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UNITED STATES v. CHILSTEAD BLDG. CO.

August 15, 1998

UNITED STATES OF AMERICA, Plaintiff
v.
CHILSTEAD BUILDING COMPANY, INC., TERRY CHILTON, and LEO W. SMITH, Defendants



The opinion of the court was delivered by: MCAVOY

MEMORANDUM, DECISION & ORDER

 I. FACTS

 This action concerns a construction project performed by defendant Chilstead Building Co., Inc. ("Chilstead" or "defendant") involving the replacement of a roof at the United States Army Reserve Center in Plattsburgh, New York. *fn1" See Pl. Rule 7.1(f) Stat. PP 1-4. The United States Army issued a "Solicitation, Offer, and Award" (hereinafter "the contract") on or about July 24, 1992, and Chilstead was awarded the contract on or about September 10, 1992. *fn2" Id. PP 1,4. The contract provided specific guidelines regarding any deviations from the original specifications. Paragraph 23 of the Statement of Work, attached to the contract, reads as follows:

 
SW-23 IMPORTANT NOTICE: The contractor will not accept instructions issued by any person other than the Contracting Officer or his/her authorized representative acting within the limits of his/her authority. No information other than that which may be contained in any authorized amendment to this solicitation or any authorized modification to any resulting contract issued by the Contracting Officer, which may be received from any person employed by the U.S. Government or otherwise, shall be considered as grounds for deviation from any provisions, conditions or other terms of this solicitation or any resulting contract.

 Furthermore, Paragraph 24(b) reads as follows:

 
No oral statements of any person, whomsoever, will in any manner or degree modify or otherwise effect the terms or conditions of this contract. The Contracting Officer shall be the only person authorized to approve changes in any of the requirements under this contract, and notwithstanding any provisions contained elsewhere in this contract, said authority shall remain solely with the Contracting Officer. CORs shall be limited to the authority specified in their letter of appointment.

 Pl. Rule 7.1(f) Stat. PP 6-7.

 A pre-construction meeting was held on November 5, 1992 and work began shortly afterwards. On February 26, 1993, Chilstead formally requested approval to make three major changes on the roof project. In particular, Chilstead proposed to eliminate the additional wood blocking as shown on Detail "D" Sheet A-1 and configure a truss heavier than that called for in the specifications. Def. Exhibit H. The proposed changes were disapproved by plaintiff by letter dated April 15, 1993. Pl. Rule 7.1(f) Stat. P 10. Chilstead never received an approved, signed submittal for the heavier trusses that it installed. Id. P 11. Nevertheless, Chilstead began installation of the deviant trusses sometime after April 15, 1993, and half of the trusses were erected by April 28, 1993. Def. Mem. at 8. Plaintiff certified that the project was 100% completed on August 16, 1993. Def. Exhibit D.

 Both parties agree that while defendant performed the work pursuant to the contract, the work failed to meet the contract specifications. Specifically, the project completed by defendant did not align truss panel points with the concrete masonry unit walls below, and defendant did not receive an "approved signed submittal" for the type of trusses which were installed. Pl. Rule 7.1(f) Stat. PP 9-12. Chilstead maintains that it received verbal approval to install the deviant trusses from plaintiff's consulting engineer, N.K. Bhandari, Inc., provided that extra support blocking be installed to bring the trusses into conformance with the original plans. Def. Mem. at 1. Chilstead further maintains that verbal acceptance of the truss system and further lack of action by plaintiff after installation induced a belief by Chilstead that the truss design as specified in the contract had been waived by plaintiff.

 After a number of bi-weekly cite inspections, inspector Thomas Shaw wrote in an October 8, 1993 report that Chilstead "had fulfilled his obligation to the contract". Def. Exhibit C. Plaintiff paid all but 1% of the final contract price on July 26, 1993. Pl. Exhibit E. On December 13, 1994, the Directorate of Contracting, Gordon Reynolds, sent a letter revoking final acceptance of the project to Chilstead, citing the installation of the disapproved trusses and subsequent deviations from the original contract specifications caused by the installation of the deviant trusses. Def. Exhibit E.

 II. PROCEDURAL HISTORY

 Plaintiff filed an action for treble damages and civil penalties under the False Claims Act, 31 U.S.C. §§ 3729-3731, and in the alternative, for damages for fraud, breach of contract, and unjust enrichment on April 22, 1996. Defendant brought counterclaims alleging malicious prosecution, abuse/misuse of legal process, bad faith, fraud, negligence, conspiracy and collusion. Plaintiff now moves for partial summary judgement on the False Claims Act and breach of contract claims, and for dismissal of defendant's counterclaims.

 III. DISCUSSION

 A. Summary ...


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