intention of the parties and either the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary or the circumstances indicate that the promisee intended to give the beneficiary the benefit of the promise. Restatement (Second) of Contracts § 302 (1981); see also III E.A. Farnsworth, Farnsworth on Contracts § 10.3 at 13 (1990). ECF does not satisfy either part of the test for an intended beneficiary.
It was not the intention of the parties in requiring the contractual provisions of 40 C.F.R. § 33.1030 to be included in all procurement contracts to allow additional claims by the contractor. "These regulations appear to be designed primarily to protect the public treasury from excessive expenditures, rather than to protect private contractors whose agreements contain provisions not as generous as those available in the regulations." J.A. Jones Construction Co. v. City of New York, 753 F. Supp. 497, 502 (S.D.N.Y. 1990).
Allowing a contractor to recover damages based on provisions not expressly included in the contract would not serve to effectuate the intent of the parties to safeguard the public treasury from excessive expenditures.
ECF does not meet the second part of the test for an intended beneficiary either. The performance of the grant conditions would not satisfy an obligation by the Village to pay ECF money. The obligation to pay the equitable adjustment (if such an obligation exists) arose after the grant to the Village. Thus, it cannot be said that the Village received the EPA grant to pay a debt owed to ECF.
Nor did the EPA and the Village intend to give ECF the benefit of the grant. The purpose of the grant was "to require and to assist the development and implementation of waste treatment management plan and practices. . . ." 33 U.S.C. § 1281(a). The Village did not receive the grant to provide more business for contractors such as ECF.
ECF is not an intended beneficiary of the EPA grant. Therefore, it could not recover as a third party beneficiary of the grant contract. Since the obligation to include the provisions of 40 C.F.R. § 33.1030 is the result of the contract between the EPA and the Village, ECF cannot claim that those provisions are implicitly incorporated in its contract with the Village.
Even if ECF were the intended beneficiary of the clauses relating to equitable adjustments, the Court would still be compelled to dismiss Count I. Under the EPA regulations, the Village was obliged to include the model subagreement provisions "or their equivalent" in each contract governed by the regulations. 40 C.F.R. § 33.1030. Under the interim rules, change orders resulting in equitable adjustments to the contract price were to be either written or oral. The contract allows only written adjustments. Requiring a written change order is the equivalent of requiring a written or oral change order, since the interim rules allow written orders.
Allowing a grant recipient some discretion in the drafting of the subagreement provisions is the crucial distinction between these regulations and the regulations at issue in Lisbon Contractors, Inc. v. Miami-Dade Water and Sewer Authority, 537 F. Supp. 175 (S.D. Fla. 1982). In Lisbon Contractors, the recipient of EPA funding, WASA, filed a third-party claim against the engineering firm which performed soil quality tests. The contract with the engineering firm was governed by regulations located in Part 35 of 40 Code of Federal Regulations. Each consulting engineering contract under that part "must include the provisions set forth in Appendix C-1 to this subpart." 40 C.F.R. § 35-937-9(c). The EPA required that the regulations be included word-for-word in contracts under Part 35. Under Part 33, the recipient of EPA grants is given some discretion to change the wording of the subagreement provisions. Even if ECF is an intended beneficiary of the regulations, the intended benefit is limited to the model subagreement provisions "or their equivalent". ECF has received the full intended benefit, and cannot claim it is entitled to more.
To the extent that Lisbon Contractors holds that the EPA regulations are included in every contract made under an EPA grant, it is unpersuasive.
The discussion of this issue in Lisbon Contractors is brief:
In addition we find that WASA relies specifically upon a contractual right of recovery against the third party defendant which is found in the United States Environmental Protection Agency Assisted Contract in Required Provision 2 entitled, "Responsibility of the Engineer" (Appendix C-1, 40 CFR, Part 35, Subpart E). WASA alleges that this provision "became part of the Engineer's Contract by virtue of the requirements of 40 CFR § 35.937-9 and paragraph D of Appendix D to 40 CFR Part 35, Subpart E." The applicable section of the CFR, Required Provisions, Construction Contracts (Appendix C-1) states that in the case of breaches, they may be decided "in a court of competent jurisdiction". We find that WASA as third party plaintiff does state a cause of action under the provisions of the cited Code of Federal Regulations, which is applicable to WASA as an assisted governmental entity, and therefore the Motion to Dismiss the Third Party Complaint is denied.
Lisbon Contractors, 537 F. Supp. at 178.
It is impossible to determine what issues were presented to the district court for decision in Lisbon Contractors. It may very well be that the engineering firm did not contest that the regulations were incorporated in its contract. Support for this possibility is found in the reasoning of Lisbon Contractors. The court based its ruling that WASA stated a cause of action on a regulations which allowed a breach of the contract to be decided in a court of competent jurisdiction. This indicates that the engineering firm was attempting to argue that WASA's only remedies were administrative. Moreover, there is no connection between allowing a breach of contract to be decided in a court of competent jurisdiction and the conclusion that regulations are automatically included in a contract. Lisbon Contractors is simply unpersuasive authority for ECF's position.
Having determined that Count I fails to state a cause of action, the Court must now consider whether it will exercise pendent jurisdiction over the remaining, purely state law claims. The exercise of federal jurisdiction over purely state law claims in this instance is not advisable, and the Court in its discretion refuses to exercise pendent jurisdiction over these claims. See Leahy v. Board of Trustees of Community College District No. 508, 912 F.2d 917, 923 (7th Cir. 1990) (district acts well within its discretion in dismissing state law claims after dismissing federal claim). The entire complaint, therefore, must be dismissed.
Defendant's motion (Document 22) is GRANTED and the complaint is DISMISSED. All other pending motions are DENIED AS MOOT.
IT IS SO ORDERED.