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Lobar Associates, Inc. v. Pennsylvania Turnpike Commission

Commonwealth Court of Pennsylvania

August 1, 2019

Lobar Associates, Inc., Petitioner
v.
Pennsylvania Turnpike Commission, Respondent

          Argued: March 12, 2019

          BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

          OPINION

          MARY HANNAH LEAVITT, PRESIDENT JUDGE

         Lobar Associates, Inc. (Contractor) petitions for review of an order of the Board of Claims (Board) that sustained the preliminary objections of the Pennsylvania Turnpike Commission (Commission) and dismissed Contractor's claim for lack of jurisdiction. The Board held that Contractor's claim was barred by the six-month statute of limitations set forth in Section 1712.1(b) of the Commonwealth Procurement Code, 62 Pa. C.S. §1712.1(b).[1] Contractor argues that the Board erred in its determination of when Contractor's claim accrued. Discerning no such error by the Board, we affirm.

         Background

         On June 18, 2014, Contractor agreed to construct a 2, 431-square-foot material testing laboratory at mile marker 113.82 of the Pennsylvania Turnpike (the Somerset Project) for the Commission. Contractor completed the work in June 2016. On July 27, 2016, Contractor submitted a "supplemental work order" to the Commission, requesting additional compensation of $150, 925.19 for changes to the project made by the Commission during construction. Reproduced Record at 676a (R.R.__). On September 21, 2016, the Commission responded that it would pay $35, 233.05 for the supplemental work. Contractor responded with a request for further review, which was denied by the Commission on October 17, 2016.

         On March 27, 2017, Contractor submitted an administrative claim to the Commission's contracting officer, seeking $418, 767.42 for the supplemental work and delay damages attributable to the Commission's project design changes. The Commission conducted an administrative hearing. It denied Contractor's claim as untimely because it was not submitted within six months of the Commission's September 21, 2016, determination that it would pay $35, 233.05 for the supplemental work.

         Thereafter, on September 14, 2017, Contractor filed a three-count claim against the Commission with the Board asserting breach of contract, unjust enrichment, and violation of the Contractor and Subcontractor Payment Act, 73 P.S. §§501-516.[2] Contractor sought a judgment in excess of $418, 767.42, plus interest, costs of suit and attorney fees.

         Contractor's claim stated that the Somerset Project began as a publicly bid project. However, the Commission then made an "unwieldy and confusing attempt to convert [the] publicly bid project into a JOC [job-order contract] project." Claim, ¶2 at 1; R.R. 8a.[3] The claim alleged that this conversion resulted in "an incomplete design to start the [p]roject and thus one that changed and morphed as the [p]roject proceeded." Claim, ¶3 at 2; R.R. 9a. The design changes required Contractor to perform work beyond the scope of the contract. Claim, ¶5 at 2; R.R. 9a. In addition, Contractor sought delay damages for expenses it incurred due to delays caused by the design changes. Claim, ¶6 at 2; R.R. 9a. Contractor's claim asserted damages of $150, 925.19 for the supplemental work and delay damages of $267, 842.23. Claim, ¶7 at 2: R.R. 9a.

         The Commission filed preliminary objections, asserting that the Board lacked jurisdiction because Contractor's claim was barred by the six-month statute of limitations in Section 1712.1(b) of the Procurement Code. The Commission also asserted that Contractor failed to exhaust its administrative remedy and failed to state a claim for unjust enrichment. The Board held an evidentiary hearing on the question of its jurisdiction.

         Contractor presented the testimony of Carl Barker, its project manager for the Somerset Project.[4] He has worked with hundreds of job order contracts, but the Somerset Project was his first with the Commission. The contract established a fixed price for the completion of the Somerset Project, but it also authorized supplemental job orders that would add work credits to, or deletions from, the contract's fixed price. [5]

         Barker's contact at the Commission was Robert Kleimenhagen, the project manager. At the outset, Kleimenhagen instructed Barker to keep an Excel spreadsheet to document extra work Contractor performed on the Somerset Project. Rather than address each project change as it arose, Kleimenhagen explained that the Commission would review the spreadsheet at the end of construction. Barker thought this was unusual for such a large project, but he complied with Kleimenhagen's directive. At the conclusion of the project, Contractor submitted a supplemental job order and spreadsheet seeking $150, 925.19 for additional work.

         Barker testified that he sent the supplemental job order request via email on July 27, 2016, to Gary Madey, the Commission's construction manager. Barker explained that the spreadsheet had to be uploaded using the Commission's collaborative software, known as "Kahua," and Madey was the person who handled this software. Notes of Testimony, 3/12/2018, at 53 (N.T.__); R.R. 388a. Barker copied Kleimenhagen on the email to Madey. On August 26, 2016, Kleimenhagen responded that he hoped to complete the review by September and requested additional information from Barker. Barker did not respond to Kleimenhagen's email.

         On September 21, 2016, Kleimenhagen sent Barker an email with an attached spreadsheet. The email explained that the Commission's entire construction management team had reviewed Barker's spreadsheet and compared it to the project design drawings, specifications, special provisions and on-site construction inspections. The email concluded that Contractor was owed $35, 233.05, and not $150, 925.19. Contractor was advised to submit a supplemental job order for the work items for which the Commission was willing to pay.

         On October 6, 2016, Barker sent Kleimenhagen an email requesting further review because Contractor did not accept the amount of $35, 233.05. Barker did not specifically request, but expected, a meeting. On October 17, 2016, Kleimenhagen responded with an email that reiterated the line-by-line account of what the Commission agreed to pay pursuant to the September 21, 2016, email.

         Barker testified that he believed the Commission's October 17, 2016, email was the final determination. He did not believe the September 21, 2016, email was a final determination because the job order contract required a "collaborative process" whereby the parties would "review and discuss" all supplemental job orders. With the October 17, 2016, email, Barker realized the Commission would not meet and discuss the supplemental job order at issue.

         On cross-examination, Barker was asked about Contractor's delay damages, which were not included in its July 27, 2016, supplemental job order. Barker explained that he was still working on the delay claims at that time. Barker acknowledged that the job order contract required prompt notification of any claim for delay damages.

         Barker was also questioned about a January 5, 2017, letter from the Commission's counsel to Contractor's counsel. In that letter the Commission expressed its disagreement with Contractor's assumption that the deadline for filing an administrative claim with the Commission was six months after Kleimenhagen's October 17, 2016, email, i.e., April 17, 2017. The letter stated that Kleimenhagen's earlier email of September 21, 2016, was the final determination, and Contractor had six months from that date to file a claim, i.e., March 21, 2017.

         Janice Fleming-White, a member of Contractor's legal department, testified. She reviewed the September 21, 2016, email and concluded that it did not constitute a final decision. Upon review of the October 17, 2016, email she prepared a letter of intent to file a claim, which was sent to Kleimenhagen the next day.

         The Commission presented the testimony of Kleimenhagen, who stated that he was the project manager for the Somerset Project, the contract representative and the contracting officer. Michael Baker International served as the construction manager, and it assigned Madey to inspect the Somerset Project.

         Kleimenhagen confirmed that he instructed Barker to keep a record of the work that was deleted or added to the project and to submit all work changes in a supplemental job order at the conclusion of the contract. Kleimenhagen's directive did not relate to the notice of delay damages; the contract requires that a claim for delay damages be asserted within ten calendar days of the act that caused the delay. The contract also required Contractor to file a notice of intent to submit a delay damages claim to the contracting officer in writing within ten days of the act or omission.

         Kleimenhagen testified that Contractor submitted the supplemental job order request on July 27, 2016. On August 24, 2016, Kleimenhagen emailed Barker requesting additional documentation to finish the review, but Barker did not respond. Kleimenhagen then sent the September 21, 2016, email partially denying the claim. Attached to the email was a spreadsheet with a line-by-line analysis of costs the Commission accepted or rejected, followed by a notation "pay" or "no pay." N.T. 142; R.R. 477a.

         Kleimenhagen noted that Barker's email of October 6, 2016, did not point out any errors in the Commission's review. It simply expressed disagreement and requested a further review. On October 17, 2016, Kleimenhagen responded to Barker, stating that the review had been completed, as reported in the Commission's September 21, 2016, email. Contractor then issued a notice of claim on October 18, 2016.

         On cross-examination, Kleimenhagen was questioned about his status as the Commission's contract representative. Kleimenhagen responded that he was assigned this job by his supervisor, but he conceded there was no written confirmation of his appointment. Kleimenhagen was then asked about an email Madey sent to Barker in 2015 in which Madey identified himself as the contract representative. Kleimenhagen explained that he drafted the email for Madey to send, but it looked, mistakenly, as if Madey was the author.

         Madey testified regarding his review of the supplemental job order.[6]When Contractor submitted the supplemental job order and spreadsheet, Madey prepared his own spreadsheet. He looked at each of the 237 line items submitted and compared each with the terms of the contract and the construction plans. If the item listed represented additional work requested by the Commission, he wrote "pay" on the line. N.T. 212; R.R. 547a. If the item listed was required under the original contract, he wrote "no pay." Id. There were items that Contractor had included in its proposal but did not perform, which he also listed as "no pay." Madey stated that the spreadsheet was produced by collaboration between Michael Baker, Inc., and the Commission. The Commission's construction management team did one review, and it was completed by September 21, 2016.

         The Board sustained the Commission's preliminary objection to its jurisdiction. The Board found that Contractor's claim accrued on September 21, 2016. Accordingly, when Contractor filed its administrative claim to the Commission on March 27, 2017, the six-month statute of limitations in Section 1712.1(b) of the Procurement Code had run.

         The Board rejected Contractor's contention that Kleimenhagen was not the contract representative with authority to deny payment on Contractor's supplemental job order. The contract defined the Commission's "representative" as "the authorized representative acting on behalf of the Director of Facilities and Energy Management Operations or the Chief Engineer." R.R. 588a. The contract made the "representative" the one to "decide differences concerning the performance of the work covered by the contract." R.R. 598a. Although Madey identified himself in an email as the Commission's "designated representative" on the Somerset Project, the Board accepted Kleimenhagen's testimony that he was the actual contract "representative." This finding was supported by other evidence.

         For example, Contractor sent the supplemental work order to Madey, but it was Kleimenhagen who responded. It was Kleimenhagen who advised Barker that if Contractor submitted a revised proposal, "I will process the supplemental Job Order ASAP." R.R. 681a. These communications showed that Kleimenhagen was the contract "representative," and at no point did Contractor question Kleimenhagen's authority to so act. Indeed, Contractor sought further review from Kleimenhagen, and Contractor accepted his October 17, 2016, email as a final determination.

         The Board rejected Contractor's argument that the September 21, 2016, email was not a final determination. The email stated that the Commission had "completed the review" of Contractor's supplemental job order request and that the "entire construction management team" had compared the submission with the project specifications. The email specifically identified what would not be paid, with line-by-line notations, and this constituted a denial. The Board also rejected Contractor's assertion that Kleimenhagen's October 17, 2016, email implied that additional review had been undertaken by the Commission subsequent to September 21, 2016. Contractor now petitions for this Court's review.

         Appeal

         On appeal, [7] Contractor raises several issues, which we have reordered and combined into three for purposes of our review. First, Contractor argues that the Board erred in finding that Kleimenhagen was the contract "representative" with authority to make a determination on Contractor's supplemental job order. Second, Contractor contends that even if Kleimenhagen could issue a determination, the Board erred in holding that Contractor's claim accrued on September 21, 2016, because Contractor reasonably interpreted the email Kleimenhagen sent on that date as merely starting the contractually mandated collaborative review process, to which the Commission did not adhere. Relatedly, Contractor contends that the Board erred in failing to consider actions by the Commission after September 21, 2016, indicating that it did not consider Kleimenhagen's email to be a final determination. Third, Contractor asserts that the Board erred in finding that any confusion over the procedure the Commission followed was cleared up by the January 5, 2017, letter from the Commission's general counsel; Contractor argues that letter was misleading.

         Discussion

         I. Kleimenhagen's Authority

         In its first issue, Contractor argues the Board erred in finding that Kleimenhagen was the Commission's named contract "representative" with authority to make a determination on Contractor's supplemental job order.[8]Contractor cites Kleimenhagen's testimony that there was nothing in writing appointing him as contract representative. The only person who asserted, in writing, that he was the Commission's contract representative was Madey, the Commission's construction manager. Because Kleimenhagen lacked the requisite authority, ...


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