Lobar Assocs., Inc. v. Pa. Tpk. Comm'n

216 A.3d 526

LOBAR ASSOCIATES, INC., Petitioner

v.PENNSYLVANIA TURNPIKE COMMISSION, Respondent

No. 1038 C.D. 2018

Commonwealth Court of Pennsylvania.

Argued: March 12, 2019

Filed: August 1, 2019

George E. Pallas, Philadelphia, for Petitioner.

Douglas C. Hart, Pittsburgh, for Respondent.

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

OPINION BY PRESIDENT JUDGE LEAVITT

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...