[00:00:00] Speaker 03: The next case is Court Construction versus Secretary of the Army, number 24-2232. [00:00:04] Speaker 03: Mr. Wilson, when you're ready. [00:00:10] Speaker 02: Thank you, Your Honors. [00:00:12] Speaker 02: May it please the Court? [00:00:14] Speaker 02: Courtee Construction Company was the appellant in this case. [00:00:18] Speaker 02: This case involves an appeal from the Armed Services Board of Contract Appeals [00:00:26] Speaker 02: It involves only legal issues. [00:00:29] Speaker 02: Interpretations of a contract are clearly established to be an issue of law. [00:00:35] Speaker 02: Whether there's an ambiguity is an issue of law. [00:00:39] Speaker 02: And the result is that this court has de novo review. [00:00:48] Speaker 02: Two issues basically are involved in this case in terms of what to interpret. [00:00:53] Speaker 02: They are beyond the hanger. [00:00:57] Speaker 02: dealing with the fuel hanger, was beyond the hanger lines, three lines that are on the drawings, and the spec information with respect to extend base-wide chilled water. [00:01:12] Speaker 02: Did that require chilled water piping? [00:01:17] Speaker 02: And the second was, was there a valve vault that required his contract work? [00:01:23] Speaker 01: Can I ask you about the valve vault really quick? [00:01:26] Speaker 01: Yeah. [00:01:27] Speaker 01: There's the language that you just referred to in paragraph 4.5.6. [00:01:33] Speaker 01: After that language about extending the base-wide chilled water, there's language that says, provide connection location for future projects. [00:01:44] Speaker 01: What could this mean other than a valve vault? [00:01:47] Speaker 02: It could be a connection at the building to bring in to have further connection. [00:01:56] Speaker 02: It could be another valve vault. [00:02:00] Speaker 02: It's not clear. [00:02:01] Speaker 02: There's no... Isn't that the problem? [00:02:04] Speaker 03: It's not clear. [00:02:05] Speaker 03: You should have asked the government about it before you submitted your pricing. [00:02:08] Speaker 02: Well, I don't think so, because it's the designation, Your Honor, in the drawing doesn't designate a valve vault. [00:02:14] Speaker 04: No, but the question is whether there's ambiguity. [00:02:17] Speaker 04: And certainly there's ambiguity here. [00:02:20] Speaker 02: I do not agree. [00:02:22] Speaker 02: But I will touch on that, Your Honor. [00:02:26] Speaker 02: And so in connection with the drawings, [00:02:31] Speaker 02: Let me start with a couple of basic principles. [00:02:35] Speaker 02: This court has clarified the principle in H.B. [00:02:38] Speaker 02: Mack versus United States that a proper technique of contract interpretation is for the court to place itself in the shoes of a reasonable and prudent contractor and decide how such a contractor would act in interpreting the contract documents. [00:02:55] Speaker 02: The burden, we believe, was on the government because they were seeking a credit. [00:03:01] Speaker 02: Uh, that they had the burden of proof. [00:03:03] Speaker 02: And in fact, the core board made that determination of law. [00:03:08] Speaker 02: Um, you can certainly disagree, but I think there's a case law that says when the government seeks any dispute about any of this, the finding of the board was. [00:03:18] Speaker 03: The contract documents were ambiguous. [00:03:21] Speaker 03: You knew specifically about this ambiguity. [00:03:24] Speaker 03: You failed to inquire. [00:03:26] Speaker 03: And therefore it's on you that you didn't provide what the government thought these documents required. [00:03:34] Speaker 02: I think there needs to be a very careful dissection of what we're talking about. [00:03:40] Speaker 02: And then I come to a different conclusion. [00:03:43] Speaker 02: So first of all, is there a requirement because of the base-wide chilled water language in the specification? [00:03:51] Speaker 02: And the only competent evidence in the record on that was Mr. Gerald, a mechanical subcontractor who was also an engineer. [00:03:59] Speaker 02: And he said that was impossible. [00:04:02] Speaker 04: So obviously... Oh, but doesn't that simply reflect the [00:04:09] Speaker 04: ambiguity, which is at the heart of this case. [00:04:12] Speaker 02: I don't think it is an ambiguity. [00:04:13] Speaker 04: He looked at that and he reached the conclusion that, well, that's just impossible to bid because it doesn't make any sense. [00:04:22] Speaker 04: But he took a chance by just saying, okay, let's just ignore this. [00:04:29] Speaker 02: There's no case rendered by this court where there's an impossibility in the specification that indicates there's a duty to clarify. [00:04:37] Speaker 04: None. [00:04:38] Speaker 04: But that's his opinion. [00:04:39] Speaker 03: Maybe this is going to be that one. [00:04:40] Speaker 03: I mean, how can that not be the case? [00:04:43] Speaker 03: If a contractor gets bid documents that says you have to do steps one through four in doing this contract, and the contractor knows there's no way you can do four, [00:04:56] Speaker 03: Doesn't it have to go back to the government and say, we can't do four? [00:05:00] Speaker 03: There's no way we're going to put four in our proposal because it's impossible. [00:05:06] Speaker 03: Or can they just assume the government didn't actually mean it? [00:05:10] Speaker 02: In the context, we're supposed to take into context the contemporaneous circumstances. [00:05:17] Speaker 02: The government started with an RFP1. [00:05:19] Speaker 03: Let me answer my question as a hypothetical first. [00:05:24] Speaker 03: The contract requires four things, doesn't matter what they are, requires four things. [00:05:31] Speaker 03: It's sent out to a bunch of contractors and a contractor says, there is no way that number four is possible. [00:05:39] Speaker 03: We can do one through three, four is impossible, can't be done. [00:05:44] Speaker 03: Can the contractor submit a bid for one through three and ignore four without telling the government in advance that it's ignoring four because it's impossible? [00:05:54] Speaker 02: I believe the answer is yes. [00:05:56] Speaker 02: And I know you disagree. [00:05:58] Speaker 02: Well, I know you're the, you're the one that counts. [00:06:00] Speaker 04: What's the basis for your, what's the legal basis for your answer? [00:06:05] Speaker 02: Because there's no, there's no court case. [00:06:07] Speaker 03: The purpose for the duty... When you say there's no court case, first of all, there is plenty of court cases saying, [00:06:14] Speaker 03: Contractors are bound to inquire about ambiguities. [00:06:18] Speaker 03: And impossibility is even more than an ambiguity. [00:06:22] Speaker 03: So it's just flat out wrong to say there's no precedent on this issue. [00:06:27] Speaker 03: If you're talking about, has any court said you have to inquire about impossibility? [00:06:32] Speaker 03: I don't know. [00:06:32] Speaker 03: Maybe not. [00:06:33] Speaker 03: But clearly, that makes sense. [00:06:36] Speaker 03: If you have to inquire about ambiguity, you certainly have to inquire about impossibility. [00:06:42] Speaker 03: Why wouldn't you? [00:06:43] Speaker 03: What legal rationale could you say a contractor can just ignore plain language in a contract requiring them to do something impossible? [00:06:54] Speaker 02: Because in the circumstances of this case, you could- I'm not asking about the circumstances of this case. [00:06:58] Speaker 03: I'm asking about my hypothetical, which you seem to suggest, even if it's clearly impossible, the contractor has no duty to inquire from the government. [00:07:09] Speaker 03: I don't understand that argument at all. [00:07:11] Speaker 03: And I don't understand any legal basis for it. [00:07:14] Speaker 03: Frankly, you're wasting your time holding on to that. [00:07:17] Speaker 03: You should probably get to whether or not this actually created an ambiguity. [00:07:23] Speaker 01: Also, what about cases like Seaboard, Lumber versus the US? [00:07:28] Speaker 01: This is one of our cases where we held that the doctrine of a possibility really applies when it's after the contract is made that it seemed to be impossible. [00:07:41] Speaker 01: And that, you know, this defense requires that some supervening event make performance impossible. [00:07:50] Speaker 02: I read Seaboard. [00:07:51] Speaker 02: I didn't understand it to me. [00:07:53] Speaker 02: I think it had a rule that said if there's an impossibility, the contractor has no obligation to perform that impossibility. [00:08:01] Speaker 01: Well, it says specifically, it's talking about after a contract is made. [00:08:06] Speaker 01: And you knew of this impossibility, alleged impossibility, before the [00:08:12] Speaker 01: consistent with what Judge Hughes has been asking. [00:08:17] Speaker 02: I know that Judge Hughes doesn't want me to get into the context, but I think the context does count. [00:08:22] Speaker 03: No, you can get into the context. [00:08:24] Speaker 03: You're insisting on a legal argument that is a clear loser. [00:08:27] Speaker 03: I don't understand why you don't concede the main point and try to move into. [00:08:32] Speaker 03: The point is, the board found there was an ambiguity here. [00:08:36] Speaker 03: Your client knew about it and had a duty to inquire, and you didn't. [00:08:41] Speaker 03: Where did the board err in those conclusions? [00:08:44] Speaker 02: Well, I will indicate that as part of what was happening here, the RFP-1 indicated that we're going to use chilled water to provide the cooling capacity for the hanger. [00:09:02] Speaker 02: RFP phase two changed that and allowed condensed Cooled air and and so there was an option if you look at four point two point three of the specifications, and you look at four point four point four That was the option and so therefore chilled water no longer became necessary and mr.. Isn't it isn't it kind of? [00:09:28] Speaker 01: This isn't the language. [00:09:29] Speaker 01: It says extend the base wide chilled water, hot water and compressed air piping. [00:09:35] Speaker 01: And you interpreted that as being all you had to do is compressed air piping. [00:09:39] Speaker 01: The other things were optional, but that was an end there. [00:09:42] Speaker 01: It didn't say or. [00:09:43] Speaker 02: No, but how do you extend something that doesn't exist? [00:09:47] Speaker 03: That's what you had to ask the government before you price this out. [00:09:53] Speaker 02: With all due respect, I think when it was very clear that they shifted to, we'll allow you to use condensed air, therefore... It was very clear we wouldn't be here. [00:10:04] Speaker 02: I think it is clear if you read the specifications. [00:10:06] Speaker 03: You think the specification, combined with the drawings, which specifically have pipes labeled CW, which you had to understand as chilled water, is very clear? [00:10:18] Speaker 03: You're into your rebuttal. [00:10:19] Speaker 03: You can answer and go on, or you can save the remainder of your time. [00:10:24] Speaker 02: Let me just make a real quick argument. [00:10:26] Speaker 02: Assuming the court, as it's leaning, that this is ambiguous, I don't consider the base. [00:10:33] Speaker 02: That was an impossibility under the specification. [00:10:36] Speaker 02: Under the drawings, I understand it mentions CW. [00:10:40] Speaker 02: But it doesn't go through the protocol, as Mr. Gerald pointed out, that is for every other line that's on that drawing that was contract work. [00:10:49] Speaker 02: The fire line, the domestic water, the other lines, they all went through that keynote schedule and on drawing C002 in the legends for the proposed work. [00:11:03] Speaker 02: And so that drawing, [00:11:05] Speaker 02: to me is a latent and ambiguity at best and We didn't have a duty to seek clarification as to those three lines Your honor I'll reserve my time Good morning, your honor, Mr.. May I please the court? [00:11:31] Speaker 00: and its statement to the board Courtey made [00:11:35] Speaker 00: dispositive admission against interest, it referred to in Appendix Page 118, which the board quotes. [00:11:45] Speaker 00: It's actually Appendix Page 237, where Cordy tells the board that the specifications and drawings were akin to a scrivener's error, suggesting that it was permissible and normal or reasonable for Cordy to interpret [00:12:06] Speaker 00: of language of the specifications as having no meaning, as being inoperative. [00:12:11] Speaker 00: And as we pointed out in our brief, we cited, for instance, this court's decision at Coast Federal Bank. [00:12:18] Speaker 00: The contractor in the court is required to interpret contractual language as giving meaning to every language. [00:12:25] Speaker 00: There's no license. [00:12:26] Speaker 00: There's no case that I'm aware of that provides any contractor with license to openly treat [00:12:32] Speaker 00: Language is an operative and superfluous and without meaning in a contract specification. [00:12:36] Speaker 00: Even if it was a scrivener's error, it raises an ambiguity. [00:12:40] Speaker 00: It had a duty to ask. [00:12:43] Speaker 00: Other offerers asked about this language in question. [00:12:47] Speaker 00: It was publicly available to Cordy, what the response was. [00:12:50] Speaker 00: I think Cordy found a coarse response to these inquiries. [00:12:55] Speaker 00: unhelpful, that put even more of a burden on Corte to ask for clarification. [00:13:00] Speaker 00: It can't simply just unilaterally declare language in the specification on a request or proposal as inoperative and having no meaning. [00:13:07] Speaker 00: There's no case that supports that position. [00:13:10] Speaker 04: Can you just spend a minute to talk about where in the RFP it specified the provision of the valve vaults? [00:13:20] Speaker 04: The valve vaults seem to be [00:13:24] Speaker 04: a little obscure to me. [00:13:27] Speaker 00: It is obscure. [00:13:28] Speaker 04: Beyond ambiguity, I'm not even sure it's there. [00:13:32] Speaker 00: Well, we cited the various appendix pages in our brief, calling for chilled water piping. [00:13:40] Speaker 00: And for the two, there are two pictures of the vaults. [00:13:46] Speaker 00: There's vault notations. [00:13:47] Speaker 04: But there's no detail or discussion about [00:13:54] Speaker 04: what they would be, how big they would be. [00:13:58] Speaker 04: I mean, no detail whatsoever. [00:14:00] Speaker 04: That is true, Your Honor. [00:14:03] Speaker 04: Which really raises a question in my mind as to whether the specification for a valve vault was there at all. [00:14:12] Speaker 00: And I forget what page of our brief. [00:14:15] Speaker 00: We do cite two specifications and drawings that show the valve [00:14:22] Speaker 00: It's not clear. [00:14:24] Speaker 00: Is there one thing I can say? [00:14:24] Speaker 04: I know in one of the drawings, one of the valve vaults is shown in bold. [00:14:29] Speaker 00: Yes. [00:14:29] Speaker 04: That's a tiny hook. [00:14:34] Speaker 00: It's a tiny hook. [00:14:35] Speaker 00: And at my age, I had difficulty looking at the drawings because the font is so tiny. [00:14:40] Speaker 00: I'm with you there. [00:14:41] Speaker 00: I had to blow it up on my phone in order to see it. [00:14:44] Speaker 00: Brian Bird, who wrote the brief, helpfully blew up some of the pictures of the specifications in the brief [00:14:52] Speaker 00: for those of us who can't read tiny font. [00:14:55] Speaker 00: The point is this is a contract within an ongoing project with a lot of neighboring activity and projects going on. [00:15:06] Speaker 00: This is a specific contract within an ongoing iterative developing project. [00:15:13] Speaker 00: That's why, for instance, the language that Judge Stoll pointed out, [00:15:17] Speaker 00: They were supposed to put chilled water piping in and then leave a connection for the future. [00:15:23] Speaker 00: Again, if they were confused about that, they could have asked the court. [00:15:26] Speaker 00: They never asked the court. [00:15:27] Speaker 04: I think that's your point. [00:15:28] Speaker 04: The point is that even if the hook is tiny, [00:15:31] Speaker 04: It was there, and it was their burden to inquire. [00:15:34] Speaker 00: Absolutely. [00:15:35] Speaker 00: The moral hazard are what they did. [00:15:36] Speaker 00: And this is speculation on my part, because we don't know how much everyone bid. [00:15:41] Speaker 00: This is a half a million dollar deduction in a $72 million contract. [00:15:49] Speaker 00: By deliberately not inquiring and not pricing this work, there's an issue. [00:15:58] Speaker 00: They say in their reply brief that [00:16:01] Speaker 00: We haven't pointed out to the fact that they were aware of it. [00:16:05] Speaker 00: But pre-award on page 20 of the reply brief, they say the government's presumption that nothing in the record suggests that Cordy or Gerald Mechanic was aware of a reasonable contract should have been aware of this ambiguity. [00:16:20] Speaker 00: Mr. Gerald testified, and Judge Stinson in the board had to point out the error of his way, that this was a requirement that was added. [00:16:28] Speaker 00: It was a holdover from phase one. [00:16:30] Speaker 00: these new specs that they're complaining about were added in phase two. [00:16:35] Speaker 00: And they repeat that same language. [00:16:37] Speaker 00: They do the black quote from Mr. Gerald's deposition in their opening brief, even though Judge Stinson pointed out to them that that's a factual error. [00:16:44] Speaker 00: It wasn't a holdover. [00:16:46] Speaker 00: But to go to your honor's question, they had a duty to inquire. [00:16:53] Speaker 00: And the moral hazard is by unilaterally deciding that they're not going to price this contractor like [00:16:58] Speaker 00: this part of the contract, unlike the other competitors, it might not have been dispositive, but they're getting a competitive advantage because they're deliberately not placing part of the contract. [00:17:10] Speaker 04: What consequence, if any, is the fact that the valve vault is not mentioned at all in the specification? [00:17:18] Speaker 00: That's an ambiguity that could write. [00:17:20] Speaker 00: I mean, again, that's an ambiguity. [00:17:22] Speaker 00: The other thing is there. [00:17:22] Speaker 04: Is it an ambiguity, or is it just an indication that that's just not part of the contract, period? [00:17:31] Speaker 04: Even if it might be shown somehow in the drawing. [00:17:35] Speaker 04: We've already agreed that. [00:17:37] Speaker 00: A little tiny book. [00:17:38] Speaker 00: I wish Mr. Bird were here, because he identified. [00:17:42] Speaker 00: And I have the specifications, although I'm not sure which one. [00:17:45] Speaker 00: Two of the drawings do show the valve. [00:17:49] Speaker 00: It may not be very clear. [00:17:51] Speaker 00: They do show part of the valve. [00:17:53] Speaker 04: The specification doesn't describe anything. [00:17:56] Speaker 01: Right. [00:17:57] Speaker 01: Can I ask a question? [00:17:59] Speaker 01: I was thinking about this very issue. [00:18:01] Speaker 01: And so my question that I asked opposing counsel was, [00:18:06] Speaker 01: What does the language provide connection location for future projects mean following the language about providing the chilled water? [00:18:15] Speaker 01: Is that a valve vault? [00:18:19] Speaker 01: And what else could it be? [00:18:20] Speaker 01: I mean, what would somebody, is there any testimony or evidence at all about what somebody who reads this, provide connection location for future projects, how they would interpret what that means? [00:18:30] Speaker 00: No, because this was on summary judgment. [00:18:34] Speaker 00: So there was no hearing at the board about this. [00:18:37] Speaker 00: But what is clear with all the materials provided to offerers here is that this was one of many projects, and that there was absolute consideration of future projects. [00:18:48] Speaker 00: insistence, and the reply brief is quite florid in suggesting. [00:18:52] Speaker 01: So there needs to be a connection location. [00:18:54] Speaker 01: A valve vault is one possible connection location. [00:18:57] Speaker 01: Yes. [00:18:57] Speaker 01: Is that right? [00:18:58] Speaker 00: Yes. [00:18:58] Speaker 01: OK. [00:19:01] Speaker 00: And again, to the extent there were any ambiguities, there was a duty to inquire. [00:19:05] Speaker 00: Again, nothing authorized them to unilaterally remove language they don't like from the RFP and not price it. [00:19:12] Speaker 03: Even if we found the specification doesn't say anything about valve vault, [00:19:16] Speaker 03: If the drawings show it, there's a general principle that specification controls over the drawings. [00:19:22] Speaker 03: But if there's a conflict, there still has to be a resolution of that conflict. [00:19:26] Speaker 03: Absolutely. [00:19:27] Speaker 03: Yes, sir. [00:19:30] Speaker 00: Any further questions? [00:19:33] Speaker 03: Thank you. [00:19:34] Speaker 00: I apologize. [00:19:36] Speaker 00: My reading of the tiny font wasn't perfect. [00:19:42] Speaker 02: Your Honor, on the last point, [00:19:45] Speaker 02: The drawings don't clearly indicate that's a valve vault. [00:19:47] Speaker 02: It doesn't match what a valve vault is. [00:19:52] Speaker 02: In C001, they have a drawing of a valve vault. [00:19:56] Speaker 02: It's got a little hourglass-type figure in it. [00:19:59] Speaker 02: Those rectangles don't have that. [00:20:01] Speaker 02: So there's no mention of a valve vault in drawing CU101. [00:20:06] Speaker 01: Is there something in the legend [00:20:08] Speaker 01: that looks like what's in the drawing. [00:20:11] Speaker 01: That is, the two, it's two boxes, not just one, but a box within a box without an hourglass. [00:20:18] Speaker 01: I was looking, I don't see anything. [00:20:20] Speaker 02: No, there's nothing, that's just a rectangle. [00:20:24] Speaker 01: So it's something. [00:20:25] Speaker 02: In the legends, it's nothing. [00:20:28] Speaker 01: I mean, there's just no indication. [00:20:29] Speaker 01: But why doesn't that make it raise a duty to inquire as to what? [00:20:33] Speaker 02: In the normal drawing, it would. [00:20:35] Speaker 02: But this drawing goes through past, [00:20:38] Speaker 02: present and future. [00:20:39] Speaker 02: It doesn't just deal with what the contractor has to put in. [00:20:43] Speaker 02: Some of the lines are pre-existing and some of the lines are future. [00:20:47] Speaker 01: The ones that are future are bold and the ones that are pre-existing are not. [00:20:51] Speaker 02: The ones that are pre-existing, it's not clear on that drawing, but they're clearly not contract work. [00:20:57] Speaker 02: The way you look for the contract work is the keynote. [00:21:01] Speaker 02: And there's a keynote on manholes, but there's not a keynote on that rectangle. [00:21:07] Speaker 02: on either side of the rectangle. [00:21:10] Speaker 02: So I'd like to quickly mention the Scrivener error. [00:21:15] Speaker 02: We acknowledge, we believe it was a mistake, because it went from RFP1, where it was going to be a chilled water, base-wide system. [00:21:24] Speaker 02: That was clear. [00:21:25] Speaker 02: If you go to our HVAC. [00:21:27] Speaker 01: Can I ask another question? [00:21:28] Speaker 01: I'm so sorry. [00:21:28] Speaker 01: Sure. [00:21:28] Speaker 01: Thank you, Judge. [00:21:30] Speaker 01: On this very drawing you were talking about with the double box. [00:21:35] Speaker 01: It has some language that my eyes aren't good enough to really see, but if I remember correctly, it says something about they must be valved appropriately. [00:21:45] Speaker 01: It's box D under the general sheet notes. [00:21:51] Speaker 01: I was wondering whether that, because it's talking about having a valved connection, whether that suggests a valve fault. [00:21:58] Speaker 02: No. [00:21:58] Speaker 02: Not necessarily, Your Honor, because there are different types of piping. [00:22:02] Speaker 02: There are seven types of piping on that drawing. [00:22:05] Speaker 02: There's domestic water. [00:22:06] Speaker 02: There's fire water. [00:22:08] Speaker 02: There's industrial water. [00:22:09] Speaker 01: And so that doesn't tell you that that's dealing with... Because all utility infrastructure extending to new apron is to be valved. [00:22:20] Speaker 02: That begs the question, though, whether those three lines in the boxes were intended to be work for this project. [00:22:29] Speaker 02: And so we do say it's Scrivener error. [00:22:34] Speaker 02: But it's clear what happened. [00:22:35] Speaker 02: And I think the circumstances, metric construction versus US, we're supposed to take into account those circumstances in interpreting the contract. [00:22:44] Speaker 02: And the major change that went, and Mr. Gerald testified about this, his testimony is actually supportive of our position. [00:22:51] Speaker 02: The government thinks it's not. [00:22:53] Speaker 02: And he says they went to not a base wide system for any of this. [00:22:58] Speaker 02: They went to a specified system for dedicated for that hanger. [00:23:05] Speaker 02: So whether we went with condensed, cooled air, [00:23:07] Speaker 02: Or we went with chilled water. [00:23:09] Speaker 02: We had that option. [00:23:10] Speaker 02: And there are chilled water specifications in 4.4. [00:23:15] Speaker 02: But they go to the building. [00:23:16] Speaker 02: In fact, it says chilled building system in that specification. [00:23:22] Speaker 02: So it's clear there was a shift to no longer do we need, we're going to have a base-wide chilled water system. [00:23:29] Speaker 02: So I think that needs to be taken into account in trying to interpret the entire contract document. [00:23:36] Speaker 03: Thank you. [00:23:36] Speaker 03: Thank you. [00:23:36] Speaker 03: Case is submitted.