NIPPO CORPORATION/INTERNATIONAL BRIDGE CORPORATION v. AMEC EARTH & ENVIRONMENTAL, INC.

Filing 318

ORDER THAT PLAINTIFF'S MOTION FOR APPROVAL OF SPECIAL MASTER'S REPORT AND RECOMMENDATION IS GRANTED. THE REPORT AND RECOMMENDATION IS ADOPTED. DEFENDANT'S UNTIMELY MOTION FOR EXTENSION OF TIME TO SUBMIT OBJECTIONS IS DENIED. PLAINTIFF& #039;S MOTION FOR LEAVE TO FILE SUR-REPLY IN OPPOSITION TO DEFENDANT'S MOTION FOR AN EXTENSION OF TIME TO SUBMIT OBJECTIONS IS GRANTED. THE SUR-REPLY ATTACHED AS EXHIBIT A TO THE MOTION IS DEEMED FILED. ANY MOTIONS FOR RECONSIDERATION SHALL BE FILED NO LATER THAN 12/29/14. SIGNED BY HONORABLE CYNTHIA M. RUFE ON 12/3/14. 12/4/14 ENTERED AND COPIES E-MAILED.(mbh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
NIPPO CORPORATION/INTERNATIONAL
BRIDGE CORPORATION, a Joint Venture
Plaintiff/Counterdefendant,

v.

CIVIL ACTION NO. 09-956

AMEC EARTH & ENVIRONMENTAL, INC.
Defendant/Counterclaimant.

ORDER
After this Court entered its findings of fact and conclusions of law following a lengthy
non-jury trial in the case, the parties agreed to submit the determination of their calculations of
damages to a Special Master for a report and recommendation. The order appointing Gene D.
Cohen as Special Master provided in part that "[a]ny party may file objections to any report and
recommendation, stating the specific basis for the objections and the relief sought, within 21
calendar days of the date the report and recommendation is filed with the Court." 1 On March 26,
2014, the Court determined that "all arguments raised in the [previously-filed] Motions for
Reconsideration ... are deemed to have been timely filed, and are preserved, and the Motions
are dismissed without prejudice to the filing of comprehensive motions for reconsideration, as
appropriate, after the damages issues have been finally determined." 2 The Special Master filed
the Report and Recommendation setting forth the damages calculations flowing from the Court's
findings of fact and conclusions oflaw with the Court on April 14, 2014, and counsel received
ECF notice of the filing. 3 On May 13, 2014, Plaintiff filed a motion for approval of the Report
and Recommendation, noting that no objections had been filed. 4 The next day, Defendant filed
1

Order of August 6, 2013 at 1-2 [Doc. No. 278].

2

Order of March 26, 2014 at 2 [Doc. No. 305].

3

Doc. No. 307.

4

Doc. No. 309 [emphasis omitted].

an opposition to this motion, arguing that the Court's Order of March 26, 2014, "permits the
parties to submit renewed and comprehensive Motions for Reconsideration for determination
following the submission of the Special Master's Report and Recommendations and in advance
of further pleadings." 5 This interpretation of the Court's Order does not make sense; the Court
expressly ordered that Motions for Reconsideration could be refiled after the damages issues had

been determined. The entire point of the Report and Recommendation was to assist the Court in
the determination of the damages, which by the terms of the Court's Order had to precede any
motions for reconsideration. Defendant therefore failed to file timely objections to the Report
and Recommendation, and the Court determines that Defendant has not shown good cause or
excusable neglect. 6 The Court has reviewed carefully the Report and Recommendation of the
Special Master and agrees with the substantive damages calculations contained therein. A
separate judgment order will be entered.

SUPPLEMENTAL FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH
REGARD TO REA COSTS
As noted in the Report and Recommendation, "the Court did not rule on the specific issue
of JV's potential entitlement to the recovery of consulting costs (and the specific amount of such
costs) JV incurred in connection with its preparation of the request for equitable adjustment
('REA')." 7 The Special Master therefore set forth his calculations of the damages associated
with the REA costs in the event the Court determined such costs were recoverable. 8 Having
considered the additional briefing on the question [Doc. Nos. 266 and 267], the Court now
determines that REA costs are not recoverable, for the following reasons.
5

Doc. No. 310 at 5.

6

Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P 'ship, 507 U.S. 380, 403 (1993).

7

Report and Recommendation at 5.

8

Id. at35.

2

The Court in its earlier Opinion held that "the procedural and administrative provisions of
the prime contract between AMEC and the Government, including the application of the
Contract Disputes Act ("CDA"), 41 U.S.C. §§ 7101-7109 (formerly codified at§§ 601-613), do
not necessarily apply to disputes between AMEC and the JV unless specifically incorporated into
the Subcontract, rather than incorporated, as they are here, as part of a very broad 'flow-down' of
a lengthy list of Federal Acquisition Regulations ('FAR') clauses." 9 The JV argues that the costs
are recoverable pursuant to FAR 31.205-33. However, FAR 31.205-33 is one of those clauses
that is procedural or administrative, and therefore, in accordance with the Court's April 1
Opinion, because FAR 31.205-33 was not specifically incorporated into the Subcontract, it does
not apply.
The JV also argues that is entitled to reimbursement for the REA consultant costs under
FAR 52.243-04, which is specifically incorporated into the Subcontract, and under a separate
"Changes in Work" clause in the Subcontract. FAR 52.253-04 provides for equitable
adjustments following a change that causes an increase or decrease in the contractor's cost of, or
the time required for, performance under the contract. Under federal law interpreting similar
clauses, a cost incurred "for the genuine purpose of materially furthering the negotiation process"
may be recoverable, while a cost incurred "to promote the prosecution" of a claim is not. 10 The
JV hired Jacobs & Associates to compile the REA in October 2006. The JV first provided notice
of the claims that would form the REA to AMEC on May 31, 2007 (the date of substantial
completion of the project), and stated that it was willing to participate in negotiations. AMEC
responded two weeks later, stating that the JV had failed to comply with the Subcontract, and
9

Findings ofFact, Conclusions of Law, Memorandum Opinion and Order, April 1, 2013 [Doc. 262] (the
"April 1 Opinion") at 3.
10

• Tip-Top Constr., Inc. v. Donahoe, 695 F.3d 1276, 1283-84 (Fed Cir. 2012) (quoting Bill Strong
Enterprises, Inc. v. Shannon, 49 F.3d 1541, 1549-50 (Fed. Cir. 1995), overruled on other grounds, Reflectone, Inc.
v. Dalton, 60 F.3d 1572 (Fed. Cir. 1995) (en bane)).

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that there was no basis to consider the claims as performance was completed. The REA itself
was submitted to AMEC on March 31, 2008, along with a settlement offer, which AMEC
promptly rejected. 11 The Court finds that in this case, Plaintiff has not established that the costs
were incurred for the genuine purpose of furthering negotiation, rather than to promote the
prosecution of the claim. In this regard, the Court finds the timing particularly striking: first, the
JV did not notify AMEC of the nature of the claims in the REA until substantial completion, and
second, after AMEC unambiguously rejected the initial submission, the JV submitted the REA
some nine months later along with a settlement demand. The JV has not shown that the parties
were in the process of negotiations during any of the relevant time period. Instead, the JV
simply cites repeatedly that under the decision in Bill Strong, it is entitled to a "strong legal
presumption" that the consultant costs incurred before a claim is filed are allowable. 12 But as the
court noted in Bill Strong, the facts in that case demonstrated that the parties "were consistently
in a negotiation posture and ... consultant costs were incurred as part of the exchange of
information." 13 The JV has not shown that the parties here were in a similar posture, and
therefore the REA costs are not recoverable.
AND NOW, this 3rd day of December 2014, upon consideration of the pending motions

and the responses and replies thereto, it is hereby ORDERED that:
Plaintiffs Motion for Approval of Special Master's Report and Recommendation

1.

[Doc. No. 309] is GRANTED. The Report and Recommendation is ADOPTED.
2.

Defendant's untimely Motion for Extension of Time to Submit Objections [Doc.

No. 310] is DENIED.

11
12

13

April 1 Opinion at 20; Plff.'s Proposed Findings of Fact at 'i['i[ 729-732, 747.
Bill Strong, 49 F.3d at 1551.

Id.

4

3.

Plaintiffs Motion for Leave to File Sur-Reply in Opposition to Defendant's

Motion for an Extension of Time to Submit Objections [Doc. No. 316] is GRANTED. The surreply attached as Exhibit A to the Motion is DEEMED FILED.
4.

Any motions for reconsideration shall be filed no later than December 29, 2014.

It is so ORDERED.
BY THE COURT:

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