United States District Court, E.D. Virginia, Alexandria Division
MEMORANDUM OPINION AND ORDER
Anthony J. Tranga United States District Judge.
government procurement, diversity case arises out of a
subcontract between Plaintiff Technology and Supply
Management, LLC ("TaSM") and Johnson Controls
Building Automation Systems, LLC, ("JCBAS") to
provide energy efficient relocatable shelters to the Army for
use at Camp Buehring, Kuwait, all in connection with
TaSM's prime contract with the Army (the
"Subcontract"). TaSM terminated the Subcontract for
default on December 3, 2014 and filed this action on March
18, 2016, seeking to recover damages for JCBAS' alleged
breach of the Subcontract and related tortious
before the Court is a Motion for Partial Summary Judgment
[Doc. No. 97] filed by Defendants JCBAS, and its affiliates
Johnson Controls Federal Systems, Inc. ("JCFS") and
Johnson Controls, Inc.'s ("JO") (the
"Motion"). Briefly summarized, defendants have
moved for judgment as a matter of law on (1) TaSM's claim
for "cover" damages, either for lack of standing or
because TaSM was able to "cover" for an amount less
than what it would have owed under the Subcontract for the
remaining shelters and any other claimed damages are
consequential damages that are waived under the Subcontract;
(2) TaSM's claim for shipping and storage costs
associated with rejected shelters on the grounds that such
expenses are incidental damages that are waived under the
Subcontract; (3) TaSM's fraud claim on the grounds that
any alleged misrepresentations related to contract
performance and therefore cannot constitute actionable
conduct under a fraud theory; (4) TaSM's claim against
JCFS and JCI for tortious interference with the Subcontract;
and (5) TaSM's claim for tortious interference with
business expectancy. For the reasons stated below, the Motion
is GRANTED as to TaSM's claim for contractual damages for
the shipping and storage costs of rejected shelter units and
TaSM's tortious interference with contract claim (Count
4) and is otherwise DENIED.
stated otherwise, the following facts are either undisputed
or disputed facts viewed most favorably to TaSM:
JCBAS is a Delaware limited liability company that provides
building systems and automation and energy savings solutions.
Its sole member is Defendant JCFS and both entities are
wholly owned subsidiaries of Defendant JCI. Around October
12, 2012, the Army issued a Request for Proposals
("RFP") in which sought goods and services in
support of the Army's Kuwait Energy Efficiency Project
(the "KEEP Project"). The RFP solicited energy
efficient relocatable shelters for Camp Buehring, Kuwait,
which the Army issued as a small business set aside. Given
the Army's decision to set aside the procurement for
small business, JCBAS could not serve as the prime
contractor. JCBAS thus approached TaSM, a small business, and
proposed that TaSM serve as the prime contractor, and JCBAS
as the subcontractor. TaSM agreed; and on November 26, 2012,
TaSM submitted its proposal in response to the RFP. The Army
awarded TaSM the KEEP contract on or around March 15, 2013.
After several rounds of protests and a re-solicitation, the
Army again selected TaSM's proposal and on September 27,
2013, awarded to TaSM Contract No. W15QKN-D-0113 (the
"Prime Contract"). The Prime Contract was an
"indefinite quantity, indefinite delivery" contract
("IQID") that had a guaranteed value of $10
million, with a total authorized "ceiling value" of
$29, 429, 017. The Army issued Prime Contract Delivery Order
1 simultaneous with the Prime Contract award, which
requisitioned 72 two-story shelter units for Camp Buehring at
a total cost of $14, 880, 593.52. Overall, the Army has
issued six fixed-price delivery orders to TaSM under the
Prime Contract at a cost of $18, 404, 304.
February 2014, TaSM and JCBAS executed the Subcontract for
JCBAS to perform certain work required by the Prime Contract.
Under Section 10(c) of the Subcontract, the parties waived
any right to recover either incidental or consequential
damages. In March 2014, TaSM and JCBAS entered Subcontract
Delivery Order 0001 for JCBAS to deliver 72 two-story shelter
units at a price of $174, 000 each, for a total price of $12,
execution of the Subcontract, a dispute arose regarding
JCBAS' performance, including the type of expanded
polystyrene ("EPS") insulating materials that would
be used in the panels of the shelters-specifically the extent
to which Neopor, a specific type of EPS manufactured by BASF,
was required under the Prime Contract and Subcontract.
Eventually, JCBAS used Neopor for all exterior walls but
another type of EPS, Styropor, for all internal dividers.
TaSM learned of the use of Styropor, instead of Neopor, for
the interior dividers in July 2014.
September 2014, TaSM issued to JCBAS a "stop work
order" based on TaSM's assessment of deficiencies in
JCBAS' performance. That "stop work order" was
eventually lifted in October 2014 following a series of
communications between the parties. On October 20, 2014, TaSM
directed JCBAS to package and prepare for shipment all of the
remaining materials for the two-story shelter units remaining
to be fabricated under Subcontract Delivery Order 0001, which
included all the materials for 36 of the 72 two-story shelter
units. Thereafter, JCBAS began preparing to deliver the
remaining materials due under Delivery Order 0001 that had
yet to be delivered. In November 2014, TaSM picked up the
remaining materials from JCBAS and shipped the units to
Kuwait. On December 3, 2014, while the JCBAS materials were
in transit to Kuwait, TaSM terminated JCBAS for default under
the Subcontract and also rejected the materials in transit.
Throughout this period, defendants' employees repeatedly
contacted the Army directly concerning TaSM's performance
and conduct with respect to the KEEP Project, even though its
own contractual relationships pertaining to the shelters were
solely with the TaSM.
the Subcontract, JCBAS had agreed to fabricate the rejected
36 two-story shelter units for approximately $6.6 million.
After termination, TaSM contracted with Energy Efficient
Building Systems, LLC ("EEBS") to provide the
materials for those remaining 36 two-story shelter units at a
cost of $5, 721, 581.02. EEBS is affiliated with TaSM and
owned by TaSM principals. EEBS, in turn, subcontracted with
Evia Operations S.a.R.L. ("Evia") to obtain the
materials needed to fabricate the shelter units. Thereafter,
Evia and its affiliate, IQ LLC, failed to perform under their
contract with EEBS and were terminated. TaSM and/or EEBS then
started a facility of their own in Virginia to produce the
panels for the shelter units, which were eventually
fabricated and delivered to the Army. TaSM has incurred over
$10 million dollars in completing JCBAS' work under the
Subcontract, either directly or through its affiliate EEBS.
Despite the amount remaining under the authorized spending
ceiling of the Prime Contact, the Army has not ordered any
further shelter units.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 56, summary judgment is
appropriate only if the record shows that "there is no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986); Evans v. Techs.
Apps. & Serv. Co., 80 F.3d 954, 958-59 (4th Cir.
party seeking summary judgment has the initial burden to show
the absence of a material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 325 (1986). A genuine issue of
material fact exists "if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party." Anderson, 477 U.S. at 248. Once a
motion for summary judgment is properly made and supported,
the opposing party has the burden of showing that a genuine
dispute exists. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586-87 (1986). To defeat a
properly supported motion for summary judgment, the
non-moving party "must set forth specific facts showing
that there is a genuine issue for trial."
Anderson, 477 U.S. at 247-48 ("[T]he mere
existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported
motion for summary judgment; the requirement is that there be
no genuine issue of material fact.").
Whether a fact is considered material is determined by the
substantive law, and "[o]nly disputes over facts that
might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment."
Id. at 248. The facts shall be viewed, and all
reasonable inferences drawn, in the light most favorable to
the non-moving party. Id. at 255; see also
Lettieri v. Equant Inc., 478 F.3d 640, 642 (4th Cir.
Contract Damages Based on TaSM's Cost to Cover ...