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United States v. Turner-Penick Joint Venture

United States District Court, S.D. California

March 27, 2014

UNITED STATES OF AMERICA, for the Use and Benefit of Collins Plumbing, Inc., a California Corporation; COLLINS PLUMBING, INC., Plaintiffs,
v.
TURNER-PENICK JOINT VENTURE et al., Defendants. AND RELATED COUNTER-CLAIMS AND CROSS-CLAIMS

ORDER: (1) DENYING MOTION FOR PARTIAL SUMMARY JUDGMENT BY TURNER-PENICK JOINT VENTURE AND SURETIES, (ECF NO. 124); (2) DENYING MOTION TO STRIKE DECLARATION OF DAVID HOLLAND, (ECF NO. 139); (3) GRANTING JOINT MOTION FOR LEAVE TO FILE EXTENDED REPLY BRIEF, (ECF NO. 141.)

GONZALO P. CURIEL, District Judge.

INTRODUCTION

Before the Court in this construction-defect case is the Motion for Partial Summary Judgment filed by Turner-Penick Joint Venture ("Turner-Penick") and its sureties SafeCo Insurance Company of America, Liberty Mutual Insurance Company, Zurich American Insurance Company, Fidelity and Deposit Company of Maryland, and Federal Insurance Company (all five collectively, "Sureties"). (ECF No. 124.) Turner-Penick and the Sureties' move for partial summary judgment against California Comfort Systems USA, Inc. ("Comfort Systems") on Comfort Systems' counterclaims against Turner-Penick and the Sureties for breach of contract, recovery under Miller Act payment bond, and quantum meruit. Comfort Systems has filed an opposition to Turner-Penick and the Sureties' Motion for Partial Summary Judgment, (ECF No. 128), and Turner-Penick and the Sureties have filed a reply, (ECF No. 137).[1] The Court finds Turner-Penick and the Sureties' Motion for Partial Summary Judgment suitable for disposition without oral argument. See CivLR 7.1.d.1. Having considered the parties' submissions and the applicable law, and for the reasons that follow, the Court will DENY the Motion for Partial Summary Judgment.

BACKGROUND

I. Facts

While the parties disagree as to the materiality of certain facts and/or the admissibility of certain evidence, the underlying facts of this controversy are largely undisputed. This case involves a dispute over the design and construction of an expansion to Camp Pendleton, a U.S. Marine Corps base in San Diego County, California. The Naval Facilities Engineering Command ("NAVFAC") administered, and is considered the "owner, " of the expansion project.

The specific components of the expansion project at issue here are known as "Package 4" and "Package 7" (together, "Projects"). Each of the Projects consists of designing and building four, dormitory-style buildings known as "Bachelor Enlisted Quarters" ("BEQ") on Camp Pendleton. The Projects are thus sometimes referred to as "BEQ 4" and "BEQ 7." Combined, the Projects entail the designing and building of eight BEQs.

In the fall of 2008, NAVFAC solicited bids from general contractors who would both design and build the Projects. As is the case with design-build contracts, NAVFAC set forth the requirements for each of the Projects in a "Request for Proposal" ("RFP"). NAVFAC issued an RFP for BEQ 4 and an RFP for BEQ 7.[2]

In mid to late 2009, Turner-Penick was awarded the general contracts for both BEQ 4 and BEQ 7. As was required to accept the award, Turner-Penick secured the proper performance and payment bonds through the Sureties. Turner-Penick also set about hiring the various architects, engineers, and other subcontractors needed to design and build the Projects. Among those with whom Turner-Penick contracted, was Comfort Systems.

In October and December of 2009, Comfort Systems entered into subcontracts with Turner-Penick for the design and construction of the heating, ventilation, and air conditioning ("HVAC") systems for BEQ 4 and BEQ 7 ("Subcontracts"). There are generally two types of HVAC systems: (1) a "through-wall" system, which provides conditioned air via small mechanical units that pass through an exterior wall of each room or unit in a building; and (2) a "central-air" system, which provides conditioned air from one large mechanical unit that is pumped through ducting to each room or unit in a building.

The core issue for purposes of this Motion for Partial Summary Judgment is whether Comfort Systems is entitled to additional payment for having to redesign the HVAC systems for BEQ 4 and BEQ 7. Comfort Systems initially designed a through-wall system but was later required to change its design to include a central, make-up air system. Comfort Systems claims it is entitled to additional compensation for having to redesign the HVAC systems. Comfort Systems contends the Project requirements were ambiguous with regard to whether a central-air system was required. Comfort Systems bases its ambiguity argument on the following undisputed facts.

First, prior to Turner-Penick being awarded the BEQ 4 and BEQ 7 general contracts, Turner-Penick representatives were required to participate in a mandatory "job walk." During this job walk, Turner-Penick representatives were shown BEQ 1, told BEQ 1 was a "Best of Breed Winner, " and encouraged to use BEQ 1 as a starting point for any response to the RFPs for BEQ 4 and BEQ 7. BEQ 1 has a through-wall HVAC system.

Second, Holland-the Turner-Penick project director for both BEQ 4 and BEQ 7-has stated that, at the time Turner-Penick and Comfort Systems were entering into the BEQ 4 Subcontract, everyone agreed that Comfort Systems' proposed through-wall HVAC system should satisfy the RFP requirements for BEQ 4. Turner-Penick agreed the RFP requirements for BEQ 4 did not clearly communicate a requirement to provide a central-air system. And Holland later testified that, indeed, Comfort Systems had a "very compelling case" for why its through-wall system would satisfy the RFP requirements.

Third, Eugene Walsh of Walsh Engineering, Inc. believed Comfort Systems' proposed through-wall system would satisfy the RFP requirements. Walsh, who had been involved in nine federal projects similar to the Projects here, was asked by Turner-Penick to consult on whether Comfort Systems' initial HVAC design satisfied the RFP requirements.

Fourth, Jonathan Lundstrom (Comfort Systems' own mechanical engineer) reviewed the RFP requirements and concluded Comfort Systems' proposed through-wall system would satisfy the RFP requirements.

Fifth, when the NAVFAC issued its RFP for BEQ 8, NAVFAC made clear that a central-air HVAC system was required. This clarity distinguished the BEQ 8 RFP from the BEQ 4 and BEQ 7 RFPs.

Sixth, prior to NAVFAC's award of the BEQ 4 and BEQ 7 general contracts, other general contractors had requested information from NAVFAC regarding the required HVAC systems. Holland agreed that NAVFAC's response to these pre-bid requests for information were "[n]ot as clear as we would have liked."

Seventh, while drafting the BEQ 4 Subcontract, Comfort Systems crossed out requirements that were pertinent to central-air systems. The initial draft of the BEQ 7 Subcontract contained none of the requirements pertinent to central-air systems that Comfort Systems had crossed out in the BEQ 4 Subcontract. The final version of both Subcontracts, however, incorporated the requirements of their respective RFPs.

Eighth, shortly after the Subcontracts were executed, Turner-Penick sent NAVFAC a letter requesting that the BEQ 4 general contract be modified to permit Comfort Systems' to install its initially designed through-wall HVAC system.[3] This letter was based on: (1) NAVFAC's representations about BEQ 1 on the mandatory job walk, (2) Walsh's belief that Comfort Systems' initial design complied with the RFP, (3) Lundstrom's belief that Comfort Systems' initial design complied with the RFP, (4) the additional clarification NAVFAC provided in the BEQ 8 RFP as compared to the BEQ 4 and BEQ 7 RFPs, and (5) the deficient responses to the other general conrtractors' pre-bid requests for information. NAVFAC denied Turner-Penick's request.[4]

Turner-Penick and the Sureties now contend the contract documents were clear all along and that Comfort Systems is not entitled to any additional payment for its redesign of the HVAC systems for BEQ 4 and BEQ 7. Turner-Penick and the Sureties base their position on the contract documents themselves.

The Subcontracts each contain an "Attachment B, '" which in turn requires the HVAC systems for each of the Projects to be designed and built in accordance with, among other things, the RFPs for each of the Projects.[5]

The RFPs for BEQ 4 and BEQ 7 each contain "General Requirements." Section 01 33 10.05 20 of the General Requirements contains "Design Submittal Procedures." The Design Submittal Procedures incorporate, and require compliance with, the U.S. Department of Defense United Facilities Criteria ("UFC") for Mechanical Engineering, which is designated as UFC 3-400-10N.

In addition to the General Requirements, the RFPs each contain "Project Program Requirements." Like the Design Submittal Procedures, the Project Program ...


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