Summary
The United States Court of Appeals for the Federal Circuit reviewed a Court of Federal Claims decision regarding alleged breaches of two agreements between the Municipality of Anchorage and the Maritime Administration concerning the Port of Alaska expansion project. The appellate court vacated the lower court’s ruling on the 2003 Memorandum of Understanding, finding it did not impose a contractual duty to deliver a defect-free port structure. However, the court affirmed the lower court’s determination that the United States breached the 2011 Memorandum of Agreement by settling subcontractor claims without coordinating with Anchorage, upholding the associated damages award.
Topics
Practice areas
Questions Presented
- Whether the 2003 Memorandum of Understanding required the United States to deliver a completed, defect-free port structure to Anchorage.
- Whether the United States breached the 2011 Memorandum of Agreement by settling ICRC's claims without coordinating or conferring with Anchorage.
- Whether the Court of Federal Claims' damages award for breach of the 2011 Memorandum was properly affirmed.
Holdings
- The 2003 Memorandum did not require MARAD or the United States to construct or deliver a completed, defect-free port or any other completed construction item.
- Testimony concerning contracting personnel's prior or contemporaneous understanding could not be used to add terms to the integrated 2003 Memorandum.
- The United States breached the 2011 Memorandum by settling ICRC's claims without coordinating and conferring with Anchorage.
- The damages award of $11,279,059 for the breach of the 2011 Memorandum was affirmed, although the award was more properly characterized as reliance damages rather than expectation damages.
Key quotations
“In short, MARAD could not have made a contractual promise to deliver any completed item of construction if it also had the undisputed freedom to end the agreement at any time for any reason.” (123 F.4th at 1323)
“Considering the full language of the clause, the correct interpretation is that MARAD was to coordinate a response to contract disputes with Anchorage, with the requirement that any such response be consistent with federal contract law.” (123 F.4th at 1325)
Factual background
Anchorage and the Maritime Administration entered a 2003 Memorandum of Understanding concerning administration, funding, and oversight of a project to improve and expand the Port of Alaska. The project suffered significant sheet-pile damage, and the parties entered a supplemental 2011 Memorandum of Agreement establishing joint oversight and requiring coordination concerning contract claims. Without consulting Anchorage, MARAD settled subcontractor claims with ICRC for $11,279,059.
Procedural history
Anchorage sued the United States in the Court of Federal Claims in 2014 for breach of the 2003 and 2011 agreements. After a trial, the Court of Federal Claims held that the government breached both agreements and later awarded Anchorage $367,446,809 in expectation damages. The United States appealed to the Federal Circuit, which vacated the ruling concerning the 2003 agreement, affirmed the finding of breach and the damages award concerning the 2011 agreement, and remanded.
Remand instructions
Vacate the Court of Federal Claims' decision and damages award insofar as they concern the 2003 Memorandum of Understanding. Remand for consideration of any adequately preserved arguments concerning breach of duties found in the 2003 Memorandum and, if breach is found, determination of reliance damages. The decision and damages award concerning the 2011 Memorandum of Agreement are affirmed.