Metropolitan Area Transit, Inc. v. R. James Nicholson, SECRETARY OF VETERANS AFFAIRS

United States Court of Appeals for the Federal Circuit
05-1541
METROPOLITAN AREA TRANSIT, INC.,
Appellant,
v.
R. James Nicholson, SECRETARY OF VETERANS AFFAIRS,
Appellee.
William L. Lucas, William L. Lucas, P.A., of Edina, Minnesota, argued for
appellant.
Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for appellee. On the
brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Todd
M. Hughes, Assistant Director, and Marla T. Conneely, Attorney.
Appealed from: United States Department of Veterans Affairs Board of Contract
Appeals
Administrative Judge Richard W. Krempasky

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United States Court of Appeals for the Federal Circuit
05-1541
METROPOLITAN AREA TRANSIT, INC.,
Appellant,
v.
R. James Nicholson, SECRETARY OF VETERANS AFFAIRS,
Appellee.
___________________________
DECIDED: August 28, 2006
___________________________
Before NEWMAN, SCHALL, and DYK, Circuit Judges.
DYK, Circuit Judge.
Metropolitan Area Transit, Inc. (“MAT”) appeals from the decision of the
Department of Veterans Affairs Board of Contract Appeals (“the Board”), denying MAT’s
breach of contract claim. We affirm.
BACKGROUND
The Department of Veterans Affairs (“VA”) operates two medical facilities in
Minnesota and Wisconsin. The VA requires various modes of special transportation for
its patients, including wheelchair van services for the wheelchair bound and litter vans
for non-ambulatory patients who need to be transported on “litter beds” or gurneys. In
addition, the VA also authorizes reimbursement for patients to travel by taxicab if they

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are ambulatory but in need of some assistance with transportation—patients with
walkers, for example.
From 1993 through 1996, the VA awarded MAT an indefinite delivery/indefinite
quantity requirements contract to provide certain transportation services; specifically, to
“Provide Transportation of the Handicapped (primarily wheelchair) for the VA Medical
Center” in Minnesota. 1993 Requirements Contract at 3-5. There is no evidence that
the VA ordered taxi and litter transportation from MAT under this contract and no
evidence of any complaints from MAT concerning the lack of such orders.
On September 3, 1999, the VA awarded MAT another indefinite
delivery/indefinite quantity requirements contract for providing handicap transportation
services at the Minnesota and Wisconsin medical facilities. The contract term was for
federal fiscal year October 1, 1999, through September 30, 2000, with renewal options
for the following four fiscal years. The request for proposals stated:
There are Ground Ambulance patient transportation contracts available to
the VA Medical Center . . .; the Government reserves the right to solely
determine how patients are to be transported. However, all Handicapped
Transportation requests will be offered the Contractor.
REQUIREMENTS
Provide Transportation of the Handicapped (primarily by wheelchair) for
the VA Medical Center . . . in accordance with the Specifications of this
Request for Proposal. . . .
The contract’s Specifications set forth physical requirements for wheelchair vans,
qualifications for drivers and attendants to accompany the vans, and procedures for
transporting patients. For example, in detailing passenger transportation procedures,
the Specifications noted that “[w]hen transporting patients using motorized wheelchairs
or electric carts[,] patients will be transferred to a regular wheelchair before being
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loaded in the vehicle. The motorized wheelchair or electric cart will be loaded
separately and must be secured to the vehicle during transport.” The Specifications
said nothing, however, about taxi or litter transportation.
During the 1999-2000 contract period, the VA ordered wheelchair transportation
services from MAT and taxi and litter transportation from other providers. The VA did,
however, occasionally ask MAT to provide services for patients requiring transport by
taxicab whenever the normal taxicab provider was unable to provide such services. The
VA never asked MAT to provide transportation for litter patients. MAT did not complain
about the limited scope of the services ordered.
The VA exercised its option to renew the contract with MAT for another year,
through September 30, 2001. During the renewal process, the VA invited questions
from MAT, and MAT posed no questions or objections concerning the scope of the
services ordered. The VA thus continued to order wheelchair services from MAT as it
had in the previous year.
On February 28, 2001, before the end of the 2000-2001 contract year, MAT
requested that the VA increase the contracted trip price because the number of
wheelchair van trips had been less than the contract estimate and, as a result, MAT was
losing revenue. After the contracting officer initially denied MAT’s request, MAT
informed the VA that it would discontinue its services on March 31, 2001, due to a lack
of resources. The VA then agreed to modify the contract trip price and MAT continued
to provide its services. Again, MAT raised no objections concerning the scope of the
services ordered by the VA.
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On April 3, 2003, MAT submitted a claim to the contracting officer arguing that it
was entitled to damages because the VA had breached the 1999-2001 contract by
utilizing other sources for transportation of wheelchair patients and by providing a
negligent estimate of the amount of wheelchair trips that would be required. The
contracting officer did not issue a final decision within sixty days, and thus was deemed
to have denied MAT’s claim under 41 U.S.C. § 605(c)(5). MAT appealed to the Board
which held an evidentiary hearing. For the first time, MAT claimed that the VA breached
the contract by failing to order taxicab and litter transportation from MAT.
The Board found that the contract’s reference to “Handicapped Transportation”
was ambiguous because it was unclear whether “Handicapped Transportation” only
referred to the transportation of wheelchair patients or whether it also included the
taxicab and litter patients. The Board thus looked to the “context” of the contract and
“contemporaneous circumstances” to decipher the intent of the parties. The Board
found that from 1993 through 1996, under the previous contract with the VA, there was
no evidence that MAT ever asserted any right to transport taxi or litter patients during
performance of that contract. Similarly, MAT had not asserted a right to transport taxi or
litter patients under the 1999-2001 contract until the Board proceedings. The Board
also found that MAT’s president admitted that he understood that the contract was for
wheelchair patients and not for taxi or litter patients. Based on these findings, the Board
concluded that MAT had no contractual right to transport taxi or litter patients. MAT
timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(10).
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DISCUSSION
MAT’s primary argument on appeal is that the plain language of the contract
required the VA to utilize MAT to transport all taxi and litter patients as well as
wheelchair patients. See Coast Fed. Bank, FSB v. United States, 323 F.3d 1035, 1038
(Fed. Cir. 2003) (en banc) (“Contract interpretation begins with the language of the
written agreement.”).
We agree with the Board that the term “Handicapped Transportation” is on its
face ambiguous. “Handicapped” is defined as “having a physical or mental disability
that substantially limits activity . . . .” Webster’s Third New International Dictionary of the
English Language Unabridged 93a (2002). On one hand, taxicab patients might be
viewed as falling outside the definition because their activity is not “substantially limited.”
Litter patients, on the other extreme, might fall outside the definition because their
mobility is not substantially limited; rather, they are unable to achieve mobility at all
without assistance.
MAT argues that this ambiguity is resolved by the contract itself, which states
that the contractor will provide transportation of the handicapped “primarily by
wheelchair.” MAT’s argument is that “primarily by wheelchair” implies that the
contractor would primarily transport wheelchair patients but would also transport taxi
and litter patients. While we agree that the contract language implies that the required
transportation services will not be limited to wheelchair patients, there is nothing to
indicate that all taxicab and litter patients were to be transported under the contract.
Significantly, the estimate of the VA’s requirements under the contract and the pricing
for the trips were based entirely on wheelchair transportation. There is no suggestion
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that MAT was unaware of the basis for the estimates or the method of pricing. The
contract states that the contractor is to provide handicapped transportation services “in
accordance with the Specifications . . . .” The Specifications say nothing about the
transportation of taxicab and litter patients. The Specifications deal almost exclusively
with the transportation of wheelchair patients. They also contemplate that the
contractor would transport patients using electric carts. See Appellee’s Apendix at 111
(“When transporting patients using motorized wheelchairs or electric carts . . . .”). Thus
when read in the context of the Specifications, the phrase “primarily by wheelchair”
could have been referring to the transportation of electric cart patients. The phrase
“primarily by wheelchair” therefore does not, as MAT argues, show unequivocally that
taxicab and litter patients were included.
Having found the contract ambiguous, we may appropriately look to extrinsic
evidence to aid in our interpretation of the contract. See City of Tacoma, Dep’t of Pub.
Utils. v. United States, 31 F.3d 1130, 1134 (Fed. Cir. 1994); see also Banknote Corp. of
Am. v. United States, 365 F.3d 1345, 1353 (Fed. Cir. 2004); Uniform Commercial Code
§ 2-208 (2003); Restatement (Second) of Contracts § 202(4) (1981) (course of
performance may be considered).
Here, the parties’ course of performance makes clear that both the VA and MAT
believed that the contract was for wheelchair patient transportation, and did not include
taxi or litter patient transportation. As the Board pointed out, MAT had a previous
contract with the VA from 1993 through 1996 with similar transportation requirements,
and MAT never asserted a right to transport taxi or litter patients under that contract.
Under the successor contract at issue here, MAT performed for one year and never
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complained about the fact that it had not received taxi or litter transportation requests.
When the VA exercised its option to renew and invited questions, MAT did not inquire
about the taxi or litter patients. Indeed, MAT did not even assert its present theory (that
the contract covered taxicab and litter transportation) until briefing before the Board.
There was no testimony that MAT was unaware of the VA’s need for litter or taxi
transportation.
When, as here, the contract language is ambiguous, the parties’ own course of
performance is highly relevant to contract interpretation. See City of Tacoma, Dep’t of
Pub. Utils., 31 F.3d at 1134. In particular:
Where an agreement involves repeated occasions for performance by
either party with knowledge of the nature of the performance and
opportunity for objection to it by the other, any course of performance
accepted or acquiesced in without objection is given great weight in the
interpretation of the agreement.
Restatement (Second) of Contracts § 202(4) (emphasis added); see Uniform
Commercial Code § 2-208 (same).
That the contract was not for taxi and litter patient transportation is further
confirmed by the testimony of MAT’s owner and president (and sole officer), who
explained that he understood that the contract was for special transportation of
wheelchair bound patients and that the contract was not for litter or taxicab patients.
When faced with an ambiguous contract, we “construe its language to effect the parties’
intent at the time they executed the [contract].” Dureiko v. United States, 209 F.3d
1345, 1356-57 (Fed. Cir. 2000); see also King v. Dep’t of Navy, 130 F.3d 1031, 1033
(Fed. Cir. 1997). The parties’ course of conduct and the testimony of MAT’s president
make clear that the parties did not intend that MAT provide taxi and litter transportation
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services under the contract. Based on these circumstances, we agree that MAT did not
have a right under the contract to provide taxi and litter transportation.
CONCLUSION
For the foregoing reasons, the decision below is affirmed.
COSTS
No costs.
AFFIRMED
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