Five years of litigation over a Denver highway job came down to one sentence in a subcontract.
The U.S. Court of Appeals for the Tenth Circuit issued a published opinion on August 14 in AECOM Technical Services, Inc. v. Flatiron | AECOM, LLC, No. 25-1140, affirming judgment for the designer on every claim and counterclaim. Judge Gregory A. Phillips wrote for a panel that also included Judges Hartz and Moritz. His summary of the appellant’s position: “Some of its arguments are procedural, others are substantive, but all lack merit.”
How a $260 million counterclaim became nothing
CDOT solicited express lanes on a 12.5-mile stretch of State Highway 470 south of Denver in 2015. Flatiron Constructors and AECOM Energy & Construction formed a joint venture to bid it, and the JV hired AECOM Technical Services to design roadways and structures. ATS was paid about $730,000 for pre-award design work under a teaming agreement with no liability cap. The post-award subcontract was a roughly $9 million lump sum, and it capped ATS’s liability at about $10 million.
ATS sued in the District of Colorado in 2019 for more than $5 million, mostly at least 27 unpaid potential change orders. The JV counterclaimed for over $260 million.
Two pretrial rulings did the damage. The court dismissed the negligent-misrepresentation counterclaim under Colorado’s economic-loss rule. Then, on summary judgment, it held the subcontract superseded the teaming agreement, which pulled all the pre-award design claims inside the $10 million cap. As Phillips put it, the JV “could sue about ATS’s pre-award conduct, including fraud during the subcontract negotiations, if it did so under the subcontract’s $10 million liability limit.” A July 2023 attempt to add fraud counterclaims came more than three years past the amendment deadline and was denied. “Reopening discovery is not a panacea for prejudice,” the panel wrote.
After roughly three weeks of trial, the jury deliberated about half a day and found for ATS across the board. Judgment came in at $5.259 million compensatory plus interest, with about $4.7 million of it the change orders.
The waiver holding is the sharper lesson
The JV argued ATS never satisfied conditions precedent, because the change orders were never approved by the Design Change Control Board the contract required. The court found the JV waived that argument. It had submitted a change order to CDOT at least six months before the Board was even formed, and kept part of CDOT’s payment.
The opinion also describes the JV “effectively shelving” change orders on the assumption that litigation would sort them out later. A general contractor that routes change orders around its own contractual change-control process, or parks them for a future lawsuit, can forfeit the conditions precedent it later needs to defeat those same claims.
What to take to your next negotiation
A negotiated liability cap plus a standard integration clause extinguished $260 million of exposure and left the designer collecting $5.26 million. No technical defense in five years of litigation did as much work as those two provisions.
For contractors, the mirror-image lesson is that a teaming agreement’s uncapped exposure evaporates the moment a subcontract with an integration clause is signed, unless the subcontract preserves it. If pre-award conduct matters to you, carve it out expressly.
Several figures in trade coverage aren’t in the opinion, including the $204.3 million original CDOT design-build award, growth to $237 million, JV expenditures over $502 million, and a $14.2 million fee award. The Tenth Circuit did not address fees. Design-heavy CMAR renovations like the Eccles Federal Reserve Building program, where discovery risk drove a $600 million budget increase, are exactly where these clauses get tested.