Board of Contract Appeals General Services Administration Washington, D.C. 20405 ______________________________________________________________ CROSS MOTIONS FOR SUMMARY RELIEF DENIED; MOTION TO STRIKE GRANTED: June 2, 2000 ______________________________________________________________ GSBCA 14786 JO-JA CONSTRUCTION, LTD., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Mark W. Couch of Breakell & Couch, P.C., Albany, NY, counsel for Appellant. Robert C. Smith and Kevin J. Rice, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges PARKER, WILLIAMS, and DeGRAFF. WILLIAMS, Board Judge. In this case appellant challenges the termination for default of its contract to renovate the Federal Courthouse in Albany, New York. Although there were originally numerous grounds for the termination, the parties have stipulated that only one ground of the termination for default is to be litigated, Jo-Ja Construction, Ltd.'s (Jo-Ja's) failure to contain known lead-based dust in order to ensure safety.[foot #] 1 The contracting officer's final decision stated: "Jo-Ja has failed to contain lead dust onsite and has persisted [in] sending workers to the job site without proper protection. These actions have continued to expose Jo- Ja's employees and building tenants to a known health hazard of ----------- FOOTNOTE BEGINS --------- [foot #] 1 The parties' stipulation withdrawing all grounds for the default termination except what the parties termed "the Lead Issue" was adopted by the Board by order dated October 20, 1999. ----------- FOOTNOTE ENDS ----------- 2 which it has full knowledge." Specifically, the General Services Administration (GSA) contends that Jo-Ja utilized improper abatement procedures in performing "spot removal" of lead-based paint from ceiling beams on the first floor. Memorandum in Support of Respondent's Cross Motion for Summary Relief (Respondent's Memorandum) at 5.[foot #] 2 This matter comes before the Board on the parties' cross motions for summary relief. As grounds for its motion, appellant states that the Government did not sustain its burden of showing that the default termination was justified and lawful. Specifically, appellant contends that the Government's case is based upon hearsay, conjecture, and assumptions which do not rise to the level of solid evidence sufficient to support the termination. In particular, appellant notes that GSA's contention that Jo-Ja used improper abatement techniques and contaminated the first floor work area was based on the testimony of Thomas Loucks, the part-time construction inspector (CQM) who admitted that he never witnessed Jo-Ja perform lead abatement improperly. In its cross motion for summary relief, respondent contends that Jo-Ja committed material breaches of important health and safety provisions of the contract, relying upon the testimony and documentation of the same CQM. The Government contends that, although the CQM did not personally observe performance of the abatement activities, he did personally observe plaster debris and lead-based paint chips on the floor directly below locations where Jo-Ja had done spot removal on the ceiling beams. The Government thus infers that the demolition had been done without proper containment. Respondent's Memorandum at 5-6. We deny both motions because genuine issues of material fact remain in dispute. In particular, the central question of whether Jo-Ja used improper abatement techniques remains unresolved. Background On September 30, 1997, respondent awarded contract number GSO2P97DTCO207 in the dollar amount of $3,604,603 to Jo-Ja to perform renovations on the first floor of the James T. Foley Post Office and Courthouse in Albany, New York. Appeal File, Exhibit 1. In an area of approximately 2000 square meters of vacant space, the alteration included demolition of existing partitioning, ceilings, and building systems, including lead and asbestos abatement as required, demolition of existing air handling unit, installation of a new heating, ventilating, and ----------- FOOTNOTE BEGINS --------- [foot #] 2 Respondent concedes that in performing plaster and lead-based paint removal from flat ceiling surfaces appellant appeared to follow the approved plan. Respondent's Memorandum at 5. ----------- FOOTNOTE ENDS ----------- 3 air conditioning (HVAC) system, installation of electric light, mechanical, and plumbing systems, and interior partitioning and finishes. Id., Exhibits 1, 236. The parties agree that lead dust contamination levels could not exceed the Housing and Urban Development standard of 100 micrograms per square foot for lead wipe samples. Appellant's Statement of Uncontested Facts 33; Affidavit of Thomas Loucks (Loucks Affidavit) (Feb. 7, 2000) 14. On March 11, 1998, Jo-Ja submitted its plan for demolition and lead-based paint abatement, which called for it to erect containment areas using plastic sheeting and provided that workers wearing suitable protective gear would remove the plaster and paint. Jo-Ja's submittal was approved by GSA that day. Loucks Affidavit, Exhibit A. From March 18 through April 8, 1998, Jo-Ja performed demolition and abatement on the flat surfaces of the first floor ceiling between the exposed beams, following the approved procedures. Id. 6. As part of its contract, Jo-Ja also poured a new concrete floor on the first floor of the Foley Building to level the floor surface. Jo-Ja completed this work on or about May 21, 1998. Loucks Affidavit 7, Exhibit C. On June 15, 1998, Jo-Ja requested a change in the approved demolition and lead abatement procedures with respect to the ceiling beams. Rather than remove all of the plaster and paint from these beams, Jo-Ja suggested that it perform spot removal only at the locations where metal studs were to be attached directly to the concrete ceiling beams. Loucks Affidavit 8, 9, Exhibit D. GSA approved this request in a submittal dated June 23, 1998. Id., Exhibit D. Between approximately June 1 and September 3, 1998, Jo-Ja installed metal studs and partitions on the first floor and tied in metal studs to the ceiling beams in more than fifty and possibly up to 100 areas. Deposition of Thomas Loucks (Loucks Deposition) (Oct. 27, 1999) at 84-85, 91. Jo-Ja also performed spot lead abatement in areas where the metal studs tied into the ceiling beams. Id. at 90. The Government's onsite inspector and CQM did not observe Jo-Ja physically doing the abatement in the June-July time frame.[foot #] 3 Id. at 89, 91; Loucks ----------- FOOTNOTE BEGINS --------- [foot #] 3 Mr. Loucks, an employee of Clough, Harbor & Associates, LLP, in his deposition was designated a nonparty witness and testified pursuant to a subpoena. ----------- FOOTNOTE ENDS ----------- 4 Affidavit 3.[foot #] 4 He "came in after the fact." Loucks Deposition at 91. The CQM did observe plastic hanging from the ceiling in the time frame when Jo-Ja was putting the studs up. Id. at 92. The CQM testified in his deposition: Q. Did you ever observe Jo-Ja's personnel actually chipping away the paint? A. Probably. I mean, it would be minimal amount of time. . . . It seemed like a lot of that activity happened when I wasn't there. Q. OK but this June and July time frame, there was -- did you notice anything out of the ordinary with the way they were doing it? A. I don't believe they followed the procedure all the time. Q. What did you base that on? A. The fact that I would look on the floor and see concrete demolition on the floor, plaster and paint. Q. This is during the June and July time frame? A. Throughout the process of that, that was done yes. Loucks Deposition at 92-93. There was friction between GSA and Jo-Ja on this project, and in July Jo-Ja was served with a cure notice. Loucks Deposition at 96-99. The CQM's August 20 Letter By letter dated August 20, 1998, the CQM advised Jo-Ja of the lead abatement problem and copied GSA. The letter states: While performing site visits on 8/18/98 and 8/19/98, it was observed that Jo-Ja was performing ceiling plaster/paint demolition on the number one first floor ceiling beams. Work was not being performed as per the approved demolition/containment procedure. All future demolition needs to conform to the approved procedure. ----------- FOOTNOTE BEGINS --------- [foot #] 4 Mr. Loucks was assigned to provide onsite inspection and construction quality management, and he maintained daily logs and took construction progress photographs. Loucks Affidavit 3. ----------- FOOTNOTE ENDS ----------- 5 GSA has requested that the first floor areas be cleaned and tested to confirm the lead level. Appeal File, Exhibit 202. In his deposition, the CQM testified as follows regarding this letter: Do you know if on the 18th, did you actually observe Jo-Ja employees or subcontractors doing lead abatement? A. That's what the letter indicates. Q. Did you see them chipping the lead away, and the lead plaster? A. I can't recall. Q. OK do you know if this was on the ceiling beams? A. There was a couple of instances, yes, where there was a ceiling beam location, and another place, a penetration for HVAC or duct work. Q. OK with regard to the ceiling beam, you said there's a couple of places. Now, do you recall if you observed them on the 18th or the 19th or -- A. There was a policy that lead containment was not being done properly on various dates, and it finally came to -- after talking to the foreman, John Smith on the site, that it wasn't going to -- that it couldn't be resolved, and that's why the letter was drafted. Q. Now when you say there was a policy that lead containment or abatement was not going to be done properly, whose policy was that? A. I'm on the site part time. I'd come in; no work was being performed as far as putting stuff up to the beams while I was onsite. I'd come back the next day and see walls had been placed. On these occasions I believe I saw, and have pictures that show, ceiling paint and plaster on the floor or in the hallway areas. Q. OK but do you know . . . did you actually observe anybody chipping -- chipping away -- A. No. Q. -- the ceiling plaster and having it drop to the floor? A. No. 6 Loucks Deposition at 128-30. Mr. Loucks testified later in the deposition: Q. [I]t's your testimony that you never actually saw Jo-Ja employees . . . chipping away the lead and plaster without containment, without a plastic surrounding it? A. I have pictures of lead and plaster on the floor and the hallway area without containment around it. Q. OK but you don't know -- but you never saw the employees actually chipping away the plaster and having it either fall to the floor or fall in a plastic bag, containment you never saw that, right? A. No. Loucks Deposition at 131; see id. at 144. The CQM based his conclusion in the August 20 letter on the fact that he "walked in the space, looked at a lift, which did not have plastic on the bottom of it, and saw ceiling paint and plaster on the lift and on the floor." Loucks Deposition at 132-33. The CQM admitted that Jo-Ja could have been using the lift to do sheetrock work, and also testified that a Jo-Ja employee he had observed on the lift was not doing abatement; he was preparing to install steel track on the ceiling. Id. at 146-47. The CQM did not observe a Jo-Ja employee on the manlift doing abatement. Id. at 147; see id. at 134. The entries in the CQM's log for August 18 and 19 did not indicate that Jo-Ja was performing lead abatement improperly. Loucks Deposition at 151; Appellant's Statement of Uncontested Facts, Exhibit C.[foot #] 5 There is no evidence to suggest that the contracting officer's representative ever saw Jo-Ja perform lead abatement on ----------- FOOTNOTE BEGINS --------- [foot #] 5 The CQM's daily diary for August 18, 1998, stated in part: "CQM and GSA informed Jo-Ja duct work at their risk until repair method approved. GSA discussed lead abatement required in basement rooms with Jo-Ja. GSA requires procedure from Jo-Ja today (8/18/98) and containment required ASAP." Loucks Affidavit, Exhibit C. The CQM's daily diary for August 19 stated, in part: "CQM advised Jo-Ja to complete lead paint/plaster removal at existing HVAC opening with containment before they start cleanup. . . . GSA takes additional lead wipes in basement to confirm extent of lead abatement." Appellant's Statement of Uncontested Facts, Exhibit C. ----------- FOOTNOTE ENDS ----------- 7 the ceiling beams improperly. Deposition of Kathy Simpson (Nov. 9, 1999) at 184-87, 227-28. The CQM's September 2 Letter By letter dated September 2, 1998, the CQM advised the contracting officer that Jo-Ja used improper abatement techniques on August 31: On August 31, 1998, Jo-Ja Construction again continued to perform ceiling and wall demolition without proper containment. Work was performed while the CQM was not on-site, but plaster and paint demolition was observed [sic] on the first floor. Jo-Ja was informed that this work was not being performed in accordance with the specifications. Loucks Affidavit, Exhibit F. However, the CQM's August 31 log did not mention that Jo-Ja was performing work using improper techniques. Loucks Deposition at 157; Appellant's Statement of Uncontested Facts, Exhibit C. The CQM testified in his deposition that he observed the debris on the floor, but he did not know if that debris actually came from the abatement process. Loucks Deposition at 158. The CQM could not recall where he observed the debris on August 31. Id. He also did not know if the debris he observed contained lead. Id. at 159.[foot #] 6 On September 2, 1998, the Government had lead wipe samples taken of four one-foot square areas on the first floor which indicated lead levels higher than the HUD standard of 100 micrograms per square foot. Appellant's Statement of Uncontested Facts, Exhibit E (Skylab Report dated September 2, 1998). By letter dated September 3, 1998, the contracting officer directed Jo-Ja to stop work on the ceiling beam abatement on the first floor, stating: Your attention is directed to the attached letter from Clough, Harbour and Associates dated August 20, 1998. This letter and the Government's letter dated August 28, 1998 advised Jo Ja that plaster removal work on the first floor was occurring without approved ----------- FOOTNOTE BEGINS --------- [foot #] 6 Mr. Loucks testified that after the occurrences on August 18, 19, and 31 he "documented the conditions with construction photographs which show plaster debris and lead-based paint chips on the floor surface, including the new concrete floor." Loucks Affidavit 12. However, it appears that the photographs were not taken on August 18, 19, or 31, but rather that photographs were taken on September 3 and 11, 1998. Loucks Affidavit, Exhibits G1-G5. ----------- FOOTNOTE ENDS ----------- 8 removal procedures. Since then, Jo Ja has persisted in removing lead contaminated plaster from ceiling beams at the first floor without using the approved removal method. Results of lead wipes in the vicinity of demolition work indicate that lead levels are higher than allowed by the contract. Jo Ja's work practices are in violation of the contract and constitute a health hazard to its workers and building residents. Therefore, you are hereby directed to stop removal work at ceiling beam plaster on the first floor in accordance with Construction Clause 42, "Accident Prevention" and contain and clean any lead dust generated as a result of improper ceiling plaster removal. No additional work of this nature can occur until the dust generated at the first floor is cleaned and Jo Ja can demonstrate that it has equipment and personnel on site to remove plaster at ceiling beams in accordance with approved methods.[[foot #] 7] Appeal File, Exhibit 213. On September 11 at approximately 2:30 p.m., GSA issued a stop work order to Jo-Ja, directing Jo-Ja to stop all construction activities onsite and stating: "[c]ontract work cannot proceed in the work area until lead contamination is remediated. Your plan for remediation must be immediately forwarded to the government and the A/E [architect/engineer] for approval. Remediation work shall not begin until an approved plan is in place." Appeal File, Exhibit 223; Loucks Deposition at 184. By letter dated September 22, 1998, Jo-Ja's contract was terminated for default based on its lack of progress in correcting this and other enumerated deficiencies. Appeal File, Exhibit 236. Discussion Appellant's Motion to Strike By letter dated March 28, 2000, appellant objects to a lead bulk chip sampling report dated November 29, 1999, appended to respondent's reply memorandum as Exhibit A, and moves that this report be stricken from the record. Appellant asserts that GSA never produced this document in discovery although there had been ----------- FOOTNOTE BEGINS --------- [foot #] 7 In his daily log for September 3, 1998, the CQM wrote: "[Appellant's president] asked if CQM was onsite and to inform John Smith when CQM leaves so Jo-Ja can perform lead paint demolition while CQM not onsite." Loucks Deposition at 203. ----------- FOOTNOTE ENDS ----------- 9 a discovery request for all tests conducted at the project. Appellant further argues that the tests were conducted on November 18, 1999, more than fourteen months after Jo-Ja was terminated and off the project site and are, therefore, irrelevant and have no probative value with regard to the condition of the debris at the work site in August 1998. In response, the Government states that the sampling report shows that paint on the first floor ceiling beams was lead based and tested above the HUD guidelines. The Government essentially agrees, however, that the report is irrelevant because the test was performed long after the default termination. Letter from Counsel for Respondent to the Board at 1 (Apr. 6, 2000). Respondent takes the opportunity to point out additional evidence that the ceiling beams were coated with lead-based paint, citing Jo-Ja's president's deposition and arguing that the lead chip sampling report would only become relevant by way of rebuttal if Jo-Ja's president, Mr. Garcia, were to renounce his prior testimony. The Government also asserts that it did produce the document in discovery, but alternatively that it had produced a vast quantity of documents in discovery and that any failure to make this report available was completely inadvertent. A copy of the November 29 lead dust report has since been sent to appellant's counsel. Finally, respondent argues that appellant did not suffer any prejudice and that there will be adequate time for appellant's expert to review any lead test reports prior to trial. The lead dust report is irrelevant to the Board's resolution of the instant motion since there remains a fundamental genuine issue of material fact. Appellant's motion that Exhibit A to respondent's reply memorandum be stricken from the record in this appeal is granted; however, respondent may seek to introduce this document at trial. The Cross Motions for Summary Relief It is well established that summary relief is properly granted only where there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law; the moving party bears the burden of establishing the absence of any genuine issue of material fact. Armco, Inc. v. Cyclops Corp., 791 F.2d 147, 149 (Fed. Cir. 1986). In the instant case, both cross motions must be denied because the central issue underlying the challenged default termination, whether Jo-Ja failed to contain known lead-based dust and utilized improper abatement procedures, remains in dispute. Appellant asks the Board to conclude that the Government's evidence is insufficient to meet its burden of proving a termination for default. While appellant correctly notes that a default termination is a drastic sanction which 10 must be based on "solid evidence,"[foot #] 8 a dispute concerning the sufficiency of such evidence is itself a genuine issue of material fact precluding the award of summary judgment. Cf. Johnson v. Weinberger, 388 F. Supp. 628 (D.C. Colo. 1974) (presence or absence of substantial evidence is genuine issue of material fact). Here, neither motion is based upon testimony of a witness who actually had first-hand observation of the abatement techniques used. Appellant has not shown that respondent cannot marshal sufficient competent evidence at the hearing to sustain its burden of proof; the Board has de novo review and the evidence on the motion is not fully developed. It is well established that a tribunal should deny summary judgment until the facts have been sufficiently developed to enable it to reasonably apply the law. E.g., NLRB v. Smith Industries, Inc., 403 F.2d 889 (5th Cir. 1968); Jecies v. Matsuda, 503 F. Supp. 580 (S.D.N.Y. 1980) (final decision should be postponed until it can be founded on a more complete factual record). Respondent's motion suffers from an additional infirmity, that is, respondent requests the Board to enter judgment in its favor by drawing an inference in its own favor from the undisputed evidence. Respondent points out that there was debris on the floor in the area where appellant had been working and from this asks that the Board infer that lead-based paint chips could only have resulted from appellant's failure to utilize proper containment procedures. It has long been the rule that "on summary judgment the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion." Adickes v. S. H. Kress and Co., 398 U.S. 144, 158-59 (1970). As such, we are unable to draw the inference respondent suggests, and its motion fails. Further, there are genuine issues of material fact as to whether the debris observed contained lead-based paint and whether appellant utilized improper abatement procedures. ----------- FOOTNOTE BEGINS --------- [foot #] 8 A default termination is a drastic sanction, a type of forfeiture which should be imposed and sustained only for good grounds and upon solid evidence. Lisbon Contractors, Inc. _________________________ v. United States, 828 F.2d 759 (Fed. Cir. 1987); De Vito v. _________________ ___________ United States, 413 F.2d 1147, 1153 (Ct. Cl. 1969); J.D. Hedin _____________ __________ Construction Co. v. United States, 408 F.2d 414, 431 (Ct. Cl. __________________________________ 1969). The Government bears the burden of proving the termination was proper. Lisbon, 828 F.2d at 765. ______ ----------- FOOTNOTE ENDS ----------- 11 Decision The cross motions for summary relief are DENIED. Appellant's motion that Exhibit A to respondent's reply memorandum be stricken from the record in this appeal is GRANTED; however, respondent may seek to introduce this document at trial. _________________________________ MARY ELLEN COSTER WILLIAMS Board Judge We concur: ______________________________ _________________________________ ROBERT W. PARKER MARTHA H. DeGRAFF Board Judge Board Judge