NOT PRECEDENTIAL
                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                  _____________

                                       No. 16-1327
                                      _____________

           PHILADELPHIA WORKFORCE DEVELOPMENT CORPORATION

                                              v.

                                  KRA CORPORATION,
                                                  Appellant
                                   _______________

                     On Appeal from the United States District Court
                        for the Eastern District of Pennsylvania
                                (D.C. No. 2-09-cv-05261)
                        District Judge: Hon. Wendy Beetlestone
                                    _______________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                  November 3, 2016

        Before: JORDAN, GREENAWAY, JR., and RENDELL, Circuit Judges.

                                (Filed: December 13, 2016)
                                     _______________

                                        OPINION
                                     _______________

JORDAN, Circuit Judge.

       This appeal involves a contract dispute between KRA Corporation, a for-profit

workforce development services management company, and Philadelphia Workforce

       
        This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
Development Corporation (“PWDC”), a non-profit entity responsible for overseeing

federal and state programs to help unemployed or underemployed Philadelphians develop

job skills. PWDC contracted with KRA for the latter to manage some of those programs.

After an audit by the Commonwealth of Pennsylvania found that PWDC had overpaid

KRA by over two million dollars, PWDC refused to pay KRA for certain invoiced but

not-yet-paid work. PWDC sued to recover the money that it claims it overpaid KRA,

while KRA sought to compel PWDC to pay the money it claims is still owed.

       KRA argues that the contract allowed it to keep as profit all of the payments it

received upon meeting certain performance benchmarks, regardless of how much money

it expended to administer the programs. PWDC urges, to the contrary, that the contract

cabins profit and requires KRA to return most of the revenue that exceeded expenditures.

The District Court determined that the contract was ambiguous and left interpretation of

it to the jury. The jury returned a verdict for PWDC.

       On appeal, KRA challenges the determination that the contract was ambiguous. It

also takes issue with several evidentiary rulings, and contends that there was insufficient

evidence to support PWDC’s decision to withhold payments for certain indirect costs

incurred by KRA. We conclude that the contract was ambiguous, that none of the

evidentiary rulings amount to reversible error, and that the evidence was sufficient to

allow the jury to accept PWDC’s indirect cost calculations. We will therefore affirm.




                                             2
I.     BACKGROUND

       A.       Factual Background

       PWDC acts as the fiscal agent for the City of Philadelphia in administering

services for the unemployed or underemployed,1 including a variety of workforce

development and skills training programs. In 2005, PWDC began contracting with both

for-profit and non-profit organizations to provide personalized career guidance to city

residents and to operate Employment Advancement and Retention Network Centers

(“EARN Centers”) where Philadelphians can receive assistance in finding and retaining

employment.

       In such a contract entered in 2007, KRA agreed to operate two EARN Centers for

the 2008 fiscal year. 2 The first was in Germantown and the second in West Philadelphia

on or near Delancey Street. During FY 2009, KRA continued to operate the two centers

and also began offering Job Specific Skills Training (“JSST”) programs for dental

assistants and phlebotomists at the Delancey location.

       PWDC utilized three types of contracts to govern its relationship with contractors

like KRA. The first was a cost-reimbursement model in which the contractor was

reimbursed for direct and indirect costs, including profit categorized as an administrative

expense. The second provided for performance-based payments requiring a contractor to


       1
        In 2012, PWDC merged with another entity, the Philadelphia Workforce
Investment Board to form a new entity, Philadelphia Works, Inc. That merger does not
impact this appeal.
       2
           Fiscal Years run from July 1 of one year through June 30 of the next.

                                              3
meet certain benchmarks before being paid. The third type of contract, the one that

governed the relationship between PWDC and KRA, was a hybrid that featured both

cost-reimbursement and performance-based payments. Under hybrid contracts in 2008

and 2009, KRA was immediately reimbursed an amount up to a fixed percentage of the

cost to run each center. It was also fully reimbursed for money expended on direct client

services. KRA received additional payments as it achieved predetermined performance

benchmarks.

      During FY 2008, the relationship proceeded according to the terms of the contract.

KRA ran the EARN centers, invoiced PWDC, and received payment in a timely fashion.

It is undisputed that KRA met its performance benchmarks. But the relationship changed

when, in May of 2009, pursuant to the terms of the contract, the Bureau of Financial

Operations of the Commonwealth of Pennsylvania audited PWDC’s payments to KRA.

The Commonwealth concluded that KRA had inflated its reported expenses and therefore

had been paid 2.2 million dollars ($2,219,060) more than it was owed. Consequently, in

June 2009, PWDC suspended payments to KRA and launched an internal audit of

pending invoices. The internal audit concluded that 1.9 million dollars ($1,932,991.08)

of invoiced payments should not be paid. Of particular relevance to this appeal, the audit

found that KRA failed to properly document administrative costs.

      Because of a budget impasse in Pennsylvania in 2009, PWDC was unable to fully

negotiate new contracts with the entities running its EARN Centers, and so it authorized

those entities to continue operating the centers on a cost-reimbursement basis. KRA thus

kept operating the Germantown and Delancey EARN Centers and JSST programs for a

                                            4
while. After PWDC withheld all payments from KRA because of the disputed FY 2008

overpayments, KRA stopped operating the EARN centers in October 2009, which fell

within FY 2010.

       That same month, PWDC sued KRA seeking damages for breach of contract,

replevin, and conversion, arguing that KRA was overpaid and failed to return the

overpayment. KRA filed counterclaims seeking payments that PWDC withheld. PWDC

conceded that KRA was owed nearly sixty thousand dollars ($59,190) from FY 2009 and

nearly two million dollars ($1,998,719) for its work during FY 2010. But once those

amounts were deducted from the amount it said it had overpaid KRA, PWDC demanded

one hundred and sixty thousand dollars ($161,151) from KRA.

       B.     Procedural Background

       At trial, each side presented sharply contrasting theories of contract interpretation.

The central dispute was over whether the FY 2008 contract required performance-based

payments to be somehow linked to expenditures. KRA argued that the contract

unambiguously entitled KRA to full payment for all performance benchmarks achieved.

PWDC, on the other hand, argued that performance-based payments in excess of

expenditures constituted excess profit that had to be returned to PWDC. KRA moved for

summary judgment, which was denied, and then made a motion in limine before the start

of trial seeking to exclude parol evidence regarding the proper interpretation of the

contract. The District Court rejected KRA’s argument and concluded that the contract

was ambiguous. As a result, the Court allowed extrinsic evidence to be presented to the

jury. Over KRA’s objection, the jury was allowed to consider the Commonwealth’s audit

                                              5
report and so-called Subcontractor Expenditure Summary forms completed by KRA at

the end of FY 2008, which reported that KRA did not have excess program income to

return to PWDC.

       KRA was not only on the losing end of rulings that allowed evidence in, it also

lost on rulings that kept evidence out. The Court excluded certain documents produced

by KRA in response to PWDC’s audit. Those documents were offered to justify some of

the payments that had been disallowed by PWDC. The Court also excluded, as

irrelevant, an e-mail from PWDC’s former President to a Commonwealth official. The

email discussed changes to PWDC’s budget proposal for FY 2010, which would cap “the

amount that EARN Centers can earn for each performance benchmark[.]” (App. at

2586.) According to the email, the changes were “absolutely necessary” since “[l]ast

year most centers earned above the contract amount in certain performance benchmarks,

which ‘busted’ the budget but did not get … the desired results[.]” (Id.)

       At trial, PWDC and KRA continued to dispute the propriety of PWDC’s

disallowance of certain payments sought by KRA for FY 2009. KRA claimed that

PWDC did not have evidence to support those disallowances. But PWDC presented its

audit report and testimony from those who had prepared it.

       After hearing extensive testimony, the jury ruled in favor of PWDC. It adopted

PWDC’s damage estimates in full and concluded that KRA owed PWDC $161,151.

KRA filed a motion for judgment as a matter of law or for a new trial. The Court denied

the motion, and KRA filed this timely appeal.


                                            6
II.    DISCUSSION3

       KRA raises three challenges before us. First, it argues that the District Court

improperly concluded that the FY 2008 contract was ambiguous. Because KRA urges

that the contract was unambiguous, it likewise believes that parol evidence should not

have been admissible and that the jury should not have been permitted to consider

PWDC’s interpretation of the contract. Second, KRA claims that the District Court erred

when it admitted into evidence certain documents introduced by PWDC and excluded

others introduced by KRA. Finally, KRA challenges specific payment disallowances for

indirect costs incurred during FY 2009. We address each of those arguments in turn.

       A.     Contract Ambiguity and Parole Evidence

       Pennsylvania law, which governs the interpretation of the contract, permits

extrinsic evidence “where a term in the parties’ contract is ambiguous[.]” Yocca v.

Pittsburgh Steelers Sports, Inc., 

, 437 (Pa. 2004). “Determining whether a

contract is ambiguous is a legal question, and our review is plenary.” Pacitti v. Macy’s,

, 773 (3d Cir. 1999). A contract is ambiguous when “it is reasonably or

fairly susceptible of different constructions and is capable of being understood in more

senses than one and is obscure in meaning through indefiniteness of expression or has a

double meaning.” Duquesne Light Co. v. Westinghouse Elec. Corp., 

, 614

(3d Cir. 1995) (quoting Samuel Rappaport Family P’ship v. Meridian Bank, 

,

21-22 (Pa. Super. Ct. 1995)).

       3
        The District Court had jurisdiction under 28 U.S.C. §1332. We have jurisdiction
pursuant to 28 U.S.C. § 1291.

                                             7
       If a contract is ambiguous, then “a decision as to which of the competing

interpretations of the contract is the correct one is reserved for the factfinder, who would

examine the content of the extrinsic evidence (along with all the other evidence) in order

to make this determination.” Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 

, 94 (3d Cir. 2001).

       We agree with the District Court that the FY 2008 contract between PWDC and

KRA was ambiguous. Ambiguity arises from three parts of the contract.

       To begin with, the definition section of the contract defines two closely related key

terms – “program income”4 and “profit”5 – in an internally inconsistent fashion.



       4
          Whether KRA’s revenue is considered program income is perhaps the most
bitterly contested issue in this case. A portion of the contract explicitly states that “[a]ll
program income … realized in operating a program provided for under this agreement …
shall be reported and returned to PWDC.” (App. at 1066.) Program income is defined as
“income” derived from a variety of sources such as interest, rental and service fees, and
the sale of commodities. KRA argues that, as a commercial organization, its revenue is
not considered program income and need not be returned to PWDC. (See App. at 759
(defining program income, in part, as “revenue in excess of costs earned by organizations
other than those that are commercial”).) PWDC, in contrast, argues that a more general
clause applies to all payments including those earned by for-profit organizations such as
KRA. (See 

income in performance-based contracts to “include[]
the difference between the payments received for completing the performance
benchmarks and the actual expenses incurred in operating the program during the
program year”).)
       5
         KRA and PWDC specifically argue over whether the contract puts any limits on
KRA’s ability to earn profit. Profit is defined as “an amount in excess of the cost
necessary to operate a program.” (App. at 759-60.) PWDC argues that the contract only
allows profit under a cost-reimbursement contract. (See 

allowable under a
cost-reimbursement agreement to the extent that it is determined reasonable during
contract negotiations.”).) Alternatively, it argues that the contract cabins profit to no
more than 10% of the reimbursable costs. (See 

“the combination of profit
and administrative cost must not exceed 10%”).) KRA on the other hand argues that the
                                              8
Consequently, KRA and PWDC were both able to offer plausible interpretations of those

terms.

         Next, the method of payment section, the portion of the contract that describes the

process KRA used to invoice costs and record expenses, is ambiguous as to whether or

not KRA was required to maintain records of expenses incurred in order to receive

performance-based payments. KRA was “responsible for maintaining adequate

books/records to document the costs incurred to execute programming under th[e]

contract.” (App. at 764.) That contractual language is consistent with PWDC’s position.

On the other hand, the same section lists supporting documentation that a party may

provide when seeking reimbursement under a performance-based contract, but the list

conspicuously omits documentation regarding expenditures. (See App. at 764 (listing

supporting documentation as including “copies of enrollment reports, attendance records,

employment verification forms, pay stubs and/or copy of completion certificates or

paperwork.”).)

         Finally, the budget, which is contained in Rider A and incorporated by reference

into the contract, offers some support for KRA’s position but remains open to PWDC’s

reading as well. It sets out all of the expected payments under the contract, including the

total “Prospective Performance Based-Payments” for which KRA could qualify. (App. at

796.) That amount is listed without any reference to cost, and the budget only mentions

that KRA would be subject to a quarterly performance review to determine whether KRA

contract is silent as to profit under hybrid contracts and that therefore such profit is
permitted without limits.

                                               9
“is meeting the performance goals” set out in the contract. (App. at 798.) KRA relies

heavily on the absence of any language linking performance-based payments to actual

expenses. PWDC, however, rightly points out that nothing in the budget is incompatible

with PWDC’s reading or forecloses the possibility of requiring the return of program

income in excess of costs.

       KRA argues that those ambiguities should be resolved in its favor due to policy

considerations. Specifically, it claims that, since the risk of loss for failing to meet

performance-based metrics would be too great without a commensurate opportunity to

earn unconstrained profit, no for-profit entity would enter into a contract under the terms

described by PWDC. But Pennsylvania law instructs that “ambiguous writings are

interpreted by the finder of fact.” Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 

, 469 (Pa. 2006). Here, the District Court rightly concluded that there was

ambiguity. The jury then heard the parties’ positions and decided against KRA.

“[V]iewing all the evidence which ha[d] been tendered and should have been admitted in

the light most favorable to the party opposing the motion,” we cannot say that “no jury

could decide in [PWDC’s] favor.” Walter v. Holiday Inns, Inc., 

, 1238 (3d

Cir. 1993) (citation omitted).

       B.     The District Court’s Evidentiary Rulings

       KRA challenges several of the District Court’s evidentiary rulings. We review

decisions to admit or exclude evidence for abuse of discretion. See United States v.

Furst, 

, 571 (3d Cir. 1989).



                                              10
              1.     Inclusion of Evidence

       KRA challenges the admission of the Commonwealth’s audit, arguing that it was

inadmissible hearsay. The District Court agreed that the audit was hearsay but concluded

that it was still admissible under the hearsay exception for regularly conducted business

activities. FED. R. EVID. 803(6)(B). Because there was evidence presented at trial that

the audit was made and kept in the ordinary course of business, the Court was within the

bounds of its discretion in ruling that the audit could be admitted.

       KRA also argues that the audit and the Subcontractor Expenditure Summary forms

were irrelevant. We disagree. Relevance is a low bar and those documents undoubtedly

clear it. See FED R. EVID. 401. The audit supported PWDC’s damage calculations. The

forms showed that PWDC’s contemporaneous understanding of the contract term

“program income” was fully compatible with its theory at the time of trial, so the forms

were capable of assisting the jury in its effort to understand the contract. The Court did

not abuse its discretion by admitting the documents.

              2.     Exclusion of Evidence

       KRA also challenges the exclusion of evidence it offered. The documents it

submitted to try to reconcile its claims with expenditures were not documents “kept in the

course of a regularly conducted activity of a business,” nor was producing those

documents “a regular practice” of KRA. FED. R. EVID. 803(6)(B), (C). They were

therefore properly excluded as inadmissible hearsay.

       The District Court’s decision to exclude the email authored by PWDC’s President

is another matter. The Court dismissed that email as irrelevant, but it is hard to see how

                                             11
that could be so since it bore directly on how the budget was affected by contractual

benchmarks. It was written soon after the end of FY 2009 and discussed how contracts in

that year for EARN centers had worked out financially. PWDC’s President’s statement

that many of the EARN centers “earned above the contract amount in certain

performance benchmarks” and that those payments “‘busted’ the budget” could have

given the jury a basis for accepting KRA’s interpretation of the contract. (App. at 2586.)

If performance payments had “busted” the budget, then the jury could have concluded

that PWDC had not cabined profit to 10% and had instead allowed contractors to keep all

of their profits.

       But even if the District Court should have allowed the e-mail into evidence, the

error was harmless. It is highly likely that the admission of the e-mail would not have

altered the jury verdict. See McQueeney v. Wilmington Trust Co., 

, 917 (3d

Cir. 1985) (holding that nonconstitutional errors in civil suits “are harmless only if it is

highly probable that the errors did not affect the outcome of the case”). While the e-mail

could have supported KRA’s interpretation of the contract, it also could be interpreted in

harmony with PWDC’s interpretation. Testimony at trial suggested that the budget was

“busted” as a result of the mandate that an EARN center accept all “clients that are

referred to that EARN Center.” (App. at 512.) In light of the economic downturn, there

was greater demand for the services of the EARN Center and therefore PWDC incurred

unusually high expenses. (App. at 512.) And, overall, PWDC’s case was strong. Even

some of the witnesses called by KRA supported PWDC’s interpretation of the contract.

Indeed, KRA’s own internal audit supported PWDC’s position that excess payments

                                              12
needed to be returned to PWDC. (See App. at 2526 (noting that KRA “does not maintain

any equity in the contract and any excess of cash received from Philadelphia Workforce

Development Corporation over final expenditures is due back to Philadelphia Workforce

Development Corporation”).)

       Given the ease with which PWDC could have drawn KRA’s interpretation of the

e-mail into question, and the strength of the evidence against KRA, we conclude that it is

highly probable that the exclusion of the e-mail did not affect the outcome of the case.

.

       C.     Indirect Cost Calculations

       The final issue before us concerns PWDC’s decision to disallow payment of

administrative costs that KRA incurred during FY 2009.6 The budget filled out at the

start of the fiscal year stated that KRA could be reimbursed for approximately one

million dollars in administrative costs and other indirect costs ($490,472 for the Delancey

EARN Center and $462,030 for the Germantown EARN Center). In the budget, those

costs were broken down into categories (salaries, fringe benefits, operating expenses,

equipment, supplies, indirect costs, other, and profit).



       6
         In its brief, KRA also seems to broadly challenge all of PWDC’s FY 2009
disallowances. But the administrative and indirect cost disallowances are the only ones
that KRA points to with any specificity. We therefore find that KRA has failed to
preserve its arguments regarding PWDC’s other disallowances. See Kost v. Kozakiewicz,

, 182 (3d Cir. 1993) (recognizing that it is well settled “that casual mention of
an issue in a brief is cursory treatment insufficient to preserve the issue on appeal.”
(citing Simmons v. City of Philadelphia, 

, 1066 (3d Cir. 1991))).


                                             13
       PWDC’s internal audit found that KRA failed to adequately account for and

categorize its administrative costs and instead lumped all of its administrative costs into

the general category of “indirect costs.” PWDC therefore disallowed all administrative

costs for FY 2009. KRA, on the other hand, argues that it did not need to break out its

administrative costs into categories because it had an agreement with the federal

Department of Health and Human Services setting a fixed rate for the reimbursement of

indirect costs, and so it could properly place all of its administrative costs into that

general category.

       KRA and PWDC both make plausible arguments based on contradictory parts of

the FY 2009 budget. In the budget’s breakdown of administrative costs by category,

KRA is not entitled to reimbursement for indirect costs. A few pages later, however, the

budget lists a reimbursement rate for indirect costs and a large “base” value for

reimbursable indirect costs. (App. at 1333.) Those two sections of the budget seem to

contradict each other.

       Even though KRA could point to language supporting its argument, it did not

otherwise offer evidence in support of its theory. The section that KRA relies on requires

that “[a] copy of the current negotiated rate, supporting the base and rate must

accompany the proposal.” (App. at 1333.) No such negotiated rate accompanied the

budget. And, at trial, KRA failed to produce the negotiated rate or any evidence that it

had a fixed rate agreement with the Department of Health and Human Services. In

contrast, PWDC put forth witnesses who testified that PWDC had conducted a line-by-

line audit of all of KRA’s claimed expenses and that the amounts that PWDC had

                                              14
disallowed were consistent with the audit findings. Because of KRA’s failure to

substantiate its claims, the jury was free to accept PWDC’s evidence and conclude that

KRA had erroneously lumped all of its administrative costs into the category of indirect

costs.

III.     CONCLUSION

         For the foregoing reasons, we will affirm.




                                              15