MOTIONS FOR SUMMARY RELIEF DENIED: January 30, 1996 GSBCA 12860 STRAND HUNT CONSTRUCTION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Charles M. Greenberg of Triad Law Group, Edmonds, WA, counsel for Appellant. M. Leah Wright, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), PARKER, and VERGILIO. DANIELS, Board Judge. This case involves a claim made under a contract between Strand Hunt Construction and the General Services Administration (GSA) for renovation of a federal office building in Seattle, Washington. The contractor maintains that it is entitled to costs incurred as a consequence of delays and labor inefficiencies caused by GSA in performance of the contract. The claim consists primarily of costs said to have been incurred by a demolition subcontractor, DeKo Enterprises, Inc., and markups applied to those costs by the contractor. GSA's contracting officer denied the claim, and Strand Hunt appealed. Each party has filed a motion for summary relief. GSA moves for summary denial of the appeal on the ground that DeKo signed a release waiving all rights to any claim, and that this release eliminates any basis on which Strand Hunt may seek additional moneys from the Government. Strand Hunt seeks a Board holding that the markups appellant claims on its own behalf must be used in calculating the amount owed by GSA. We consider both motions under the familiar standard that summary relief is appropriate where no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. E.g., SMS Data Products Group, Inc. v. Defense Logistics Agency, GSBCA 13413-P, 1995 BPD 202, at 7 (Oct. 19, 1995). Neither motion meets this test. Thus, both are denied. GSA's Motion After DeKo's work was completed, DeKo requested from Strand Hunt an equitable adjustment to the subcontract price. Respondent's Statement of Uncontested Facts 10-12, Exhibits 2, 3. DeKo later sent to Strand Hunt a Request for Progress Payment. This request was signed by DeKo's president.[foot #] 1 The request contained the following certification: Now, therefore, upon receipt of the above payment due, the undersigned does waive any and all liens whatsoever, upon the above described real estate and each and every portion thereof to the extent of all payments received. The undersigned further certifies that all obligations of the undersigned arising out of, in connection with, or incident to the undersigned's performance under this subcontract, were paid when due and agrees to indemnify and save harmless, the General Contractor and/or the Owner, from any and all liens, levies, suits, claims, losses, costs, penalties and damages of whatsoever kind or nature, whenever asserted, including reasonable attorney's fees and costs that may ----------- FOOTNOTE BEGINS --------- [foot #] 1 Paragraph 14 of respondent's Statement of Uncontested Facts says that DeKo's president signed the request. Strand Hunt lists as a "genuine issue" whether this statement is true. Appellant's Response to Respondent's Motion for Summary Judgment at 5; see also id. at 11. Strand Hunt has not provided ________ ___ any evidence which even intimates the falsity of the statement, however. The contractor has supplied an affidavit from the president, and that document does not address the issue. Because appellant has not provided any affidavit or document which supports the existence of a genuine dispute, we consider for the purpose of ruling on the motion that DeKo's president did sign the request. Rule 8(g)(3); Octocom Systems, Inc. v. Houston __________________________________ Computer Services, Inc., 918 F.2d 937, 941 (Fed. Cir. 1990); ________________________ Mingus Contractors Inc. v. United States, 812 F.2d 1387, 1390-91 ________________________________________ (Fed. Cir. 1987). ----------- FOOTNOTE ENDS ----------- be incurred by the General Contractor and/or Owner in connection therewith. Respondent's Statement of Uncontested Facts 14, Exhibit 4. After the date of this Request for Progress Payment, Strand Hunt submitted to the contracting officer the claim which is the subject of this appeal. Respondent's Statement of Uncontested Facts 15; Appeal File, Exhibit 3. GSA contends that the certification contained in the request is a clear and unambiguous release waiving all DeKo's rights to any claim or damages, and that the release excepts no preexisting claim. Citing William Cramp & Sons Co. Ship & Engine Building v. United States, 206 U.S. 118 (1907), J. G. Watts Construction Co. v. United States, 161 Ct. Cl. 801 (1963), and several more recent decisions by various boards of contract appeals, GSA maintains that the release precludes DeKo from bringing against Strand Hunt any action based on occurrences which preceded the execution of the document. Citing Severin v. United States, 99 Ct. Cl. 435 (1943), cert. denied, 322 U.S. 733 (1944), the agency urges that Strand Hunt is consequently barred from passing DeKo's claim through to the Government. Strand Hunt asserts in opposition to the motion that GSA has mischaracterized the certification, and that DeKo has committed in that document to something very different from not making a claim against Strand Hunt. The contractor and the agency agree as to two portions of the certification -- the first sentence and the first part of the second sentence. The parties agree that the first sentence (waiving liens on the real estate) is irrelevant to this contract because the Government owns the building and contractors have no lien rights on Government-owned buildings. The parties also agree that in the first part of the second sentence, DeKo certified that it had paid all obligations it had relating to its performance under the contract. The dispute centers on the second part of the second sentence. According to Strand Hunt, this clause says only that DeKo will indemnify both Strand Hunt and GSA against various types of actions, and associated legal costs, which those entities might incur in connection with the DeKo obligations specified in the first portion of the sentence. According to GSA, the two parts of the sentence should be read independently of each other; the second clause is a freestanding, general release, and the phrase "in connection with" refers to legal costs incurred in any of the mentioned actions. As Strand Hunt points out, the Court of Claims explained that it "refined the Severin doctrine so that it requires an iron-bound release or contract provision immunizing the prime contractor completely from any liability to the sub[contractor]." Cross Construction Co. v. United States, 225 Ct. Cl. 616, 618 (1980); see also Southern Construction Co. v. United States, 364 F.2d 439, 447 (Ct. Cl. 1966); Folk Construction Co. v. United States, 2 Cl. Ct. 681 (1983). The board of contract appeals cases cited by GSA contain such "iron-bound" releases: one contractor "release[d] and discharge[d] the United States of America of and from all liabilities, obligations, and claims whatsoever arising out of [this] Contract," Wall Street Roofing, VABCA 1773, 83-2 BCA 16,568, at 82,398; another accepted payment "in full and complete settlement of [amounts due] and of all other claims and liabilities . . . under the contract," Zinger Construction Co., ASBCA 22499, 78-2 BCA 13,461, at 65,784; a third agreed that payment was in "complete discharge of all obligations of the Government in connection with [the] Contract," Kadin Corp., DOT CAB 1229, 82-2 BCA 16,114, at 79,995; the fourth "remise[d], release[d], and discharge[d] the Government . . . from all liabilities, obligations, and claims, and demands whatsoever under or arising from the said contract," Newport Construction, Inc., DOT BCA 2262, 91-1 BCA 23,366, at 117,224. A "Final Waiver" form which Strand Hunt asks a subcontractor to sign when a final accounting has been agreed to between the two companies contains a statement which similarly is intended to serve as a final release of liability and rights: In consideration of the sum of ______________, the undersigned does hereby waive, release, and forever discharge any and all liens, claims or rights of lien that it may have, including without limitation, claims or liens against the Owner, the Contractor, the retainage, or any bond posted on the project referenced above. Affidavit of James Levin (Jan. 9, 1996) (Levin Affidavit II) 10, 12, Exhibit B; Affidavit of James Levin (Jan. 25, 1996) (Levin Affidavit III) 7. In our judgment, the clause at issue in DeKo's Request for Progress Payment falls far short of the general and definitive language contained in each of these statements. If GSA is correct in arguing that the clause must be read independently of the first part of the sentence in which it appears, the language is so broad as to be nonsensical. It would say that DeKo is agreeing to indemnify both Strand Hunt and GSA "from any and all liens, levies, suits, claims, losses, costs, penalties and damages of whatsoever kind or nature, whenever asserted." Thus, if Strand Hunt's landlord successfully sued the company for non- payment of rent, DeKo would have to pay the sum due; or if a man in Tupelo, Mississippi who was struck by a U.S. Government vehicle won a tort claims action, DeKo would be liable for the damages. This is without doubt vastly beyond the commitment DeKo is making. The only reasonable reading of the lengthy sentence is the one advanced by Strand Hunt: the commitment for indemnification extends only to "liens, levies," and so forth relating to DeKo's obligations which stem from the firm's performance under its subcontract. GSA may also be contending that even apart from the supposed release, an alternative reason exists for precluding Strand Hunt from bringing this claim on DeKo's behalf: the contractor and subcontractor have concluded their business relationship as to this project, with neither party having any further financial obligation to the other. According to both Strand Hunt's project manager and DeKo's president, however, DeKo has never signed a final waiver regarding this project, and the two firms currently maintain obligations to one another. Levin Affidavits II 13- 15, III 9; Affidavit of DeDe MacKenzie (Jan. 8, 1996) 16-17. GSA suggests that the account balance may be imaginary. In considering a motion for summary relief, the Board draws all reasonable inferences in favor of the non-moving party. Reliance Insurance Co. v. United States, 931 F.2d 863, 865 (Fed. Cir. 1991); Amerinex Services Corp., GSBCA 10671-P, 90-3 BCA 23,102, at 115,997, 1990 BPD 173, at 5. For the purposes of ruling on this motion, we infer that the obligations between the two companies are real. GSA has not met its burden of proving, as it must to prevail under Severin, that Strand Hunt has no liability to DeKo for damages under the contract. Keydata Corp. v. United States, 504 F.2d 1115, 1120-21 (Ct. Cl. 1974); Southern Construction Co., 364 F.2d at 447; J. L. Simmons Co. v. United States, 304 F.2d 886, 888-89 (Ct. Cl. 1962). The agency's motion for summary relief is denied. Strand Hunt has asked the Board to award it the costs it incurred in responding to GSA's motion. The request references Federal Rule of Civil Procedure 11. The Board's Rules of Procedure do not incorporate the affirmative standards of Rule 11, and we do not impose sanctions for lack of adherence to that rule's requirements. International Technology Corp., GSBCA 10056-C (10010-P), 90-1 BCA 22,341, at 112,282, 1990 BPD 2, at 4 (1989).[foot #] 2 In other regards, the request is premature. Any request for reimbursement of costs incurred in an appeal of a contracting officer's decision is properly placed before the Board through an application filed pursuant to the Equal Access to Justice Act, 5 U.S.C. 504 (1994), and Board Rule 35. ----------- FOOTNOTE BEGINS --------- [foot #] 2 See also, with regard to this decision, _________ Integrated Systems Group, Inc. v. Department of the Treasury, ----------- FOOTNOTE BEGINS --------- GSBCA 11336-C (11214-P), 95-1 BCA 27,308, 1994 BPD 257. ----------- FOOTNOTE ENDS ----------- Strand Hunt's motion While the contract was being performed, Strand Hunt presented claims to the contracting officer on behalf of two subcontractors other than DeKo, Dwyer Electric and Sandstrom Plumbing and Heating. As to these claims, a GSA auditor recommended that in finalizing the amounts of the equitable adjustments to the contract price, Strand Hunt should receive certain markups -- 8.43 percent for field office overhead and 7.33 percent for home office overhead. Appellant's Statement of Uncontested Facts 9-15; Affidavit of James F. Levin (Nov. 6, 1995) (Levin Affidavit I), Exhibits C, D. The contracting officer used these rates during negotiations with Strand Hunt regarding the claims, and he asked the contractor to sign a contract modification which incorporated them. Appellant's Statement of Uncontested Facts 16-20; Levin Affidavit I, Exhibit E. The contracting officer subsequently issued decisions on those claims which incorporated these markups. Appellant's Statement of Uncontested Facts 21-22; Levin Affidavit I, Exhibits F, G. The contracting officer's decisions on the claims involving Dwyer and Sandstrom were subsequently appealed to the Board by Strand Hunt. These appeals were docketed as GSBCA 12759 and 12868, respectively. The parties entered into alternative dispute resolution proceedings, with the assistance of a Board judge, on each of these cases. The parties settled each appeal by asking the Board to enter judgment for Strand Hunt in a specified lump sum amount. We did so on November 1, 1995. Strand Hunt maintains that "[u]nder the doctrines of Finality, Estoppel and Waiver, the Government is bound by the decisions of its duly authorized contracting officer" as to the overhead markups. Appellant's Motion and Memorandum in Support of Motion for Partial Summary Relief at 4. The law is to the contrary. "[W]here an appeal is taken to a board or court, the contracting officer's award is not to be treated as if it were the unappealed determination of a lower tribunal which is owed special deference or acceptance on appeal." Assurance Co. v. United States, 813 F.2d 1202, 1206 (Fed. Cir. 1987). "Thus, once an action is brought following a contracting officer's decision, the parties start in court or before the board with a clean slate." Wilner v. United States, 24 F.3d 1397, 1402 (Fed. Cir. 1994) (en banc). A contracting officer's decision is not entitled to any presumption of correctness and is not to be treated as an evidentiary admission of the extent of the Government's liability. Id. at 1403. "[A] contract appeals board can, with respect to a contracting officer's decision that has been appealed to it, reduce as well as increase the award made by that contracting officer." Assurance Co., 813 F.2d at 1206. The contracting officer's decisions on the claims involving both Dwyer and Sandstrom were appealed to this Board, and both cases were resolved without any finding by the Board as to the appropriate overhead markups. Those decisions thus have no finality. Strand Hunt has not even tried to show any detrimental reliance on the decisions -- an essential element of estoppel. State Street Management Corp. v. General Services Administration, GSBCA 12374, 94-1 BCA 26,500, at 131,908 (citing Kozak Micro Systems, Inc., GSBCA 10519, 91-1 BCA 23,342, at 117,060, 92-2 BCA 24,953, at 123,986-87, aff'd, 989 F.2d 1201 (table) (Fed. Cir. 1993)). Nor has Strand Hunt attempted to demonstrate that the nature of the Dwyer and Sandstrom claims was so similar to the nature of the claim involving DeKo that similar markups are appropriate. Given the record presented on Strand Hunt's motion for summary relief, we have no legal or factual basis for binding the Government to the markups used by the contracting officer in his decisions on the claims involving Dwyer and Sandstrom. The motion must consequently be denied. Decision Both motions for summary relief are DENIED. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ ROBERT W. PARKER JOSEPH A. VERGILIO Board Judge Board Judge