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IN THE SUPERIOR COURT OF GUAM
2 Civil Case No. CVl35/!rt:!;cl; U CGJ:T 3 HUBTEC INTERNATIONAL CO., a Guam Corporation l flL. . g 4 Plaintiff. 5 DECISION AND ORDER: Defendants'
Motion for Summary Judgment 6 vs. 7
8 GOVERNMENT OF GUAM and JOANNE BROWN, in her capacity as Director of the )
l
9 DEPARTMENT OF PUBLIC WORKS, an ) instrumentality of the Government of Guam , )))
10 Defendants.
12 INTRODUCTION
This matter came before the Honorable Alberto C. Lamorena, III for a hearing on the
Defendants' (Government of Guam and Joanne Brown) Motion for Summary Judgment.
15
16 Attorney Phillip Torres represented Plaintiff HubTee International Co. ("Hubtec"). Defendants
17 were represented by Assistant Attorney General Kenneth Orcutt, Office of the Attorney 18 General. Foilowing the hearing, the Court took the matter under advisement. Upon review of 19 the evidence, written arguments, and legal authorities presented by both parties, the Court 20 hereby issues this Decision and Order GRANTING the Defendants' motion.
21
22 BACKGROUND
23 Plaintiff and Defendants, through the Department of Public Works ("DPW''), entered int
a contract for a project regarding improvement of road infrastructure in southwestern Guam.
Following a successful bid by Plaintiff, the contract was finalized on January 7, 2010. Under it
-(927 terms, Plaintiff was to reconstruct damaged culverts in the villages of Agat and Umatac, the Sell
Bay Culvert, Cetti Bay Culvert, an& Umatac BaseQall ~Q.tlvert. Among other improvements, th Ct::" 0 Hub Tee lniemalional "· Government ofGuam (CVI358-12) Decision wtd Order
Page I ofl1
project included the construction of a rock slide retaining wall near Cetti Bay. DPW terminate<
1
, the agreement on February 22, 2011, following revelation that Hubtec had submitted falso
3 invoices and sales receipts for payment and used foreign steel on a project funded by the Federa
Highways Administration that required American-made steel. 1 Declaration of Derrick Lehma1
4
5
in Support of Defendants' Motion for Summary Judgment, CV1358-12, (Oct. 31, 2013) at 2·
6
Declaration ofRodalvn May Gerardo in Support of Defendants' Motion for Summary Judgment
7
8 CV1358-12, Ex. A (Oct. 30, 2013) (Procurement Record OPA-PA-11-009-0589).
9 On April I, 2011, Hubtec sent a letter protesting DPW's termination of the contract. 10 Declaration of Dertick Lehman, Ex. A. Thereafter, on June 24, 2011, Hubtec filed ar 11 administrative appeal with the Office of Public Accountability ("OPA") regarding sai< 12
13 termination. Declaration of Rodalvn May Gerardo, Ex. B, Item 1 (Notice of Appeal). The issue
14 evaluated in this appeal were: whether DPW breached the contract; whether DPW wrongl 15 terminated Hubtec, preventing it from completing performance of the contract; and whethe 16 Hubtec should be compensated for time and effort lost in performance of the contract. !d. at Ex 17 B, Item 16 (Appellant's list of issues). On August 19,2011, Hubtec submitted its heating brief!< 18
19 the OPA. In the brief, Hubtec sought damages for time, money, and materials lost in its attemp
20 to perform the contract. ld. at Ex. B, Item 18 (Appellant's Hearing Brief) at 15. In addition 21 Hubtec asserted that the work performed and accepted by the Government was valued in exces 22 of $500,000. ld. at 16. The OPA heard arguments by the parties on August 25, 2011. Relying or 23 the Procurement Record, declarations of witnesses, and supplemental briefing by the parties, th 24 -' <( 25 OPA denied Hubtec's appeal on December 23, 2011. Specifically, the OPA held DPW' 2 -<..0 26 termination of the contact to be justified by Hubtec's violations of the agreement. Declaration o
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Hubtec was indicted for its conduct in federal court by the United States Department of Justice and pled guilty to making false statements regarding the project in violation of 18 U.S.C. § 1020. Declaration of Kenneth Orcutt in 0 Support of Defendant's Motion for Summarv Judgment, CVI358·12, Ex. A (Oct. 30, 2013) at 1.
Hub Tee Jntemationalv. Government ofGuam (CV1358·12) Decision and Order
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Rodalyn May Gerardo, Ex. Cat 29 (Decision for Appeal no. OPA-PA-11-009). The decisio 1
2 further concluded that DPW did not owe Hubtec money for time and effort expended i
3 performance of the contract or for the change orders. !d. at 29-37. 4 On December 10, 2012, Hubtec filed its Complaint with this Court. Hubtec's suit agains 5 DPW includes claims for breach of contract and quantum meruit regarding work performed fo 6 which it allegedly was not compensated. Defendants filed a counterclaim alleging damages fro 7
a Plaintiffs breach of contract and fraud. Defendants also seek compensation under Guam'
9 Deceptive Trade Practices - Consumer Protection Act. Defendants now move for summ 10 judgment dismissing Plaintiff's claims and for partial summary judgment in fuvor of Defendant 11 on their counterclaim against Plaintiff for breach of contract.
12 DISCUSSION
13
14 When a dispute has previously been adjudicated through the administrative appeal
15 process, "a motion for summary judgment ... is an appropriate vehicle to scrutinize an agency' 16 procurement actions because the issues are matters of contractual and regulatory interpretation.'
17 Bean Stuyvesant, L.L.C. v. United States, 48 Fed. Cl. 303, 318 (Fed. Cl. 2000) (citatio 18
19 omitted); City & County of San Francisco v. United States, 130 F.3d 873, 877 (9th Cir.l997)
20 Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, an
21 admissions on file, together with the affidavits, if any, show that there is no genuine issue as t 22 any material fact." Gayle v. Hem/ani, 2000 Guam 25,, 20 (citing Bank of Guam v. Flores, 200 23 Guam 25, 1f 8; Guam R.Civ.P. 56(c). There is a genuine issue if there is "sufficient eyjdence'
_J 24
<C 25 which establishes a factual dispute requiring resolution by a fact-finder. /d. (citing Iizuka Corp. z -(!) 26 v. Kawasho Int'/, Inc., 1997 Guam 10,, 7 (citation omitted)). However, the dispute must beast
-0::: 27 a "material fact." Id "A 'material' fact is one that is relevant to an element of a claim or defens 28 C) HubTer: International v. Government of(Jw)m (CVI358·12) Decision and Order
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and whose existence might affect the outcome of the suit ... Disputes over irrelevant o 1
2 unnecessary facts will not preclude a grant of summary judgment." /d.
3 In Motions for Summary Judgment, the Court must view the evidence and dra 4 inferences in the light most favorable to the non-movant. Id. If, however, there are no genuin 5 issues of material fact, the non-movant may not simply rely on allegations in the complaint, bu 6 must provide some significant probative evidence supporting the complaint. !d. at~ 21 (citin 7
8 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510 (1986)).
9 Breach of Contract 10 Under Guam law, the Public Auditor, through the OPA, has the authority to decide 11 "contract or breach of contract controversy." 5 G.C.A. § 5706. On appeal from the Director o 12 Public Works, the Public Auditor found that Plaintiff had breached the contract and DPW 13
14 justified in terminating. Declaration of Rodalyn May Gerardo, Ex. C at 29 (Decision for Appe
15 no. OPA-PA-11-009). As both parties concede, the issues of whether the Plaintiff's conduc 16 warranted recission of the contract and justified termination by Defendants have already bee 17 decided administratively. See Defendants' Motion for Summanr Judgment, at 7-9; 0 sition t 18
19 Defendants' Motion for Summary Judgment, at 4-5.
20 Under 5 G.C.A. § 5704, "[a]ny determination of an issue or finding of fact by the Publi 21 Auditor shall be final and conclusive unless arbitrary, capricious, clearly erroneous, or contr 22 to law." Upon examination, this Court finds the decision of the Public Auditor to be soundl 23
_J reasoned and devoid of clear error. Its findings appear consistent with the infonnation submitte 24 <(
-z 25
(.0 26 May Gerardo, Ex A (Procurement Record OPA-PA-11-009-0589). Thus, the decision is neithe 27 0::: arbitrary nor capricious. Indeed, the administrative ruling was never appealed and neither p 0 28
Hub Tee lntemat/ona{ v. GOW!mmen/ ofGuwn (CVJJ58·12) Decision and Order
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has objected to the findings or reasoning used by the Auditor in adjudicating the breach o
1
2 contract. Thus, factual findings regarding this issue may not be disputed or re-litigated. Unde
3 this standard, no issue of material fact remains and summary judgment may be granted
4
consistent with the Auditor's findings.
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Plaintiff argues in its opposition that deference to the Public Auditor's factual finding
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should not apply since "[p]rocurement law is not part of the analysis of this case." Oyposition a
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8 5. However, the Court is not persuaded by this argument. The standards used in procuremen
9 law are applicable to "controversies based upon a claim for breach of contract damages' 10 Sumitomo Construction Co., Ltd v. Guam, 2001 Guam 23, 1i 15; see also Pacific Rock Corp. v.
11 Department of Education ("Pacific Rock II"), 2001 Guam 21, ~ 33 ("The Procurement La 12
13 remains applicable to [breach of contract cases for monetary relief] ... "). Indeed, administrativ
14 review by the Public Auditor is a necessary prerequisite to bringing an independent claim agains
15 the Government for breach of contract. Pacific Rock II, 2001 Guam 21 at ,-r I ("Procurement La 16 serves as the final administrative remedy that is a prerequisite to filing a claim pursuant to th 17 Claims Act."). Thus, despite the fact that this is an independent claim, the factual conclusions o 18
19 an administrative decision are provided the same deference as in a procurement appeal before th
20 Superior Court. Accordingly, the fmdings of the Public Auditor entitle Defendants to summ 21 judgment on this claim. Flores, 2004 Guam 25, at~ 8.
22 In addition, summary judgment for Defendants on this issue is proper regardless o 23
__] whether the factual conclusions of the Public Auditor are binding. As pointed out by Defendants 24 <( the administrative record and declarations provide evidence on the breach of contract cl · z 25
26 which Plaintiff has failed to contest or rebut in any manner. Defendants' Reply Memorandum a (!) 27 0::: 6; Declaration ofRodalyn May Gerardo, Ex. Cat 29 (Decision for Appeal no. OPA-PA-11-009)· 28 0 Hub Tee lnternationall'. GOl'ernment ofGucvn (CV1358·12) Decision and Order
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Declaration of Carl V. Dominguez in Supoort of Defendants' Motion for Summary Judgment
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2 CV1358-12, (Oct. 31, 2013) at 2. As the Court explained supra, the non-movant may not rei
3 solely on the assertions made in their Complaint, but must offer sufficient probative evidence i
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support of their claim. Hem/ani, 2000 Guam 25, at~ 21. In the face of significant administrativ
5
findings, Plaintiff has presented no evidence which creates a factual dispute with regard t
6
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whether its own wrongdoing resulted in justified termination of the agreement. Indeed, Plainti
• states that "the issue of breach of contract or interpretation of the Contract" is not before th 9 Court. Qnposition, at 5. This failure to provide affirmative evidence of a genuine factual dispu 10 entitles Defendants to summary judgment on Plaintiff's breach of contract claim. Anderson, 47 11 U.S. at 256-57, 106 S.Ct. at 2514.
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13 Quantum Meruit
14 The Court next turns to the issue of Plaintiffs right to compensation for work performed 15 The essence of quantum meruit liability is the receipt of a benefit by one party which would b 16 inequitable for that party to retain. Tanaguchi-Ruth Associates v. MDI Guam Corp., 2005 G 17 7, 1f 27. The elements of quantum meruit liability are: the performance of services by th 18
19 Plaintiff, the benefit of those services by the Defendants, and the unjustness of the Defendants'
20 retention of that benefit without compensating the Plaintiff. /d. As such, recovery under quantu 21 meruit is necessarily evaluated in terms of monetary value owed by one party to another. Id. at 22 25 ("The measure of recovery for quantum meruit ... is the value of the services, measuring th 23
___J 24 value in the labor market where the service itself was sought by the defendant.") (Intema <( z 25 quotations omitted).
(_!) 26 It is well settled that the OPA does not have jurisdiction to decide the issue of mone 27 0::: owed by or to the Govermuent of Guam. 5 G.C.A. § 5703; Pacific Rock II, 2001 Guam 21 at C) 28
Hub Tee International v. G011emment ofGuam (CV!358-12) Decision and Order
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31 (procurement appeals may not aid claimants "who are seeking monetary damages under
1
2 breach of contract theory."). Indeed, this fact has been expressly acknowledged by both parties
3 See Defendants' Motion, at 10; Plaintiff's Opposition, at 4. Thus, despite the gener
4
applicability of procurement law, factual findings made by the Public Auditor in this area are no
5
entitled to the same deference provided for breach of contract issues. 5 G.C.A. § 5703 (limitin
6
an Auditor's detennination authority to "matter[s] properly submitted to him or her")
7
8 Accordingly, the Court may not accept the administrative findings as conclusive regardin
' money owed. /d.
10 The Defendants claim that Plaintiff has waived its right to challenge the jurisdiction o 11 the Public Auditor since the issue was not raised during the administrative proceeding. As 12
13 initial matter, the cases cited by Defendants supporting their contention are not binding upon thi
14 Court. See Amerault v. Intelcom Support Servs., Inc., 2004 Guam 23, ,-r 16 (Guam court 15 consider other courts' interpretations of statutes similar to laws of Guam as merely persuasive)· 16 Gibbs v. Holmes, 2001 Guam 11, ,-r 15 (Guam courts are "not at all bound" by reliance on cas 17 law from other jurisdictions). More importantly, as Plaintiff points out, this case is not an appe 18
of the Auditor's decision. Accordingly, the question before the Court is not whether Plainti " 20 may assert an argument to overturn the administrative decision. Rather, the relevant inquiry is t 21 what extent the decision's factual conclusions are binding upon this Court. Thus, while Plainti 22 may have indeed waived its right to assert a jurisdictional argument for the purpose o 23 overturning the Auditor's decision on appeal, this detail has no bearing on the standard used b - l 24 <( the Court to determine if issues of fact remain disputed in an independent quantum meruit claim. z 25
26 Whether the elements for quantum meruit recovery are satisfied is itself a question o C.!.) 27 0::: fact. Tanaguchi-Ruth, 2005 Guam 7 at, 22; Biller Assocs. v. Rte. /56 Realty Co., 725 A.2d 398 28 0 Hub Tee lnJemationaJ v. Government ofGuam (CV1358·12) Decision and Order
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405 (Conn.App.Ct.l999) ("A determination of a quantum meruit claim requires a factua
1
examination of the circumstances and of the conduct of the parties ... "). Here, disputes remai
2
3 regarding the extent to which work performed by Hubtec constituted a benefit to the Governmen
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as well as whether the conduct of the parties rendered retention of any benefit unjust. Thus, ther
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remain issues of fact on the question of money owed by the Government to Plaintiff. Jd.
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Notwithstanding these remaining factual disputes, however, the Court must asses
7
a whether Defendants are entitled to judgment as a matter of law based upon their affirmativ
9 defenses of Unclean Hands and Sovereign Immunity.
10
Unclean Hands
11
The doctrine of unclean hands is an afftnnative defense invoked by defendants to preven
12
a plaintiff from obtaining relief Guam Top Builders, Inc. v. Tanota Partners, 2012 Guam 12,
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14 26 (citations omitted). "Traditionally, the doctrine of unclean hands is invoked when one seekin
15 relief in equity has violated conscience, good faith or other equitable principles in his prio
16
conduct." !d. (citing Fibreboard Paper Prods. Corp. v. E. Bay Union of Machinists, Loca/1304
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39 Cal.Rptr. 64, 96 (Dist.Ct.App.1964). "Unclean hands"" is an equitable defense which may b
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asserted only against claims seeking equitable relief. Chung v. World Corp., CV-04-000 1-ARM
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20 2005 WL 1459674 at *3 (D. N. Mar. L June 22. 2005) (citing Aetna Cas. & Sur. v. Anier
21 Concrete Co., 404 F.3d 566. 607 (2d Cir.2005); General Dev. Corp. v. Einstein, 743 F.Supp
22
1115, 1133-1134 (D.N.J.1990)).
23
As discussed above, quantum meruit is a calculation of monetary damages owed fro
24
--' <( 25 one party to another. Tanaguchi, 2005 Guam 7. at~ 25. Thus, "[a]Ithough quantum meruit h :z 26 been referred to as 'equitable' in nature and is grounded in principles of equity and fairness, th (.!)
27
correct characterization of a quasi-contract quantum meruit claim is that of an action at law.'
a: 28 0 Hub Tee lnternat/o110lv. Government of Guam (CVI358·12)
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Chung , 2005 WL 1459674 at *3 (citing Hudson View II Assoc. v. Gooden, 222 A.D.2d 163
1
2
(N.Y.App.Div.1996)). Accordingly, the equitable defense of unclean hands cannot be assert
3 against plaintiff's claim for quantum meruit. /d.
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Sovereign Immunity,
5
The principle of sovereign immunity states that a government, by virtue of its status as
6
independent sovereign, may not be sued within its own courts absent hs consent. Alden v. Maine
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8 527 U.S. 706, 715, 119 S. Ct. 2240, 2247-48, (1999). As a territory of the United States, th
9 Government of Guam inherently possesses such immunity. See Marx v. Gov't of Guam, 866 F.2
10
294,297 (9th Cir. 1989); Guam Economic Development Authority v. Island Equiptment Co., Inc.
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1998 Guam 7, ~ 6. Sovereign immunity implicates a court's subject matter jurisdiction
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Sumitomo, 2001 Guam 23, ~ 22 (citing Wood v. Guam Power Auth., 2000 Guam 18, ~ 10). Thus
13
14 if an action is subject to immunity, the Court lacks jurisdiction over Plaintiff's claim. Pacifl
15 Rock II, 2001 Guam 21, at ~ 18. In order for a suit to be maintained, therefore, "against th
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Government of Guam and any of its instrumentality ... there must be an express waiver o
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sovereign immunity by the Guam Legislature." /d. at 1f 20.
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19
In Guam Police Dep 't v, Superior Court of Guam, 2011 Guam 8, The Guam Suprem
20
Court was presented with the issue of whether the Legislature "extended the waiver o
21
[sovereign] immunity to oral or un-written contracts, or to ... quasi-contract, or quantum meruit.'
22
23 Guam Police Dep't, 2011 Guam 8 at Footnote 7. However, because resolution of this questio
__j 24 was unnecessary for adjudication of controversy before it, the Court expressly declined <(25 :z -26 provide a definitive holding. Id. (''we leave for another day our answer to whether the G
(0 Legislature has extended the waiver of sovereign immunity to oral or unwritten contracts, or t
27
0::: any theories of recovery based in equity"). Nonetheless, existing case law provides sufficien o" Hub Tee lnterrwtionaf v. Government of Guam (CVJ358-12)
Decision and Order
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guidance for this Court to appropriately evaluate sovereign immunity. The Supreme Court
1
2 stated unequivocally that "waivers of immunity are to be strictly construed in favor of th
)
sovereign." Sumitomo, 2001 Guam 23, at, 25. Accordingly, the Court may not simply "imply
4
waiver of immunity.. against quantum meruit or quasi-contract actions by relying on the Claim
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Act's "general waiver of immunity against suit for breach of contract". !d. Because the Organi
6
7
Act gives the ability to waive immunity solely to the Legislature, "courts lack the authority t
8 find an implied waiver of immunity even in the face of strong public policy favoring such
9 finding." !d. at, 27. Thus, in the absence of explicit waiver by the Guam Legislature, Plaintiff'
10
quantum meruit claim is barred by the doctrine of sovereign immunity and this Court lack
11
subject matter jurisdiction to adjudicate it. Defendants are entitled to summary judgment as
12
1)
matter oflaw.
14 Defendants' Counterclaim: Breach of Contract
15
As discussed above, the Public Auditor's factual findings are conclusive on matters
16
relating to the breach of contract. 5 G.C.A. § 5704. As both parties acknowledged, the Auditor
17
determined that Plaintiff breached the contract by using Korean steel when the terms required
18
19 use of American steeL Declaration ofRodalyn May Gerardo, Ex. Cat 11-15, 26-29 (Decision
20 for Appeal no. OPA-PA-11-009). While the Public Auditor is not authorized to determine the
21
amount of money owed to the government, Defendants have offered uncontested evidence that
22
this breach directly resulted in a $120,000 loss of federal funding. See Declaration of Derrick 2)
Lebm!!!!, at 3; Declaration of Carl V. Dominguez, at 2, Ex. A (Federal Highway Administration --'"
~ z<( 25
26
Letter). As such, there is no dispute of material fact as to this claim and Defendants are entitled
(0 to summary judgment as a matter oflaw. Flores, 2004 Guam 25, at, 8.
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0 Hub Tee International v. Government of Guam {CVI358-l2) Decision 1111d Order
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As with the breach of contract claim, unrebutted evidence presented by Defendants i
1
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sufficient to warrant summary judgment regardless of whether the Auditor's conclusions ar
3 binding. In addition to the administrative findings themselves, Defendants have submitte
4
multiple declarations in support of their counterclaim. See e.g. Declaration of Derrick Lehman, a
5
3; Declaration of Kenneth Orcutt, Ex. A (Plea Agreement); Declaration of Carl V. Dominguez, a
6
2, Ex A. Further, Plaintiff's representative has, on several occasions, explicitly admitted failin
7
8 to use American steel in violation of the contract. Declaration of Kenneth Orcutt. Ex.
9 (Deposition) at 36, 106; Declaration of Dep:ick Lehman, Ex C. In the absence of any factua
support for Plaintiff's position on this issue, swnmary judgment for the Defendants is proper 11 Hem/ani, 2000 Guam 25, at~ 21; Anderson, 477 U.S. at 256-57.
12
CONCLUSION
13
14 Based on the foregoing, the Court GRANTS Defendants' motion for summary judgment
15 with regard to Plaintiff's breach of contract claim, Plaintiffs quantum meruit claim, and
Defendants' breach of contract counterclaim.
17 SO ORDERED this _L day of MAY, 2014.
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22 HONORABLE ALB
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26 Si:RViCE VIA COURT BOX
27 I aclcnowledqe fhata eopyof._ original hereto was placad In the
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C:O\_!ft box ~.
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Hub Tee l11ternationalv. Governme11t ofGuam (CVIJ58-l2) Decision and Order
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