Gilbane Federal v. United Infrastructure Projects

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 25, 2019
• Docket: 17-16814
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION JUN 25 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

GILBANE FEDERAL, FKA ITSI Gilbane No. 17-16814 Company, D.C. No. 3:14-cv-03254-VC Plaintiff-counter- defendant-Appellee, MEMORANDUM* v.

UNITED INFRASTRUCTURE PROJECTS FZCO, a foreign corporation; UNITED INFRASTRUCTURE PROJECTS SAL (OFFSHORE) LEBANON, a foreign corporation,

Defendants-counter- claimants-Appellants.

Appeal from the United States District Court for the Northern District of California Vince Chhabria, District Judge, Presiding

Argued and Submitted June 13, 2019 San Francisco, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: GOULD and IKUTA, Circuit Judges, and PEARSON,** District Judge.

United Infrastructure Projects FZCO and United Infrastructure Projects

Lebanon (collectively “UIP”) appeal the district court’s ruling that Gilbane Federal

was entitled to terminate UIP for a default, as defined in the Federal Acquisition

Regulation 52.249-10, 48 C.F.R. § 52.249-10.1 We have jurisdiction under 28

U.S.C. § 1291.

We first reject UIP’s arguments that the original contract deadline of

December 4, 2014, should be extended due to excusable delays. See 48 C.F.R.

§ 52.249-10(b). The district court did not clearly err in finding that UIP was not

entitled to an extension of the deadline due to Kinney allegedly being a sole source

provider. The record supports the district court’s finding that UIP refused to deal

with Kinney because of Kinney’s prices, rather than due to UIP’s concern about

ethical improprieties. Further, the district court did not clearly err in rejecting

UIP’s argument that it was entitled to an extension of the deadline under United

States v. Spearin, 248 U.S. 132 (1918), due to the Navy’s requirement that the

** The Honorable Benita Y. Pearson, United States District Judge for the Northern District of Ohio, sitting by designation. 1 We analyze this issue under federal law because both parties assume that federal law applies to the interpretation of the contract’s definition of default. See Glickman v. Collins, 13 Cal. 3d 852, 857 n.1 (1975), disapproved of on other grounds by In re Marriage of Dawley, 17 Cal. 3d 342 (1976); Wells v. Wells, 74 Cal. App. 2d 449, 453 (1946). 2 switchgear include a fourth position indicator. Although this was subsequently

determined to be an erroneous requirement, Gilbane did not know that when it

terminated the contract. See McDonnell Douglas Corp. v. United States, 323 F.3d

1006, 1019 (Fed. Cir. 2003) (courts consider only what the parties knew at the time

of termination). The district court did not clearly err when it determined that, at

the time of termination, Gilbane knew only that UIP refused to contract with

providers who could comply with the fourth position indicator requirement, and

the requirement remained in place as of the date Gilbane terminated the contract.

Lastly, the district court did not clearly err in finding that programming was not on

the project’s critical path. Although Gilbane subsequently told the Navy that

programming was a critical path item, the district court’s conclusion that this

statement was false was not clearly erroneous.

Because UIP was not entitled to an extension of the contract deadline for

excusable delays, the district court did not err in determining that Gilbane was

justifiably insecure that there was “no reasonable likelihood that the [contractor]

could perform the entire contract effort within the time remaining for contract

performance,” namely December 4, 2014. Lisbon Contractors, Inc. v. United

States, 828 F.2d 759, 765 (Fed. Cir. 1987). The record establishes that the

switchgear was on the project’s critical path, including evidence that the Navy,

3 UIP, and Gilbane all identified the switchgear as such a critical path item.

Because the switchgear had a lead time of six to nine months for delivery, and UIP

had failed to submit a compliant switchgear submittal that met the Navy’s

specifications as of June 2014, Gilbane was justified in believing there was no

reasonable likelihood that UIP could complete the contract by December 4, 2014.

Id. Because the record clearly establishes that UIP could not complete the work

within the required time, Gilbane was not required to complete a time impact

analysis before reaching such a conclusion.2 Cf. id.

AFFIRMED.

2 Because we affirm on this ground, we need not consider Gilbane’s argument that UIP has waived the right to argue that it is entitled to an excusable delay under Greg Opinski Construction, Inc. v. City of Oakdale, 199 Cal. App. 4th 1107 (2011). 4