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In 2010, the United States Army Corps of Engineers (USACE)
entered into an agreement with Hirani Engineering & Land Surveying, PC
(Hirani) for the construction of a levee wall on the National Mall to prevent
the Potomac River from flooding into Downtown Washington. Hirani in turn then
subcontracted out most of the work to a single firm, American Civil
Construction (ACC). For the next two
plus years, the project was plagued with delays, changes, and disputes and consequently
USACE terminated Hirani in April of 2013.
ACC then vacated the work site in the days following the
termination. USACE made a claim on
Hirani’s Performance Bond and its surety Colonial Surety Company (Colonial)
hired a contractor team to complete the project.
ACC filed suit against Hirani and Colonial in April of 2014
in the United States District Court for the District of Columbia for $2,172,285.23
in damages, prejudgment interest, attorney's fees, and costs. In turn, Colonial counter-sued in the amount
of $723,049.14 for work ACC had failed to complete. The bulk of ACC’s requested damages fell
under at Miller Act-Payment Bond claim against Colonial for work ACC claimed was
performed but not paid for by Hirani.
In its bond suit, ACC claimed quantum meruit damages which
contained $138,135.34 for costs related to idle equipment. ACC identified the idle equipment costs as, "the
standby costs of having its owned equipment idling at the site as part of the
reasonable value of ACC's owned equipment furnished in connection with the
Project." ACC asserted the
figure did not represent rental values or other profit opportunities the
equipment could have been used for.
The Court began its analysis by stating the Miller Act
allows a contractor who "furnish[es] labor or material in carrying out
work provided for in a contract" to make payment bond claim. The court then goes on to state that idle
equipment costs “cannot be viewed as an indivisible whole.” The Court presented two scenarios to exemplify this. The
first is when a contractor brings machines to a site and uses them over
the course of weeks, but not every day.
The second scenario is one in which a contractor brings equipment to a
job sixty days before it is ultimately used in the execution of contract
work.
The Court differentiated the two scenarios by stating in the
first, a contractor cannot be expected to remove equipment from a work site every
time it is not used so long as there are other activities that require its use, but in
the second, a contractor cannot claim equipment is “furnished” for “carrying
out work” if the equipment is not used absent a reasonable explanation. The Court drew examples from the claim pointing
to a skid steer that was brought to the job site early and used throughout the
course of the project, but not every day, and compared it to an excavator brought
in December of 2011, used a few times in January of 2012, and then used only
one more time while sitting onsite for the duration of the project.
In its decision, the Court examined a submitted schedule of
equipment utilized and determined ACC was entitled to $38,897.62 for standby
expenses for idle equipment.
United States ex rel. Am. Civ. Constr., LLC v. Hirani Eng'g & Land Surveying, P.C.
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The author, Brendan Carter, Esq., is the Director of Industry Advancement & Labor Relations with the AGC of Massachusetts based in Wellesley, MA. He is a monthly contributor to The Dispute Resolver and a former Student Division Liaison to the Forum on Construction Law.
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The author, Brendan Carter, Esq., is the Director of Industry Advancement & Labor Relations with the AGC of Massachusetts based in Wellesley, MA. He is a monthly contributor to The Dispute Resolver and a former Student Division Liaison to the Forum on Construction Law.
