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K-Con Building Systems, Inc. v. United States

United States Court of Appeals, Federal Circuit

February 12, 2015

K-CON BUILDING SYSTEMS, INC., Plaintiff-Appellant
v.
UNITED STATES, Defendant-Appellee

Page 1001

[Copyrighted Material Omitted]

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Appeal from the United States Court of Federal Claims in No. 1:05-cv-01054-MMS, Judge Margaret M. Sweeney.

WILLIAM ATKINS SCOTT, Pederson & Scott, P.C., Charleston, SC, argued for plaintiff-appellant.

DANIEL B. VOLK, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by STUART F. DELERY, ROBERT E. KIRSCHMAN, JR., BRYANT G. SNEE.

Before PROST, Chief Judge, NEWMAN and TARANTO, Circuit Judges.

OPINION

Page 1003

Taranto, Circuit Judge.

K-Con Building Systems, Inc., entered into a contract with the federal government to construct a building for the Coast Guard. Once K-Con finished, the government imposed liquidated damages for delay in completion. KCon sued in the Court of Federal Claims, seeking two forms of relief. First, it requested remission of the liquidated damages on two grounds--that the contract's liquidated-damages clause was unenforceable and that KCon was entitled to an extension of the completion date. Second, it requested additional compensation based on work performed in response to government requests that K-Con alleges amounted to contract changes. The Court of Federal Claims held that the contract's liquidated-damages clause is enforceable and that K-Con did not comply with the written-notice precondition for invoking the contract clause governing changes. It also held that K-Con's claim for an extension on the completion date must be dismissed for lack of jurisdiction. We affirm.

Background

On January 20, 2004, K-Con entered into a contract with the Coast Guard, under which K-Con would construct a " cutter support team building" in Port Huron, Michigan, for $582,641. The project was to be completed by November 20, 2004, with K-Con agreeing to pay $589 in liquidated damages for each day of delay. On May 23, 2005, the Coast Guard accepted the building as substantially complete. It withheld payment of $109,554 as liquidated damages for what it calculated to be tardiness of 186 days. No party challenges the calculation.

On July 28, 2005, K-Con sent a letter to the government contracting officer requesting remission of the liquidated damages " wrongfully withheld from the contract."

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J.A. 259, Letter from K-Con to Contracting Officer (July 8, 2005) (first letter). As grounds for remission, KCon asserted that the " liquidated damages [constituted] an impermissible penalty" and that the Coast Guard " failed to issue extensions to the completion date as a result of changes to the contract." Id. It provided no details regarding its request for a time extension based on contract changes. After the contracting officer denied KCon's request for remission, K-Con sued in the Court of Federal Claims under the Contract Disputes Act (CDA), 41 U.S.C. § § 601-613 (2006).[1] K-Con sought remission of $109,554 plus interest in liquidated damages on the two grounds asserted in its July 28, 2005 letter. Original Complaint, K-Con Bldg. Sys., Inc. v. United States, No. 05-01054C (Fed. Cl. Sept. 30, 2005).

On December 15, 2006, while litigation in the Court of Federal Claims was underway, K-Con submitted a second letter to the contracting officer. J.A. 263-64, Letter from K-Con to Contracting Officer (Dec. 15, 2006) (second letter). The second letter extensively details the contract changes allegedly made by the Coast Guard during the contract term and asks for a new remedy--$196,126.38 for additional work necessitated by the changes--as well as an extension of the completion date of the contract. The contracting officer denied K-Con's requests. K-Con then amended its complaint in the Court of Federal Claims to add allegations about the matter covered in its second letter and to seek, beyond the liquidated-damages relief, a judgment of $196,126.38 and a 186-day extension. Amended Complaint, K-Con Bldg. Sys., No. 05-01054C (Fed. Cl. Mar. 18, 2007).

The Court of Federal Claims first ruled, in deciding an initial government motion for summary judgment, that the contract's liquidated-damages clause is enforceable. The court later issued two rulings in deciding a second government motion for summary judgment. It held that K-Con did not provide valid written notice regarding contract changes and therefore had not satisfied a precondition to claiming additional compensation under the contract's changes clause. And it dismissed, for lack of jurisdiction, K-Con's time-extension claim for remission of liquidated damages.

K-Con appeals all three rulings. We have jurisdiction under 28 ...


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