29] Speaker 00:
But the point is whether it was foreseeable.

[00:25:32] Speaker 00:
The question is whether it was foreseeable that these sureties were going to default on the payment they owed.

[00:25:40] Speaker 00:
Saying, well, they should have filed a lawsuit doesn't answer the question of whether or not it was foreseeable.

[00:25:45] Speaker 00:
The question is then the second question is, it wasn't foreseeable, but did you act reasonably?

[00:25:52] Speaker 01:
On the foreseeability issue,

[00:25:54] Speaker 01:
E&I was aware that the sororities were making payments of reluctantly, I believe they said.

[00:26:01] Speaker 01:
So they were aware that there were problems with the sororities making payments to the subcontractors.

[00:26:07] Speaker 01:
When were they aware of that?

[00:26:12] Speaker 01:
Before E&C signed the completion agreement.

[00:26:16] Speaker 02:
They were aware that the... Doesn't the agreement provide that the sororities were to pay?

[00:26:23] Speaker 01:
I'm sorry, before E&I filed the follow-on agreement.

[00:26:27] Speaker 01:
I'm sorry, Your Honor, could you repeat your question?

[00:26:29] Speaker 02:
When E&I became involved, the suries had recommitted to pay, right?

[00:26:36] Speaker 01:
But E&I says in their brief that even though they had committed to pay, they were making the payments reluctantly, that they were slow in coming and that the subcontractors were unhappy.

[00:26:48] Speaker 01:
And at that time, he and I did not look for other alternatives to those subcontractors.

[00:26:54] Speaker 01:
Took no steps to look for other alternatives, which under the law, they're required to do.

[00:26:59] Speaker 01:
Well, that's what they say, but that's conjecture, because they didn't even look.

[00:27:04] Speaker 01:
They didn't even ask.

[00:27:06] Speaker 01:
And if they had asked and it was more expensive, that would be evidence that we could look at before the court.

[00:27:11] Speaker 02:
Why is it unreasonable for them to pay?

[00:27:13] Speaker 02:
I'm expecting you get the money back later.

[00:27:16] Speaker 01:
Well, it was unreasonable if it prohibited them from finishing the job.

[00:27:23] Speaker 02:
So what evidence is there that they knew it would prohibit them?

[00:27:26] Speaker 01:
Well, that's what they're claiming.

[00:27:27] Speaker 01:
I don't think there is evidence.

[00:27:29] Speaker 01:
There's, in fact, a lack of evidence in this case about this whole issue, because ENI hasn't put forward the evidence.

[00:27:37] Speaker 01:
ENI hasn't put forward the evidence it needs to affirmatively prove its case, because it hasn't shown

[00:27:43] Speaker 01:
the details of this dispute with the subcontractors.

[00:27:46] Speaker 01:
How serious was this refusal?

[00:27:48] Speaker 02:
And again, you haven't shown that they should have known that they were going to run out of money and not be able to complete the contract.

[00:27:55] Speaker 01:
Well, yeah, Your Honor, we don't have enough information to say they should have been aware that they ran out.

[00:28:04] Speaker 01:
That's the way they're operating their business.

[00:28:08] Speaker 01:
On the equipment issue,

[00:28:13] Speaker 01:
The documents show that the equipment was not ordered.

[00:28:20] Speaker 01:
Opposing counsel is claiming that there's evidence that the equipment was ordered, but the documents show the exact opposite.

[00:28:25] Speaker 01:
The documents they're attempting to rely on say that the orders are under review.

[00:28:32] Speaker 01:
Mr. Bruce, in deposition, admitted to some of the big pieces of that equipment that he knew that that was on ENI to order.

[00:28:43] Speaker 01:
He knew it wasn't on, that Isolux hadn't ordered it.

[00:28:47] Speaker 01:
Also, Mr. Bruce conducted a site visit, and ENI was a subcontractor.

[00:28:54] Speaker 01:
So they had knowledge of what was going on on the site, and it was

[00:29:01] Speaker 01:
It was foreseeable that that equipment hadn't been ordered, because that's where all the evidence was pointing.

[00:29:06] Speaker 01:
They haven't pointed to any evidence that shows that it was ordered.

[00:29:10] Speaker 03:
And on the schematics, they claim that the... Did they ask the government for a time extension as a result of their problems with the subcontractors and their difficulty in having enough money to complete?

[00:29:32] Speaker 01:
I'm sorry, your honor, I'm not sure.

[00:29:34] Speaker 01:
I mean, I think they asked for an extension, but I'm not sure what they asked for.

[00:29:39] Speaker 01:
Because by that time, the subcontractors were already performing.

[00:29:42] Speaker 03:
They were, you know, they... Now, but when they were running up against the deadline and they ran out of money, did they ask for an extension of time so that they could raise enough money to complete the contract?

[00:29:58] Speaker 01:
I don't know, Your Honor.

[00:30:01] Speaker 01:
I'm sorry.

[00:30:06] Speaker 01:
Quickly on the schematics, they claimed that they spent from June of 2017 to July of 2017 procuring these schematics that allegedly weren't in the first email or the first CDs.

[00:30:19] Speaker 01:
And they didn't make the claim that that was a cause of the delay until 2023.

[00:30:25] Speaker 01:
So that clearly weighed.

[00:30:28] Speaker 01:
They needed to make that delay claim immediately and weighted through.

[00:30:33] Speaker 01:
They didn't make it in their certified claim.

[00:30:35] Speaker 01:
and waited until 2023 to say that was a reason for the delay.

[00:30:39] Speaker 02:
You agree that on summary judgment, all factual inferences have to be made in E&I's favor, right?

[00:30:46] Speaker 01:
Yes, Your Honor.

[00:30:46] Speaker 01:
Yeah.

[00:30:48] Speaker 00:
I wasn't here for the first round before our court.

[00:30:51] Speaker 00:
So there were lots of other issues in dispute, I assume, in terms of what money is owed or not owed.

[00:30:57] Speaker 00:
That's all off the table.

[00:30:58] Speaker 00:
That's been done.

[00:30:59] Speaker 00:
And this only issue is whether

[00:31:01] Speaker 00:
they should be stung with a notice as a defaulter?

[00:31:06] Speaker 00:
Is that what this is about?

[00:31:07] Speaker 01:
Yeah, that's correct, Your Honor.

[00:31:09] Speaker 01:
So they had several other claims.

[00:31:12] Speaker 01:
This court affirmed the dismissal and summary judgment and trial on some of the claims.

[00:31:19] Speaker 03:
Well, this money is a volunteer, because what they're saying is if they were improperly terminated for default, it should be a convenience termination, in which case they could potentially get money, right?

[00:31:28] Speaker 01:
Potentially.

[00:31:29] Speaker 01:
They haven't made an application for termination for convenience, and they haven't said what money they say they're entitled to.

[00:31:35] Speaker 01:
If it's 93, I think, was the number opposing cons.

[00:31:38] Speaker 01:
So 93% complete.

[00:31:41] Speaker 01:
I haven't seen what they claim they're entitled to if it's converted to a termination for convenience.

[00:31:50] Speaker 03:
OK.

[00:31:51] Speaker 03:
Thank you.

[00:32:03] Speaker 03:
But was there a request for a time extension to the government in order to raise more money so that they could, your client, could complete the contract?

[00:32:14] Speaker 04:
So yeah, sure.

[00:32:15] Speaker 04:
So I brought to the attention to the court February 18th.

[00:32:19] Speaker 04:
It's in the appendix.

[00:32:21] Speaker 04:
So again, at the time, in February.

[00:32:24] Speaker 04:
So where do we find this?

[00:32:25] Speaker 04:
Let me find that.

[00:32:26] Speaker 04:
I wrote a bunch of numbers down here so I could find everything.

[00:32:29] Speaker 04:
I think it's 1524.

[00:32:32] Speaker 04:
Let's see if I'm right about that.

[00:32:38] Speaker 04:
I might be going to a deposition piece here.

[00:32:44] Speaker 04:
The document that I'm referring to, Your Honor, is marked with the four

[00:32:51] Speaker 04:
WAPA folks.

[00:32:53] Speaker 04:
Basically, ENI sends a claim to Liberty Mutual in July.

[00:33:03] Speaker 04:
On 9-11 of 2016, ENI says, in writing, expressly states in that document that we have tendered... Where's the request?

[00:33:21] Speaker 04:
wrote down so many pages that now it's not totally useful to me.

[00:33:26] Speaker 04:
So first of all, again, if you look at the exchange at 1737, that is an exchange between Mr. Dittmer and Ms.

[00:33:34] Speaker 04:
Banks.

[00:33:35] Speaker 04:
And in that exchange, Mr. Dittmer is making it... I'm sorry?

[00:33:41] Speaker 02:
I do.

[00:33:44] Speaker 04:
The document I'm referring to, the February document?

[00:33:47] Speaker 04:
I do, Your Honor.

[00:33:49] Speaker 04:
1737 is the exchange between Mr. Dittmer and Ms.

[00:33:58] Speaker 04:
So 1737, if you see there, that's dated February 7, 2018.

[00:34:06] Speaker 04:
And that's from Jonathan, who's Mr. Dittmer.

[00:34:08] Speaker 04:
He's writing Ms.

[00:34:09] Speaker 04:
Banks.

[00:34:11] Speaker 04:
Or no, that is Ms.

[00:34:12] Speaker 04:
Banks writing Jonathan.

[00:34:13] Speaker 04:
And that's where she specifically writes.

[00:34:15] Speaker 04:
And we've raised this several times in all the courts that will listen.

[00:34:19] Speaker 04:
As you know, this tender grant, this is a project that's subject to a tender where an E&I LLC was tendered for the completion of the project.

[00:34:28] Speaker 04:
That's one of the many instances that we raised.

[00:34:31] Speaker 03:
The E&I LLCs say we need more time.

[00:34:33] Speaker 03:
Where does the E&I say it needs more time?

[00:34:37] Speaker 04:
So there it is.

[00:34:38] Speaker 04:
So it's the page before.

[00:34:41] Speaker 04:
So 1575 it is a copy of the claim that is filed wait wait what page it's the page just before so I had you open the 1737 Is the cover page right ENI global that's the that's the cover page for the claim where

[00:35:02] Speaker 04:
that they asked.

[00:35:03] Speaker 04:
Also there's... You don't have the voluminous claim.

[00:35:07] Speaker 02:
It's like a 500 page claim.

[00:35:13] Speaker 04:
Mr. Dittmer concedes in his deposition

[00:35:16] Speaker 03:
The regulations require that you request a time extension, right?

[00:35:20] Speaker 03:
Yes.

[00:35:21] Speaker 03:
Yes.

[00:35:21] Speaker 03:
OK.

[00:35:21] Speaker 03:
So where is the request?

[00:35:23] Speaker 04:
So that is actually, Your Honor, that was dealt with by the lower, by this court and the lower court, the first iteration, the first at-bat.

[00:35:30] Speaker 04:
So that the first time it raises the issue that it asked for the delay, that issue wasn't on appeal in this instance.

[00:35:38] Speaker 04:
But in the first instance, it was on appeal that Mr. Bruce asked Mr. Dittner for a delay and Mr. Bruce responded that

[00:35:45] Speaker 04:
it was a call for.

[00:35:47] Speaker 04:
Now as it relates to the emails with Ms.

[00:35:49] Speaker 04:
Wythe, Mr. Bruce alerted Ms.

[00:35:52] Speaker 04:
Wythe the very next day that the email that she sent him with the schematics did not come through and he was unable to open it.

[00:35:59] Speaker 04:
He not only alerted the government to them timely, he did it in essentially the same day.

[00:36:07] Speaker 04:
And there were about four different exchanges on these emails, and that is in Ms.

[00:36:11] Speaker 04:
Wythe's deposition, which is on

[00:36:16] Speaker 04:
I'm going to use my glasses again.

[00:36:20] Speaker 04:
That's on 1826, starting on 1826.

[00:36:24] Speaker 03:
Where did we treat this issue in the first appeal?

[00:36:27] Speaker 03:
I'm sorry?

[00:36:29] Speaker 03:
Where in our opinion on the first appeal did we treat this question of whether there was a request for a time extension?

[00:36:39] Speaker 04:
In the remand.

[00:36:41] Speaker 04:
I didn't have that page marked.

[00:36:43] Speaker 04:
Your Honor, as far as that request, the eight... Okay, never mind.

[00:36:52] Speaker 04:
I'm sorry, Your Honor.

[00:36:53] Speaker 04:
I wasn't prepared for that question.

[00:36:54] Speaker 04:
I wanted to address the singular issue about that the courts brought up a couple of times about the reasonableness of paying the subcontractors.

[00:37:02] Speaker 04:
There's no universe in which E&I could have gotten this work completed in time.

[00:37:09] Speaker 04:
Even the court suggests in its lower, in its ruling

[00:37:13] Speaker 04:
It says in dicta, even assuming he and I could get other subcontractors in this rural environment.

[00:37:20] Speaker 04:
But if it did, again, the big, the big money expenditure was actually in the material.

[00:37:28] Speaker 04:
And that, if you go through Mr. Dittmer's testimony.

[00:37:31] Speaker 04:
We walked through each one of those receipts.

[00:37:33] Speaker 04:
Mr. Bruce showed the WAPA in February of 2018, $965,000 or $85,000 worth of canceled checks that E&I wrote for materials that it was not supposed to pay for.

[00:37:50] Speaker 04:
And it did so throughout the performance of the contract.

[00:37:53] Speaker 04:
And that is why by February, it was out of money.

[00:37:57] Speaker 04:
had to shrink its staff.

[00:37:58] Speaker 00:
It did keep performing.

[00:38:01] Speaker 00:
So your real allegation isn't about whether or not you had the money for subcontractors.

[00:38:06] Speaker 00:
It really involves the money and the dispute that existed with respect to the material, not with respect to the subcontractors.

[00:38:13] Speaker 04:
It is in some part, some contractors, when they came up, they all had ratification agreements.

[00:38:17] Speaker 00:
Can you just answer my question?

[00:38:18] Speaker 00:
Yes.

[00:38:18] Speaker 00:
Largely?

[00:38:19] Speaker 04:
Yes, Your Honor.

[00:38:21] Speaker 00:
Largely a result of the who ordered what when for the materials and not with respect to who went to hire new subcontractors.

[00:38:29] Speaker 04:
Yes, Your Honor.

[00:38:30] Speaker 04:
As an overall percentage of money, unexpected money that E&I laid out, the vast majority of it was for materials.

[00:38:37] Speaker 04:
That's why I said earlier that material minutes of contractors were kind of used interchangeably.

[00:38:41] Speaker 04:
The vast majority of that money was laid out for materials.

[00:38:45] Speaker 04:
Some money at the very beginning of the performance of the contract was laid out for disgruntled.

[00:38:51] Speaker 04:
So there was a ratification of 13 subcontractors, but E&I only, I'm sorry, Liberty Mutual.

[00:38:59] Speaker 02:
You're talking about a lot of different stuff.

[00:39:01] Speaker 02:
I just want to make sure that I understand.

[00:39:03] Speaker 02:
You've set forth multiple reasons for why there was an excusable delay.

[00:39:08] Speaker 02:
One of them is that you had to pay subcontractors.

[00:39:12] Speaker 02:
Are you giving that one up now and saying, no, no, the real reason is because we had to pay for this material?

[00:39:19] Speaker 02:
I want to make sure I understand what you're saying because you're getting distracted with all the facts to be honest with you.

[00:39:25] Speaker 04:
I'm sorry.

[00:39:25] Speaker 04:
So it's both things.

[00:39:27] Speaker 04:
So one thing's so important to understand is that E&I or Liberty Mutual was only going to pay subcontractors that it was obligated to pay under the Miller Act.

[00:39:37] Speaker 04:
It wasn't going to pay subs that it didn't have to pay under the Miller Act.

[00:39:40] Speaker 04:
So it paid tier one, tier two subcontractors, and it only paid tier two subcontractors that had filed a claim, a timely claim, within the three month or so.

[00:39:50] Speaker 02:
So you're arguing that that was a reasonable action that you took.

[00:39:53] Speaker 04:
That's right.

[00:39:53] Speaker 02:
And then separately you're saying it wasn't foreseeable that you would have not, that you would have had to pay for material as well.

[00:40:01] Speaker 04:
Almost a million dollars for the material.

[00:40:02] Speaker 02:
Some materials, yes.

[00:40:03] Speaker 02:
The court blow found differently, said it was foreseeable, right?

[00:40:08] Speaker 04:
That's right.

[00:40:09] Speaker 02:
And how do you challenge that?

[00:40:11] Speaker 04:
So it's the factual analysis that the court does.

[00:40:14] Speaker 04:
So the court says, for example, he and I did a walkthrough on December 20th.

[00:40:19] Speaker 04:
In that walkthrough, it would have, and I argue this in my brief, intuitively, he and I couldn't have seen materials that would have been theoretically in transit.

[00:40:29] Speaker 04:
There would have been no mechanism for inspecting materials that would have been in transit.

[00:40:33] Speaker 04:
It would have only been able to inspect materials that were on site.

[00:40:37] Speaker 04:
And Mr. Bruce testified, and it's undisputed, Mr. Bruce testified that there were materials inside crates that he could not physically inspect.

[00:40:47] Speaker 04:
And there was snow on the ground and he also testified that, and this was included in the governance record, he testified in the Liberty Mutual trial and in his deposition here that on the termination date of December 2nd, 2016, Wapa comes in basically, he describes a few SUVs, pulls up

[00:41:11] Speaker 04:
pulls all of the documentation off the site and orders everyone off the site that day.

[00:41:18] Speaker 04:
And that's in Mr. Bruce's deposition near the end when I'm cross-examining him.

[00:41:22] Speaker 04:
And so he says, of course he didn't have an opportunity to hold on to materials.

[00:41:26] Speaker 04:
He was a subcontractor at the time.

[00:41:28] Speaker 04:
So he fast forward to December 20th.

[00:41:31] Speaker 04:
He does a one, two-hour walkthrough on a 19-acre piece of land.

[00:41:35] Speaker 03:
Help me, because this is very confusing.

[00:41:39] Speaker 03:
I'm sorry.

[00:41:40] Speaker 03:
Your contention is we were delayed in performance because the client ran out of money.

[00:41:46] Speaker 03:
Yes.

[00:41:47] Speaker 03:
But did he ever say I need two weeks to raise money or if you give me a month I can raise money?

[00:41:54] Speaker 03:
I mean did he say that if he were granted a time extension he could perform?

[00:42:00] Speaker 03:
Or is he just saying I can't do anything because I don't have enough money?

[00:42:03] Speaker 04:
No, the former, not the latter.

[00:42:05] Speaker 04:
So he kept people on the ground.

[00:42:07] Speaker 04:
He continued to perform.

[00:42:09] Speaker 04:
He pressed Mr. Dittmer believing at the time that it was Mr. Dittmer or WAPA that had withheld the material facts that he needed to actually bid on the job.

[00:42:18] Speaker 04:
There's a meeting that's in the very beginning of this appendix where Mr. WAPA, Mr. Dittmer, Mr. Bruce, a bunch of the WAPA staff are having a conversation.

[00:42:30] Speaker 04:
Mr. Bruce tells

[00:42:32] Speaker 04:
Dittmer, hey, you withheld a bunch of information.

[00:42:34] Speaker 04:
Dittmer says, no, I gave it all to Liberty Mutual.

[00:42:37] Speaker 04:
We did not find out that that statement was true until November of 2021, three years after that.