United States Court of Appeals for the Federal Circuit
2006-5127
RENDA MARINE, INC.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
Terry L. Salazar, Quilling Selander Cummiskey Lownds, of Dallas, Texas, argued
for plaintiff-appellant.
John E. Kosloske, Senior Trial Counsel, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, argued for defendant-
appellee. With him on the brief were Peter D. Keisler, Acting Attorney General and
Jeanne E. Davidson, Director. Of counsel on the brief was P. Alex Petty, Assistant District
Counsel, Office of Counsel, United States Army Corps of Engineers, of Galveston, Texas.
Appealed from: United States Court of Federal Claims
Judge Emily C. Hewitt
United States Court of Appeals for the Federal Circuit
2006-5127
RENDA MARINE, INC.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
DECIDED: December 11, 2007
Before SCHALL, Circuit Judge, PLAGER, Senior Circuit Judge, and MOORE, Circuit
Judge.
SCHALL, Circuit Judge.
This is a government contract case. Renda Marine, Inc. (“Renda”), entered into
Contract No. DACW64-99-C-0001 (“contract”) with the United States Army Corps of
Engineers (“Corps”) for the dredging of a portion of the Houston-Galveston Navigation
Channel (“navigation channel”). The contract was governed by the Contract Disputes
Act of 1978, as amended (“CDA”). 41 U.S.C. §§ 601–13 (2000). Upon completion of
the dredging work, Renda submitted various claims to the contracting officer (“CO”)
seeking additional compensation under the contract. Following the denial of those
claims, Renda filed suit in the United States Court of Federal Claims pursuant to 41
U.S.C. § 609(a)(1). On July 28, 2005, following a trial, the Court of Federal Claims
issued a decision holding that Renda was not entitled to recover on its claims. Renda
Marine, Inc. v. United States, 66 Fed. Cl. 639 (2005) (“Merits Decision”). Subsequently,
on June 30, 2006, the court issued a decision denying Renda’s motion for
reconsideration of certain prior rulings of the court. Renda Marine, Inc. v. United States,
71 Fed. Cl. 782 (2006) (“Reconsideration Decision”). In those prior rulings, the court
had denied Renda’s motion for leave to amend its complaint to challenge a decision of
the CO asserting government claims against Renda. The court did so on the ground
that Renda’s challenge to the CO’s decision was untimely. Following its denial of
Renda’s motion for reconsideration, the Court of Federal Claims entered final judgment
in the case in favor of the United States. Renda has timely appealed from that
judgment. We affirm.
BACKGROUND
I.
Renda is a marine dredging contractor. Under the contract, it was required to
increase the depth of the navigation channel to -45 feet Mean Low Tide (“MLT”). Merits
Decision at 657. This means that the channel had to be dredged to a depth 45 feet
below its level at MLT.
During the period between January and October of 2001, Renda submitted
various claims to the CO, including seven differing site condition claims.
Reconsideration Decision at 784. After its claims were denied, on April 11, 2002,
Renda filed suit in the Court of Federal Claims. Id. In its suit, Renda challenged the
2006-5127 2
CO’s denial of its seven differing site condition claims, as well as the CO’s denial of an
additional claim that was based upon the Corps’ alleged constructive modification of the
contract. See Merits Decision at 642. Based upon its claims, Renda sought additional
compensation under the contract in the total amount of $14,244,848. Id.
During the period between February 28, and April 7, 2005, the Court of Federal
Claims conducted a trial on Renda’s eight claims. Id. at 643. Thereafter, on July 28,
2005, the court issued a decision in favor of the government, holding that Renda was
not entitled to recover on any of its claims. Id. at 721.
II.
On November 26, 2002, while Renda’s suit was pending in the Court of Federal
Claims, the CO issued a final decision under the contract asserting six separate
government claims against Renda, in the total amount of $11,860,016. Reconsideration
Decision at 784. In his final decision, the CO informed Renda that it had the right to
appeal the decision to the Armed Services Board of Contract Appeals (“ASBCA”) within
90 days of receipt of the decision, see 41 U.S.C. § 606, or to initiate an action in the
Court of Federal Claims within twelve months of receipt of the decision, see id.
§ 609(a)(3). Reconsideration Decision at 784.
Renda received the CO’s final decision on or about November 26, 2002. Id. at
784–85. Thus, it had until February 24, 2003 to challenge the decision in the board of
contract appeals and until November 26, 2003 to do so in the Court of Federal Claims.
Renda, however, did not pursue either course. Instead, on July 1, 2004, roughly
nineteen months after the approximate date on which it received the final decision, it
sought leave to amend its complaint in the ongoing Court of Federal Claims litigation in
2006-5127 3
order to challenge the validity of the decision there. Id. at 785. The Court of Federal
Claims denied Renda’s motion on July 30, 2004, on the ground that Renda’s challenge
to the CO’s decision was untimely. Id. Subsequently, on April 19, 2005, the court
denied a second motion by Renda to amend its complaint to challenge the CO’s
decision, again on the ground that Renda’s challenge to the decision was untimely. Id.
On June 1, 2005, following the completion of trial, but prior to the issuance of the
Merits Decision, Renda sought reconsideration of the Court of Federal Claims’ decision
denying its motion for leave to amend its complaint. Id. at 786. In its motion, Renda
asserted that the government claims in the CO’s November 26, 2002 decision were
related to the claims in Renda’s suit in the Court of Federal Claims. Starting from this
premise and relying upon our decision in Sharman Co. v. United States, 2 F.3d 1564
(Fed. Cir. 1993), overruled on other grounds by Reflectone, Inc. v. Dalton, 60 F.3d 1572
(Fed. Cir. 1995) (en banc), Renda argued that its suit divested the CO of authority to
render a final decision on the government’s claims, thereby rendering the CO’s
November 26, 2002 decision a nullity inasmuch as it issued after the initiation of
litigation by Renda. Reconsideration Decision at 786. On June 30, 2006, the court
denied Renda’s motion, holding that, because Renda had failed to appeal the CO’s final
decision within the twelve-month period set forth in the CDA, 41 U.S.C. § 609(a)(3),
Renda was precluded from challenging the validity of the decision. Reconsideration
Decision at 797.
On June 30, 2006, based upon the Merits Decision and the Reconsideration
Decision, the court entered final judgment in favor of the United States. As noted,
2006-5127 4
Renda has timely appealed from that judgment. We have jurisdiction pursuant to 28
U.S.C. § 1295(a)(3).
DISCUSSION
On appeal, Renda challenges both the Merits Decision and the Reconsideration
Decision. As far as the former is concerned, Renda argues that the Court of Federal
Claims erred insofar as it denied Renda compensation for one of its seven differing site
condition claims. That claim involved a section of the navigation channel known as the
“Flare Area.” Turning to the Reconsideration Decision, Renda argues that the Court of
Federal Claims erred in denying it leave to amend its complaint in order to challenge the
CO’s November 26, 2002 final decision. We address these contentions in turn.
I.
A.
We consider first Renda’s differing site condition claim. The Flare Area was a
portion of the navigation channel where the width of the channel “flare[d] out” from 400
to 600 feet to permit safe passage of ships. Merits Decision at 685 n.52. While
performing dredging work in the Flare Area, Renda encountered “stiff clays” in locations
where it claimed it expected to encounter “soft clays.” Id. at 686. The presence of stiff
clays allegedly increased Renda’s cost of performing under the contract, leading Renda
to seek some $4.7 million in additional compensation and approximately 100 additional
days in contract performance time. Id. Ultimately, the Corps awarded Renda an
additional $3.1 million and extended the time for contract performance by 56 days. Id.
at 687. After the CO denied Renda’s claim for the $1.6 million difference between
Renda’s original claim and what the Corps had awarded it, Renda included the Flare
2006-5127 5
Area claim in its suit in the Court of Federal Claims, where it sought to recover $900,000
additional compensation for the claim. Id.
In the Court of Federal Claims, Renda presented the Flare Area claim as based
upon an alleged Type I differing site condition. A Type I differing site condition arises
when the conditions encountered differ from what was indicated in the contract
documents. See FAR 52.236-2, 48 C.F.R. § 52.236-2(a)–(b) (2006). It is distinguished
from a Type II differing site condition, which arises when the conditions encountered are
of an unusual nature and differ materially from those normally encountered in the kind of
work contemplated by the contract. See id. In order to be eligible to recover for a Type
I differing site condition, a contractor must first prove, as a threshold matter, that the
contract contained some identification of the conditions to be encountered at the site.
H.B. Mac, Inc. v. United States, 153 F.3d 1338, 1345 (Fed. Cir. 1998); P.J. Maffei Bldg.
Wrecking Corp. v. United States, 732 F.2d 913, 916 (Fed. Cir. 1984). The contractor
must then prove by a preponderance of the evidence that the conditions encountered
during the contract performance differed materially from the conditions indicated in the
contract. To carry this burden, the contractor must demonstrate that the conditions
encountered were not reasonably foreseeable in light of all information available to the
contractor when bidding, that the contractor reasonably relied upon its original
interpretation of the contract, and that the contractor suffered damages as a result of the
material variation between the conditions expected and those encountered. H.B. Mac,
153 F.3d at 1345; Stuyvesant Dredging Co. v. United States, 834 F.2d 1576, 1581 (Fed.
Cir. 1987).
2006-5127 6
The Court of Federal Claims held that Renda had failed to establish that it was
entitled to additional compensation based upon the Flare Area Claim. Merits Decision
at 687–90. The court found that Renda’s interpretation of the contract documents was
not reasonable. Id. at 687–88. Renda purportedly relied solely upon two boring logs to
predict the character of the material that it would encounter in the Flare Area. Id. at
687. Those two boring logs, logs 93-62 and 92-63, were located in the Flare Area, and
the court acknowledged that “they would be the first borings that a contractor would
examine to determine the character of soils in the vicinity.” Id. Those logs did not
indicate the presence of stiff clays. Id. at 686. The court determined, however, that
those boring logs, whose uppermost elevations were at depths of -33 feet MLT and -44
feet MLT, respectively, reflected subsurface conditions at depths considerably below
where Renda would be required to do most of its dredging. Id. at 687. Under these
circumstances, the court found, those logs gave an incomplete account of the materials
to be dredged in the Flare Area, and Renda should have considered boring logs 3ST-4,
3ST-5, and 3ST-6. Id. at 688. The court stated that those logs, although from locations
on the opposite side of the navigation channel from the Flare Area, provided “a more
complete picture of the soils to be dredged in the vicinity of the Flare Area than 93-62
and 93-63. The tops of each of these logs is [sic] located between 0 feet MLT and +10
feet MLT.” Id. Continued the court, “[e]ach of these logs shows stiff or hard clay at
approximately -35 feet MLT through at least -45 feet MLT. These contract indications
are consistent with the conditions plaintiff encountered in the Flare Area.” Id. (internal
citations omitted). The court concluded: “To the extent that plaintiff disregarded these
boring logs entirely and decided to rely solely upon logs 93-62 and 93-63 to predict the
2006-5127 7
character of materials to be dredged in the Flare Area, plaintiff did not act as a
reasonably prudent contractor.” Id.
Second, the Court of Federal Claims determined that the existence of stiff clays
was reasonably foreseeable to Renda. The court stated that, “prior to its bid, [Renda]
expected to encounter stiff clays in the Flare Area—and, in fact, relied on its estimates
concerning the quantity of such materials when preparing its levee construction plan.”
Id. at 689. The court noted that a Renda employee, in submitting information to the
Corps during contract performance, presented a spreadsheet prepared by Renda during
the bid preparation process. Id. at 688. On the spreadsheet, the Flare Area was
included within a larger area in which there was shown the likelihood of the existence of
stiff clays. Id. The court further noted that the same Renda employee indicated to the
Corps that medium to stiff clays from the Flare Area would be utilized in constructing the
levies required under the contract. Id. In the court’s view, this evidence strongly
suggested that Renda was aware of the likelihood of encountering stiff clays in the Flare
Area. Id. at 689.
Third, the court determined that Renda had not proven that the damages it
suffered as a consequence of encountering stiff clays were solely attributable to the
clays and not to other causes. Id. at 689–90.
Renda challenges each of the Court of Federal Claims’ findings. First, it asserts
that its belief that stiff clays were unlikely in the Flare Area was reasonable, noting that it
relied solely on the two borings within the Flare Area precisely because those borings
would presumably provide the most accurate picture of clay consistency within the Flare
Area. Second, it maintains that the discovery of stiff clays was indeed unforeseeable,
2006-5127 8
asserting that the items of evidence upon which the court relied to find to the contrary,
including the spreadsheet that placed the Flare Area within a region wherein stiff clays
were expected, concerned a very large area and were not intended to be particularly
precise analyses of where stiff clays were expected. Renda also argues that the
unforeseeability of stiff clays is supported by the CO’s decision to award Renda an
additional $3.1 million under the contract. Third, Renda contends that, by their very
nature, stiff clays have the effect of slowing dredging work, regardless of the existence
of additional factors that might slow contract performance further. For these reasons,
Renda argues that it did in fact prove the marginal harm it incurred as a consequence of
stiff clays, thereby entitling it to appropriate damages.
B.
Following a trial, we review factual findings by the Court of Federal Claims for
clear error. See Columbia Gas Sys., Inc. v. United States, 70 F.3d 1244, 1246
(Fed.Cir.1995). “A finding is ‘clearly erroneous’ when although there is evidence to
support it, the reviewing court on the entire evidence is left with the definite and firm
conviction that a mistake has been committed.” United States v. United States Gypsum
Co., 333 U.S. 364, 395 (1948). We review the court's legal conclusions de novo. See
Columbia Gas, 70 F.3d at 1246.
We see no error in the Court of Federal Claims’ findings that stiff clays were
foreseeable in the Flare Area and should reasonably have been anticipated, and that,
therefore, Renda was not entitled to additional compensation under the contract by
reason of a Type I differing site condition. Under these circumstances, it is not
2006-5127 9
necessary for us to address the issue of whether Renda established the costs it
incurred on account of the stiff clays it encountered in the Flare Area.
The pertinent findings of the Court of Federal Claims are set forth above. Having
reviewed the record, we cannot say that those findings are clearly erroneous. Boring
logs 93-62, 93-63, 3ST-4, 3ST-5, and 3ST-6 are in the record, and their contents are
undisputed. As noted, the latter three logs show the presence of stiff clays. At the
same time, while the latter three boring logs are, as the court noted, from locations
across the navigation channel from the Flare Area, those locations are aligned so that if
one extends the borders of the Flare Area to across the channel, each of those logs
falls within the Flare Area. This is reflected on page 3 of Exhibit 5, a prebid drawing
prepared by the Corps showing the dredging plan for the navigation channel. In
addition, Mr. Robert Lofgren, the government’s expert in hydraulic dredging, including
the preparation of bid estimates for hydraulic dredging work, testified that it was
unreasonable to rely upon the two borings within the Flare Area to the exclusion of other
borings in adjacent areas that provided additional information. Finally, we think that
Renda’s claim that it was reasonable in not anticipating stiff clays in the Flare Area is
belied by the fact that, as the Court of Federal Claims noted, the spreadsheet prepared
by Renda showed the Flare Area as being within an area in which there was the
likelihood of encountering stiff clays, as well as by the fact that Renda indicated to the
Corps that medium to stiff clays drawn from the Flare Area would be utilized in
2006-5127 10
constructing levies required under the contract. For these reasons, we will not disturb
the Court of Federal Claims’ rejection of the Flare Area claim. 1
II.
A.
We turn now to Renda’s challenge to the Reconsideration Decision. In that
decision, the Court of Federal Claims declined to alter its two prior rulings denying
Renda’s motion for leave to amend its complaint to challenge the November 26, 2002
final decision of the CO asserting government claims against Renda. Reconsideration
Decision at 797. As seen, the court did so on the ground that Renda’s challenge to the
CO’s decision was untimely because it was not brought within the twelve-month period
set forth in the CDA. Id.
We review a ruling by the Court of Federal Claims denying a motion for leave to
amend a complaint for an abuse of discretion. E.W. Bliss Co. v. United States, 77 F.3d
445, 450 (Fed. Cir. 1995). The same standard of review applies to the court’s denial of
a motion for reconsideration. Mass. Bay Transp. Auth. v. United States, 254 F.3d 1367,
1378 (Fed. Cir. 2001). An abuse of discretion occurs when a court misunderstands or
misapplies the relevant law or makes clearly erroneous findings of fact. PPG Indus.,
Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1572 (Fed. Cir. 1988).
Renda asserts that the Court of Federal Claims erred in its determination that the
CDA bars any challenge to the CO’s final decision. Relying upon Sharman, Renda
1
As support for its claim that the parties did not foresee encountering stiff
clays in the Flare Area, Renda notes that the Corps agreed to provide Renda additional
compensation when Renda first reported its discovery of stiff clays in the Flare Area.
However, a CO’s decision to award additional compensation is not binding upon the
agency in subsequent CDA litigation. See Wilner v. United States, 24 F.3d 1397, 1401
(Fed. Cir. 1994).
2006-5127 11
argues that its pending suit in the Court of Federal Claims divested the CO of his
authority to issue a final decision on the government claim. Under these circumstances,
Renda urges, even though it did not seek to do so within the twelve-month period set
forth in the CDA, it should have been allowed to amend its complaint to challenge the
decision, so as to permit the Court of Federal Claims to issue a declaratory judgment
with respect to the validity of the November 26, 2002 final decision.
B.
We consider first Renda’s reliance upon Sharman. Sharman was a party to a
CDA contract with the Navy. Sharman, 2 F.3d at 1566. The contract was for the
construction of steel water tanks. Id. On August 7, 1989, the contracting officer
terminated the contract for default. Id. On February 2, 1990, Sharman filed suit in what
was then the United States Claims Court. Id. at 1567. In its suit, Sharman sought to
invalidate the default termination. Id. In addition, it sought to recover alleged
uncompensated costs incurred in performing the contract. Id. Subsequently, on
October 18, 1990, while Sharman’s suit was pending in the Claims Court, the
contracting officer issued a final decision asserting a government claim against
Sharman in the amount of $1,391,240 for the return of unliquidated progress payments.
Id. On January 6, 1992, Sharman filed an amended complaint in the Claims Court, to
which the government responded on February 18, 1992, by filing a counterclaim
seeking the return of unliquidated progress payments in the amount of $1,391,240, the
matter that had been the subject of the October 18, 1990 final decision. Id. at 1567–68.
In due course, after a trial, the Claims Court ruled that the default termination was valid
and that the government was entitled to recover on the full amount of its counterclaim.
2006-5127 12
Id. at 1568. After judgment was entered in favor of the United States, Sharman
appealed. Id.
On appeal, this court held that the Claims Court had lacked jurisdiction over the
government’s counterclaim. Id. at 1572. The court started from the premise that “[o]nce
a claim is in litigation, the Department of Justice gains exclusive authority to act in the
pending litigation[,] . . . [a]nd that exclusive authority divests the contracting officer of his
authority to issue a final decision on the claim.” Id. at 1571 (internal citations omitted).
Viewing the government’s counterclaim for unliquidated progress payments as
“effectively the same claim” as Sharman’s claim for uncompensated performance costs,
“but made by the other party,” id. at 1570, the court reasoned that the government’s
progress payments claim was in litigation and therefore could not be the subject of a
valid contracting officer’s decision: “Because the progress payment claim was the
subject of litigation at the outset, the contracting officer had no authority to issue a final
decision on the claim after the complaint was filed. Therefore, the October 1990 final
decision letter was issued without authority and consequently is a nullity.” Id. at 1572.
Accordingly, the court reversed the money judgment in favor of the United States. Id.
Renda’s reliance on Sharman is misplaced. In Sharman, this court ruled that the
Claims Court lacked jurisdiction over the government’s claim because it was the product
of an invalid contracting officer’s decision. Id. However—and this is the critical point—
the government’s claim and the underlying contracting officer’s decision were properly
before the Claims Court and this court because the government had put them in issue
by asserting its counterclaim. The Claims Court and this court thus were both in a
position to rule on the validity of the contracting officer’s final decision. That is not the
2006-5127 13
case here. Renda did not timely appeal the November 26, 2002 final decision, and the
government did not put the decision in issue by filing a counterclaim based upon the
decision. Renda’s argument that the CO’s final decision is invalid because, in the words
of Sharman, it involves a claim that is the “mirror image” of a claim already in litigation,
see id. at 1573, is thus beside the point. Only a court, after hearing argument from both
a contractor and the government, may declare a contracting officer’s final decision
invalid—for whatever reason. A contractor may not do so unilaterally. In this case, the
Court of Federal Claims was not in a position to consider the validity of the November
26, 2002 final decision because Renda did not timely appeal the decision and the
government did not put it in issue.
That brings us to the basic issue in the case: whether the Court of Federal
Claims abused its discretion when it denied Renda’s motion for leave to amend its
complaint. We hold that it did not. The statutory language is clear and unambiguous.
Pursuant to 41 U.S.C. § 605(a), “[a]ll claims by the government against a contractor
relating to a contract shall be the subject of a decision by the contracting officer.” When
dissatisfied with a contracting officer’s final decision, a contractor has a choice. “Within
ninety days from the date of receipt of . . . [the] decision,” it “may appeal [the] decision
to an agency board of contract appeals.” 41 U.S.C. § 606. Alternatively, the contractor
“may bring an action directly on the claim in the United States Court of Federal Claims.”
Id. § 609(a)(1). If the contractor chooses this latter option, any action in the Court of
Federal Claims “shall be filed within twelve months from the date of the receipt by the
contractor of the decision of the contracting officer concerning the claim.” Id.
§ 609(a)(3). The statute further provides that “[t]he contracting officer’s decision on the
2006-5127 14
claim shall be final and conclusive and not subject to review by any forum, tribunal, or
Government agency, unless an appeal or suit is timely commenced as authorized by
this chapter.” Id. § 605(b); see United States v. Kasler Elec. Co., 123 F.3d 341, 346
(6th Cir. 1997) (“[T]he statute clearly states that a contractor may seek review of a final
decision only in a board of contract appeals or in the Court of Federal Claims. Absent
commencement of such review within the prescribed period of time, the decision
becomes impervious to any substantive review.” (internal citations omitted) (emphasis in
original)).
Here, it is undisputed that Renda received the CO’s final decision on or about
November 26, 2002, and that it was informed of its appeal rights at the time. It further is
undisputed that Renda did not appeal to the ASBCA within 90 days of receipt of the
decision, and that it was not until July 1, 2004, approximately nineteen months after
receipt of the decision, that Renda sought to amend its complaint in the Court of Federal
Claims in order to challenge the decision. In denying Renda’s motion to amend its
complaint on the ground that the motion was untimely, the Court of Federal Claims
simply applied the clear language of the CDA to the undisputed facts of the case. See,
e.g., Cosmic Constr. Co. v. United States, 697 F.2d 1389, 1391 (Fed. Cir. 1982)
(upholding dismissal of an appeal filed outside of the 90-day statutory period for
appealing a final decision to a board of contract appeals); Handel v. United States, 16
Cl. Ct. 70, 73 (1988) (denying jurisdiction on the basis of plaintiff’s failure to file appeal
in Claims Court within one year of final decision). The Court of Federal Claims neither
erred as a matter of law nor acted arbitrarily or capriciously. In short, it did not abuse its
discretion.
2006-5127 15
CONCLUSION
For the foregoing reasons, we see no error in the Merits Decision and no abuse
of discretion in the Reconsideration Decision. Accordingly, we affirm both decisions.
We also affirm the final judgment of the Court of Federal Claims based upon those two
decisions.
AFFIRMED
2006-5127 16
Renda Marine, Inc. v. United States
Court: Court of Appeals for the Federal Circuit
Date filed: 2007-12-11
Citations: 509 F.3d 1372
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