Poong Lim/Pert Joint Venture Ex Rel v. Dick Pacific/Ghemm Joint Venture et al

Filing 260

Order on Motion for Summary Judgment

UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA

UNITED STATES OF AMERICA for
the use of POONG LIM/PERT
JOINT VENTURE,
Plaintiff,
vs.

DICK PACIFIC/GHEMM JOINT
VENTURE; CONTINENTAL
CASUALTY CO.; NATIONAL
FIRE INSURANCE CO. OF
HARTFORD; SEABOARD SURETY
CO.; and ST. PAUL FIRE AND
MARINE INSURANCE CO.,
Defendants.

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Case No. 3:03-cv-290-JWS
ORDER FROM CHAMBERS
[Re: Motion at Docket 151]

I. MOTION PRESENTED
At docket 151, plaintiff Poong Lim/Pert Joint Venture (“Poong Lim”) moves for
summary judgment on certain counterclaims. Defendants Dick Pacific/Ghemm Joint
Venture, et al. (“DPG”) oppose the motion, which has been fully briefed. Oral argument
was requested by DPG, but it would not assist the court.

II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 56© provides that summary judgment should be
granted when there is no genuine dispute about material facts and when the moving
party is entitled to judgment as a matter of law. The moving party has the burden to
show that material facts are not genuinely disputed.1 To meet this burden, the moving
party must point out the lack of evidence supporting the nonmoving party’s claim, but
need not produce evidence negating that claim.2 Once the moving party meets its
burden, the nonmoving party must demonstrate that a genuine issue exists by
presenting evidence indicating that certain facts are so disputed that a fact-finder must
resolve the dispute at trial.3 The court must not assess the credibility of this evidence,
and must draw all justifiable inferences from it in favor of the nonmoving party.4
III. DISCUSSION
DPG was selected as the prime contractor on the Bassett Hospital replacement
project, a public works construction project at Fort Wainwright, an Army post near
Fairbanks, Alaska. DPG subcontracted certain work on the project to Poong Lim.
Poong Lim's complaint asserts that DPG breached the subcontract and seeks to
recover additional compensation. DPG denies that additional compensation is owed,
alleging that Poong Lim breached the subcontract, and further alleging that as a result
DPG is entitled to recover damages from Poong Lim. In the motion at bar, Poong Lim
1

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

2

Id. at 325.

3

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).

4

Id. at 255.

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urges the court to characterize four of the specific claims advanced by DPG as “total
cost” claims for which DPG cannot meet the criteria legally required for use of a total
cost methodology. In particular, Poong Lim contends that the requests to recover
damages for the value of John Conover’s extra work (“Conover claim”), costs incurred
for the winter season of 2002/2003 (“Winter claim”), AMEC’s additional inspection costs
(“AMEC claim”), and the cost of additional bolts (“Bolts claim”) should be dismissed.
The total cost method of proving damages resulting from breach of a construction
contract is “universally disfavored.”5 The Alaska Supreme Court has recognized that
courts will not condone use of the method unless the proponent meets a four-part test
requiring proof that (1) the peculiar nature of the particular loss renders it impossible or
very impracticable to establish the damages to a reasonable certainty (2) the
proponent’s bid was a realistic one, (3) the proponent’s actual costs were reasonable,
and (4) the proponent was not responsible for the additional costs.6 Furthermore, the
Alaska Supreme Court approved the comments by the Seventh Circuit Court of Appeals
in Fattore Co. v. Metropolitan Sewerage Comm’n7 indicating that the proponent of a
claim cannot avoid its recognition as a total cost claim, by formulating it as a discrete
item from a larger overall claim and then labeling the cost for the selected item as a
“reasonable” estimate of the actual cost of the item selected.8 It is Poong Lim’s position

5

Municipality of Anchorage v. Frank Coluccio Const. Co., 826 P.2d 316, 325 (Alaska

1992).
6

Id.

7

505 F.2d 1, 5-6 (7th Cir. 1974).

8

Frank Coluccio, 826 P.2d 326-27.

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that the Conover, Winter, AMEC, and Bolts claims or items are based on a total cost
methodology and that the undisputed facts show that DPG cannot establish the four
factors necessary for use of this disfavored approach to determining damages.
DPG does not contest the proposition that a total cost claim requires proof of the
factors noted above. Neither does DPG controvert DPG’s assertion that there is no
evidence to support the existence of the four necessary factors. Rather, DPG advances
the propositions that (1) “Poong Lim has failed to explain what the total cost
methodology is or how DPG’s four damage items constitute total cost damages”9 and
(2) ”the four damage items are not calculated based on the total cost method but are
based on actual costs incurred.”10
Poong Lim’s briefing and the cases it cites are adequate to show that the total
cost method attributes all costs incurred above those originally bid or budgeted to the
alleged breach of contract. In its opening memorandum, Poong Lim asserts that the
undisputed facts show that DPG’s claims are total cost claims and that DPG cannot
prove the four factors necessary to justify use of the disfavored total cost approach and
cites evidence in the record which it asserts shows this to be true. Once the moving
party has alleged the non-existence of facts the non-moving party must prove to avoid
summary judgment, the burden is on the non-moving party to show there is evidence
that the facts exist. DPG has not attempted to do that. Thus, DPG’s opposition to the

9

Doc. 197 at p. 2.

10

Id.

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motion depends entirely on the proposition that the four claims at issue are not total cost
claims, but rather are actual cost claims.
The court turns first to the Conover claim. DPG itself explains that in determining
the damages it seeks for the Conover claim, its expert, Jens, determined that John
Conover was on the project 10 months longer than planned and then Jens calculated
damages by “multiplying DPG’s cost for Mr. Conover over that period.”11 DPG’s
protestation to the contrary notwithstanding, the Conover claim damages are obviously
derived using total cost methodology. DPG having made no effort to show that
circumstances warrant use of the total cost methodology for the Conover claim, it
follows that Poong Lim is entitled to summary judgment on the Conover claim.
The Winter claim is different. The court is satisfied after reviewing Jens’ expert
report that there is at least a disputed issue of material fact as to whether DPG actually
is presenting a total cost claim rather than an actual cost claim as to which DPG has
been able to associate specific costs with Poong Lim’s alleged breach of contract. The
court is also persuaded that, at a minimum, there is a genuine issue of fact as to
whether DPG’s claim for additional costs incurred to pay AMEC is based on a total cost
methodology. There appears to be evidence to support the proposition that the
damages sought are tied to specific errors allegedly made by Poong Lim during
fabrication in Korea which necessitated further inspection by AMEC on the project.
Finally, the court is persuaded that, at a minimum, there is a disputed issue of material
fact as to whether the claim for damages for supplying bolts is a total cost claim. It

11

Id. at p. 6.

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appears from the evidence that this may be a claim for damages for replacing bolts
which were improperly packaged leading to rusting and rejection of the bolts, as well as
damages for provision of bolts that should have been, but were not, supplied by Poong
Lim. Poong Lim is not entitled to summary judgment on the Winter, AMEC, and Bolts
claims.

V. CONCLUSION
For the reasons above, the motion at docket 151 is GRANTED as to the Conover
Claim, but in all other respects the motion at docket 151 is DENIED.
DATED at Anchorage, Alaska this 2nd day of March 2006.

/s/
JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

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