Cervetto Building Maintenance Co. v. United States

30 Cont. Cas. Fed. 71,058, 2 Cl. Ct. 299, 1983 U.S. Claims LEXIS 1779
CourtUnited States Court of Claims
DecidedApril 15, 1983
DocketNo. 215-81C
StatusPublished
Cited by5 cases

This text of 30 Cont. Cas. Fed. 71,058 (Cervetto Building Maintenance Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cervetto Building Maintenance Co. v. United States, 30 Cont. Cas. Fed. 71,058, 2 Cl. Ct. 299, 1983 U.S. Claims LEXIS 1779 (cc 1983).

Opinion

OPINION

KOZINSKI, Chief Judge.

FACTS

Plaintiff challenges termination of its contract to provide janitorial services at the Presidio and several neighboring military bases at San Francisco, California.

The contract called for plaintiff to clean approximately 100 buildings, some at night and some during the day. Its performance was monitored by one night and two day inspectors. If an inspector determined that cleaning was done in an unsatisfactory fashion or not at all, he completed a deficiency report. A copy of this report was presented to the contractor’s project manager at the beginning of the next cleaning day. Where performance was deficient, plaintiff was required to correct the problem. However, where the report documented a complete failure to clean a building, no correction was generally required and the government took a deduction from the contract price instead.

Performance problems developed from the start and continued throughout the life of the contract. During the approximately three months that the contract was in force, plaintiff collected no fewer than 473 deficiency reports and suffered $1,339.91 in deductions. By contrast, plaintiff’s successor incurred $63.00 in deductions over six months of performance.

On March 14, 1980, the contracting officer notified plaintiff that performance was deficient because it had failed to provide a list of the manufacturers and brand names of materials it was using. The notice gave plaintiff 10 days to cure by providing the information. Plaintiff complied on March 21, 1980.

Before plaintiff’s response had been received, however, defendant sent a second 10-day cure notice setting forth a series of additional deficiencies consisting of failures to: provide adequate staffing; provide adequate equipment and keep it in working order; provide an adequate inspection system; and correct inspection deficiencies. The notice was mailed March 19, 1980, and was received by plaintiff on March 24,1980.

By letter dated April 2, plaintiff wrote defendant and informed it of the various [301]*301steps it had taken to correct the deficiencies. The last day of the cure period was April 3, 1980. Defendant concedes, however, that by no later than the morning of April 3, it had decided to terminate the contract. That same day, the contracting officer signed the termination notice and solicited several reprocurement bids. On April 4, plaintiff’s representative was handed the notice of termination for default.

Trial was held in San Francisco on November 12-17, 1982. Much of the evidence concerned whether the government had imposed an unreasonably harsh standard in inspecting the contractor’s performance and whether that performance had been so deficient as to warrant default termination. The court found that the government had not imposed an unreasonable standard but had applied the same standard as on other contractors who had performed janitorial services at the Presidio. The court also found that plaintiff’s performance had warranted default termination. Cf. Pride Unlimited, Inc., ASBCA, 75-2 BCA (CCH) ¶ 11,436. Detailed findings on these points can be found in the transcript immediately following the trial and merit no further elaboration.

The case also presented two legal issues. First, plaintiff argued that in sustaining the termination for default, the government was precluded from relying upon any deficiencies which had been corrected or which had occasioned a deduction from the contract price. Second, plaintiff argued that the termination was defective because the decision to terminate was reached prior to the expiration of its 10-day cure period and it was therefore deprived of a full and fair opportunity to cure. Defendant disputes both points.

DISCUSSION

A. The Election of Remedies Issue

Plaintiff’s argument that the government is precluded from relying upon most of the 473 reports documenting its deficient performance is simple and elegant. In plaintiff’s view, the government may exact only one penalty for a deficiency, be it a reduction in the contract price, a correction of the deficiency or, under certain circumstances, a termination of the contract. If a deduction is taken, the argument goes, the government has elected its remedy and may ask no more. By the same token, if defendant requires correction, the deficiency is cured and, plaintiff asserts, defendant is precluded from relying upon the deficiency to sustain a termination of the contract. Since virtually all of the deficiency reports presented at trial had been followed by deductions or corrections, plaintiff argues that they should not have been admitted to support the default termination.

Despite its elegance, plaintiff’s argument must be rejected as leading to an absurd result. The contract plainly contemplates that minor deficiencies in performance will be addressed through remedies short of termination for default. Equally plainly, it was intended that minor deficiencies be the exception and that performance be satisfactory on most days. When deficiencies become the rule, as they did in this case, necessitating corrections or deductions virtually every day, overall performance under the contract can be deemed unsatisfactory even though individual problems are resolved. See Pride Unlimited, 75-2 BCA at 54,500. In such a case, the repeated need for correction may itself serve as the default, making termination an appropriate remedy.

The language of the contract fully supports this interpretation. Part II, § J, ¶ 21(b) provides that the contractor will correct all deficiencies as set forth in the deficiency reports. The paragraph provides further that “[Repeated ... deficiencies will be cause for reduction in payment ... or default action.” This clause contemplates that correction of deficiencies is the preferred remedy where problems are few but that more serious remedies, including default termination, may be invoked for chronic shortcomings.

Any other construction would place defendant in an extremely awkward position and make it unreasonably difficult to termi[302]*302nate the contract for inadequate performance. Under plaintiffs analysis, defendant would be precluded from requiring the contractor to correct deficiencies if it wished to rely upon them as a basis for termination. This would result in unjustified hardship upon those who would have to suffer the inadequate janitorial services. Moreover, defendant could never rely upon more than one month’s deficiencies because at the end of the month defendant would be required either to take a deduction for them or to make payment. According to plaintiff, either choice would thereafter preclude defendant from using those deficiencies to justify an adverse action, either because defendant had elected another remedy, deduction, or had waived the deficiency by paying for the performance and thereby accepting it. The court rejects this strained interpretation which could force defendant to prematurely default contracts which might be salvagable with the passage of more time.

Plaintiff relies in its argument on a case from the ASBCA, W.M. Grace, Inc., 80-1 BCA (CCH) ¶ 14,255. While Grace is not totally clear on this point, the opinion can be read as supporting plaintiff’s position that the government is precluded from relying upon defaults which had been the subject of prior deductions. It is uncertain whether Grace

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Bluebook (online)
30 Cont. Cas. Fed. 71,058, 2 Cl. Ct. 299, 1983 U.S. Claims LEXIS 1779, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cervetto-building-maintenance-co-v-united-states-cc-1983.