COFC Dismissed Contractor’s Claims. Why Did the Federal Circuit Reverse?

A contractor filed suit, arguing it was entitled to an equitable adjustment for delays caused by the government's failure to secure rights of way and utility relocation agreements.  The COFC dismissed the contractor's suit for failure to state a claim. But the Federal Circuit held that the contractor had sufficiently pleaded the claims to survive a 12(b)(6) motion to dismiss.

Hawaiian Dredging Construction Company, Inc. v. United States, CAFC No. 2023-1909

• Background - The contractor filed suit with the COFC seeking an equitable adjustment for delays and increased costs. The contractor alleged the government's "failure to secure the ROWs in a timely manner" and the differences between the final and proposed ROWs caused the appellant to suffer delays and increased costs. Furthermore, the contractor claimed it experienced excusable delays due to the government's changes and additions. The COFC dismissed the suit for failure to state a claim. The contractor appealed to the Federal Circuit.
• Excusable Delay - The contractor alleged in it complaint that it should recover time and costs associated with the government's delays. The COFC rejected the claim, reasoning that although the contract assigned the government responsibility to obtain title to ROWs, it did not specify when it was required to do so. The government provided the ROWs four months after it issued its notice to proceed. But the Federal Circuit reversed. Whether this time frame to obtain ROWs was "reasonable" or "foreseeable" is a fact-intensive inquiry. Additionally, whether the final ROWs materially deviated from the proposed ones was also a fact-intensive inquiry. Such factual determinations were not proper for a Rule 12(b)(6) determination.
• Utlity Relocation - In its amended complaint, the contractor alleged the government was responsible for the "unforeseen delay of having to wait for the local utility services providers to approve and perform utility relocations. The Federal Circuit held this issue was also a factual determination because it depended on whether a 209 day period to return executed agreements was reasonable under the duty of good faith and fair dealing.
• Changes and Additions - The contractor further alleged wall work delays were subject to relief due to additional changes to the contract. Allegedly, the appellant could not proceed with the wall work until the government issued approved contract modifications. The Federal Circuit rejected this argument. Even when the alleged facts were taken as true, the appellant intentionally contributed to the delay for economic reasons. It mischaracterized a "standby" as government delay. The Federal Circuit affirmed the COFC's dismissal of the change claim.

The appellant was represented by Michael Zisa of Peckar & Abramson, P.C. The government was represented by Russel James Upton, Brian M. Boynton, Martin F. Hockey, Jr., and Patricia M. McCarthy of DOJ.

-- Case summary by Joshua Lim, Assistant Editor