Mergentime Corp. v. Washington Metropolitan Area Transit Authority

166 F.3d 1257, 334 U.S. App. D.C. 294, 43 Fed. R. Serv. 3d 234, 1999 U.S. App. LEXIS 2256, 1999 WL 79365
CourtCourt of Appeals for the D.C. Circuit
DecidedFebruary 16, 1999
Docket97-7138 to 97-7140
StatusPublished
Cited by22 cases

This text of 166 F.3d 1257 (Mergentime Corp. v. Washington Metropolitan Area Transit Authority) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mergentime Corp. v. Washington Metropolitan Area Transit Authority, 166 F.3d 1257, 334 U.S. App. D.C. 294, 43 Fed. R. Serv. 3d 234, 1999 U.S. App. LEXIS 2256, 1999 WL 79365 (D.C. Cir. 1999).

Opinion

TATEL, Circuit Judge:

This case requires us to interpret Federal Rule of Civil Procedure 63, which applies when a district judge becomes unable to proceed and is replaced by a successor judge. The original judge in this case presided over a 45-day bench trial, during which the parties presented more than 50 witnesses and introduced more than 4,000 exhibits. Because the original judge became terminally ill after the close of evidence and could make only partial findings of fact and conclusions of law before he died, the successor judge faced two discrete tasks: adjudicating post-trial motions challenging the original judge’s findings and conclusions, and making findings and conclusions of his own regarding the unresolved issues. Stating that he would not “second guess” the original judge’s findings and conclusions, the successor judge refused to consider the parties’ post-trial motions. Then, without allowing the parties to recall witnesses, the successor judge made further findings and conclusions from the record. Because we hold that the successor judge’s *1260 refusal to adjudicate post-trial motions and to consider recalling witnesses violated Rule 63, we reverse.

I

In 1985, the Washington Metropolitan Area Transit Authority awarded a $50.9 million contract to build the Shaw Street station and associated tunnels on Metro’s Green Line to a joint venture consisting of two construction companies, Mergentime Corporation and Perini Corporation, appellants in this case. WMATA soon awarded the joint venture a second contract to build the Green Line’s U Street station and associated tunnels for $44.3 million. The contracts, which contained standard provisions governing contract modification, default termination, and dispute resolution, called for the completion of the Shaw Street work by March 1989 and the U Street work by August 1989.

From the outset, both projects experienced unexpected difficulties that caused substantial delays and cost overruns. For example, the Department of Public Works rejected the contractors’ request to close Rhode Island Avenue (as WMATA’s bid invitation had specified). This required significant changes in utility relocation plans that were important to the early stages of construction of the Shaw Street station. The contractors also encountered unanticipated soil conditions as they tunneled north from the Shaw Street station, requiring the use of time-consuming and expensive grouting techniques to stabilize the soil.

Invoking the “changes” clause of the contracts, the contractors submitted claims for equitable adjustments to the contract price seeking compensation for expenses resulting from these unforeseen problems. WMATA paid some of these claims, but slowly. By early 1988, the contractors were running a deficit of over $8.6 million on the Shaw Street project alone. To make matters worse, the contractors dissolved their joint venture at the end of 1987, though they did not immediately inform WMATA. Mergen-time bought out Perini’s interest for $1.5 million. This capital outlay, coupled with the fact that Perini was no longer making capital contributions to the project, worsened Mer-gentime’s financial straits.

In April 1989, the contractors sued WMATA in the United States District Court for the District of Columbia, alleging that WMATA’s failure to pay their claims for additional work constituted a breach of the Shaw Street contract. They sought $18.5 million in damages and a declaration that they had no obligation to continue working. In the meantime, work on the two projects slowed significantly. By the following summer, Mergentime had drastically reduced its workforce, falling weeks if not months behind schedule.

In an effort to rejuvenate the projects, the contractors and WMATA entered into a written agreement in August 1989, which, recognizing that most of the completion dates in the original contracts had passed, established revised “milestone” completion dates of September 1 and December 15, 1990 for Shaw Street and U Street, respectively. The contractors promised to use their “best efforts” to complete the projects by those dates in exchange for WMATA’s promise to pay the contractors $4.4 million against their outstanding reimbursement claims and to use its “best efforts” to settle the remainder of those claims as promptly as possible. WMATA also agreed to relinquish any right to terminate the contract for default based on events that had occurred prior to the agreement. In return, the contractors agreed not to stop working based on prior events, including WMATA’s failure to process their reimbursement claims. Apart from the reciprocal waivers of the right to terminate, the agreement expressly disclaimed any intent by the parties to relinquish their claims in the pending lawsuit, which the parties asked the district court to hold in abeyance.

Mergentime resumed work in September. It progressed satisfactorily for a few months, but by December work had once again slowed substantially. Mergentime complained to WMATA that because of its cash flow problems it would be unable to complete the work unless WMATA processed its outstanding reimbursement claims. In response, WMATA gave Mergentime an advance of $1 million in December 1989, and another advance of $1.6 million in February *1261 1990. Although these advances briefly revitalized Mergentime’s progress, each burst of energy was short-lived. By the spring of 1990, Mergentime had all but ceased working at both sites.

Asserting that the September and December 1990 milestone dates were no longer attainable, WMATA issued “show cause” letters to the contractors. (By then WMATA knew that the contractors had dissolved their joint venture, but it was not entirely clear whether Perini, which remains a party to this litigation, retained its obligations under the original contracts.) Responding to the show cause letters and continuing to insist that further progress hinged on the settlement of outstanding claims, Mergentime demanded an additional $7.9 million as a condition of returning to work. WMATA terminated the contracts for default on May 11,1990.

Reviving their dormant lawsuit, the contractors added claims for breach of the U Street contract, breach of the August 1989 agreement, and wrongful termination. WMATA counterclaimed to recover so-called “excess reprocurement costs” — expenses incurred in hiring other contractors to complete the work covered by the contracts. During a 45-day bench trial, the parties presented over 50 witnesses and submitted over 4,000 exhibits.

Following the close of evidence, the district judge developed a terminal illness. As the illness worsened, he continued to work heroically, issuing a 251-page opinion containing partial findings of fact and conclusions of law in July 1993. Observing that “[tjhis case is about how not to build a subway system,” the judge held that WMATA justifiably terminated the contracts for default and was entitled to $16.5 million in excess reprocurement costs, that the contractors’ Shaw Street reimbursement claims had “substantial, if not complete, merit,” and that the contractors had failed to establish their entitlement to prove those claims with the beneficial “total cost” accounting method. Mergentime Corp. v. WMATA No. 89-1055, at 1, 242, 247, 249 (D.D.C. July 30, 1993) (“July 1993 Order”).

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Bluebook (online)
166 F.3d 1257, 334 U.S. App. D.C. 294, 43 Fed. R. Serv. 3d 234, 1999 U.S. App. LEXIS 2256, 1999 WL 79365, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mergentime-corp-v-washington-metropolitan-area-transit-authority-cadc-1999.