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Foundation Fence, Inc. v. Kiewit Pacific Co.

October 13, 2010

FOUNDATION FENCE, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
KIEWIT PACIFIC COMPANY, A DELAWARE CORPORATION; ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [Docket No. 26]

This case came on for hearing on October 1, 2010, on Defendants' motion for summary judgment. Louis J. Blum appeared on behalf of Plaintiff and Jack Leer appeared and argued on behalf of Defendants. After reviewing the parties' briefs and hearing oral argument from counsel, the Court denies the motion.

I. BACKGROUND

On July 8, 2008, Defendant Kiewit Pacific Company ("Kiewit") entered into a "Prime Contract" with the United States Army Corps of Engineers ("ACE") for the construction of three segments of a fence along the United States-Mexico Border between Tecate and Jacumba.

On July 24, 2008, Kiewit entered into a Subcontract with Plaintiff Foundation Fence, Inc. for the fabrication and installation of approximately 6.25 miles of the border fence for the price of $12,887,814.48. (Notice of Lodgment, Ex. E.)

During the course of construction, two disputes arose between and among Foundation Fence, Kiewit and ACE. The first dispute concerned a change to the project requested by ACE. Specifically, on August 26, 2008, ACE informed Kiewit that Kiewit and Foundation Fence were to suspend work on or around an access road and lay down area near another section of the project. (Notice of Lodgment, Ex. F at 91.) Kiewit forwarded this information to Foundation Fence on August 27, 2008. (Id. at 90.)

On October 29, 2008, Foundation Fence submitted a claim to Kiewit for $346,461.37 in additional costs arising out of the delayed access to the site ("the Delayed Access Claim"). (Notice of Lodgment, Ex. G.) Kiewit requested that Foundation Fence revise its claim so that Kiewit could present it to ACE. (Notice of Lodgment, Ex. H.) Foundation Fence revised its claim and resubmitted it to Kiewit on January 7, 2009. (Notice of Lodgment, Ex. I.) Kiewit again requested that Foundation Fence revise its claim. (Notice of Lodgment, Ex. K.) Foundation Fence did so, and resubmitted its claim to Kiewit on February 24, 2009. (Notice of Lodgment, Ex. J.) On March 16, 2009, Kiewit submitted the claim to ACE. (Notice of Lodgment, Ex. L.) ACE denied the claim on April 7, 2009, and Kiewit informed Foundation Fence of the denial on April 13, 2009. (Notice of Lodgment, Ex. M.)

The parties disagree on the basis for the second dispute. Kiewit asserts it arose out of ACE's rejection of Foundation Fence's proposal to modify the foundation requirements and dig barrier for the fence, while Foundation Fence contends the dispute was the result of wide trenches caused by natural conditions and Kiewit's conduct.

On January 13, 2009, Foundation Fence submitted a claim to Kiewit for $1,432,131.84 in additional costs arising out of the trench/foundation dispute ("the Trench/Foundation Claim"). (Notice of Lodgment, Ex. Q.) In that claim, Foundation Fence stated, "The USACE did not want to use our design and chose to have us dig the 6' depth regardless of the width of the trench. This cost us much more time and additional concrete." (Id. at 146.) Kiewit responded to the claim in a letter dated January 22, 2009. (Notice of Lodgment, Ex. R.) In that letter, Kiewit took issue with Foundation Fence's characterization of the dispute as a "design change," and stated its position was that "the USACE acted appropriately and in accordance with the RFP and contract documents." (Id. at 150.) Kiewit requested that Foundation Fence revise its claim so that Kiewit could present it to ACE. (Id. at 149-51.) Foundation Fence revised its claim and resubmitted it to Kiewit on March 13, 2009. (Notice of Lodgment, Ex. U.) That claim states: "This letter is submitted by Foundation Fence, Inc. ("FFI") as a request for Change Order ("RFCO") and equitable adjustment in accord with Section 5(b), CHANGES, of that certain Subcontract between FFI and Kiewit Pacific Co. ("Kiewit") dated July 20, 2008 ("Subcontract"), attached hereto as Exhibit 'A.'" (Id. at 155.) Kiewit responded to the claim in a letter dated March 26, 2009. (Notice of Lodgment, Ex. V.) In that letter, Kiewit requested that Foundation Fence make further revisions to its claim. Foundation Fence declined to do so, and instead filed the present case against Kiewit and its payment bond surety, Travelers Casualty and Surety Company of America. The Complaint alleges five claims: three claims under the Miller Act, one claim for breach of the Subcontract, and one claim for reasonable value.

II. DISCUSSION

Defendants move for summary judgment on all of Plaintiff's claims. They argue Sections 5(b) and 19(a) of the Subcontract set forth conditions precedent to Plaintiff's right to bring the present claims, and since Plaintiff has failed to comply with those conditions, its claims are barred. (Mem. of P. & A. in Supp. of Mot. at 11.) Plaintiff disputes that Sections 5(b) and 19(a) apply to its claims, but argues that even if they do, they are not conditions precedent to its claims. Rather, Plaintiff asserts these Sections operate as an implied waiver of Plaintiff's claims, which is invalid.

A. Standard of Review

Summary judgment is appropriate if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party has the initial burden of demonstrating that summary judgment is proper. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The moving party must identify the pleadings, depositions, affidavits, or other evidence that it "believes demonstrates the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth." S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982).

The burden then shifts to the opposing party to show that summary judgment is not appropriate. Celotex, 477 U.S. at 324. The opposing party's evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, to avoid summary judgment, the opposing party cannot rest solely on conclusory allegations. Berg v. Kincheloe, 794 F.2d 457, 459 (9th Cir. 1986). Instead, it must designate specific facts showing there is a genuine issue for trial. Id. More than a "metaphysical doubt" is required to establish a genuine ...


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