[00:00:08] Speaker 03:
The next case is Agility Public Warehousing Company versus the Department of Defense.

[00:00:15] Speaker 03:
2016, 1265, Mr. Elward.

[00:00:21] Speaker 04:
Thank you, Your Honor.

[00:00:22] Speaker 04:
May I please the Court?

[00:00:24] Speaker 04:
The military's use of Agility's trucks severely undermined Agility's capacity to perform the delivery contract at issue in this case.

[00:00:32] Speaker 04:
It required Agility to procure literally hundreds of additional trucks in order to carry out required deliveries.

[00:00:38] Speaker 04:
The Armed Services Board of Contract Appeals made three errors when it concluded that agility wasn't entitled to any additional compensation for the work that it did in Iraq.

[00:00:47] Speaker 04:
The first is that the board explicitly said it need not decide, and was not deciding, the issue of the implied duties.

[00:00:55] Speaker 01:
Can I rewind you for a second and just focus on this?

[00:00:58] Speaker 01:
And I'm not sure what to make of it.

[00:01:02] Speaker 01:
The board described your claim as simply and purely for the transportation rate times the number of days.

[00:01:14] Speaker 01:
Simply that.

[00:01:15] Speaker 01:
Your three counts of your complaint do the same thing.

[00:01:19] Speaker 01:
They ask for whatever the number is, which is calculated in exactly that way.

[00:01:24] Speaker 01:
And I wonder, I guess, whether

[00:01:30] Speaker 01:
you have in this case a claim that says they breached a variety of agreements.

[00:01:37] Speaker 01:
Our damages may or may not be related to the transportation rate times the number of days, which it's very easy to see how maybe it's not in fact related.

[00:01:46] Speaker 01:
Maybe you had excess capacity, but damages might be how many other trucks you had to bring into the Middle East to serve and all of that.

[00:01:54] Speaker 01:
But I wonder, are you limited to essentially your claim

[00:02:00] Speaker 01:
to the transportation contract rate times the number of days?

[00:02:05] Speaker 04:
I think, well, to begin with, this was a bifurcated proceeding.

[00:02:08] Speaker 04:
We never got to damages.

[00:02:10] Speaker 04:
And I think that contract rate times the number of days is the outer limit of what we'd be entitled to under each of the different theories.

[00:02:17] Speaker 04:
But again, because we never got to the damages phase, this is just subtle liability, we didn't have to really drill down on exactly what the measure was in each instance.

[00:02:27] Speaker 04:
But it was along the lines of any civil complaint, where you state the maximum amount that you might be entitled to.

[00:02:33] Speaker 00:
Well, but I think the problem here is that, putting aside whether you got to damages, we need to understand your legal theory as to implied duty.

[00:02:44] Speaker 00:
Is your theory that the government did certain things which caused you to incur costs that were unrelated to the 29-day cap

[00:02:57] Speaker 00:
Or is your theory that even though everybody understood there was a 29-day cap, there was bad faith activity by the government that made it impossible for anyone to ever work within that cap?

[00:03:10] Speaker 04:
Our theory was that this was a delivery contract.

[00:03:14] Speaker 04:
And in order to be able to make additional deliveries, we needed the trucks back.

[00:03:18] Speaker 04:
And the government had a duty to try to return those trucks.

[00:03:21] Speaker 04:
And it violated that by over-ordering food, by trying not facilitating the return of the trucks, by using them for storage.

[00:03:30] Speaker 04:
And I think that that is entirely consistent.

[00:03:32] Speaker 04:
Even if you conclude that the board got it right, that the contract here overrode the storage prohibition.

[00:03:40] Speaker 04:
and capped fees after 29 days, that is precisely when you would want people to have a duty to try to procure additional storage.

[00:03:48] Speaker 04:
And I think that's consistent.

[00:03:49] Speaker 04:
If you look at the actual evidence, it's consistent with the idea that they understood, even after mod 27, the government understood it had a duty to try to do more.

[00:03:57] Speaker 04:
If you look at page 3914, Gary Shifton said that Agility, Gary Shifton is contracting officer for his boss, said that Agility had a case for additional compensation, because here it is almost a year after we knew we didn't have enough storage.

[00:04:10] Speaker 04:
And we're just now getting around to getting enough storage, which is a sign that they didn't do what they could to facilitate the return of the trucks to reduce the amount of trucks used for storage.

[00:04:20] Speaker 00:
And similarly, that they... Are you saying that there was a quid pro quo for the...

[00:04:25] Speaker 00:
Cap?

[00:04:26] Speaker 04:
Well, I think that that is also true.

[00:04:29] Speaker 04:
But I think that independent of the 29-day cap, I think that it's true that they undertook to try to keep below the 29-day cap.

[00:04:38] Speaker 04:
But independent of that, they had an obligation to try to do enough to reduce the need for storage, to tell the troops in the field to stop ordering so much food so that there wouldn't be this problem with storing food on trucks and with the inability to return trucks.

[00:04:53] Speaker 01:
So what's wrong with the following way of looking at this?

[00:04:58] Speaker 01:
Mod 27 was agreed to because of the

[00:05:05] Speaker 01:
contracting officers concern about certain tail events of extremely long holding on to trucks.

[00:05:14] Speaker 01:
The agreement was you're going to get 29 days to the extent it's the government's fault.

[00:05:19] Speaker 01:
It used to be you didn't even have to establish that.

[00:05:22] Speaker 01:
And that, by fair implication, was an elimination of the storage prohibition of Mod 1.

[00:05:33] Speaker 01:
And that takes care of essentially your first three claims, the express breach and the implied duties, because there no longer was a duty attachable to the written contract about storage.

[00:05:47] Speaker 01:
part of the quid pro quo was you had this side deal.

[00:05:49] Speaker 01:
And let's assume you really do have a side deal.

[00:05:52] Speaker 01:
The problem is that was not written down.

[00:05:54] Speaker 01:
And so the content had to be proven at trial.

[00:05:56] Speaker 01:
And she showed up, and your guy didn't.

[00:05:58] Speaker 01:
So why couldn't the board find what the content of the side deal was?

[00:06:02] Speaker 04:
Well, I think there's an awful lot there.

[00:06:05] Speaker 04:
I think the first thing is with respect to whether or not that overrode the cap on transportation fees

[00:06:12] Speaker 04:
which is for customer cause events, which they specifically link to capability to unload and return trucks, whether that is overriding the storage prohibition.

[00:06:23] Speaker 04:
And I think, to begin with, it doesn't address storage.

[00:06:26] Speaker 04:
It doesn't speak in terms of it.

[00:06:28] Speaker 04:
And it's part of an agreement, MOD 27 included specific language that said that, except as provided herein,

[00:06:38] Speaker 04:
I'm trying to find the language here.

[00:06:40] Speaker 04:
Except as provided herein, all of the remaining provisions remain in full force and effect, which I think at a minimum has to kind of toggle on an idea of kind of clear statement.

[00:06:50] Speaker 04:
If you're going to absolve yourself of liability, you have to speak clearly.

[00:06:55] Speaker 04:
And that's a basic principle of contract interpretation when you're dealing with the government.

[00:06:58] Speaker 04:
And none of that, I think, was present here.

[00:07:04] Speaker 04:
And then in addition to that, you have the extraneous evidence or the outside evidence.

[00:07:08] Speaker 04:
You have at page 3969, you have agility telling contracting officer Ford in March of 2005, six months after mod 27 was in place,

[00:07:18] Speaker 04:
You're violating the storage prohibition here.

[00:07:20] Speaker 04:
You're using our trucks for storage in violation of mod one paragraph four, referring to the very provision that is the storage provision.

[00:07:26] Speaker 04:
Her response to that wasn't to say, what are you taught?

[00:07:28] Speaker 04:
What are you high as a kite?

[00:07:29] Speaker 04:
That was abrogated by mod 27.

[00:07:31] Speaker 04:
She didn't say anything of the sort.

[00:07:33] Speaker 04:
And you also have at page 3914 of the appendix where, again, Shifton says, we better track down what's all going on at these various sites and have some justification for why we're holding onto these trucks.

[00:07:45] Speaker 00:
But what's your response to the fact that, as the government points out, that the average time did actually go down after the 29-day cap was in place in the expanded TLO program?

[00:07:59] Speaker 00:
I mean, doesn't that indicate that the government was really trying to do its part?

[00:08:05] Speaker 04:
Our understanding is that it actually increased for a while after mod 27 before it went down.

[00:08:10] Speaker 04:
But in any event, I think that even what you have to look at is more of the input rather than what came out of it.

[00:08:16] Speaker 04:
And the board just simply didn't look at that.

[00:08:19] Speaker 04:
You have to look and see whether they actually did things to decrease the rate of over 29 day trips.

[00:08:26] Speaker 04:
and see what did they actually do to try to provide for adequate storage.

[00:08:30] Speaker 04:
What did they do to try to cut down on over-ordering?

[00:08:32] Speaker 04:
And again, as I said, if you look at page 3914 of the Joint Appendix, it looks very much like inside the government, when they were in the privacy of their own offices, they said, we didn't do enough.

[00:08:44] Speaker 04:
Here it is.

[00:08:45] Speaker 04:
We've known for a year that there wasn't enough storage, and we're just doing something about it now.

[00:08:49] Speaker 04:
That is, I think, not a sign that they were doing what they could to reduce the incidence of storage.

[00:08:53] Speaker 00:
Well, they did order the extra storage, right?

[00:08:56] Speaker 04:
Well, according to that email by Shifton, who was, again, Contracting Officer Ford's supervisor, they were just getting around to doing that now, that they could have done more earlier.

[00:09:07] Speaker 04:
And furthermore, Contracting Officers Representative Burkett said, you know, there's rampant over-ordering going on, and the Army tries to fix its mistakes.

[00:09:17] Speaker 04:
by essentially re-delivering the goods on Agility's trucks.

[00:09:22] Speaker 04:
And you can look through the whole record and you can try to find instances where they're telling the people who are engaging in over-ordering, cut it out guys, you have enough.

[00:09:30] Speaker 04:
And I just simply haven't found it yet.

[00:09:32] Speaker 04:
then I think that that's the things when you're looking at it is what are they doing to try to make sure that there's actual permanent storage or are they doing enough there and are they doing enough to eliminate this kind of over-ordering that was resulting in rampant.

[00:09:45] Speaker 00:
How much proof would you have to have in order to establish this kind of implied duty claim because

[00:09:51] Speaker 00:
The reality is that the 29-day cap did shift certain risks away from the government to your client.

[00:09:59] Speaker 00:
Did it not?

[00:10:01] Speaker 04:
I think it did.

[00:10:01] Speaker 04:
But when you look at it, what it shifted to it is the risk of a capability to unload the truck.

[00:10:08] Speaker 04:
That's explicitly the government.

[00:10:09] Speaker 04:
Other people who wrote the contract here, they could have made it however broad or specific as they wanted.

[00:10:14] Speaker 04:
And all they specifically covered was capability to unload the truck.

[00:10:17] Speaker 04:
And the difference between that and paragraph 6 of mod 1 is striking.

[00:10:21] Speaker 04:
Because in paragraph six of model one, the government had absolved itself of any liability from loss if the trucks are destroyed.

[00:10:27] Speaker 04:
And they couldn't have used more clear language than they did there.

[00:10:30] Speaker 00:
But the government had some pretty striking numbers in their brief about the small percentage of instances that really went beyond 29 days.

[00:10:41] Speaker 00:
I know you say that it represents a lot of money.

[00:10:43] Speaker 00:
But basically, there was a lot of money that also was made and a lot more that was made.

[00:10:51] Speaker 00:
and everything came in under the 29-day cap.

[00:10:53] Speaker 04:
Well, I think that the way they make it sound small, as they say, was like 4 percent of the overall cost of the contract.

[00:11:00] Speaker 04:
But, you know, it's 1,750 days over 29 days.

[00:11:04] Speaker 04:
It's four years, essentially,

[00:11:06] Speaker 04:
of truck trip days above the 29-day cap.

[00:11:10] Speaker 04:
There were literally scores of trucks that were out there for more than 50 days.

[00:11:14] Speaker 04:
So they may say it's a small amount, but if it's such a small amount, pay it.

[00:11:19] Speaker 04:
It's, you know, $12 million of truck use.

[00:11:21] Speaker 04:
And as we said, and they really haven't disputed this, is it essentially required us to buy almost as many or procure almost twice as many trucks as we thought we would need.

[00:11:31] Speaker 04:
And at that point, I'd like to reserve my remaining time for rebuttal.

[00:11:35] Speaker 03:
We will do that, Mr. Ellwood.

[00:11:37] Speaker 03:
Mr. Gwynne.

[00:11:43] Speaker 02:
Your Honor, may it please the Court.

[00:11:45] Speaker 02:
As counsel talked about and as the Court asked questions regarding, I think it's important to note here something that we talk about and the footnotes a lot.

[00:11:54] Speaker 02:
The party's agreement, the bargain that they struck through the entire contract.

[00:12:00] Speaker 02:
So you're starting with an argument that you made in footnotes in your brief?

[00:12:04] Speaker 02:
I'm not, Your Honor.

[00:12:04] Speaker 02:
I'm talking about the entire deal.

[00:12:05] Speaker 02:
But we talk about these claims in certain footnotes.

[00:12:10] Speaker 02:
But the deal as a whole was for round trips through the entire time of the contract from mod 2 on, and notably

[00:12:20] Speaker 02:
Agility makes no claim, if there's this independent cause for a breach of the storage provision, your honor.

[00:12:27] Speaker 02:
Agility makes no claim for any trip under 29 days throughout the course of the contract.

[00:12:34] Speaker 02:
And they make no claim.

[00:12:36] Speaker 01:
But so what?

[00:12:36] Speaker 01:
I mean, they say, they thought that maybe they had a claim, but they got paid.

[00:12:42] Speaker 01:
So why fuss about it?

[00:12:43] Speaker 01:
They probably didn't, sort of no harm.

[00:12:47] Speaker 01:
I'm not sure what you think the fair implication about the claims that they brought in.

[00:12:53] Speaker 02:
I think it reflects not only counsel's arguments, but I think it reflects the understanding of the parties at the time that the way payment was going to be made was per round trip.

[00:13:06] Speaker 02:
That happens in mod 2.

[00:13:09] Speaker 02:
And then it's continued in mod 27.

[00:13:11] Speaker 02:
And what mod 27 really does

[00:13:13] Speaker 02:
is modifying Mod 2's change, which was to change from a contract, the contract for other places, like Oman or Qatar, which is the original contract before Iraq comes in, was for one way.

[00:13:29] Speaker 02:
It was from the warehouse to the delivery point.

[00:13:32] Speaker 02:
And then there was a provision that talked about demurrage fees.

[00:13:36] Speaker 02:
That demurrage fee provision uses the same language as we pointed out in our brief.

[00:13:42] Speaker 02:
It talks about

[00:13:43] Speaker 02:
delays as a result of offloading the trucks.

[00:13:48] Speaker 02:
That changes in Mod 2.

[00:13:50] Speaker 02:
Mod 1 talks about Iraq, and it expands the program into Iraq.

[00:13:56] Speaker 02:
Mod 2 sets up the payment structure, the general structure that the parties were going to use.

[00:14:02] Speaker 02:
And that structure changed from one way with demurrage to round trip.

[00:14:08] Speaker 02:
That language, the inclusion of round trip, inherently includes

[00:14:12] Speaker 02:
any storage delays anywhere along that route from warehouse to warehouse.

[00:14:18] Speaker 01:
So your view is that the sentence or half sentence or whatever it is in mod one that says you shall not use these trucks for storage was modified in mod two?

[00:14:29] Speaker 02:
It was modified in both mod two or I should say that in mod two it reflects the party's understanding that the way

[00:14:39] Speaker 02:
any storage problems were going to be addressed was through the fee structure that was set up at Mod 2, which at the time was unlimited.

[00:14:47] Speaker 02:
So exactly the way the parties performed here, the idea that there are no claims for storage problems while Mod 2 was in effect reflects that same understanding, that what the parties thought was that the payment structure that was going to handle things over 29 days, including where those delays

[00:15:07] Speaker 02:
were the result of storage came from that payment structure.

[00:15:13] Speaker 02:
And as we discussed, Ms.

[00:15:18] Speaker 02:
Ford, there started to be problems, problems that each of the parties knew about.

[00:15:25] Speaker 02:
There was a summit that discussed these storage delays.

[00:15:29] Speaker 02:
There was an Army captain, Captain Sinclair,

[00:15:33] Speaker 02:
who wrote and made reports, those reports copied Mr. Switzer, and it talked about the existence of those delays.

[00:15:41] Speaker 00:
The whole thing about mod 27 was that we're going to put a cap

[00:15:49] Speaker 00:
But at the same time, we're going to do everything we can to make sure that these trucks get back to you in a quick fashion, right?

[00:15:57] Speaker 02:
Absolutely right, Your Honor.

[00:15:59] Speaker 00:
All right.

[00:15:59] Speaker 00:
So you don't really defend the board's position that it didn't have to decide the implied duty claim, do you?

[00:16:06] Speaker 02:
I think the board's position that it didn't have to decide the implied duty claim, I think, comes down to the ruling that the

[00:16:16] Speaker 02:
expressed language of the contract encompassed the implied view.

[00:16:21] Speaker 00:
Right, but under contract law, that's not really an accurate assessment.

[00:16:26] Speaker 00:
I don't see you in your brief saying that that would be an appropriate contractual principle.

[00:16:33] Speaker 00:
I see you saying that it was essentially harmless error, because there's no evidence of a breach.

[00:16:39] Speaker 02:
I think along the lines of, I mean obviously it would have been much more helpful to our position had the board elaborated on its reasons, but the reason standing alone that the plain language of the contract here, like as in Lakeshore and Metcalfe and the cases that talk about the implied duty.

[00:16:57] Speaker 02:
The implied duty depends on what the actual terms of the contract are.

[00:17:02] Speaker 02:
And here, you cannot expand the duties under the contract in the way that the plaintiffs attempt to here by where the contract itself encompasses those claims.

[00:17:19] Speaker 02:
Here, the delay.

[00:17:20] Speaker 00:
Well, the contract doesn't say, and the government can

[00:17:25] Speaker 00:
can use the trucks for whatever purposes and they don't have to return the trucks.

[00:17:29] Speaker 00:
I mean, in contemplating that we have an average time of returning trucks and we have an outside time of returning trucks, it would entail the contemplation that the trucks actually get returned, right?

[00:17:45] Speaker 02:
That's correct, Your Honor.

[00:17:47] Speaker 02:
But I would say there are also, as a part of the negotiations for mod 27, it wasn't simply the TLO program.

[00:17:55] Speaker 02:
the transportation liaison officers, which was an attempt to reduce times.

[00:17:59] Speaker 02:
But there was also sort of two other negotiations back and forth.

[00:18:06] Speaker 02:
The first one is that there was a question of how much paperwork to put in.

[00:18:11] Speaker 02:
And Mr. Switzer was very clear that for any times over the minimum, which was the original draft,

[00:18:17] Speaker 02:
that would be too much problem.

[00:18:19] Speaker 02:
And Ms.

[00:18:20] Speaker 02:
Ford agreed to that, and the parties agreed on a sort of 19-day limit.

[00:18:24] Speaker 02:
That's telling here, because I believe it's 18 days, was the existing average trip time.

[00:18:32] Speaker 02:
So that reflects the party's agreement that we are making this deal for everything, and for things over the average, up to 29, you show us documentation, we'll pay those claims, but you're also agreeing to a 29-day

[00:18:47] Speaker 02:
cap.

[00:18:47] Speaker 02:
The second point on that is that the parties also agreed to an increase in fees.

[00:18:54] Speaker 02:
That was something Mr. Switzer talked about originally, but they also agreed to a higher minimum for most of the regions of Iraq.

[00:19:02] Speaker 02:
So this is a deal that set a firm cap, a cap that Mr. Switzer, in his own words, said was unqualified, and at the time objected to

[00:19:13] Speaker 02:
but then eventually accept it as a part of the negotiation.

[00:19:16] Speaker 00:
But let me give you a hypothetical.

[00:19:18] Speaker 00:
I know you would say that this, of course, didn't happen.

[00:19:21] Speaker 00:
But what if that deal was struck and it was all this understanding that you're going to get more money and you're going to get more liaisons, and we're all going to make this whole process be more efficient?

[00:19:33] Speaker 00:
But then the government said, you know what?

[00:19:35] Speaker 00:
Don't even bother giving back their trucks, because now we're protected.

[00:19:39] Speaker 00:
And they just went out of their way to sit on those trucks and made it impossible for them to live with this 29-day cap.

[00:19:48] Speaker 00:
You would agree in those circumstances that there is an implied duty claim that could be asserted, right?

[00:19:54] Speaker 02:
I think I would agree, Your Honor, with all of the regular caveats about hypotheticals.

[00:19:59] Speaker 02:
I think I would say that

[00:20:03] Speaker 02:
Under those circumstances, there would at least be a claim because if you take a look at Appendix 20, which is the board's opinion, one of the things Ms.

[00:20:11] Speaker 02:
Ford testified to with respect to sort of exceptions and relief and all those things, she gives this specific example in her testimony where, for example, all of the trucks, and this is the quote part, were out over 29 days and for some reason, Agility was going to be out of business beyond their losses.

[00:20:33] Speaker 02:
That's the sort of circumstances that she had contemplated these kind of exceptions.

[00:20:38] Speaker 02:
So I think what I'd say to your question is the scope of the agreement here was for a set of circumstances that looked like it did on the ground.

[00:20:49] Speaker 02:
And there's evidence in the record that there were delays of up to at least one truck had been reported out for over 150 days.

[00:20:57] Speaker 02:
And under those circumstances, where a small number

[00:21:02] Speaker 02:
and and Julie talked about my numbers the numbers and what they changed it to was was days the numbers 1700 days was out of I believe it's around 38,000 and That number is about five percent.

[00:21:17] Speaker 02:
So these numbers are still small regardless of how you measure them, but the deal was That for this set of circumstances on the ground We accept this cap structure and I think

[00:21:32] Speaker 02:
to your hypothetical, if the set of circumstances on the ground shifted in a dramatic fashion, then I think Ms.

[00:21:40] Speaker 02:
Ford would have admitted, and I think Agility would have at least course of performance evidence to say that's not the express bargain of a struck and contract trial.

[00:21:52] Speaker 01:
Did this trial, the proceeding that took place, I guess in a bifurcated way so the second half never did take place,

[00:22:02] Speaker 01:
Did agility have the opportunity in the proceeding that actually did take place to prove up

[00:22:10] Speaker 01:
harms to itself like we actually had to bring in a thousand more trucks from from into the the Into the area because too many of our trucks were out for for so long was that part of this procedure I'm at a bit of a disadvantage honor and that I did not represent government in that proceeding it is my understanding I know at a minimum the

[00:22:35] Speaker 02:
There was a selection, a poll, of 50 trucks out of the 1,781 truck trips that had been over 29 days.

[00:22:50] Speaker 02:
Evidence was presented, and there is samples of that in the record, of 50 particular trucks.

[00:22:59] Speaker 02:
at least a sampling of what the trucks looked like afterwards.

[00:23:03] Speaker 02:
And there is certainly evidence in the record of the existence of delays and emails that complained about various delays.

[00:23:13] Speaker 01:
Here, I guess, is what I'm trying to get at.

[00:23:15] Speaker 01:
It does seem to me that the correspondence surrounding the agreement on mod 27 created

[00:23:27] Speaker 01:
a nonwritten down contract between the government and agility about submitting claims over and above the contract rate claims in mod 27.

[00:23:45] Speaker 01:
And then there is a question, well, what was that agreement?

[00:23:48] Speaker 01:
And there was testimony, and Contracting Officer Ford testified, well, I contemplated it would be some sort of set of extreme circumstances.

[00:23:56] Speaker 01:
And I guess my question is, did agility in this proceeding have notice of what it might have to prove to establish a breach of that nonwritten down agreement so that it could prove that?

[00:24:15] Speaker 01:
Like, we had to bring in twice the number

[00:24:18] Speaker 01:
contracts into the theater, trucks into the theater that we otherwise would have because we couldn't actually make the deliveries we were required to do because so many of our trucks were sitting, you know, being used as giant refrigerators somewhere for a long time.

[00:24:34] Speaker 02:
I believe they did, Your Honor, and I know certainly they had the ability to cross Miss Ford on her, this particular testimony to attempt to rebut it.

[00:24:44] Speaker 02:
And they certainly had the ability to look at any of the trips that were in question, including this 50 sample size.

[00:24:54] Speaker 00:
If we were to conclude that the board erred just as a matter of process and not addressing the implied duty claim, do we have to vacate and remand, or is there any way that we could ever address that in the first instance?

[00:25:08] Speaker 02:
Well, I think that would be, we could address it in the first place because

[00:25:14] Speaker 02:
This court could find, as a matter of law, that there is no implied duty because of the specifics of the contract.

[00:25:21] Speaker 02:
And they could find, similarly, there's no constructive change as a matter of law, de novo review, because any of the changes that are contemplated by the alleged constructive change flow from the direct changes to the contract.

[00:25:40] Speaker 00:
But we have to accept the proposition as a matter of law.

[00:25:43] Speaker 00:
that express contract can essentially wipe out the ability to assert an implied duty claim?

[00:25:50] Speaker 02:
Well, the ability to assert this particular implied duty claim, Your Honor, where it is entirely encompassed by the cap that the parties agreed to and the multiple findings, in fact, from the board support

[00:26:09] Speaker 02:
The idea that this was the bargain that encompassed in the bargain the party struck was an unqualified 29-day cap that included storage delays.

[00:26:21] Speaker 00:
And even if we accept the board's conclusion that there wasn't a separate contractual agreement to look at additional claims, doesn't at least her view that you can make a claim

[00:26:39] Speaker 00:
indicate some conclusion that there might be an implied duty claim that could arise that wouldn't be completely covered by this.

[00:26:48] Speaker 02:
I think that it's certainly possible.

[00:26:50] Speaker 02:
I do not think these facts, these findings of fact, and this contractual arrangement support that idea.

[00:26:58] Speaker 02:
And that does go to another point.

[00:27:01] Speaker 02:
With respect to this unwritten duty claim, a breach of promise claim, I think they call

[00:27:09] Speaker 02:
As we note, it's not in the complaint, and this evidence regarding the quote-unquote deal.

[00:27:16] Speaker 01:
It may not be in the complaint, but the board entertained it, and thought, yeah, there was an agreement, but it basically was an agreement that you'll get paid only under very extreme circumstances, and you haven't proved those extreme circumstances.

[00:27:30] Speaker 02:
Well, Your Honor, the board entertained it, but they entertained it

[00:27:34] Speaker 02:
within the scope of the actual breach of contract claim, because Agility had presented it as pre-dispute interpretation of the contract great way.

[00:27:45] Speaker 02:
So if you look at Appendix 40, where the board finds this, they talk about it in that sense, that it's a way to piggyback onto the contract claim, Your Honor.

[00:27:57] Speaker 02:
And it was not presented as a sort of independent breach claim.

[00:28:01] Speaker 01:
Right.

[00:28:01] Speaker 01:
So it was an agreement to exceptions.

[00:28:04] Speaker 01:
Let's call it that.

[00:28:06] Speaker 01:
But the nature of the exceptions were not written down.

[00:28:10] Speaker 01:
And that had to be established by testament.

[00:28:14] Speaker 02:
That's correct, Your Honor.

[00:28:15] Speaker 02:
And in the sense of, at the board, that was used particularly to the topic of whether or not the contract said what it said.

[00:28:24] Speaker 02:
I see my time has expired, Your Honor.

[00:28:25] Speaker 03:
Thank you, Mr. Gwynne.

[00:28:27] Speaker 03:
Mr. Elwood has a little rebuttal time.

[00:28:31] Speaker 03:
Under four minutes.

[00:28:35] Speaker 04:
Thank you, Your Honor.

[00:28:38] Speaker 04:
The government, its position is essentially that the contract was such that there was no need for the court to surmise or go into the question about the implied duty.

[00:28:49] Speaker 04:
But I think that that's kind of putting the cart before the horse in that this court has indicated in the Scott Timber case that the question of what were the reasonable expectations of the parties

[00:28:58] Speaker 04:
is an intensely factual question.

[00:29:02] Speaker 04:
And I think that the board should be given the opportunity in the first instance to determine what the understanding of the parties was with respect to what the obligation was of the government to return the trucks and what duties it had and at what point the risks of the contract began.

[00:29:22] Speaker 04:
Because as Judge O'Malley got the government to concede, at some point there is a duty.

[00:29:28] Speaker 04:
The duty of good faith and fair dealing would click in.

[00:29:30] Speaker 04:
And the duty to facilitate the return of the trucks would be over borne.

[00:29:34] Speaker 04:
It would be violated in this case.

[00:29:36] Speaker 04:
But we don't know where that is.

[00:29:38] Speaker 04:
And that is a sort of, as the court has said, an intensely factual question that has to be undertaken by the board in the first instance.

[00:29:48] Speaker 04:
Now, the evidence in the record here, I think, undisputed evidence in the record, including some of the government's own witnesses, all of the government's own witnesses, indicates they very much believe that they weren't doing enough.

[00:30:00] Speaker 04:
Again, contracting officer Ford's boss, Gary Shifton, said he thought agility had a case for more compensation because they weren't doing enough to reduce the storage by buying enough refrigeration early enough in the conflict.

[00:30:16] Speaker 04:
And I think that is an indication that the people who know this case the best, the government people on the inside, when they don't know they're being watched, more or less, didn't think they were doing enough.

[00:30:26] Speaker 04:
And Gary Shifton said in other circumstances, I really let this go too far.

[00:30:30] Speaker 04:
And that's the kind of evidence that the board had to consider in the first instance and see whether the implied duty was violated here.

[00:30:41] Speaker 04:
Another point which the government made was it tried to assert that the exception agreement we call it, the informal agreement after mod 27 was reached concerning the post mod 27 era was waived.

[00:30:57] Speaker 04:
It's right there in our complaint at paragraph 29 and 51, and as Judge Toronto noticed, the board below certainly thought it was preserved enough that they addressed it.

[00:31:07] Speaker 04:
And I think the important thing there is that

[00:31:12] Speaker 04:
When you look at the actual government's own conduct, it's entirely consistent with what we say the agreement said, which was that above a certain time we just have to document it well, and there's no evidence whatsoever that it was concerned cost, which was Contracting Officer Ford's explanation.

[00:31:32] Speaker 04:
Because after all, when she came back, when she got the documentation, she said that they better prove in every instance that the delay was essentially the government's fault.

[00:31:41] Speaker 04:
She didn't say anything at all about cost until much, much later when she was finally denying the claim.

[00:31:47] Speaker 04:
At no point along in that situation did she say, you have to prove evidence of cost.

[00:31:51] Speaker 04:
At a time when she was instead saying, you have to prove it was the government's delay, she was not saying anything at all about cost.

[00:31:58] Speaker 00:
But if all they had to prove was that it was

[00:32:02] Speaker 00:
If every time you could show that it was the government's fault, then what's the point of the 29-day cap?

[00:32:10] Speaker 04:
At a minimum, it's a heavier burden.

[00:32:14] Speaker 04:
Instead of ministerial information about name of the driver, truck vehicle identification number, time out, time in, and reason for the delay, we have to prove that the delay, essentially that agility was blameless, and the government had all of the blame.

[00:32:30] Speaker 04:
And secondly, the quantum of documentation was much different, in that for the under 29-day claims,

[00:32:36] Speaker 04:
We gave them a spreadsheet of all the information.

[00:32:38] Speaker 04:
They asked, they audited essentially 3%.

[00:32:41] Speaker 04:
And for these, for the post 29-day claims, it was to use contracting officer Ford's terms, mountains of paperwork.

[00:32:48] Speaker 04:
You had to lavishly document everything.

[00:32:50] Speaker 04:
So at a minimum, it was a much heavier showing on agility.

[00:32:54] Speaker 04:
There are no further questions over on our submission.

[00:32:57] Speaker 03:
Thank you, Mr. Elwood.

[00:32:58] Speaker 03:
We'll take the case on with Roger.