Skip Kirchdorfer, Inc. v. United States

38 Cont. Cas. Fed. 76,390, 26 Cl. Ct. 666, 1992 U.S. Claims LEXIS 369, 1992 WL 198160
CourtUnited States Court of Claims
DecidedAugust 18, 1992
DocketNo. 337-89C
StatusPublished
Cited by4 cases

This text of 38 Cont. Cas. Fed. 76,390 (Skip Kirchdorfer, Inc. 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
Skip Kirchdorfer, Inc. v. United States, 38 Cont. Cas. Fed. 76,390, 26 Cl. Ct. 666, 1992 U.S. Claims LEXIS 369, 1992 WL 198160 (cc 1992).

Opinion

OPINION

HARKINS, Senior Judge:

Skip Kirchdorfer, Inc. (plaintiff or SKI) was a subcontractor in a contract awarded by the Naval Facilities Engineering Command, Atlantic Division (NAVFAC) to a joint venture for the design and construction of family housing units at the Guantanamo Bay, Cuba, Naval Station. The joint venture (JV) consisted of American Export Group, International Services, Inc. (AEGIS) and Zublin Delaware, Inc. (Zublin). Plaintiff contends the Navy seized its warehouse, which resulted in a taking of plaintiffs personal property. In its complaint, plaintiff claimed $5.5 million; ultimately the claim was reduced to $951,821. The case is before the court after trial of the taking issue.

The prime contract, entered November 25, 1985, was a negotiated firm fixed price construction contract in the amount of $11,-595,000. It was a “turnkey” contract for construction of 125 units of family housing. The subcontract, dated June 17, 1986, covered the construction portion of the work at a fixed price of $4,250,000. It provided that the JV would supply all construction materials, and SKI would furnish all necessary tools, equipment and labor.

The prime contract provided work was to start on November 30, 1985. The JV was to complete work on plans and specifications by January 29, 1986, and all work on the project was to be completed by July 23, 1987. As a result of delays, beneficial occupancy of various housing units was not given until the period January 15, 1988— August 21, 1988. Final completion of warranty and punch list work was in August 1989.

The prime contract was on standard forms that included general provisions applicable to construction contracts. Standard Form 23-A March 1981 (Rev. 8/83). The subcontract was on forms developed by the Associated General Contractors of America. AGO Document No. 600—Au-gust 1984. The subcontract identified special provisions and contract documents applicable to subcontract work, and relevant provisions of the prime contract were incorporated by reference with modifications and specifications set forth in attachments. The subcontract provided special procedures for its termination by the parties. The parties agreed all claims, disputes and matters in question related to the subcontract or to its breach would be decided by arbitration.

General Provision No. 38 was included in both the JV prime contract and in the SKI subcontract. This provision authorizes the contractor to erect temporary buildings for storage, shops and offices, only with the approval of the contracting officer, from materials purchased by the contractor without expense to the government. Such temporary buildings remain the property of the contractor and are to be removed at contractors’ expense on completion of the work. In addition to General Provision No. 38, the subcontract’s scope of work article obligated SKI to provide storage and protection of construction materials provided by the JV, and an office and accommodation for the JV’s representative.

In negotiations for the Project, in order to accommodate the construction of residences at both leeward-and main base at Guantanamo Bay, the JV proposed two locations for its temporary office space and warehouse/shop operations. The initial proposal had on the main base: a 1,000 sq. ft. office, and a 10,000 sq. ft. warehouse/shop; and on leeward: a 500 sq. ft. office, and a 5,000 sq. ft. warehouse/shop. These items totaled $117,500 on the schedule of prices. The contract subsequently was changed to locate all residences on the main base. This resulted in a need for only one location for office and warehouse/shop facilities.

On June 10, 1986, SKI purchased in the United States materials to be shipped to Cuba for a 120 ft. X 300 ft. building. The temporary building would have a galva[669]*669nized metal roof and ribbed steel siding, and would provide a 36,000 sq. ft. area. The total cost of the materials was $63,105.

On June 27, 1986, SKI requested the Navy to approve the location for its warehouse and storage area on Sherman Avenue. The Navy gave its approval, subject to requirements of the family housing project contract, on September 16, 1986. SKI purchased and shipped to Guantanamo all materials used to construct the Sherman Avenue warehouse facility. SKI performed all construction related to construction of the building and improvements. As constructed, the 36,000 sq. ft. temporary structure included 1,000 sq. ft. for office space.

At the time SKI built the Sherman Avenue warehouse facility, it had other prime and subcontracts for work at the Guantanamo Bay Naval Base. Materials, tools, and equipment relative to SKI’s other contracts were stored in the Sherman Avenue warehouse and compound. Construction materials owned by the JV that had been furnished for the Project also were stored in the warehouse facility. Although these various types of property were segregated roughly by warehouse areas, SKI did not maintain inventories of any of the items in the warehouse facility.

On August 12, 1987, SKI submitted to the JV a schedule of mobilization prices that included 1,000 sq. ft. of office space, priced at $15,000, and 15,000 sq. ft. for a warehouse/shop, priced at $135,000. Progress payments for mobilization, paid by the Navy to the JV, and from the JV to SKI, included $150,000 for the office and warehouse/shop facility.

During the period 1986-88 the Project was delayed, and substantial changes occurred in the relationships of the parties. In 1987, Zublin took over completion of the housing project after AEGIS on April 30, 1987, filed a petition under Chapter 11 of the Bankruptcy Code. Disputes between SKI and Zublin, acting for the JV, culminated on November 5, 1987, in arbitration proceedings pursuant to the subcontract. These arbitration proceedings are pending. As of August 30, 1988, most of the Project construction work had been completed, and occupancy by Navy personnel of the residential units was in progress. As of that date, a substantial amount of work remained outstanding. Numerous punch list items needed completion, and workmanship deficiencies directly attributable to SKI’s performance, and for which SKI was responsible, were substantial. Workmanship deficiencies included: improper welding, improper plumbing connections, failure to connect bathtub overflow drains, defective duct work, use of defective materials, and use of rejected materials.

After August 30, 1988, JV personnel did not man an office in the warehouse. Representatives of the JV remained in contact with the Navy through trips to the Base and by telephone. The JV maintained a presence in Guantanamo Bay throughout the course of the Project.

In September 1988, because of its dispute with the JV over nonpayment, SKI refused to perform any more work on the Project. SKI asserted control over the warehouse, and rented some of the office space to the Kelley Company. SKI performed no further work on the Project after September 15, 1988. Prior to SKI’s repudiation of the subcontract, the JV had office space in the warehouse and had free and continuous access to the warehouse.

On September 29, 1988, the Navy notified the JV that lack of performance on the punch list items and warranty work was not acceptable and that termination for default was being considered. The notice was given to JV’s bonding company, with intervention requested.

As of September 30, 1988, the JV had paid SKI $4,073,058 for subcontract work. The balance owed was $16,963.

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Related

Skip Kirchdorfer, Inc. v. United States
35 Fed. Cl. 742 (Federal Claims, 1996)
Marks v. United States
34 Fed. Cl. 387 (Federal Claims, 1995)
Skip Kirchdorfer, Inc. v. United States
6 F.3d 1573 (Federal Circuit, 1993)

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Bluebook (online)
38 Cont. Cas. Fed. 76,390, 26 Cl. Ct. 666, 1992 U.S. Claims LEXIS 369, 1992 WL 198160, Counsel Stack Legal Research, https://law.counselstack.com/opinion/skip-kirchdorfer-inc-v-united-states-cc-1992.