Free Motion to Dismiss - Rule 12(b)(1) - District Court of Federal Claims - federal

Case 1:05-cv-00458-MCW

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS OK'S CASCADE COMPANY, Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 05-458C (Judge Williams)

DEFENDANT'S MOTION TO DISMISS Pursuant to RCFC 12(b)(1), the United States respectfully requests that the Court dismiss this case for lack of jurisdiction. In support of this motion, we rely upon the pleadings, the following memorandum of law, and the attached appendix. DEFENDANT'S MEMORANDUM OF LAW STATEMENT OF THE ISSUE Whether this Court lacks jurisdiction to entertain the complaint because OK's failed to submit certified claims to a contracting officer, as required by the Contract Disputes Act of 1978 (41 U.S.C. §§ 601-613). STATEMENT OF THE CASE I. Nature of The Case This case arises pursuant to the Contract Disputes Act ("CDA") of 1978 (41 U.S.C. §§ 601-613). Plaintiff, OK's Cascade Company ("OK's") alleges that the United States Department of Agriculture, Forest Service, National Interagency Fire Center ("NIFC") breached its contract with OK's Cascade and abused its discretion when it refused to submit payment to OK's in the amount of $92,883.90, an amount OK's alleges was awarded to it by a final contracting officer's decision. II. Statement of Facts In June 2003, NIFC entered into a requirements-type contract, Contract Number 53024B-9-2056, with OK's for the provision of meals to Government firefighting crews.

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Complaint ("Compl.") at ¶4. The contract obligated the NIFC to place meal orders through its National Interagency Coordination Center ("NICC" or "the dispatch center") with OK's according to the following procedure: The Government has contracts with several firms for Mobile Food Services and will utilize the Contractor located at the Designated Dispatch Point closest to the Incident as determined using the Rand McNally Road Atlas© or the latest version of Microsoft Expedia Streets & Trips©, provided that the equipment meets the Incident's needs and that required time frames can be met. . . . . Contract, § C.2.1, App. at 89. The contract addressed order cancellations as follows: A Mobile Food Service Unit may be canceled at any time prior to any meals being served or released at any time after serving has begun. Contract, § C.2.2, App. at 91. Notice of cancellation [of a Mobile Food Service Unit] will be provided to the Contractor by the NICC located at NIFC or AICC. Contract, § C.2.2.1, App. at 91. In the event an order is cancelled or reassigned before any meals are served, the Contractor will be paid for the number of meals ordered for the first meal plus mileage, if applicable. Contract, § G.2.2.1, App. at 126. On the morning of July 5, 2003, the NIFC needed a mobile food service unit to report to the Encebado Fire in Taos, New Mexico. Compl. at ¶11. At the time, OK's had a unit (K-13) in Albuquerque, New Mexico, about 130 miles from Taos, which was en route back from another fire to its Designated Dispatch Point ("DDP") in Fresno, California. Compl. at ¶¶ 7, 9; Appendix ("App.") at 1. At 8:54 a.m. on July 5, 2003, the dispatch center faxed OK's a Food Service Request, asking it to report to the Encebado Fire. App. at 7. For the first meal, the NIFC ordered 300 sack lunches to be provided by 12:00 p.m. that day. Id. OK's called the dispatch center and said it would not have time to mobilize its equipment and set up in time for the 12:00 p.m. lunch order. Compl. at ¶12. OK's alleges that it told a dispatcher the earliest order it could fill was 2

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dinner at 7:00 p.m. on July 5, 2003, and the NIFC agreed to have OK's fill this order. Id. OK's records, however, indicated that they would complete initial set-up between 7:30 and 9:00 p.m. App. at 8. Thus, OK's could not have served dinner on July 5, 2003, because they would not have begun preparing meals until 9:00 p.m. At approximately 10:00 a.m. on July 5, 2003, dispatcher Richard Bates ("Catfish") cancelled the order with OK's and placed an order with Houston's Trails End Catering ("Houston's"), because he realized OK's K-13 unit was not at its DDP. App. at 1; Compl. at ¶15. Under contract clause C.2.1, the NIFC decided to use the contractor "located at the Designated Dispatch Point closest to the Incident," which was Houston's, not OK's. Id. Houston's catered the Encebado Fire from July 6, 2003 through July 18, 2003. App. at 20-31. During that time, the NIFC assigned OK's K-13 unit to two other fires: the Woodlot Fire (July 9, 2003 through July 13, 2003) and the Robb Fire (July 15, 2003 through July 17, 2003). App. at 32. On August 4, 2004, OK's submitted a "claim" to the NIFC, alleging the Encebado Fire order was "given in error" to Houston's, rather than OK's. App. at 2-31. OK's sought $154,854.00. App. at 2. OK's did not certify this amount, nor does it allege in its complaint that it certified this amount. On August 5, 2004, in a letter that purported to be a contracting officer's final decision, Contracting Officer John Venaglia responded to OK's August 4, 2004 letter, stating that OK's was entitled to $149,831.40, plus interest. App. at 33-34. Mr. Venaglia's letter stated, "The government correctly gave the order to OK's as they were the closest available vendor. However, the order was cancelled and given to Houston's Catering against my order." App. at 33. OK's signed the decision letter and returned it to Mr. Venaglia by facsimile on August 5, 2004. App. at 35. Meanwhile, Mr. Venaglia and OK's president, James Vuksic, had been negotiating a settlement agreement relating to a similar claim filed by OK's against the NIFC. App. at 36-39. 3

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The NIFC and OK's executed a settlement agreement on August 6, 2004 ­ one day after Mr. Vengalia had issued his decision upon the Encebado Fire claim. Id. The settlement agreement stated it pertained "to damages allegedly suffered by OK's for alleged wrongful suspension of kitchen sites and for other alleged improper Contracting Officer actions under the Contract."1 App. at 36. The agreement also contained the following release language: This agreement is being entered into in order to resolve on the following terms . . . any and all claims relating to or arising under the Contract, subject to any exceptions described herein. . . . In consideration therefore, OK's hereby releases FS from any and all claims of any kind either relating to or arising under the Contract. . . . In consideration for receiving the settlement sum, OK's agrees to release FS from any and all claims of any kind either relating to or arising under the Contract. . . . It is understood by the Parties that this Agreement expresses the full and complete settlement of liabilities claimed and denied under the Contract, that there is absolutely no agreement or reservation not clearly expressed herein, and regardless of the adequacy or inadequacy of the settlement sum, that this Agreement is intended to be final and complete. App. at 36-37. OK's submitted an amended claim on August 25, 2004, after the NIFC pointed out that OK's had been dispatched to two other fires during the same time period when it alleged that it should have been dispatched to the Encebado fire. App. at 40. In its amended claim, OK's agreed the award should be decreased, but said it was entitled to $123,722.40. Id. OK's did not certify its amended claim, nor does it allege in its complaint that it certified its amended claim. Because OK's other fire assignments had not been taken into account in his August 5, 2004 letter, Mr. Venaglia issued a second "decision" on August 27, 2004. App. at 32. Mr. Venaglia awarded a smaller amount, $92,883.90, based upon income earned by OK's between July 6 and July 18, 2003, for work performed for the two other fires. App. at 32. The August 27, 2004, decision purported to be final, but invited OK's to "advise within 15 days of receipt of this notice" if there was any disagreement. Id.

The "Contract" described in the settlement agreement is Contract No. 53-024B-9-2056, the same contract for mobile food service that is the subject of this action. 4

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On August 31, 2004, Mr. Venaglia sent a letter to OK's vice president, Wade McIntyre, stating that after further consideration, he had decided to leave the total due to OK's for the Encebado Fire at $92,883.90. App. at 43. Mr. Venaglia then attempted to modify the August 6, 2004 settlement agreement for the purpose of excluding OK's Encebado Fire claim from the settlement. To do so, he drafted another settlement agreement identical to the first, except for the addition to the title of "Addendum No. 1" and the inclusion of the following sentence, in bold: "However, the claim for the Encebado Fire (2003) shall be settled separately." App. at 41-42. Mr. Venaglia and OK's president signed the modified settlement agreement on September 14, 2004. App. at 42. There was no consideration given by OK's for this modification. On September 16, 2004, OK's submitted to the NIFC an invoice for $92,883.90, along with a copy of Mr. Venaglia's August 31, 2004 letter and the modified settlement agreement. App. at 199-202. The NIFC refused to pay the award amount, because it determined there was no contractual basis for liability, contrary to Mr. Venaglia's decisions. App. at 44-45. Instead, as explained in a letter dated December 14, 2004, OK's was entitled to payment under the contract in accordance with contract clause G.2.2.1, which provides that "[i]n the event an order is cancelled or reassigned before any meals are served, the Contractor will be paid for the number of meals ordered for the first meal plus mileage, if applicable."2 Id. The NIFC determined that the first meal of the cancelled order was for 300 lunches at $13.40 each, for a total of $4,020.00. Id. In addition to notifying OK's of the revised award, the December 14, 2004 letter stated, "[l]acking the required certification, as in the instant case, there never was a valid claim that would warrant a final decision by a Contracting Officer." App. at 45. In response, OK's argued

The December 14, 2004 letter was signed by Contracting Officer Richard M. Willis, Chief of the Fire and Aviation Support Branch of the National Interagency Fire Center. The former contracting officer, John Venaglia, resigned from the NIFC in September 2004, soon after modifying the settlement agreement. 5

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it had negotiated a "deal" with Mr. Venaglia that the NIFC was obligated to honor and that nothing "prohibited [Mr. Venaglia] from considering our uncertified submission." App. at 4648. OK's further claimed a certification was unnecessary, because, although the claim exceeded $100,000, the "settlement amount" of $92,883.40 ultimately was less than $100,000. App. at 48. ARGUMENT I. Standard of Review When reviewing a RCFC 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, the Court must construe all the facts alleged in the complaint in favor of the plaintiff. Morris v. United States, 33 Fed. Cl. 733, 741 (1995) (citing Scheuer v. Rhodes, 416

U.S. 232, 236 (1974)). The Court also must presume all factual allegations to be true and correct. Id. at 741-42 (citing Reynolds v. Army and Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988)). However, when a defendant challenges the facts upon which jurisdiction is premised, the plaintiff bears the burden of establishing the Court's jurisdiction by a preponderance of the evidence. Id. The Court then "may look outside the complaint and receive evidence for the purpose of resolving the jurisdictional issue of fact." Morris, 33 Fed. Cl. at 742 (citing Mainer v. United States, 31 Fed. Cl. 410, 413-14 (1994); Camelus Development Corp. v. United States, 31 Fed. Cl. 399, 405 (1994)). Absent congressional consent to entertain a claim against the United States, this Court lacks authority to grant relief. United States v. Testan, 424 U.S. 392, 399 (1976); United States v. Sherwood, 312 U.S. 584, 586 (1941). Such consent, including the consent to be sued in this Court, is a waiver of the Government's sovereign immunity and, as such, must be explicit and strictly construed. United States v. Mitchell, 445 U.S. 535, 538 (1980); Fidelity Construction Co. v. United States, 700 F.2d 1379, 1383 (Fed. Cir. 1983). It may not be implied. Testan, 424 U.S. at 399; United States v. King, 395 U.S. 1, 4 (1969).

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II.

This Court Lacks Jurisdiction To Entertain OK's Complaint Because OK's Failed To Comply With The CDA's Certification Requirement Although, generally speaking, Congress has consented to the United States being sued in

this Court for claims arising out of contracts with the Government, 28 U.S.C. § 1491(a), it has established conditions upon that consent in cases involving contracts with an executive agency for the procurement of: property (other than real property in being); services; construction, alteration, or repair of real property; and the disposal of personal property. 41 U.S.C. §§ 601 613. Contractors must adhere to the procedural requirements of the CDA for this Court to assume jurisdiction of a contractor's claim. Scan-Tech Security LP v. United States, 46 Fed. Cl. 326, 330 (2000). Consequently, pursuant to the CDA, this Court may not entertain any claim that has not been properly submitted to the contracting officer for a decision. W.M. Schlosser Co. v. United States, 705 F.2d 1336, 1338-39 (Fed. Cir. 1983). The CDA requires that: "[A]ll claims by a contractor against the government . . . shall be in writing and shall be submitted to the contracting officer for decision." 41 U.S.C. § 605(a). While the CDA does not explicitly define "claim," its implementing regulation, provides that a claim is: a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract. . . . a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 until certified as required by the Act and 33.207 48 C.F.R. § 33.201 (2004) (emphasis added). Submission of a certified claim to the contracting officer by the contractor is "an unequivocal prerequisite for a post-CDA claim being considered under [the CDA]." Fidelity Construction v. United States, 700 F.2d 1379, 1384 (Fed. Cir.), cert. denied, 464 U.S. 826 (1983) ("[t]he submission of an uncertified claim . . . is, in effect, a legal nullity"). Accord Newport News Shipbuilding v. Garrett, 6 F.3d 1547 (Fed. Cir. 1993). Thus, a claim over $100,000 that is not certified does not constitute a claim under the CDA and does not 7

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confer jurisdiction upon this Court. The purpose underlying the certification requirement is an important one, as it is to deter contractors from engaging in fraudulent behavior, such as submitting unwarranted or inflated claims. Fischbach & Moore Int'l Corp. v. Christopher, 987 F.2d 759, 763 (Fed. Cir. 1993). Section 605(c)(1) of Title 41 mandates that the contractor include with its claim language indicating that "the claim is made in good faith, that the supporting data are accurate and complete to the best of his knowledge and belief, and that the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable, and that the certifier is duly authorized to certify the claim on behalf of the contractor." While the CDA permits contractors to correct a defective certification, defined as one that "alters or otherwise deviates from the language in 33.207(c) or which is not executed by a person duly authorized to bind the contractor with respect to the claim," 48 C.F.R. § 33.201, it does not allow them to ignore and evade the certification requirement entirely. A lack of any certification constitutes a jurisdictional bar to the filing of a complaint in this Court. Scan-Tech, 46 Fed. Cl. at 340 (citing, among others, W.M. Schlosser, 705 F.2d at 1338-39; Pevar Co. v. United States, 32 Fed. Cl. 822, 825 (1995); Hamza v. United States, 31 Fed. Cl. 315, 324 (1994)). Under these principles, because OK's completely failed to certify any of its claims, this Court does not possess jurisdiction to entertain OK's complaint. OK's submitted two documents that could arguably be construed as claims, but for the fact that none of these documents were certified as required by the CDA. OK's August 4, 2004, letter requested $154,854. 00. App. at 2-31. OK's did not certify this claim or include any language remotely resembling a certification. OK's "amended claim," dated August 25, 2004, requested $123,722.40. App. at 40. OK's did not certify this claim or include any language remotely resembling a certification. In sum, neither of OK's requests for payment contained any language indicating that OK's was certifying its claim. In fact, the NIFC put OK's on notice that it had not certified its 8

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claims and that it needed to do so for them to be considered valid. App. at 45. In response, OK's conceded that it had not certified its requests, nor did it intend to certify its requests. App. at 47. Consequently, none of OK's "claims" can be considered a proper CDA claim and, therefore, OK's cannot demonstrate that it has met the jurisdictional prerequisites of this Court. Because it cannot do so, OK's complaint must be dismissed. E.g., Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988) (court lacking jurisdiction should dismiss case because it cannot review merits); Johns-Manville Corp. v. United States, 893 F.2d 324, 327 (Fed. Cir. 1989); Medina Construction, Ltd. v. United States, 43 Fed. Cl. 537, 547 (1999). CONCLUSION For the foregoing reasons we respectfully request that the Court dismiss plaintiff's complaint in its entirety for lack of jurisdiction.

Respectfully submitted, PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director s/Franklin E. White, Jr. FRANKLIN E. WHITE, JR. Assistant Director s/Lindsay E. Williams LINDSAY E. WILLIAMS Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor Washington, D.C. 20530 Tel: (202) 353-7995 Fax: (202) 514-8624 July 22, 2005 Attorneys for Defendant 9

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APPENDIX TABLE OF CONTENTS

WildCAD for NICC, showing caterers' distance from Encebado Fire . . . . . . . . . . . . . . . . . . . . . 1 Letter written by OK's, dated August 4, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Adjusted Claim Amount for the Encebado Fire, written by contracting officer, John Venaglia, dated August 27, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Letter from contracting officer, John Venaglia, to Wade McIntyre, dated August 5, 2004 . . . . 33 Letter from contracting officer, John Venaglia, to Wade McIntyre, dated August 5, 2004 signed by Wade McIntyre, vice president of OK's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Settlement Agreement, dated August 6, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Letter Written by OK's, dated August 25, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Amended Settlement Agreement, dated September 14, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Letter from contracting officer, John Venaglia to OK's vice president, Wade McIntyre, dated August 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Letter from the Chief of Fire and Aviation Support Branch, Richard Willis to OK's vice president, Wade McIntyre, dated December 14, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Letter from OK's president, James Vuksic, to the Chief of Fire and Aviation Support Branch, Richard Willis, dated December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Invoice, dated September 16, 2004 with attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199