Case: 20-1260 Document: 40 Page: 1 Filed: 02/04/2021
United States Court of Appeals for the Federal Circuit ______________________
P.K. MANAGEMENT GROUP, INC., Appellant
v.
SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Appellee ______________________
2020-1260 ______________________
Appeal from the Civilian Board of Contract Appeals in No. 6185, Administrative Judge Kyle E. Chadwick, Admin- istrative Judge Allan H. Goodman, Administrative Judge Beverly M. Russell. ______________________
Decided: February 4, 2021 ______________________
NICHOLAS SOLOSKY, Fox Rothschild LLP, Washington, DC, argued for appellant. Also represented by DOUGLAS HIBSHMAN, RONNI TWO.
GEOFFREY MARTIN LONG, Commercial Litigation Branch, Civil Division, United States Department of Jus- tice, Washington, DC, argued for appellee. Also repre- sented by JEFFREY B. CLARK, MARTIN F. HOCKEY, JR., ROBERT EDWARD KIRSCHMAN, JR.; JONATHAN ENGLISH, Case: 20-1260 Document: 40 Page: 2 Filed: 02/04/2021
Office of General Counsel, United States Department of Housing and Urban Development, Washington, DC. ______________________
Before PROST, Chief Judge, LOURIE and HUGHES, Circuit Judges. HUGHES, Circuit Judge. P.K. Management Group, Inc. appeals a Civilian Board of Contract Appeals decision denying its claim that it should receive individual payments for inspections of Cus- todial properties under a contract with the Department of Housing and Urban Development. Because we agree with the Board’s determination that the contract terms unam- biguously cover routine inspections through a monthly fee rather than individual payments, we affirm. I Under contract DU204SA-14-D-06 with HUD (the Con- tract), P.K. Management Group (PKMG) manages multiple types of properties in HUD’s possession, including “HUD- Owned Vacant” properties and “Custodial” properties. HUD-Owned properties are those that “HUD owns,” J.A. 139, while Custodial properties are those of which HUD has taken possession but does not yet have title, J.A. 143–44. The Contract requires PKMG to perform various ser- vices related to the properties. For example, for each rele- vant property that comes into HUD’s possession, PKMG must perform an initial inspection and some initial services maintaining the property. As HUD’s possession of the prop- erty continues, PKMG must conduct ongoing management of the property. The specifics of ongoing management vary by property type. HUD does not own Custodial properties, so they are “not marketable” and have “limited property management tasks.” Id. Relevant here, PKMG must per- form bi-weekly inspections of each property type. See Case: 20-1260 Document: 40 Page: 3 Filed: 02/04/2021
P.K. MANAGEMENT GROUP, INC. v. HUD 3
J.A. 163, 171. These inspections are more thorough for HUD-Owned properties because HUD-Owned properties must be in “Ready to Show Condition,” while Custodial properties generally do not need to be ready for showing. Compare J.A. 163, with J.A. 171. The Contract lists the compensation for each contrac- tual service in a series of Contract Line Item Numbers (CLINs). The Contract requires HUD to pay “as full com- pensation for all work required, performed and accepted under [the] contract, inclusive of all costs and expenses, the fixed-unit-rate for the applicable CLINs and applicable pe- riods, as stated in Part I, Section B of [the] contract.” J.A. 191. The contract requires some services to be compen- sated individually, while others are covered under monthly fees. The issue here is which CLIN specifies the compensa- tion for routine, bi-weekly inspections of Custodial proper- ties. At first, HUD paid PKMG individually for every bi- weekly inspection, applying the per-inspection fee from CLIN 0005AA regardless of property type. Later, HUD be- gan rejecting invoices for inspections of Custodial proper- ties and only providing individual payments for HUD- Owned properties. P.K. Mgmt. Grp., Inc. v. HUD, 2019 CIVBCA Lexis 208, *5 (Aug. 20, 2019). PKMG submitted a claim to the HUD contracting officer seeking a determina- tion that PKMG is entitled to CLIN 0005AA fees for inspec- tions of Custodial properties. Id. The officer denied the claim, stating that “the contract is clear that CLIN 0005AA applies to HUD-Owned Vacant Properties only.” Id. at *5– 6. The officer explained the prior payments by noting that HUD’s payment system “was erroneously programmed” to pay for each inspection individually, and that the change in behavior did not signal a change in interpretation. Id. at *6. PKMG appealed to the Board, which denied the appeal, Case: 20-1260 Document: 40 Page: 4 Filed: 02/04/2021
deeming the Contract language unambiguous. See id. at *6–14. PKMG now appeals to this court. II Pursuant to the Contract Disputes Act, 41 U.S.C. § 7107(b)(1), we review the Board’s decisions on questions of law de novo. Dai Glob. v. Adm’r of the United States Agency for Int'l Dev., 945 F.3d 1196, 1198 (Fed. Cir. 2019). However, “we give the Board’s interpretation of govern- ment contracts careful consideration given its considerable experience and expertise.” Agility Logistics Servs. Co. KSC v. Mattis, 887 F.3d 1143, 1148 (Fed. Cir. 2018). Contractual interpretation is a pure legal issue. PKMG argues that CLIN 0005AA requires HUD to pay individually for each inspection of Custodial properties. However, for the following reasons, we hold that the plain meaning of the contract is that CLIN 0006 covers these in- spections through a monthly fee. First, the title of CLIN 0005AA indicates that it applies only to HUD-Owned properties. CLIN 0005AA is entitled “On-Going Property Inspection HUD-Owned Vacant.” J.A. 278. Although Custodial properties are in HUD’s posses- sion, they are not owned by HUD. See J.A. 143 (noting that for Custodial properties, “[t]itle is not yet in HUD’s name.”). Thus, as the Board noted, “[i]n order to accept PKMG’s position that CLIN 0005AA sets the unit price of inspections of custodial properties, we would need to read the words ‘HUD-owned vacant’ out of CLIN 0005AA . . . .” P.K. Mgmt. Grp., Inc., 2019 CIVBCA Lexis 208, at *10. “An interpretation that gives meaning to all parts of the con- tract is to be preferred over one that leaves a portion of the contract useless, inexplicable, void, or superfluous.” NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (citing Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991)). PKMG’s argument would make the title of CLIN 0005AA inexplicable. Case: 20-1260 Document: 40 Page: 5 Filed: 02/04/2021
P.K. MANAGEMENT GROUP, INC. v. HUD 5
Another indication that CLIN 0005AA only applies to HUD-Owned Vacant properties is its connection with CLIN 0005. Neither party disputes that CLIN 0005 (enti- tled “On-Going Property Management (PM) Fee, HUD- Owned Vacant”) applies only to HUD-Owned vacant prop- erties, and the two CLINs are linked by both their number- ing and titles. See P.K. Mgmt. Grp., Inc., 2019 CIVBCA Lexis 208, at *4. Thus, the Board called CLIN 0005AA a “sub-CLIN” of CLIN 0005. Id. at *9. PKMG disputes this “sub-CLIN” characterization because “sub-CLIN” isn’t a term in the Contract, but regardless, the most sensible in- terpretation is that provisions with related numbering ap- ply to the same properties, particularly when both have titles that say “HUD-Owned Vacant.” PKMG’s interpreta- tion would require us to deem the CLIN numbering system and titles meaningless.
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Case: 20-1260 Document: 40 Page: 1 Filed: 02/04/2021
United States Court of Appeals for the Federal Circuit ______________________
P.K. MANAGEMENT GROUP, INC., Appellant
v.
SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Appellee ______________________
2020-1260 ______________________
Appeal from the Civilian Board of Contract Appeals in No. 6185, Administrative Judge Kyle E. Chadwick, Admin- istrative Judge Allan H. Goodman, Administrative Judge Beverly M. Russell. ______________________
Decided: February 4, 2021 ______________________
NICHOLAS SOLOSKY, Fox Rothschild LLP, Washington, DC, argued for appellant. Also represented by DOUGLAS HIBSHMAN, RONNI TWO.
GEOFFREY MARTIN LONG, Commercial Litigation Branch, Civil Division, United States Department of Jus- tice, Washington, DC, argued for appellee. Also repre- sented by JEFFREY B. CLARK, MARTIN F. HOCKEY, JR., ROBERT EDWARD KIRSCHMAN, JR.; JONATHAN ENGLISH, Case: 20-1260 Document: 40 Page: 2 Filed: 02/04/2021
Office of General Counsel, United States Department of Housing and Urban Development, Washington, DC. ______________________
Before PROST, Chief Judge, LOURIE and HUGHES, Circuit Judges. HUGHES, Circuit Judge. P.K. Management Group, Inc. appeals a Civilian Board of Contract Appeals decision denying its claim that it should receive individual payments for inspections of Cus- todial properties under a contract with the Department of Housing and Urban Development. Because we agree with the Board’s determination that the contract terms unam- biguously cover routine inspections through a monthly fee rather than individual payments, we affirm. I Under contract DU204SA-14-D-06 with HUD (the Con- tract), P.K. Management Group (PKMG) manages multiple types of properties in HUD’s possession, including “HUD- Owned Vacant” properties and “Custodial” properties. HUD-Owned properties are those that “HUD owns,” J.A. 139, while Custodial properties are those of which HUD has taken possession but does not yet have title, J.A. 143–44. The Contract requires PKMG to perform various ser- vices related to the properties. For example, for each rele- vant property that comes into HUD’s possession, PKMG must perform an initial inspection and some initial services maintaining the property. As HUD’s possession of the prop- erty continues, PKMG must conduct ongoing management of the property. The specifics of ongoing management vary by property type. HUD does not own Custodial properties, so they are “not marketable” and have “limited property management tasks.” Id. Relevant here, PKMG must per- form bi-weekly inspections of each property type. See Case: 20-1260 Document: 40 Page: 3 Filed: 02/04/2021
P.K. MANAGEMENT GROUP, INC. v. HUD 3
J.A. 163, 171. These inspections are more thorough for HUD-Owned properties because HUD-Owned properties must be in “Ready to Show Condition,” while Custodial properties generally do not need to be ready for showing. Compare J.A. 163, with J.A. 171. The Contract lists the compensation for each contrac- tual service in a series of Contract Line Item Numbers (CLINs). The Contract requires HUD to pay “as full com- pensation for all work required, performed and accepted under [the] contract, inclusive of all costs and expenses, the fixed-unit-rate for the applicable CLINs and applicable pe- riods, as stated in Part I, Section B of [the] contract.” J.A. 191. The contract requires some services to be compen- sated individually, while others are covered under monthly fees. The issue here is which CLIN specifies the compensa- tion for routine, bi-weekly inspections of Custodial proper- ties. At first, HUD paid PKMG individually for every bi- weekly inspection, applying the per-inspection fee from CLIN 0005AA regardless of property type. Later, HUD be- gan rejecting invoices for inspections of Custodial proper- ties and only providing individual payments for HUD- Owned properties. P.K. Mgmt. Grp., Inc. v. HUD, 2019 CIVBCA Lexis 208, *5 (Aug. 20, 2019). PKMG submitted a claim to the HUD contracting officer seeking a determina- tion that PKMG is entitled to CLIN 0005AA fees for inspec- tions of Custodial properties. Id. The officer denied the claim, stating that “the contract is clear that CLIN 0005AA applies to HUD-Owned Vacant Properties only.” Id. at *5– 6. The officer explained the prior payments by noting that HUD’s payment system “was erroneously programmed” to pay for each inspection individually, and that the change in behavior did not signal a change in interpretation. Id. at *6. PKMG appealed to the Board, which denied the appeal, Case: 20-1260 Document: 40 Page: 4 Filed: 02/04/2021
deeming the Contract language unambiguous. See id. at *6–14. PKMG now appeals to this court. II Pursuant to the Contract Disputes Act, 41 U.S.C. § 7107(b)(1), we review the Board’s decisions on questions of law de novo. Dai Glob. v. Adm’r of the United States Agency for Int'l Dev., 945 F.3d 1196, 1198 (Fed. Cir. 2019). However, “we give the Board’s interpretation of govern- ment contracts careful consideration given its considerable experience and expertise.” Agility Logistics Servs. Co. KSC v. Mattis, 887 F.3d 1143, 1148 (Fed. Cir. 2018). Contractual interpretation is a pure legal issue. PKMG argues that CLIN 0005AA requires HUD to pay individually for each inspection of Custodial properties. However, for the following reasons, we hold that the plain meaning of the contract is that CLIN 0006 covers these in- spections through a monthly fee. First, the title of CLIN 0005AA indicates that it applies only to HUD-Owned properties. CLIN 0005AA is entitled “On-Going Property Inspection HUD-Owned Vacant.” J.A. 278. Although Custodial properties are in HUD’s posses- sion, they are not owned by HUD. See J.A. 143 (noting that for Custodial properties, “[t]itle is not yet in HUD’s name.”). Thus, as the Board noted, “[i]n order to accept PKMG’s position that CLIN 0005AA sets the unit price of inspections of custodial properties, we would need to read the words ‘HUD-owned vacant’ out of CLIN 0005AA . . . .” P.K. Mgmt. Grp., Inc., 2019 CIVBCA Lexis 208, at *10. “An interpretation that gives meaning to all parts of the con- tract is to be preferred over one that leaves a portion of the contract useless, inexplicable, void, or superfluous.” NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (citing Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991)). PKMG’s argument would make the title of CLIN 0005AA inexplicable. Case: 20-1260 Document: 40 Page: 5 Filed: 02/04/2021
P.K. MANAGEMENT GROUP, INC. v. HUD 5
Another indication that CLIN 0005AA only applies to HUD-Owned Vacant properties is its connection with CLIN 0005. Neither party disputes that CLIN 0005 (enti- tled “On-Going Property Management (PM) Fee, HUD- Owned Vacant”) applies only to HUD-Owned vacant prop- erties, and the two CLINs are linked by both their number- ing and titles. See P.K. Mgmt. Grp., Inc., 2019 CIVBCA Lexis 208, at *4. Thus, the Board called CLIN 0005AA a “sub-CLIN” of CLIN 0005. Id. at *9. PKMG disputes this “sub-CLIN” characterization because “sub-CLIN” isn’t a term in the Contract, but regardless, the most sensible in- terpretation is that provisions with related numbering ap- ply to the same properties, particularly when both have titles that say “HUD-Owned Vacant.” PKMG’s interpreta- tion would require us to deem the CLIN numbering system and titles meaningless. Only CLIN 0006 refers to Custodial properties, and we hold that this CLIN governs the compensation for routine inspections of Custodial properties. Entitled “Inspection, Initial Services, On-Going [Property Management] For Custodial Properties,” CLIN 0006 sets a monthly fee that covers a variety of services. J.A. 278. The parties do not dispute that all other services associated with Custodial properties are covered by this monthly fee, so it would be anomalous to interpret this one service, routine inspections of Custodial properties, to be covered by a separate provi- sion, which by its title only addresses fees for HUD-Owned properties. Thus, we agree with the Board that “the fixed monthly price in CLIN 0006 includes inspections of custo- dial properties.” P.K. Mgmt. Grp., Inc., 2019 CIVBCA Lexis 208, at *13. PKMG raises several arguments to the contrary, but we find none of them persuasive. PKMG contends that be- cause one section of the Contract lays out criteria for re- ceiving “credit” for routine inspections of Custodial properties, the inspections must be individually compen- sated. See Appellant’s Br. 16 (citing J.A. 163–64). But Case: 20-1260 Document: 40 Page: 6 Filed: 02/04/2021
“credit” does not equate to payment. One can receive credit for a required task without being individually paid for that task. In another section, the Contract describes the conse- quences of the “failure of the Contractor to perform . . . any routine inspection” under CLIN 0005AA. J.A. 125 (empha- sis added). PKMG argues that the use of the word “any” here indicates that CLIN 0005AA deals with all routine in- spections, not just those of HUD-Owned properties. Appel- lant’s Br. 12–13. But a more reasonable interpretation is that, to the extent this passage discusses CLIN 0005AA, it simply refers to any routine inspection under CLIN 0005AA, i.e., any inspection of a HUD-Owned prop- erty. Reading the Contract as a whole, we hold that the plain meaning places compensation for routine inspections of Custodial properties under CLIN 0006 rather than CLIN 0005AA. Because the Contract is unambiguous, we follow the plain meaning without considering extrinsic ev- idence or related arguments. Nw. Title Agency, Inc. v. United States, 855 F.3d 1344, 1347 (Fed. Cir. 2017) (citing Coast Fed. Bank, FSB v. United States, 323 F.3d 1035, 1040 (Fed. Cir. 2003) (en banc)). III We have considered PKMG’s remaining arguments and find them unpersuasive. Because we agree with the Board that CLIN 0006, rather than CLIN 0005AA, governs compensation for routine inspections of Custodial proper- ties, we affirm. AFFIRMED