Free Reply to Response to Motion - District Court of Federal Claims - federal

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 1 of 8

IN THE UNITED STATES COURT OF FEDERAL CLAIMS YATES INTERNATIONAL, LLC, Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 06-157C (Judge Allegra)

DEFENDANT'S REPLY TO PLAINTIFF'S RESPONSE TO DEFENDANT'S MOTION FOR LEAVE TO AMEND ITS ANSWER TO THE COMPLAINT Pursuant to Rules 7.1(b) and 6(e) of the Rules of the Court of Federal Claims ("RCFC"), we respectfully file this reply to plaintiff's response to our motion for leave to amend our answer to the complaint. In our motion, we requested leave to file an amended answer to assert affirmative defenses and counterclaims. We explained

that the filing of our proposed counterclaims was timely because the contracting officer issued a final decision on June 29, 2006, after we had filed an answer to plaintiff's complaint, on June 14, 2006. We also explained that we asserted affirmative

defenses in our proposed amended answer because the documents contained in the contract files support the defenses of accord and satisfaction and waiver. Because both the counterclaims and

the affirmative defenses are asserted early in this litigation, we did not unreasonably delay in asserting them.

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 2 of 8

In its response, plaintiff objects to our affirmative defenses and Counterclaims III-VI, because they allegedly do not arise from the contracting officer's June 29, 2006 final decision, which was contrary to plaintiff's counsel's understanding when he acquiesced to our motion to file an amend answer. When speaking to plaintiff's counsel regarding the

proposed amended answer, undersigned counsel for defendant did not state that the affirmative defenses arose from or were based upon the June 29, 2006 final decision. Although counsel for

defendant informed plaintiff's counsel that the contracting officer had issued a final decision, of which plaintiff's counsel was already aware, counsel for defendant did not state that the affirmative defenses were based upon that decision. Moreover, contrary to plaintiff's assertion, all of the counterclaims are based upon the contracting officer's final decision. The events articulated in the final decision, and upon

which it is based, consist of (1) Yates' abandonment of the contracts, (2) Yates' leaving Government Furnished Property unsecured at its facility, (3) Yates' leaving debris scattered around the facility, and (4) missing cylinder valves for 2,627 of the abandoned cylinders. See Ex. A to Defendant's proposed As we explained in our motion

Amended Answer and Counterclaim.

to file an amended answer, these events support counterclaims for both reprocurement costs based upon the Federal Acquisition

2

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 3 of 8

Regulations, as well as common law breach of contract damages, including conversion. In fact, the final decision specifically

stated that because of the above, Yates was liable to the Government for "common law breach of contract." Id. at 2.

Plaintiff "questions the necessity of the defendant's proposed [amended answer] because the issue arises directly in the plaintiff's new appeal." Pl. Res. at 3.1 It also states

that "[t]he defendant could have raised the remaining breach of contract claims in its original answer, but did not." Id.

Plaintiff ignores the fact that the counterclaims we propose to file are compulsory counterclaims because they arise out of the same transaction that is the subject matter of Yates's complaint. RCFC 13(a). Because the proposed counterclaims are compulsory

under RCFC 13(a), they may be lost to the Government if not raised in this proceeding. Furthermore, the defendant's

counterclaims are appropriately raised together in a single, amended answer based upon the contracting officer's final decision setting forth plaintiff's liability under the Default clause of the contract. See Mega Constr. Co., Inc. v. United

States, 29 Fed. Cl. 396, 486 (1993)(termination for default clause reserves to defendant all remedies provided by law, i.e., damages for breach of contract, in addition to its contractual

"Pl. Res. at " refers to the referenced page of plaintiff's response to our motion to file an amended answer. 3

1

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 4 of 8

remedies). "[L]eave to amend should be freely permitted absent sufficient explicit reasons indicating that it should be denied." State of Alaska v. United States, 15 Cl. Ct. 276, 279 (1988)(citing Hess v. United States, 210 Ct. Cl. 483, 537 F.2d 457, 461 (1967)). In considering a motion to amend a pleading

pursuant to RCFC 15, "[t]he two factors most commonly taken into account are prejudice and delay." Tyger Constr. Co. v. United

States, 28 Fed. Cl. 35, 54 (1993) (citing Tenneco Resins, Inc. v. Reeves Bros., Inc., 752 F.2d 630, 634 (Fed. Cir. 1985)). In

this regard, this Court has recognized that the purpose of Rule 8(c), which requires affirmative defenses to be set forth in responsive pleadings, "is simply to guarantee that the opposing party has notice of any additional issue that may be raised at trial so that a party is prepared to properly litigate it." Al-Kurdi v. United States, 25 Cl. Ct. 599, 604 (quoting Hassan v. United States Postal Service, 842 F.2d 260, 263 (11th Cir.1988). Thus, where a plaintiff can "'ably and thoroughly

respond'" to issues raised in an proposed amended pleading, leave to amend will be freely granted. See Al-Kurdi, 25 Cl. Ct. at 604

(quoting Cities Service Helex, Inc. v. United States, 211 Ct. Cl. 222, 234, n. 14, 543 F.2d 1306 (1976)).

4

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 5 of 8

Yates asserts that it would be prejudiced by "undue delay" if the Court were to grant our motion. Yates also asserts that

because we possessed information relating to the affirmative defenses before filing the amended answer, the motion to file the amended answer should be denied. Yates, however, also possessed

information upon which the affirmative defenses and Counterclaims III-VI are based, before we sought leave to amend our answer. Thus, Yates would not be prejudiced by the filing of our amended answer. Moreover, because the parties have not begun discovery

in this case, Yates will have sufficient opportunity to inquire about and defend against the allegations contained in our proposed amended answer. Accordingly, Yates' assertions of

prejudice and undue delay are not well-founded, and in no way warrant denial of leave to amend. See, e.g., Tyger Constr., 28 Fed. Cl. at 54 (granting leave to amend answer where case was "still in its nascent stage" and defendant's delay did not rise to "the egregious level found in cases where courts have refused leave to amend," i.e., one month after trial) (citing Hidell v. Int'l Diversified Invs., 520 F.2d 529 (7th Cir.1975)). Finally, regarding Yates' statement that the Court ordered that there would be no further enlargements of time to file an answer to its complaint, we assert that we complied with that order and filed our answer on June 14, 2006. was subsequently issued on June 29, 2006. 5 The final decision

Thus, pursuant to RCFC

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 6 of 8

13(a), we appropriately sought leave to file a compulsory counterclaim. For the reasons stated in our motion, we also

sought leave to include two affirmative defenses in our amended answer. A motion for leave to amend an answer should be granted

absent "any apparent or declared reason, such as undue delay, bad faith or dilatory motive on the part of the movant . . . ." Foman v. Davis, 371 U.S. 178, 182 (1962). Our request to amend

our answer is not motivated by any of these reasons. Therefore, because we did not unreasonably delay in the filing of our motion, and Yates is not prejudiced by the proposed amended answer, the Court should grant our request to amend our answer to assert affirmative defenses and counterclaims. Foman,

371 U.S. at 182; accord State of Alaska v. United States, 15 Cl. Ct. 276, 279 (1988); Hess v. United States, 210 Ct. Cl. 483, 537 F.2d 457, 461 (1967). CONCLUSION For the reasons stated above, we respectfully request that the Court grant leave to file our amended answer.

6

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 7 of 8

Respectfully submitted, PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director s/ Brian M. Simkin BRIAN M. SIMKIN Assistant Director s/ Lauren S. Moore LAUREN S. MOORE Attorney DONALD S. TRACY Commercial Litigation Branch Chief Trial Attorney Civil Division Office of Counsel Department of Justice Defense Supply Center Richmond 1100 L Street, N.W. 8000 Jefferson Davis Highway Attn: Classification Unit Richmond, VA 23297-5701 8th Floor Washington, D.C. 20530 Tele: (202) 307-6288 Fax: (202) 514-8640 Attorneys for Defendant AUGUST 9, 2006 OF COUNSEL:

7

Case 1:06-cv-00157-FMA

Document 12

Filed 08/09/2006

Page 8 of 8

CERTIFICATE OF ELECTRONIC FILING I hereby certify that on the 9th day of August, 2006, a copy of the foregoing "DEFENDANT'S REPLY TO PLAINTIFF'S RESPONSE TO DEFENDANT'S MOTION FOR LEAVE TO AMEND ITS ANSWER TO THE COMPLAINT" was filed electronically. I understand that notice of

this filing will be sent to all parties by operation of the Court's electronic filing system, and that the parties may access this filing through the Court's system. /s/ Lauren S. Moore