Opinion
Civil Action 19-cv-2811-WJM-KLM
06-16-2023
AECOM TECHNICAL SERVICES, INC., Plaintiff-Counterclaim Defendant, v. FLATIRON AECOM, LLC, Defendant-Counterclaim Plaintiff.
ORDER GRANTING AECOM TECHNICAL SERVICES, INC.'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT
William J. Martínez Senior United States District Judge
Before the Court is Plaintiff-Counterclaim Defendant AECOM Technical Services, Inc.'s (“AECOM”) Amended Motion for Partial Summary Judgment (“Motion”). (ECF No. 215.) Defendant-Counterclaim Plaintiff Flatiron | AECOM, LLC (“Flatiron”) filed a response in opposition (ECF No. 216), to which AECOM replied (ECF No. 217). For the following reasons, the Motion is granted.
I. LEGAL STANDARD
Summary judgment is warranted under Federal Rule of Civil Procedure 56 “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). A fact is “material” if, under the relevant substantive law, it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). An issue is “genuine” if the evidence is such that it might lead a reasonable trier of fact to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).
In analyzing a motion for summary judgment, a court must view the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In addition, the Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. See Houston v. Nat'l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).
The following factual summary is largely based on the briefing on the Motion and documents submitted in support thereof. All citations to docketed materials are to the page number in the CM/ECF header, which sometimes differs from a document's internal pagination. Facts disputed by the parties are noted as such.
A. Teaming Agreement
When the Colorado Department of Transportation (“CDOT”) put out the C-470 Express Lanes Project (“Project”) to bid, Flatiron partnered with URS Energy & Construction, the construction side of AECOM, to form a Joint Venture to pursue the Project; and Flatiron engaged the design side of AECOM, known as AECOM Technical Services, Inc., as the Project's designer. (ECF No. 215 at 5-6.) Flatiron and AECOM began by negotiating a Contractor/Designer Teaming Agreement (“Teaming Agreement”), under which AECOM agreed to provide the design and engineering services (“Pre-Award Services”) required for the Project so that Flatiron could submit the required Statement of Qualifications (“SOQ”) and the Request for Proposals (“RFP”) materials and bid on the Project. (ECF No. 215 at 6; ECF No. 37-1 at 3 ¶ 5.)
The Teaming Agreement sets forth several provisions relevant to the resolution of the Motion.
In Paragraph 4, the Teaming Agreement provides that
[t]his Agreement shall terminate in the event [of] . . . (iv) the Project is awarded to another bidder; or . . . (vi) execution of the Subcontract.... If the Parties enter into the Subcontract the terms of this Agreement shall be superseded by the Subcontract, Upon [sic] any such termination, this Contractor/Designer Teaming Agreement shall have no further effect; provided, however, those provisions which, by their terms are intended to survive termination, including and [sic] Section 10 (non-disclosure/confidentiality), Section 12 (liability upon withdrawal), Section 15 (limitation on damages) and Section 17 (Procurement Integrity) shall specifically survive termination, [sic][.](ECF No. 37-1 at 3 ¶ 4.)
In Paragraph 15, the Teaming Agreement sets forth the limitation on damages provision, which provides in part:
In no event shall any Party be liable to the others for any indirect, incidental, special or consequential damages (including, but not limited to, loss of profits, loss of interest or other financing charges, or loss of use), whether arising in contract, tort (including negligence) or pursuant to other legal theory, with respect to its decision concerning any of the foregoing issues. The Parties hereto agree that the provisions of this Agreement which, by their nature, are intended to survive termination or expiration of this Agreement, including, but not limited to, releases or limitations on liability or remedies, shall survive and continue in full force and effect following any such termination or expiration. To the fullest extent permitted by law, limitations on liability set forth in this Agreement are intended to apply even in the event of default, negligence or strict liability on the part of the Party whose liability is limited or released.(ECF No. 37-1 at 6 ¶ 15.)
In Paragraph 20, the Teaming Agreement sets forth numerous “terms and conditions, [that] among others, shall be made part of and included in the Subcontract to be negotiated by the Parties,” including:
• Overall limitation of liability capped at 100% of the final design portion of the agreed-upon Subcontract amount.
• Subcap on schedule-related damages of 20% of the final design portion of the agreed-upon Subcontract amount. Other than breach of standard of care, no quantity liability. Mutual waiver of consequential damages.
• In the event of a conflict between the terms and conditions of the Subcontract and the terms and conditions of the Design-Build Agreement, the terms and conditions of the Subcontract shall control and prevail.(ECF No. 37-1 at 7-8 ¶ 20.)
The parties entered the Teaming Agreement on November 9, 2015. (ECF No. 37-1 at 2.) On April 4, 2016, CDOT accepted Flatiron's bid and awarded the Project to Flatiron. (ECF No. 215 at 9; ECF No. 37-2 at 2.)
B. Subcontract
As contemplated in the Teaming Agreement if Flatiron won the Project, on May 23, 2016, Flatiron executed the Subcontract with AECOM, under which AECOM would be the designer for the Project. (ECF Nos. 37-2, 37-3.)
The Subcontract states that the “Lump Sum Base Design Fee Amount” for AECOM's work is $9,058,493.65. (ECF No. 37-2 at 2.) Additionally, the Subcontract requires AECOM to obtain “project specific professional liability coverage . . . which covers the complete scope of [the] Subcontract,” with coverage limits per claim and in the aggregate of $10 million. (ECF No. 37-2 at 4 § 2.)
The Subcontract contains a limitations of liability provision, stating in relevant part:
Limitations of Liability. Designer's aggregate liability to
Contractor for any damages, claims, costs, or expenses arising under the Subcontract, whether in contract, tort or otherwise, shall be limited to 100% of the Lump Sum in the aggregate, less direct costs, plus additional design fees incurred pursuant to this Agreement (“Total Design Fee”). Any project specific insurance proceeds shall not count toward this cap....(ECF No. 37-2 at 6 ¶ 1.) In the next section, the Subcontract provides:
Liability for Schedule. In the event Designer fails to timely perform the Design Services resulting in a demonstrable delay to the Project's critical path of construction, then Designer shall be liable to Contractor for the Owner's liquidated damages (“LDs”) the Contractor is charged to the extent directly resulting from this delay, along with Contractor's other direct costs and time related project overhead arising from such delay, including acceleration and other mitigation costs. Contractor shall use commercially reasonable efforts to mitigate such delay. Such liability for delay (including but not limited to LDs) shall be limited to 20% of the Total Design Fee in the aggregate which shall be included as part of the overall limitation of liability.(ECF No. 37-2 at 6 ¶ 2.)
In the order of precedence provision, the Subcontract states:
Order of Precedence. ln the event of a conflict between the Teaming Agreement and this Subcontract, this Subcontract shall prevail, except with respect to the calculation of pre-bid compensation in which case the Teaming Agreement shall prevail. Section 16.10 is amended by adding the following sentence to the end of the section: “In the case of a conflict between the terms of this Subcontract and the Design/Build Agreement and any incorporated document, the terms of this Subcontract shall take precedence.”(ECF No. 37-2 at 7 ¶ 7.)
The Subcontract contains a waiver of consequential damages paragraph, which provides:
In no event shall any Party be liable to the others for any indirect, incidental, special or consequential damages
(including, but not limited to, loss of profits, loss of interest or other financing charges, or loss of use), whether arising in contract, tort (including negligence) or pursuant to other legal theory, with respect to its decision concerning any of the foregoing issues. The parties hereto agree that the provisions of this Subcontract which, by their nature, are intended to survive termination or expiration of this Subcontract, including, but not limited to, releases or limitations on liability of remedies, shall survive and continue in full force and effect following any such termination or expiration. To the fullest extent permitted by law, limitations on liability set forth in this Subcontract are intended to apply even in the event of default, negligence or strict liability on the part of the Party whose liability is limited or released.(ECF No. 37-2 at 8-9 ¶ 12.)
In Exhibit 5 - Design Assumptions, the Subcontract provides:
Pre-Award services are not included in the Base Design Fee or scope of work. The pre-bid design costs shall be paid in full, in the amount of $729,661.35, and shall not be included in the Lump Sum Base Design Fee Amount. The Contractor shall pay the remaining unpaid balance of this $729,661.35 pre-bid design cost within ten days of receipt of the first payment from the Owner.(ECF No. 37-2 at 25.)
In the General Recitals section, the Subcontract provides:
This subcontract for Design Services (“Subcontract”) is made as of the date and between the Parties identified on the cover pages of this Subcontract ....(ECF No. 37-3 at 16, Section A.)
In the Terms and Conditions section, Scope of Services subsection, the Subcontract provides:
1.1 Responsibilities Generally. Designer agrees to perform and shall be solely responsible for all obligations of design professionals required by the Contract Documents (the “Design Services”). The Designer shall prepare all necessary preliminary design plans required by the RFP or
that the Contractor needs to quantify and bid the Project. The Contractor may request Designer to prepare new conceptual designs that differ from the RFP plans. The Contractor may also request that the Designer prepare additional preliminary designs to include in the Proposal that are not required by the RFP. Design Services includes any additional services provided by Designer in accordance with this Subcontract and all services provided by Designer pursuant to any “Teaming Agreement” or similar agreement between the Parties regarding the Project (“Teaming Agreement”). Designer and Contractor agree to be bound by all of the limitations and restrictions on Designer and on Contractor in the Contract Documents as they apply to Design Services.(ECF No. 37-2 at 6 ¶ 1.1.)
At the end of the Subcontract is the merger clause, which provides:
16.10 Entire Agreement. This Agreement (together with any exhibits and documents incorporated herein by reference and any terms of a Teaming Agreement between the Parties regarding the Project not inconsistent with this Subcontract), represent the entire agreement between Designer and Contractor and supersedes all prior negotiations, representations and agreements regarding the Project, whether written or oral and cannot be amended except with the written approval of all Parties.(ECF No. 37-3 at 33 ¶ 16.10.)
The Subcontract also contains a provision concerning litigation costs and attorneys' fees:
If the Party submitting the claim prevails on more than half of the claims it makes, then each party shall pay its own costs of such litigation. If the Party submitting the claim to litigation prevails on less than half of the claims it makes, then the Party submitting the claim to litigation shall pay both Parties' costs of such litigation, including reasonable attorneys' fees.(ECF No. 37-2 at 7 ¶ 5.)
III. PROCEDURAL HISTORY
On October 2, 2019, AECOM filed its Complaint against Flatiron, alleging claims for: (1) breach of the Subcontract; and (2) unjust enrichment. (ECF No. 1.) AECOM alleges that Flatiron only partially paid AECOM for services performed under the Subcontract and now refuses to pay the remaining amounts due. (Id. at 1-2.) On April 9, 2020, Flatiron filed its Answer and Amended Counterclaim, alleging counterclaims for: (1) breach of the Teaming Agreement; (2) negligent misrepresentation; and (3) breach of the design Subcontract. (ECF No. 37.)
On February 23, 2021, the Court granted in part and denied in part AECOM's Motion to Dismiss the Amended Counterclaim Pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b) (ECF No. 46). (ECF No. 97.) In that Order, the Court dismissed with prejudice Flatiron's negligent misrepresentation counterclaim, finding it was barred by the economic loss doctrine, and left pending Flatiron's claims for breach of the Teaming Agreement and breach of the Subcontract. (Id.)
On September 17, 2021, the Court denied AECOM's Amended Early Motion for Partial Summary Judgment (“Early Summary Judgment Order”). (ECF No. 168.) The Court found that certain provisions of the Subcontract rendered it ambiguous on its face and concluded that it could not grant summary judgment in AECOM's favor at that time.(ECF No. 168 at 11.)
The Court discusses this Order more fully in Part V.A.3.
On September 20, 2021, the Court denied Flatiron's Renewed Alternative Motion for Certification of State Law Question to the Colorado Supreme Court. (ECF No. 169.) Flatiron's motion was moot because the Court had denied AECOM's Amended Motion for Partial Summary Judgment. Nonetheless, Flatiron's motion raised an important question regarding the enforceability of limitation of liability provisions; so the Court took the time to clarify that the SOLIDFX line of cases applies to this litigation, foreclosing Flatiron's arguments that the limitation of liability provision in the Subcontract is not enforceable if there is a finding that AECOM acted in a willful and wanton manner.
On April 29, 2022, AECOM filed the Amended Motion for Partial Summary Judgment before the Court, requesting that the Court: (1) dismiss Flatiron's claim for breach of the Teaming Agreement; (2) rule that Flatiron's remaining claim for breach of the Subcontract is subject to the liability limitations contained in that agreement; and (3) rule that by virtue of having lost on two of the three claims it asserted, Flatiron must pay for AECOM's attorneys' fees incurred in this litigation per the Subcontract's fee-shifting provision. (ECF No. 215 at 42.) The Motion is now ripe for the Court's consideration.
IV. LAW
The interpretation of a written contract is generally a question of law. Matter of May, 756 P.2d 362, 369 (Colo. 1988) (en banc). “Under Colorado law, the purpose of contract interpretation is to ascertain the intent of the parties by ensuring that contracts are construed ‘consistently with the well-established principles of interpretation.'” Stroh Ranch Dev., LLC v. Cherry Creek S. Metro. Dist. No. 2, 935 F.Supp.2d 1052, 1059-60 (D. Colo. 2013) (quoting East Ridge of Fort Collins, LLC v. Larimer and Weld Irrigation Co., 109 P.3d 969, 973 (Colo. 2005)). As a starting point, courts examine the contractual terms and attempt to determine the parties' intent therein. Id. (citing Level 3 Commc'ns, LLC v. Liebert Corp., 535 F.3d 1146, 1154 (10th Cir. 2008)).
When construing a contract, courts must not “view clauses or phrases in isolation.” Id. (quoting East Ridge, 109 P.3d at 974-75). This principle guards against a reading of the contract that would yield an absurd result-and run inconsistent with the purpose of the contract. Id. (citation omitted). Courts must examine the contract as a whole and attempt to determine the intent by reference to all of the contract's terms and provisions. Liebert, 535 F.3d at 1154; East Ridge, 109 P.3d at 973.
Whether a written contract is ambiguous is a question of law. Id. When a contractual term “unambiguously resolves the parties' dispute, the interpreting court's task is over” because “in the absence of an ambiguity a written contract cannot be varied by extrinsic evidence.” Id. A contract is ambiguous “if it is fairly susceptible” to more than one interpretation. Id. In determining whether an ambiguity exists, the “language of the agreement must be construed by application of the accepted meaning of the words with all reference to its provisions,” and the “nature of the transaction which forms the contract subject matter must also be considered.” In re Marriage of Thomason, 802 P.2d 1189, 1190 (Colo.App. 1990).
V. ANALYSIS
A. Flatiron's Claim for Breach of the Teaming Agreement
In its Motion, AECOM argues that the Court can rule that Flatiron's claim for breach of the Teaming Agreement fails as a matter of law for at least three independent reasons: (1) the plain and unambiguous language of the Teaming Agreement and Subcontract, construed together, confirms that by entering into the superseding Subcontract, Flatiron's sole claim against AECOM is for breach of that Subcontract, and its recovery is capped per the Subcontract's enforceable liability limitation; (2) by entering the Subcontract, Flatiron waived its right to sue on the Teaming Agreement; and (3) the $263.5 million in Project-related losses that Flatiron seeks are at most unrecoverable consequential damages vis-a-vis the Teaming Agreement. (ECF No. 215 at 14.)
For the following reasons, the Court agrees with AECOM's first argument and concludes that the plain language of the Teaming Agreement and the Subcontract, when construed together, confirms that by entering into the superseding Subcontract, Flatiron's sole claim against AECOM is for breach of that Subcontract, and its recovery is capped per the Subcontract's enforceable liability limitation.Because the Court's ruling here relies solely on the plain language of the Teaming Agreement and the Subcontract, it does not examine the extrinsic evidence offered by the parties, nor any common sense arguments asserted by either party.
Given this finding, the Court will not address AECOM's two alternative arguments.
1. Teaming Agreement Provisions
The Court begins its analysis of the contracts at issue with two decisive provisions of the Teaming Agreement-the first agreement the parties signed. Most importantly, the parties agree that the Teaming Agreement itself contained no limitation on liability, except for a mutual waiver of consequential damages. (ECF No. 215 at 3, 13; ECF No. 216 at 14 ¶ 41.) In other words, “while the Teaming Agreement has no liability cap, it has an important liability limitation: a mutual waiver of consequential damages.” (ECF No. 215 at 34 (emphasis in original).)
Paragraph 4 of the Teaming Agreement provides that
[t]his Agreement shall terminate in the event [of] . . . (iv) the Project is awarded to another bidder; or . . . (vi) execution of the Subcontract.... If the Parties enter into the Subcontract the terms of this Agreement shall be superseded by the Subcontract, Upon [sic] any such termination, this Contractor/Designer Teaming Agreement shall have no
further effect; provided, however, those provisions which, by their terms are intended to survive termination, including and [sic] Section 10 (non-disclosure/confidentiality), Section 12 (liability upon withdrawal), Section 15 (limitation on damages) and Section 17 (Procurement Integrity) shall specifically survive termination, [sic][.](ECF No. 37-1 at 3 ¶ 4.) By including this detailed provision, the parties confirmed that they intended that the Teaming Agreement “shall terminate” if the parties executed the Subcontract. Not only did they specify that the Teaming Agreement would necessarily terminate, but they also used the word “supersede” to reaffirm their agreement that the Subcontract would supplant the Teaming Agreement; critically, they could have used the word “incorporate” but chose not to do so.
Further, the parties conspicuously contemplated that certain provisions of the Teaming Agreement would survive and specifically listed those provisions. Although the parties could have incorporated the uncapped limitation of liability provision into the list of provisions which would survive the supersession of the Teaming Agreement, they remained silent concerning the Teaming Agreement's uncapped limitation of liability. The Court cannot ignore such a glaring omission.
Though it does not bear directly on the limitation of liability issue at hand, another paragraph of the Teaming Agreement showed intent for particular provisions to survive. In Paragraph 15, the parties agreed that neither party would be liable for certain types of damages and that this provision would survive termination or expiration of the Teaming Agreement. (Id. at 6 ¶ 15.) But again, there is no mention of survival of the Teaming Agreement's uncapped limitation of liability. As AECOM puts it, while the Teaming Agreement has no liability cap, it has an important liability limitation: a mutual waiver of consequential damages set forth in Paragraph 15. (ECF No. 215 at 34.)
In Paragraph 20, the parties specified “terms and conditions . . . [that] shall be made part of and included in the Subcontract to be negotiated by the Parties,” including:
• Overall limitation of liability capped at 100% of the final design portion of the agreed-upon Subcontract amount.
• In the event of a conflict between the terms and conditions of the Subcontract and the terms and conditions of the DesignBuild Agreement, the terms and conditions of the Subcontract shall control and prevail.(ECF No. 37-1 at 7-8 ¶ 20.)
With respect to the first bullet point listed above, the word “overall” is telling. The Court finds that by employing this word, the parties contemplated that the limitation of liability provision to be included in the Subcontract would apply to all of AECOM's work under the Subcontract. Moreover, the plain language of Paragraph 20 makes clear that the parties intended that the Subcontract would “control and prevail” should it conflict with the Teaming Agreement.
2. Subcontract Provisions
The Court next turns to the Subcontract itself and its relationship with the Teaming Agreement. As an initial matter, the Court notes that the title of the Subcontract is “Standard Subcontract for Design Services.” (ECF No. 37-2 at 2.) Moreover, the General Recitals section describes the contract as “[t]his subcontract for Design Services (‘Subcontract') ....” (ECF No. 37-3 at 16.)
Keeping the title of the Subcontract in mind, perhaps the most important provision of the Subcontract is the definition of “Design Services.” (ECF No. 37-3 at 16 ¶ 1.1.)
1.1 Responsibilities Generally. Designer agrees to perform and shall be solely responsible for all obligations of design professionals required by the Contract Documents (the “Design Services”). The Designer shall prepare all necessary preliminary design plans required by the RFP or that the Contractor needs to quantify and bid the Project. The Contractor may request Designer to prepare new conceptual designs that differ from the RFP plans. The Contractor may also request that the Designer prepare additional preliminary designs to include in the Proposal that are not required by the RFP. Design Services includes any additional services provided by Designer in accordance with this Subcontract and all services provided by Designer pursuant to any “Teaming Agreement” or similar agreement between the Parties regarding the Project (“Teaming Agreement”). Designer and Contractor agree to be bound by all of the limitations and restrictions on Designer and on Contractor in the Contract Documents as they apply to Design Services.(ECF No. 37-2 at 6 ¶ 1.1 (emphasis added).) Based on this plain language, the definition of Design Services incorporates “all” work that AECOM performed under the Teaming Agreement; notably, the definition does not differentiate between Pre-Award and Post-Award Services but instead encompasses “all services” performed pursuant to the Teaming Agreement.
Accordingly, the Court concludes that this language-in addition to other language in the Subcontract to be discussed infra-turns any claim for breach of the Teaming Agreement into a claim for breach of the liability-capped Subcontract. In other words, as a result of the parties having signed the Subcontract, to the extent Flatiron believed that AECOM had breached the Teaming Agreement, Flatiron could nonetheless no longer sue for breach of the Teaming Agreement; instead, Flatiron can sue for breach of the liability-capped Subcontract alone.
Despite Flatiron's arguments to the contrary,the other clauses in the Subcontract support the Court's interpretation. First, the Court examines the limitation of liability clause in the Subcontract. This clause provides that AECOM's “aggregate liability” to Flatiron for “any damages . . . arising under the Subcontract . . . shall be limited to” the roughly $10 million “Total Design Fee.” (ECF No. 37-2 at 6 ¶ 1.) As the Court just discussed, AECOM's work under the Teaming Agreement work was incorporated into the Subcontract through the Subcontract's definition of Design Services, which subjects that work to the Subcontract's liability cap. Flatiron argues with respect to the subset of Design Services “arising under the Subcontract” language that it “is common sense that this cannot include work performed prior to the Subcontract's existence.” (ECF No. 216 at 32 n.6.) Although this contention in the abstract has some appeal, it nonetheless fails given that the opposite is precisely what the parties agreed to through their agreed definition of Design Services. Further, the Subcontract is for Design Services, and therefore, Flatiron's concern that the limitations of liability clause fails to specifically refer to the larger category of Design Services is of little import. (ECF No. 216 at 27.) The phrase “arising under the Subcontract” in the limitations of liability clause includes work AECOM performed under the Teaming Agreement.
Flatiron argues that the limitation of liability clause “only applies narrowly to the scope of damages ‘arising under the Subcontract,' and specifically omits any reference to the larger category of ‘Design Services.'” (ECF No. 216 at 27.)
Flatiron's contention that the liability limitation in Paragraph 15 of the Teaming Agreement survives despite the Subcontract's limitation of liability provision also has some initial appeal, but the Court finds it is ultimately without merit. (ECF No. 216 at 32.) While Paragraph 15 states that “limitations on liability set forth in this [Teaming] Agreement are intended to apply even in the event of default, negligence or strict liability on the part of the Party whose liability is limited or released” (ECF No. 37-1 at 6 ¶ 15), this language does not override the superseding Subcontract's cap on liability in light of Paragraph 20 of the Teaming Agreement and the order of precedence and merger clauses in the Subcontract. Further, the language of Paragraph 15 directing that the liability limitation should survive refers to the liability limitation wherein the parties mutually waived consequential damages.
Other provisions support this interpretation. As explained above, Paragraph 20
of the Teaming Agreement states that in the event of a conflict between the terms and conditions of the Subcontract and the Teaming Agreement, the Subcontract's terms “shall control and prevail.” (ECF No. 37-1 at 8 ¶ 20.) Moreover, the Subcontract's Order of Precedence clause reinforces the Teaming Agreement's language and provides:
Order of Precedence. ln the event of a conflict between the Teaming Agreement and this Subcontract, this Subcontract shall prevail, except with respect to the calculation of pre-bid compensation in which case the Teaming Agreement shall prevail. Section 16.10 is amended by adding the following sentence to the end of the section: “In the case of a conflict between the terms of this Subcontract and the Design/Build Agreement and any incorporated document, the terms of this Subcontract shall take precedence.”(ECF No. 37-2 at 7 ¶ 7.) Accordingly, to the extent the uncapped limitation of liability in the Teaming Agreement is read to be inconsistent with the Subcontract's liability cap, then the Subcontract's cap applies under the Order of Precedence and merger clauses. And, to the extent they are read to be consistent, the Subcontract incorporates AECOM's work performed under the Teaming Agreement in the Design Services definition, so again, the Subcontract's cap applies to this lawsuit.
Additionally, the Subcontract's merger clause supports this reading.
16.10 Entire Agreement. This Agreement (together with any exhibits and documents incorporated herein by reference and any terms of a Teaming Agreement between the Parties regarding the Project not inconsistent with this Subcontract), represent the entire agreement between Designer and Contractor and supersedes all prior negotiations, representations and agreements regarding the Project, whether written or oral and cannot be amended except with the written approval of all Parties.(ECF No. 37-3 at 33 ¶ 16.10.) The merger clause confirms that the Subcontract is the parties' “entire agreement” and “supersedes all prior . . . agreements.” (ECF No. 215 at 20 (citing Nelson v. Elway, 908 P.2d 102, 107 (Colo. 1995) (enforcing similar merger clause to reject a claim for breach of an alleged earlier contract); Breckenridge Co. v. Swales Mgmt. Corp., 517 P.2d 476, 477-78 (Colo.App. 1973) (where party “entered into a contract which specifically stated that it superseded the prior contract,” second contract controlled) rev'd in part on other grounds, 522 P.2d 737, 739 (Colo. 1974)).) Once the parties entered into the Subcontract, its limitation on liability prevailed. The Subcontract's definition of Design Services includes AECOM's work under both contracts, and the limitation of liability clause in the Subcontract applies to work “arising under the Subcontract.” When reading the two contracts together, the Court reconciles their terms to mean that the work under the Teaming Agreement falls under the umbrella of work under the Subcontract, and therefore, the Subcontract's capped limitation on liability applies to all of AECOM's work under both contracts.
Flatiron's argument that the parties referred to Design Services in the liability for schedule provision but not the limitations of liability provision shows that they intended for the two provisions to apply differently is without merit. (ECF No. 216 at 29.) The limitations of liability provision states that AECOM's liability for any damages “arising under the Subcontract” shall be limited. (ECF No. 37-2 at 6 ¶ 1.) As described above, work performed under the Subcontract includes work performed under the Teaming Agreement, per the Subcontract's definition of Design Services.
In its reply, AECOM makes a clever argument that the Court could switch the two phrases highlighted by Flatiron and the meaning of the liability limitations provisions would be the same. (ECF No. 217 at 11.) The Court will not reiterate the full argument here but finds it persuasive.
3. The Contracts' Provisions Are Not Ambiguous
In its Early Summary Judgment Order, the Court addressed the same issues as here. (ECF No. 168.) The Court found that certain provisions-two in particular-of the Subcontract rendered it ambiguous on its face. (Id. at 10.) The provision defining Design Services appeared to incorporate work performed under the Teaming Agreement, and supported AECOM's contention that the limitation of liability clause of the Subcontract applies to work it performed under the Subcontract and the Teaming Agreement. However, the language in the Design Assumptions section which states that “Pre-Award Services are not included in the Base Design Fee or scope of work,” seemed to point toward a different conclusion. Accordingly, the Court concluded that
While it is possible that AECOM's interpretation is accurate, it is far from clear at this point in the litigation. On this basis, the Court finds that these material terms of the Subcontract are in direct conflict, rendering the document ambiguous, and as a consequence the Court cannot on this record grant summary judgment in AECOM's favor.(Id. at 11.)
Given this ruling, Flatiron argues in its response that the Motion is merely a “second bite at the apple” and essentially the Court cannot revisit this ruling because nothing has materially changed. (ECF No. 216 at 25-26.)
For the following reasons, the Court disagrees. First, Federal Rule of Civil Procedure 54(b) provides that
any order or other decision [other than final judgment], however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.Fed. R. Civ. P. 54(b). The Early Summary Judgment Order was not a final judgment. Moreover, the Tenth Circuit has also ruled that “law of the case doctrine has no bearing on the revisiting of interlocutory orders.” Rimbert v. Eli Lilly & Co., 647 F.3d 1247, 1252 (10th Cir. 2011); Been v. O.K. Indus., Inc., 495 F.3d 1217, 1225 (10th Cir. 2007) (“district courts generally remain free to reconsider their earlier interlocutory orders”). Thus, the Court remains free to revisit its Early Summary Judgment Order and finds it necessary to do so here.
Moreover, in the Early Summary Judgment Order, the Court emphasized that it was “possible that AECOM's interpretation [was] accurate,” but it was “far from clear at this point in the litigation” and “on this record.” (ECF No. 168 at 11.) Now the Court has the benefit of plenary briefing on all of the issues and arguments from both parties. (ECF Nos. 215, 216, 217.) On further consideration and review of the case in its entirety, the Court reaches the conclusions explained above and for the following reasons finds that the contractual provisions it previously described as facially ambiguous are on reconsideration, in fact, not.
In the Early Summary Judgment Order, the Court took issue with two clauses in the Subcontract that apparently conflicted: the definition of Design Services, which included the work AECOM performed under the Teaming Agreement and language in the Subcontract's Design Assumptions section, which provided that “Pre-Award Services are not included in the Base Design Fee or scope of work.” (ECF No. 168 at 11.) At the time, the Court concluded that this apparent conflict might render the Subcontract ambiguous, allowing for the possibility-as AECOM correctly describes- that Flatiron could assert a cognizable claim for breach of the uncapped Teaming Agreement even though the parties went forward with the Project under the liabilitycapped and superseding Subcontract. (ECF No. 215 at 17.) However, upon further consideration, the Court concludes no such ambiguity exists.
As noted above, the Subcontract is for AECOM's Design Services on the Project. (ECF No. 37-2 at 2.) The Subcontract's definition of “Design Services” includes the preliminary design work AECOM performed under the Teaming Agreement. (ECF No. 37-3 at 16 ¶ 1.1.) The Subcontract also supersedes the Teaming Agreement (which terminated with execution of the Subcontract) (ECF No. 37-1 at 3 ¶ 4), thus limiting Flatiron's remedies to claims under the liability-capped Subcontract. (ECF No. 37-3 at 33 (merger clause), ECF No. 37-2 at 7 (order of precedence provision).) Thus, having signed the Subcontract, Flatiron limited itself to a lawsuit for breach of the liabilitycapped Subcontract alone.
The language in the Subcontract's “Design Assumptions” section that previously gave the Court pause does not alter this conclusion. It is helpful to read the entire paragraph for context:
Pre-Award services are not included in the Base Design Fee or scope of work. The pre-bid design costs shall be paid in full, in the amount of $729,661.35, and shall not be included in the Lump Sum Base Design Fee Amount. The Contractor shall pay the remaining unpaid balance of this $729,661.35 pre-bid design cost within ten days of receipt of the first payment from the Owner.(ECF No. 37-2 at 25, Exhibit 5.) As AECOM argues, with this provision, the Subcontract “simply notes that Flatiron had already paid the $729,661.35 of preliminary design work separately, even though (by definition) that preliminary design work is part of the Design Services that are the subject of the liability-capped Subcontract.” (ECF No. 215 at 19.) In other words, the Design Assumptions paragraph excludes the cost of the preliminary design work done under the Teaming Agreement from the Lump Sum Base Design Fee of $9,058,493.65.
The Court agrees with AECOM's assertion that “there is nothing inconsistent or ambiguous about excluding the already performed preliminary design work from [AECOM's] ‘scope of work' under the Subcontract.” (Id.) Rather, the Subcontract defines “a universe of tasks as the ‘Design Services' covered by the liability-capped Subcontract,” and simultaneously “distinguish[es] between the subset of Design Services that have been performed already (like the preliminary design work under the Teaming Agreement) from the subset of Design Services yet to be performed-the “scope of work” under the Subcontract.” (Id.) The Court agrees, and on further consideration finds that the terms of the Subcontract are not ambiguous and do not conflict, and therefore no extrinsic evidence is required to resolve any ambiguity.
Given the foregoing, the Court finds that when the parties executed the Subcontract, Flatiron lost its right to sue AECOM for breach of the Teaming Agreement. As a result, the Court dismisses Flatiron's claim for breach of the Teaming Agreement. B. Litigation Costs and Attorneys' Fees Provision
The Subcontract provides that
[i]f the Party submitting the claim prevails on more than half of the claims it makes, then each party shall pay its own costs of such litigation. If the Party submitting the claim to litigation prevails on less than half of the claims it makes, then the Party submitting the claim to litigation shall pay both Parties' costs of such litigation, including reasonable attorneys' fees.(ECF No. 37-2 at 7 ¶ 5.)
Should the Court dismiss Flatiron's claim for breach of the Teaming Agreement- which it now has-AECOM asks the Court to rule that “by virtue of having lost on two of the three claims it asserted, Flatiron must pay for [AECOM's] attorney fees incurred in this litigation per the Subcontract's fee-shifting provision.” (ECF No. 215 at 42.) The Court concludes that in light of its prior rulings in this Order, this issue is ripe and ruling on it will further clarify the “playing field” for the parties before trial. Accordingly, the Court now addresses the fee-shifting provision in the Subcontract.
According to the Colorado Supreme Court, “attorney fees are not recoverable by the prevailing party in either a contract or tort action” absent a statute, court rule, or private contract to the contrary. Bernhard v. Farmers Ins. Exch., 915 P.2d 1285, 1287 (Colo. 1996). “This reasoning is based on the American rule, which requires each party in a lawsuit to bear its own legal expenses.” Id. Whether a contract provides for an award of attorney fees is a question of interpretation. Butler v. Lembeck, 182 P.3d 1185, 1188 (Colo.App. 2007) (citations omitted). “It is axiomatic that a contract should be interpreted ‘according to the plain and ordinary meaning of its terms.'” Morris v. Belfor USA Grp., Inc., 201 P.3d 1253, 1259 (Colo.App. 2008) (quoting Lane v. Urgitus, 145 P.3d 672, 677 (Colo. 2006)). Accordingly, fee-shifting provisions in a contract are to be interpreted in a “common sense manner.” Id. (quoting Butler, 182 P.3d at 1189); see also Agritrack, Inc. v. DeJohn Housemoving, Inc., 25 P.3d 1187, 1192 (Colo. 2001).
In its response, Flatiron argues that AECOM's argument concerning the feeshifting provision is “unsupported, overly-simplistic, and illogical” and will “lead to absurd results.” (ECF No. 216 at 47.) It argues that the parties “actually intended the Fee-Shifting Provision to align with common sense, and to penalize the party who initiated litigation for losing the balance of its overall case, rather than counting wins and losses on individual causes of action.” (Id.) Further, Flatiron points out that the Subcontract does not define the term “claim” to refer to individual causes of action. (Id. at 48.) Instead, Flatiron suggests that the fee-shifting provision should be read in a commonsense manner, and as a last resort, Flatiron asserts that the provision is ambiguous and thus the jury must determine its meaning. (Id. at 49-51.)
Nonetheless, based on the plain meaning of the fee-shifting provision, the Court concludes that Flatiron's arguments are without merit. As AECOM points out, the term “claim” has a
familiar and well-accepted meaning in American legal parlance: a claim is a “demand for money, property, or a legal remedy to which one asserts a right; esp. the part of a complaint in a civil action specifying what relief the plaintiff asks for.-Also termed claim for relief (1808).”(ECF No. 217 at 23 (quoting CLAIM, Black's Law Dictionary (11th ed. 2019)).) AECOM observes that even Flatiron employed the term “claim” to describe the causes of action it brought in the Amended Counterclaim. (ECF No. 37 (“FIRST CLAIM FOR RELIEF”, “SECOND CLAIM FOR RELIEF,” “THIRD CLAIM FOR RELIEF”).) The Court agrees. Claim means claim.
At bottom, Flatiron's proposed interpretation of the fee-shifting provision is essentially a prevailing party fee-shifting provision. But regardless of whether a prevailing party provision is what Flatiron thought it was agreeing to or wishes it had agreed to when it signed the Subcontract, that is not what the Subcontract's fee-shifting provision is. And while this fee provision is novel and peculiar, and one the Court has not previously encountered, it plainly requires what AECOM says it requires: “If the Party submitting the claim to litigation prevails on less than half of the claims it makes, then the Party submitting the claim to litigation shall pay both Parties' costs of such litigation, including reasonable attorneys' fees.” (ECF No. 37-2 at 7 ¶ 5.) It is not ambiguous. While applying it as written may not comport with Flatiron's idea of common sense, apply it the Court must.
In this action, AECOM brought two claims against Flatiron: breach of the Subcontract and unjust enrichment, both of which remain pending. (ECF No. 1.) Flatiron brought three counterclaims against AECOM: breach of the Teaming Agreement, negligent misrepresentation, and breach of the Subcontract. (ECF No. 37.) AECOM concedes that Flatiron's breach of the Subcontract claim must “go forward to determination through a lengthy and complex jury trial.” (ECF No. 215 at 5.) However, on February 23, 2021, the Court dismissed Flatiron's negligent misrepresentation claim (ECF No. 97) and in this Order dismisses Flatiron's breach of the Teaming Agreement claim. Therefore, Flatiron submitted three claims to litigation and has only one remaining cognizable claim.
Pursuant to the plain terms of the Subcontract, the fee-shifting provision applies, and thus, Flatiron must pay for AECOM's attorneys' fees and litigation costs. This is not the final word on the matter, however, given that the amount Flatiron may ultimately owe to AECOM in attorney's fees and costs is subject to a possible offset in the event Flatiron can successfully argue for application of this provision against AECOM, which also brought two claims.
In its reply, AECOM acknowledges that if it loses a majority (both) of its claims for breach of contract and unjust enrichment at trial, the Court would then need to determine how the Subcontract's fee-shifting provision operates in that scenario. (ECF No. 217 at 24.)
VI. CONCLUSION
For the reasons set forth above, the Court ORDERS:
1. Plaintiff-Counterclaim Defendant AECOM Technical Services, Inc.'s
Amended Motion for Partial Summary Judgment (ECF No. 215) is GRANTED;
2. Flatiron's claim for breach of the Teaming Agreement is DISMISSED;
3. Flatiron's sole remaining claim for breach of the Subcontract is subject to the liability limitations contained in the Subcontract;
4. By virtue of having lost on two of the three claims it asserted, Flatiron must pay for AECOM's attorneys' fees and cost incurred in this litigation per the Subcontract's fee-shifting provision;
5. The Court will separately enter a Scheduling Order setting deadlines with respect to pretrial and trial deliverables; and
6. This case remains set for trial beginning on January 29, 2024 (ECF No. 244).