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G&T Conveyor Company, Inc v. Allegheny County Airport Authority.

October 25, 2011

G&T CONVEYOR COMPANY, INC., PLAINTIFF,
v.
ALLEGHENY COUNTY AIRPORT AUTHORITY.
DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM OPINION RE: PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT (DOC. NOS. 34 & 44)

I. INTRODUCTION

The present case is a contractual dispute between Plaintiff, G&T Conveyor Company, Inc. ("G&T"), and Defendant, Allegheny County Airport Authority ("ACAA"). On April 29, 2011, Plaintiff filed a one count Complaint before this Court, pursuant to 28 U.S.C. § 1332, alleging breach of contract for work it performed at the ACCA on baggage handling conveyors for a contract amount of $9,008,600. Doc. No. 1. On May 26, 2011, Defendant filed a Motion to Dismiss the Original Complaint (doc. no. 10), and on June 8, 2010, Plaintiff filed an Amended Complaint alleging Breach of Contract, and adding claims for Promissory Estoppel, Unjust Enrichment, and violation of the Pennsylvania Contractor and Subcontractors Payment Act. Doc. No. 15. On June 21, 2011, Defendant filed a Motion to Dismiss the Amended Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure (doc. no. 21), and on June 29, 2011, Plaintiff filed its Response in Opposition thereto. Doc. No. 23. On July 5, 2011, this Court granted in part, denied in part Defendant‟s Motion to Dismiss, and dismissed Plaintiff‟s cause of action under the Pennsylvania Contractor and Subcontractors Payment Act while retaining all other claims in the Amended Complaint. Doc. No. 25.

Currently pending before this Court are the parties‟ Cross Motions for Summary Judgment. Doc. Nos. 34 & 44. For the reasons set forth below, this Court will Grant Plaintiff‟s Motion for Partial Summary Judgment (doc. no . 34) and will Grant in Part, and Deny in Part Defendant‟s Motion for Summary Judgment (doc. no. 44).

II. FACTUAL BACKGROUND

The following facts are material and undisputed unless otherwise indicated herein.*fn1

Plaintiff, G&T Conveyor Company, Inc. is a Florida corporation that designs, manufactures, and installs baggage-handling systems in airports throughout the United States. Doc. No. 15 ¶¶ 1, 6. Defendant, ACAA, operates the Pittsburgh International Airport in Allegheny County, Pennsylvania. Id. at ¶¶ 2, 7. On August 2, 2007, the parties entered into a construction Contract for the North Baggage In-Line Explosive Detection System Project at the Pittsburgh International Airport, known as ACAA Project Number 59Q1-06-Equipment (the "Project"), at the agreed-upon price of $9,008,600. Id. at ¶ 8; Doc. No. 45 ¶ 16. The Contract*fn2 required G&T to construct and test a Baggage Handling System,*fn3 which included an in-line explosive detection system. The Contract also required G&T to coordinate its efforts with other contractors and all appropriate government agencies,*fn4 as well as meet all technical specifications in the contract.*fn5 Funding for the work performed by G&T was provided, in part, by the United States of America through the Transportation Safety Administration ("TSA") pursuant to a federally-funded grant, referenced in the Contract as an "Other Transaction Agreement" ("OTA"). Doc. No. 50 at 2. The OTA established:

[T]he respective cost-sharing obligations and other responsibilities of the TSA and the Airport Authority relating not only to the installation of integrated and non-integrated Explosives Detection Systems and Explosives Trade Detection equipment, but also to the improvements to be made to the existing systems in the baggage handling system at the North Landside Terminal at Pittsburgh International Airport.

Doc. No. 50, Ex. 1, OTA, art. I.

Pursuant to the OTA, the TSA was responsible for reimbursing ACAA for 75% of all "allowable and allowable costs of the Project as set forth herein" up to a maximum of $3,400,000. Id. at art. III. A. However, the OTA mandates that title to the EDS and ETD security equipment, which includes the CTX, was to remain, as it does today with the TSA and not with ACAA. Id. at art. III. A.3.

In order to construct the Baggage Handling System, G&T was required to install a "CTX" machine (the "CTX"), which is an explosive detection device that uses CAT scans and image processing software to screen checked baggage for explosives. Doc. No. 36 ¶ 1. Although G&T was required to install the CTX, the Contract required that the TSA provide G&T with the CTX for the Project.*fn6 Doc. No. 36 ¶ 2. The Contract also required that representatives of the TSA inspect the Project. Doc. No. 45 ¶ 18; Ex. G, Project Manual, §§ 800-08, ¶ D.

In early 2009, after installing the CTX and completing a substantial amount of work on the Project, Plaintiff conducted a Pre-Integrated Site Acceptance Test ("ISAT").*fn7 Doc. No. 15 ¶ 9. At the conclusion of the Pre-ISAT testing a number of bags returned a bag designation status of "CTX unknown," which occurs when the CTX is unable to determine the content of a scanned piece of luggage. Id. at ¶¶ 6-7. Once a piece of luggage is designated as a "CTX unknown," a TSA employee in a Baggage Inspection Room must manually search it. Doc. No. 45 ¶ 30. Although a number of the Pre-ISAT results returned pieces of luggage with "CTX Unknown" statuses, Plaintiff, BNP Associates, Inc. (on behalf of ACAA), and Carter-Burgess (on behalf of TSA) each concluded that the results of the Pre-ISAT tests met the established site acceptance criteria. Doc. No. 36 ¶ 7.

After the completion of the pre-ISAT, Battelle, which was the commissioning agency for the TSA on the Project, began the formal ISAT testing on the baggage handling system.*fn8 Doc. No. 15 ¶ 10. In March of 2009, Battelle terminated the initial ISAT test prior to completion and left the job site. Id. at ¶ 8. Although both parties admit that Battelle terminated the ISAT testing (doc. no. 45 ¶ 42; doc. no. 36 ¶ 13), the parties dispute Battelle‟s reasons for terminating the initial ISAT test. ACAA contends that Battelle cited several reasons supporting its decision to terminate the initial ISAT test, including: (1) an abnormally large number of CTX Unknown bags were observed throughout the line and system tests indicating a problem with the EDS/BHS interface; (2) a six percent (6%) unknown Error Rate;*fn9 (3) a number of incomplete BHS reports;*fn10 and, (4) a number of problems occurred with one of the dimensioning devices. Doc. No. 45 ¶ 8. Moreover, ACAA contends that G&T was required to obtain and comply with the latest copy of the TSA ISAT procedures prior to the beginning of any testing.*fn11 Doc. No. 45 ¶ 31. However, G&T contends that the primary contributing factor to Battelle‟s halting the ISAT testing was a defect in the PLC*fn12 parameters settings in the CTX machines furnished for the Project. Doc. No. 36 ¶ 9. Additionally, G&T contends that the stoppage of ISAT testing was premature, which added significant costs to the project. Doc. No. 36 ¶ 10. Although the scope of G&T‟s work under the Contract did not change, G&T contends Battelle‟s termination of ISAT testing delayed G&T from completing its work for twenty-eight (28) days while the site-specific acceptance criteria in the original Contract was modified. Doc. No. 15 ¶ 14.

The parties also disagree as to whether G&T was responsible for the delay. G&T contends that any defect in the PLC parameters settings on the CTX was beyond its control, and that Battelle was solely responsible for prematurely terminating the ISAT testing. Doc. No. 36 ¶¶ 11, 13. G&T also contends that Battelle changed the site acceptance criteria outlined in the Contract, which caused the delay to G&T. Id. at ¶ 12. Moreover, G&T also contends that ACAA allowed Battelle to change the site acceptance criteria, making ACAA responsible for any damages G&T incurred as a result of the delay. ACAA denies that Battelle terminated ISAT testing prematurely, and contends G&T is responsible for the termination. Specifically, ACAA contends that the excessive number of "CTX Unknown" bag statuses generated by the CTX were within the control of G&T because G&T was able to reduce the number of CTX Unknowns to "an acceptable level" after Battelle terminated the ISAT testing. Doc. No. 45 ¶¶ 11, 13.

As a result of the delay caused by the termination of ISAT testing, G&T filed the present action against ACAA seeking $173,042.27 (which represents a reduction from the $280,000 total for the full amount of delay damages), plus all applicable costs and fees. Doc. No. 15 ¶ 36.

III. LEGAL STANDARD

Summary judgment should be granted if, drawing all inferences in favor of the non-moving party, "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)(2). A fact is "material" if proof of its existence or non-existence might affect the outcome of the suit under applicable law. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, (1986). "Facts that could alter the outcome are material facts." Charlton v. Paramus Bd. of Educ., 25 F.3d 194, 197 (3d Cir.1994). In deciding whether there is a disputed issue of material fact, the Court must grant all reasonable inferences from the evidence to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Penn. Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Cir.1995). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250.

Once the moving party has properly supported its showing that there is no triable issue of fact and demonstrated an entitlement to judgment as a matter of law, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita, 475 U.S. at 586. The non-moving party must "go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file,‟ designate "specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

In summary, the inquiry under a Rule 56 motion is whether the evidence of record presents a genuine dispute over material facts so as to require submission of the matter to a jury for resolution of that factual dispute, or whether the evidence is so one sided that the movant must prevail as a matter of law. It is on this standard that the Court has reviewed the parties Motions for Summary Judgment, Responses and Replies thereto.

IV. DISCUSSION

On September 15, 2011, G&T filed a Motion for Partial Summary Judgment asking this Court to rule as a matter of law that: (1) the twenty-eight (28) day delay on the project resulted from a defect in the CTX machine PLC‟s and a change in the Contract site acceptance criteria, and that ACAA is liable for any increased costs incurred by G&T to complete testing of the Baggage Handling System after the delay; and, (2) the Provisions within paragraph B, Scope of Work 6, of the Project Technical Specifications of G&T‟s Contract with ACAA do not require G&T to cover the costs of changes and/or interferences to either: (a) the bid set of plans and specifications for the Project, or the work undertaken under those plans and specifications; or, (b) the TSA‟s site acceptance criteria for its Site Specific Test Plan in effect prior to the commencement of ISAT testing in March of 2009. Doc. No. 34.

On October 3, 2011, ACAA filed a Cross-Motion for Summary Judgment seeking this Court to grant its Motion for Summary Judgment on all counts in the Amended Complaint. Doc. No. 44.

After careful review of the facts, motions, briefs in support, and oppositions thereto, this Court will Grant Plaintiff‟s Motion for Partial Summary Judgment, will Deny Defendant‟s Motion for Summary Judgment as to Count I of the Amended Complaint, and will Grant Defendant‟s Motion for Summary Judgment as to Counts II and III.

The present dispute requires this Court to interpret the Contract entered into by the parties on August 2, 2007. It is undisputed by the parties that Pennsylvania law governs the interpretation and construction of the Contract. As the United States Court of Appeals for the Third Circuit has recognized, "Pennsylvania law on contract interpretation and ambiguity is somewhat complicated; while the broad principles are clear, it is not a seamless web." BohlerUddehom America, Inc. v. Ellwood Group, Inc., 247 F.3d 79, 93 (3d Cir. 2001). Contracts are interpreted to give effect to the intent of the contract of the parties. See Hutchison v. Sunbeam Coal Corp., 519 A.2d 385, 389 (Pa. 1986). In other words, a contract should be construed to give effect to its general purpose. Capitol Bus Co. v. Blue Bird Coach Lines, Inc., 478 F.2d 556, 560 (3d Cir. 1973). ""[W]hen a written contract is clear and unequivocal, its meaning must be determined by its contents alone.‟" Steuart v. McChesney, 444 A.2d 659, 661 (Pa. 1982) (quoting E. Crossroads Center, Inc. v. Mellon-Stuart Co., 205 A.2d 865, 866 (Pa. 1965)). ""[W]here language is clear and unambiguous, the focus on interpretation is upon the terms of the agreement as manifestly expressed, rather than as, perhaps silently intended.‟" BholerUddeholm, 247 F.3d at 93 (quoting E. Crossroads Center, Inc., 205 A.2d at 866) (emphasis in original). Thus, "[c]lear contractual terms that are capable of one reasonable interpretation must be given effect without reference to matters outside the contract." Krizovensky v. Krizovensky, 624 A.2d 638, 642 (Pa. Super. 1993) (internal citations omitted). Therefore, a Court may only look outside the terms of the contract if the contractual terms are ambiguous. Id. As the Superior Court of Pennsylvania aptly stated, "[w]here the contract terms are ambiguous and susceptible of more than one reasonable interpretation, . . . the court is free to receive extrinsic evidence, i.e., parol evidence, to resolve the ambiguity." Id. However, contractual terms: will be found ambiguous if, and only if, it is reasonably or fairly susceptible of different constructions and is capable of being understood in more senses than one and is obscure in meaning through indefiniteness of expression or has a double meaning. A contract is not ambiguous if the court can determine its meaning without any guide other than a knowledge of the simple facts on which, from the nature of the language in general, its meaning depends; and a contract is not rendered by the mere fact that the parties do not agree on the proper construction.

Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 614 (3d Cir. 1995) (quoting Samuel Rappaport Family Partnership v. Meridian Bank, 657 A.2d 17, 21-22 (1993)) (internal quotations omitted).

Contractual ambiguity can either be patent or latent. See Duquesne Light, 66 F.3d at 614. "While a patent ambiguity appears on the face of the instrument, "a latent ambiguity arises from extraneous or collateral facts which make the meaning of a written agreement uncertain although the language thereof, on its face, appears clear and unambiguous.‟" Bohler-Uddeholm, 247 F.3d at 93 (quoting Duquesne Light, 66 F.3d at 614). A party may use extrinsic evidence to prove a latent ambiguity, "but the evidence must show that some specific term or terms in the contract are ambiguous; it cannot simply show that the parties intended something different that was not incorporated into the contract." Id. Moreover, an interpretation of the ambiguous term must be reasonable; "In holding that an ambiguity is present in an agreement, a court must not rely upon a strained contrivancy to establish ...


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