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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ____________________________________ ) THE SWEETWATER, A WILDERNESS ) LODGE LLC, ) ) Plaintiff, ) ) No. 02-1795C v. ) (Senior Judge Merow) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________) DEFENDANT'S POST-TRIAL BRIEF
PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director KATHRYN A. BLEECKER Assistant Director JOHN H. WILLIAMSON Trial Attorney Commercial Litigation Branch Civil Division U.S. Department of Justice ATTN: Classification Unit 1100 L St. N.W., 8th floor Washington, D.C. 20530 Tel: (202) 307-0277 Fax: (202) 307-0972 E-mail: [email protected] Attorneys for Defendant
OF COUNSEL: KENNETH S. CAPPS Attorney-Advisor Office of the General Counsel Mountain Region U.S. Department of Agriculture P.O. Box 25005 Denver, CO 80225-0005
December 23, 2005
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TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I. The Permit Issued To The Sweetwater Is A License, Not A Contract For Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Permit Is Not A Contract Covered By The Contract Disputes Act . . . . . 3 The Forest Service Does Not Owe, And Did Not Violate, Any Implied Contractual Duties That Plaintiff Asserts In Count I . . . . . . . . . 5 A. The Terms Of The Permit Do Not Require The Forest Service To Replace The Bridges . . . . . . . . . . . . . . . . . . . . 5 The Parties' Discussions Before The Permit Issued Preclude Any Implied Duty To Ensure Access Over Bridges To The Lodge . 11 1. Mr. Rossman Lacked Authority To Commit The Government To Replacing The Bridges . . . . . . . . . . . . . 12 The Government Clearly Stated That The Sweetwater Would Have To Use Fords As Its Means Of Access If The Bridges Failed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
II. III.
B.
2.
C.
The Alleged Actions Of The Forest Service After The Permit Issued Did Not Breach Any Implied Duties To Cooperate And Not Hinder . . . . . . . . . . . . . 18
IV.
The Forest Service Has Not Violated Clause 15 Of The Permit, As Asserted In Count II . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Plaintiff's Failure To Operate The Lodge As A Public Resort Was A Material Breach Of Contract That Excused Any Alleged Non-Performance By The Forest Service . . . . . . . . . . . . . . . . 31 The Forest Service Has Not Committed Any Tortious Breach Of The Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Plaintiff Is Unable To State A Claim For A Fifth Amendment Taking . . . . . 38
V.
VI.
VII.
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VIII.
Plaintiff Is Not Entitled To Recover Any Breach Of Contract Damages . . . 43 A. Plaintiff Could Have Covered Its Out-Of-Pocket Expenses By Operating The Lodge Using Bridges 1997-2001, And Using Fords 2001-Present . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Plaintiff Cannot Meet Any Of The Three Requirements To Recover Lost Profits . . . . . . . . . . . . . . . . . . . . . 48 1. The Lost Profits That Plaintiff Claims Were Not Foreseeable, Because The Parties Contemplated Plaintiff Operating With Fords . . . . . . . . . . . . . . . . . . . . . . . 48 Plaintiff Cannot Prove It Would Have Made A Profit, Because It Never Tried To Operate The Lodge According To Its Present Plan . . . . . . . . . . . . . . . . . . . . . . . . 49 The Measure Of The Lost Profits Plaintiff Seeks Is Far From "Reasonably Certain" . . . . . . . . . . . . . . . . . . . . . 52
B.
2.
3.
C.
Plaintiff Is Not Entitled To Recover The Market Value Or Replacement Cost Of Its Lodge As Damages For Breach Of Contract . . . . . . . . . . . . . . . . 57 1. Plaintiff's Expert Used A Flawed Analysis To Arrive At His Value, Which Is Inconsistent With His Appraisals Of Other Lodges . . . . . . . . . . . . . . . . . . . . . . . . . 59 There Is No Legal Support Or Business Justification For Plaintiff To Recover The Reconstruction Cost Of The Lodge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ii
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TABLE OF AUTHORITIES CASES Alaska Pulp Corp. v. United States, 59 Fed. Cl. 400 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Allied-General Nuclear Servs. v. United States, 839 F.2d 1572 (Fed. Cir.), cert. denied, 488 U.S. 819 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40-41 Alpine Camping Servs., B-238 90-1 CPD ¶ 580 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Alves v. United States, 133 F.3d 1454 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 American Pelagic Fishing Co., L.P. v. United States, 379 F.3d 1363 (Fed. Cir. 2004), cert. denied, ___ U.S. ____, 125 S. Ct. 2963 (2005) . . . . . . . . . . . . . . . . . . . 40, 41, 42 Anderson v. United States, 344 F.3d 1343 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Andrus v. Allard, 444 U.S. 51 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 B-West Imports, Inc. v. United States, 75 F.3d 633 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Bonneville Assocs. v. United States, 43 F.3d 648 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Bradley v. Chiron Corp., 136 F.3d 1317 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13, 19 Caldwell & Santmyer, Inc. v. Glickman, 55 F.3d 1578 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 24 California Fed. Bank v. United States, 395 F.3d 1263 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48, 51, 52, 54
Casa de Cambio Comdiv S.A., de C. v. v. United States, 291 F.3d 1356 (Fed. Cir. 2002) cert denied, 538 U.S. 921 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 -iii-
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Castle v. United States, 301 F.3d 1328 (Fed. Cir. 2002), cert. denied, 539 U.S. 925 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Cedar Lumber v. United States, 5 Cl. Ct. 539, 459 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 22, 23 Chancellor Manor v. United States, 331 F.3d 891 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Christopher Village , L.P. v. United States, 360 F.3d 1319 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 33 Coll. Point Boat Corp. v. United States, 267 U.S. 12 (1925) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Contel of California, Inc. v. United States, 37 Fed. Cl. 68 (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Conti v. United States, 291 F.3d 1334 (Fed. Cir. 2002), cert. denied, 537 U.S. 1112 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim Dalton v. Cessna Aircraft Co., 98 F.3d 1298 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Davidson Indus., Inc., AGBCA No. 95-166-1, 96-2 BCA ¶ 28, 299 (1996) . . . . . . . . . . . . . . . . . . . . . . . . . 29 Dolan v. City of Tigard, 512 U.S. 374 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Energy Capital Corp. v. United States, 302 F.3d 1314 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51, 57 Essex Electro Engineers v. Danzig, 224 F.3d 1283 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Glendale Federal Bank, F.S.B. v. United States, 239 F.3d 1374 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 61 H. Landau & Co. v. United States, 886 F.2d 322 (Fed. Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-14 -iv-
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Hage v. United States, 35 Fed. Cl. 147 (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 16 Hansen Bancorp, Inc. v. United States, 367 F.3d 1297 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Hardeman-Monier-Hutcherson v. United States, 458 F.2d 1364, 198 Ct. (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Harris v. Department of Veterans Affairs, 142 F.3d 1463 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Hughes Communications Galaxy, Inc. v. United States, 271 F.3d 1060 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Kaiser Aetna v. United States, 444 U.S. 164, (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Kania v. United States, 650 F.2d 264, 227 Ct. (1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 LaSalle Talman Bank F.S.B. v. United States, 317 F.3d 1363 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45, 64, 66 Lamirage, Inc. v. United States, 44 Fed. Cl. 192 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Lenry v. United States, 156 Ct. C 297 F.2d 550 (1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11 Lion Raisins Inc. v. United States, 416 F.3d at 1372 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47, 48 M & J Coal Co. v. United States, 47 F.3d 1148 (Fed. Cir.), cert. denied, 516 U.S. 808 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 41 Maritrans Inc. v. United States, 342 F.3d 1344 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 McAbee Constr., Inc. v. United States, 97 F.3d 1431 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Meyers Cos., Inc v. United States, 41 Fed. Cl. 303 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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Mitchell Arms, Inc. v. United States, 7 F.3d 212 (Fed. Cir. 1993), cert. denied, 511 U.S. 1106 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Mountain States Telephone and Telegraph Co. v. United States, 499 F.2d 611 (Ct. Cl. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 8, 9 Ness Investment Corp. v. United States Department of Agriculture, Forest Service, 360 F. Supp. 127 (D. Ariz. 1973), aff'd, 512 F.2d 706 (9th Cir. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Oman-Fischbach Int'l (JV) v. Pirie, 276 F.2d 1380 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Oroville-Tonasket Irrigation Dist. v. United States, 33 Fed. Cl. 14 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Pacific Gas & Elec. Co. v. United States, 3 Cl. Ct. 329 (1983), aff'd, 738 F.2d 452 (Fed. Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 9 Precision Pine & Timber, Inc. v. United States, 63 Fed. Cl. 122 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Renda Marine, Inc. v. United States, 66 Fed. Cl. 639 ( 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35, 36 Robinson v. United States, 305 F.3d 1330 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45, 49 S.A. Healey Co. v. United States, 216 Ct. Cl. 576 F.2d 299 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 20 Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Sierra Club v. Hickel, 433 F.2d 24 (9th Cir. 1970), aff'd, 405 U.S. 727 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Ski Corp. v. United States, 30 Fed. Cl. 115 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Son Broadcasting v. United States, 52 Fed. Cl. 815 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
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Southern Comfort Builders, Inc., 67 Fed. Cl. 124 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34, 35 Sun Oil Co. v. United States, 215 Ct. Cl. 716, 572 F.2d 786 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 T&M Distributors, Inc. v. United States, 185 F.3d 1279 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Torncello v. United States, 681 F.2d 756, 213 Ct. (1982)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Trauma Service Group v. United States, 104 F.3d 1321 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Walter Dawgie Ski Corp. v. United States, 30 Fed. Cl. 115 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 21 Wetsel-Oviatt Lumber Co., Inc. v. United States, 38 Fed. Cl. 563 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 30 Yancheng Baolong Biochemical Products Co., Ltd. v. United States, 406 F.3d 1377 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
STATUTES
16 U.S.C. § 497 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 8 16 U.S.C. § 580d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 16 U.S.C. § 5954(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Contract Disputes Act, 41 U.S.C. § 602(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 36 C.F.R. § 251.51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 26 36 C.F.R. § 251.55 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 9
OTHER AUTHORITIES Corbin on Contracts § 564, p. 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Restatement (Second) of Contracts, § 344 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 -vii-
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Restatement (Second) of Contracts, § 347 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Restatement (Second) of Contracts, § 350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 John D. Calamari & Joseph M. Perillo, The Law of Contracts § 14.9 (4th ed.1998)) . . . . . 56
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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ____________________________________ ) THE SWEETWATER, A WILDERNESS ) LODGE LLC, ) ) ) Plaintiff, ) ) No. 02-1795C v. ) (Senior Judge Merow) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________)
DEFENDANT'S POST-TRIAL BRIEF Pursuant to Appendix A, ¶ 19 of the Rules of the United States Court of Federal Claims, and this Court's December 19, 2005 Order, defendant, the United States, respectfully files this post-trial brief. I. The Permit Issued To The Sweetwater Is A License, Not A Contract For Services The permit issued to The Sweetwater, A Wilderness Lodge LLC ("The Sweetwater") is not a contract for services, as plaintiff contends, but is a license whose terms are set by the Forest Service using authority delegated from Congress to manage National Forest System lands. The Court of Claims has stated that "management and control over lands of the United States is in Congress under Article IV, Section 3 of the Constitution." Mountain States Telephone and Telegraph Co. v. United States, 499 F.2d 611, 613 (Ct. Cl. 1974). The court noted that this congressional power, which is unlimited, may be delegated to the Executive. Id. (citing Sierra Club v. Hickel, 433 F.2d 24, 28 (9th Cir. 1970), aff'd, 405 U.S. 727 (1972) (interpreting the Term Permit Act, 16 U.S.C. § 497). The Term Permit Act authorizes the Secretary of Agriculture
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under such regulations as he may make and upon such terms and conditions as he may deem proper, [] to permit the use and occupancy of suitable areas of land within the national forests . . . for the purpose of constructing or maintaining hotels, resorts, and any other structures or facilities necessary or desirable for recreation, public convenience, or safety. . . . The authority provided by this section shall be exercised in such manner as not to preclude the general public from full enjoyment of the natural, scenic, recreational, and other aspects of the national forests. 16 U.S.C. § 497 (emphasis added). The Department of Agriculture has promulgated regulations to carry out this congressional delegation to set the terms and conditions of special use permits, including term special use permits. 36 C.F.R. Part 251, Subpart B. Those regulations define a "term permit" as "a special-use authorization to occupy and use National Forest System land . . . for a specified period which is both revocable and compensable according to its terms." 36 C.F.R. § 251.51. The nature of the interest created by a term permit is a license, that provides a revocable personal privilege to the permittee to occupy National Forest System lands and conduct activities only for the purposes specified in the permit. 36 C.F.R. § 251.55. The permit issued to plaintiff possesses "the traditional characteristics of a revokable license." Hage v. United States, 35 Fed. Cl. 147, 166 (1996). In Hage, the Court noted that the permit could not be assigned or transferred, and created a personal privilege for the specific purpose of grazing cattle according to the terms of the permit for a period not to exceed ten years. Id. at 167. The Court also relied upon the fact that the Forest Service had reserved the right to cancel the permit. Id.
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Likewise, the first sentence of the permit issued to The Sweetwater states that "[p]ermission is granted to . . . use subject to the conditions set out below, the following described lands," and identifies the personal "privileges granted by this permit" to occupy and use National Forest land (emphasis added). JX1 1. The permits cannot be assigned or transferred (clauses 12 and 51), grants personal privileges (clauses 6, 9, 38, 46, and 49), and is terminable at the discretion of the authorized Forest Service officer (clause 15). Id. Even if the Court finds that the permit is a contract in some respects, this does not resolve the central issue in this case: does the permit give rise to the specific contractual duties that plaintiff asserts were breached by the Government? As shown below in section "III.," the permit does not give rise to any implied duty to repair or replace the Sweetwater bridges, as asserted in Count I. Moreover, as shown below in section "IV.," the permit does not give rise to any duty to pay plaintiff equitable consideration pursuant to clause 15 because the Forest Service has not repaired or replaced the bridges (as asserted in Count II). Thus, even if the Court finds that the permit is a contract in some respect, the Court should still rule in favor of the Government on Counts I and II, because the Government does not owe the specific contractual duties asserted by plaintiff. II. The Permit Is Not A Contract Covered By The Contract Disputes Act Even if the Court were to conclude that the permit is a contract in some respect, the Court should reject plaintiff's assertion that the permit issued to The Sweetwater is a contract for the "procurement of services" within the meaning of the Contract Disputes Act, 41 U.S.C. § 602(a). As this Court stated in Son Broadcasting v. United States, 52 Fed. Cl. 815,
1
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821 (2002), regarding term special use permits that granted use of a communication site, "[b]y their plain language, the Permits and incorporated Site Plan are not contracts by which the Forest Service acquired commercial supplies or services. The parties agree that the primary responsibility of Forest Supervisors is the management of National Forest System land, not the procurement of goods and services." This Court has also stated that "[a] `procurement' is an acquisition by purchase, lease, or barter, of property or services for the direct benefit or use of the federal government." Oroville-Tonasket Irrigation Dist. v. United States, 33 Fed. Cl. 14, 21 (1995) (citing Bonneville Assocs. v. United States, 43 F.3d 648, 653 (Fed. Cir. 1994)). In Oroville, the Court noted that Congress authorized the Secretary of the Interior "to construct, operate, and maintain" the irrigation project at issue, and that "ownership of the project is retained by the United States." 33 Fed. Cl. at 22. The Court determined that because the irrigation district was required by contract "to carry out the obligation placed by Congress on the Secretary of the Interior to operate and maintain the project in question. . . . Clearly by the contract in question, the government has procured the services of OTID to operate and maintain a government-owned facility. This is a procurement of services." Id. (emphasis added). In contrast, the permit is not a contract with plaintiff to operate or maintain a Government-owned facility. JX 1. The Sweetwater owns all the improvements that are located within the 15.4 acre site identified in its permit; indeed, the alleged loss of this property is the basis of most of its damages claim. Any responsibilities that the permit requires The Sweetwater to perform to care for the Forest lands within or around its site are strictly a result of its occupancy, and are not services that the Government set out to find someone to provide. DPFF ¶ 28.
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Similarly, the Government Accountability Office ("GAO") decision that was cited by plaintiff in its pre-trial brief also involved the provision of services to maintain and operate Government-owned facilities. Alpine Camping Servs., B-238,625, 90-1 CPD ¶ 580. In Alpine, the Forest Service issued a prospectus inviting offerors to submit proposals for two special use permits for campground concessionaire operations. Id. The GAO noted that the permits were "issued pursuant to 16 U.S.C. § 580d, which authorizes the Secretary of Agriculture to require concessionaires to, at their expense, recondition and maintain Forest Service recreation facilities" (emphasis added), such as "to replace, paint and straighten barricades, signs, posts, tables, restrooms, etc.; recondition and install fire rings and hydrant posts." Id. Because the Forest Service had conducted a competition to select a concessionaire to maintain the Government-owned campground facilities, the GAO stated that "we conclude that the prospectus at issue is a procurement for services." Id The Forest Service never has conducted a competition to select a concessionaire to operate a lodge on the site occupied by The Sweetwater's lodge, and the Government has never owned the lodge. DPFF ¶ 27. Thus, the permit is not covered by the Contract Disputes Act, because it is not a contract for the "procurement of services," as plaintiff asserts. III. The Forest Service Does Not Owe, And Did Not Violate, Any Implied Contractual Duties That Plaintiff Asserts In Count I A. The Terms Of The Permit Do Not Require The Forest Service To Replace The Bridges
To determine what, if any, contractual duties arise from the permit issued to The Sweetwater, the Court should start by examining the text of the permit. In Son Broadcasting, this Court observed that "[c]ourts have reached divergent conclusions about whether a
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particular permit constitutes a binding contract. However, they agree that an examination of the language and characteristics of the permit is critical to the determination." 52 Fed. Cl. at 822. The site plan that was incorporated in the communication site permit at issue in Son Broadcasting expressly provided that "`a third antenna tower which may be self supporting may be authorized when the technical capacity of the intial [sic] two towers is reached.'" Id. at 817. The Court stated "[t]he plain language of these provisions suggests that although the Forest Service has the discretion to authorize a third tower, the exercise of that discretion is conditioned upon the technical capacity of the first two towers having been reached." Id. at 825 (emphasis added). The Court also noted that the permit expressly provided that "`[t]he Forest Service agrees not to issue authorizations to additional users'" until it was satisfied that the additional users had agreed to pay rent to the original permittee to compensate it for the original expense it had borne to develop the site. Id. at 823. The Court also noted that the permit "plainly provides that the Forest Service reserved the right to authorize other users only if `such use does not interfere with the rights and privileges' authorized by the Permit." Id. at 825 (emphasis added). Based upon the express language in the permit and site plan, the Court found that "[p]laintiff's rights under the contract embodied in these documents included the right to rent out all available space on its tower as long as it was economically and technologically feasible before the Forest Service could authorize construction of a third tower." Id. (emphasis added). The Court held "that the Special Use Permit, together with the incorporated Site Plan, constitutes a binding contract between plaintiff and the government and that this contract prohibited construction of the third tower until the first two had reached
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capacity." Id. at 820. The Court's holding that the permit formed a contract was limited to enforcing what it found to be a specific right of the permittee that the Forest Service would refrain from authorizing construction of a third tower until the first two reached their capacity that was expressly provided in the permit and site plan. In contrast, the permit issued to The Sweetwater does not expressly grant the permittee any right that the Forest Service would repair or replace the Sweetwater bridges. As plaintiff concedes, plaintiff declined to enter into a memorandum of understanding ("MOU") that was incorporated into the permit and addressed financial responsibilities for the road and bridges, as had the previous permittees, the Brannons. DPFF ¶ 78. In contrast, the Brannons entered into an MOU in which the Forest Service made the limited commitment that "[n]ew construction or reconstruction, such as bridge replacement, will be agreed to as part of the yearly Joint Maintenance plan." DPFF ¶ 33. Because The Sweetwater declined to enter a similar MOU to the one entered by the Brannons, the Forest Service did not make even the limited commitment of considering on an annual basis whether to agree to replace the bridges. The permit issued to The Sweetwater is silent on the subject of replacing the bridges, because the Forest Service never agreed to commit itself to paying to replace them. JX 1. "[A] provision should not be found by 'implication' when the testimony convincingly shows that such a provision was intentionally omitted." Corbin on Contracts § 564, p. 20 (Interim Ed. 2002). If any informal understanding were reached between The Sweetwater and the Forest Service, it was that Jeff Mummery, The Sweetwater's manager, would "maintain the road as he sees fit" for the guests of his lodge, as described in a contemporaneous email by Acting Wapiti District Ranger Bob Rossman. DPFF ¶ 71. The MOU signed by the Brannons
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provided that the permittee was responsible for road maintenance for all traffic to the lodge. JX 4/3. The road was a Level 2 maintenance road, and was marked on the 1990 Shoshone National Forest map (which was in effect in 1995) as an improved dirt road that was intended for high-clearance vehicles. DPFF ¶¶ 4-7. Signs at the foot of the road prominently notified motorists that the road was not maintained for passenger cars. Id. ¶¶ 10-12. Mr. Brannon used a grader to ensure that the low-clearance passenger vehicles could reach the lodge. Id. ¶ 34. Mr. Mummery remained responsible for ensuring that passenger cars could reach the lodge in accordance with his discussions with Forest Service before the permit issued. DPFF ¶ 71. As the Court of Claims has recognized, it lies within the discretion of the Forest Service to establish the terms and conditions of special use permits, including term special use permits. Mountain States Telephone, 499 F.2d at 613-14. In Mountain States Telephone, the Court of Claims refused to read new terms into the special use permit at issue, rejecting the plaintiff's request to "'judicially set conditions and terms for a use permit'" that had not been set by the Forest Service in the permit. 499 F.2d at 616 (quoting Ness Investment Corp. v. United States Department of Agriculture, Forest Service, 360 F. Supp. 127, 128 (D. Ariz. 1973), aff'd, 512 F.2d 706 (9th Cir. 1975)). This Court should follow the precedent of Mountain States, and should reject The Sweetwater's attempt to set by judicial means new terms that the Forest Service did not include in the permit. This Court should be especially reluctant to imply terms over the objection of the Forest Service under the Term Permit Act where Congress expressly reserved to the Secretary the unilateral authority to set the terms and conditions for occupancy and use of the National Forest lands. 16 U.S.C. § 497. In the Act, Congress granted the Secretary of
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Agriculture the unilateral authority to set all terms and conditions of term permits with a duration of less than 30 years and for sites fewer than 80 acres. Id, The Secretary is unable to fulfill this statutory mandate if the courts impose implied obligations that were contemplated and expressly rejected by the parties. In the regulations that implement the Term Permit Act, the Secretary reserved "all rights not expressly granted." 36 C.F.R. § 251.55(b). Here, the permit issued to The Sweetwater twice emphasizes that the Secretary only intends to authorize the use and occupancy of the permit area under the expressly enumerated terms. The first unnumbered sentence of the permit states: "Permission is hereby granted to . . . the permittee, to use subject to the conditions set out below, the following described lands or improvements for the period ending 12/31/14." JX 1/1. Permit clause 2 also makes it clear that no other "implied" terms are allowed by informing the prospective permittee that: "This permit is accepted subject to the conditions set forth herein, and to conditions 3 to 55 attached hereto and made a part of this permit." Id. The Claims Court relied upon Mountain States to find that no implied-in-fact contract was formed in a case involving facts similar to this one. Pacific Gas & Elec. Co. v. United States, 3 Cl. Ct. 329 (1983), aff'd, 738 F.2d 452 (Fed. Cir. 1984). In PG&E, the Claims Court declined to find that an implied-in-fact contract had arisen when the Forest Service and PG&E never finalized an agreement about the costs of reconstructing a road that PG&E used heavily. Id. at 340. The court and noted the broad scope of the Secretary of Agriculture's discretion in regulating the national forests, including "tax-supported road systems in national forests that suffer substantial use by private entities." Id. at 342.
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Here, the parties did not enter into a MOU or any other agreement that expressly required the Forest Service to assume the cost of replacing the Sweetwater bridges to ensure passenger car access to the lodge. DPFF 80-82; JX 1, JX 4. Moreover, the permit expressly provides that The Sweetwater assumed the risk that the road or bridges leading to The Sweetwater's lodge would become impassable. Clause 30 of the permit, titled "Risks and Hazards," states in its entirety: "Avalanches, rising waters, high winds, falling limbs or trees, and other hazards are natural phenomena in the Forest that present risks which the holder assumes. The holder has responsibility of [sic] inspecting the site, lot, right-of-way, and immediate adjoining area for dangerous trees, hanging limbs, and other evidence of hazardous conditions and, after securing permission from the Forest Service, of removing such hazards." JX 1, ¶ 30. Clause 30 placed upon the permittee the risk that heavy rainfall or snowmelt in Sweetwater Creek would wash out Sweetwater Road or the abutments that supported the Sweetwater bridges. Mr. Mummery understood that he was responsible for hazardous conditions on Sweetwater Road, not just on the 15.4 acre site for his lodge. DPFF ¶ 71. The risk that erosion from Sweetwater Creek presented to the abutments to the Sweetwater bridges was contemplated and discussed by The Sweetwater and the Forest Service at the June 12, 1999 meeting before the permit issued. DPFF ¶ 72. Mr. Mummery testified at trial that when he discussed the bridges with Forest Service representatives in June 1995 before the permit issued, "I was concerned about a big flood, a washout, a gullywasher, whatever you want to call it, that wiped out the bridges." DPFF ¶ 73. Acting Wapiti District Ranger Bob Rossman testified that he told Mr. Mummery during the June 1995 meeting that the bridges were "vulnerable" to such a washout. DPFF ¶¶ 74-75.
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The Court of Claims rejected a contractor's claim that the Government bore responsibility for ensuring vehicular access to a construction site despite a flood that rendered unavailable access roads to the site. Lenry v. United States, 156 Ct. Cl. 46, 297 F.2d 550 (1962). The contractor had anticipated using the roads in its method of operation, which was not a part of the contract itself. Id. The court rejected the plaintiff's claim that because parts of existing roads that led to the construction site were shown on the contract drawings, that the Government "impliedly warranted, for the life of the contract, the continued availability of the streets intended by plaintiff to be used as access roads." 297 F.2d at 553. The court stated, "plaintiffs make no attempt to define the scope of the warranty they find implicit in the contract. . . . Had defendant ever intended to make such a unique and all-encompassing guarantee, and had plaintiffs expected it, we believe they would have so specified in clear and unmistakable language." Id. If the Forest Service had intended to assume responsibility for ensuring that the Sweetwater Road and bridges would remain passable for cars for the 20-year life of the permit, it would have expressly stated that commitment in the permit. Instead, clause 30 of the permit provides that the permittee assumed the risk that rising waters might render the roads or bridges impassable. The Court of Appeals for the Federal Circuit cited Lenry in a decision that also rejected a contractor's assertion that an implied warranty of access was created to reach a construction site. Oman-Fischbach Int'l (JV) v. Pirie, 276 F.2d 1380, 1385 (Fed. Cir. 2002). In Oman-Fischbach, the court relied in part upon the standard site investigation clause, FAR 52.236-3, which the court ruled placed the burden of determining the availability of roads upon the contractor. Id. The court of appeals also found that the risk of increased costs
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caused by third parties, like the flood in Lenry, were not shifted to the Government unless the parties had agreed so "in unmistakable terms." Id. In Son Broadcasting, this Court also relied upon Lenry in holding that the permit did not support any implied warranty of access. 30 Fed. Cl. at 128. Here, if the permit issued to The Sweetwater is treated as a contract, clause 30 similarly required The Sweetwater to assume the responsibility for ensuring that the road and bridges leading to its lodge remained passable. B. The Parties' Discussions Before The Permit Issued Preclude Any Implied Duty To Ensure Access Over Bridges To The Lodge
Plaintiff has acknowledged that the promise that it seeks to enforce is not expressly stated in the permit. Instead, plaintiff rests its case upon its assertion that the permit is a contract that gives rise to implied duties to cooperate and not hinder The Sweetwater's performance of its alleged contractual duty to operate a public resort. Tr. 12:6-20. The specific duty that plaintiff asserts it was owed by the Forest Service was to ensure that the two Sweetwater bridges remained passable to provide access to the lodge in all conditions, as opposed to fords, which could not be used during high water caused by snowmelt or heavy rains, and might only be accessible to high-clearance vehicles even during low water. Tr. 12:21-13:11, 141:4-142:8. The Federal Circuit has ruled that the implied duties to cooperate and not hinder performance of Government contracts are "an aspect of the duty of good faith and fair dealing." Essex Electro Engineers v. Danzig, 224 F.3d 1283 (Fed. Cir. 2000). The Federal Circuit has also ruled that "implied covenants of good faith and fair dealing are limited to assuring compliance with the express terms of the contract and cannot be extended to create new obligations not contemplated in the contract." Bradley v. Chiron Corp., 136 F.3d 1317, 1326 (Fed. Cir. 1999). -12-
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In the circumstances of this case, the Court should not imply any duty to replace the Sweetwater bridges for at least two reasons: (1) the Forest Service official who issued the permit lacked authority to enter a binding contract that committed the Government to funding the replacement of the bridges; and (2) the permittee understood that he might have to use fords as a means of access for an indefinite period if the bridges became impassable. 1. Mr. Rossman Lacked Authority To Commit The Government To Replacing The Bridges
Mr. Mummery admitted that at the June 12, 1995 meeting before The Sweetwater closed its purchase of the lodge, the Forest Service representatives clearly stated that they lacked the authority to commit the Forest Service to ensuring all-weather access to the lodge by bridges. DPFF ¶¶ 88-91. During his testimony, Bill Simpson, the lawyer who represented The Sweetwater at the meeting, agreed that Forest Service employee Monte Barker, with the concurrence of Acting District Ranger Bob Rossman, did not make any unconditional commitment to rebuild the bridges. DPFF ¶ 92. Mr. Mummey also testified that he understood that higher-level Forest Service officials might decide not to fund replacement of the bridges if they became impassable. Id. ¶ 91. Moreover, the Forest Service representatives stated clearly that it was unlikely that approval would be granted to fund the bridges for the foreseeable future, because they were a low priority in relation to other higher-use capital improvement projects. DPFF ¶¶ 83-87. In these circumstances, no binding commitment to replace the bridges could arise from the June 12, 1995 meeting. No contract can be formed with the Government unless the Government representatives whose conduct is relied upon possess actual authority to bind the United States in contract. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384 (1947); Anderson v. United States, 344 F.3d 1343, 1353 (Fed. Cir. 2003). Authority to bind the -13-
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Government may be implied when such authority is considered to be an integral part of the duties assigned to an agency's employee. H. Landau & Co. v. United States, 886 F.2d 322 (Fed. Cir. 1989). Mr. Rossman was Acting District Ranger for the Wapiti District in 1995, and signed the permit as the "Acting Forest Supervisor." JX 1/1. The Forest Service Manual only permits Forest Supervisors to delegate authority to District Rangers to issue special use permits for terms of less than five years, or for "standardized" permits on sites approved in the Forest plan. DX 37 (FSM 2704.34). Mr. Larson testified that Barry Davis, who was Forest Supervisor for the Shoshone in 1995, had purported to delegate to District Rangers authority to issue all term permits. DPFF ¶ 63; DX 7/2. Even if Mr. Davis were able to delegate authority to Mr. Rossman to issue the permit to The Sweetwater as the "Acting Forest Supervisor" (JX 1/1), Mr. Rossman, as an Acting District Ranger, was not authorized to issue a permit that assumed responsibility for replacing the Sweetwater bridges. The standard permit issued for use of the lodge eventually acquired by The Sweetwater did not include any responsibility for the Government to replace the bridges. As Mr. Mummery was aware, the bridges were built by previous permittees, and had always been their responsibility. DPFF ¶¶ 18-19. The permit issued to the Brannons in 1983 specifically charged the permittees with responsibility for "operating and maintaining . . . two bridges (FS No. 423-2[.]5 and 423-3.0)." JX 3/1. In 1985, the Forest Service agreed to assume maintenance responsibility for the Sweetwater bridges, but made no commitment regarding "bridge replacement" other than agreeing to address the subject in a yearly joint maintenance plan. JX 4, ¶ C.4. The permit issued to The Sweetwater states, like the
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Brannons' permit, that it was issued for the purpose of operating a public resort on a 15.4 acre site, but does not refer to the bridges in any fashion. JX 1. The exclusion of the bridges from the scope of the permit issued to The Sweetwater was not a positive representation that the Forest Service would replace the bridges. Mr. Rossman was not authorized to alter the standard permit previously issued. FSM 2704.34. Moreover, Mr. Rossman was not a contracting officer when he signed the permit issued to The Sweetwater, and did not have a warrant that authorized him to incur the substantial expense of procuring two bridges. DPFF ¶ 65. Authority to contract cannot be implied "to bind the government in contract when an agency's internal procedures specifically preclude its agent from exercising such authority." Contel of California, Inc. v. United States, 37 Fed. Cl. 68, 73 (1996). Plaintiff's assertion that Mr. Rossman possessed authority to commit the Forest Service to obtaining funds to replace the bridges is another important distinction between this case and Son Broadcasting. The Court concluded that the Forest Service officials in Son Broadcasting possessed authority to bind the Government, even though they lacked warrants. 52 Fed. Cl. at 820-21. However, the plaintiff in that case did not seek to enforce any alleged right that the Forest Service would pay the plaintiff any money, but instead contended that the Forest Service was required not to authorize construction of a third tower on the communication site until the first two towers reached capacity. Id. at 819. The Court determined that the permit was a binding contract because the Forest Supervisor was authorized by regulation to issue a special use permit that granted the permittee a specific described right to rent out space on its tower and preclude construction of a third tower until the technical capacity of its tower was reached. Id. at 821 (citing 36 C.F.R. § 251.54(c)).
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The Court did not determine that Forest Supervisors possess the authority to bind the Government to an agreement requiring the disbursement of funds. Similarly, in PG&E, representatives of the Forest Service and PG&E held meetings to discuss the costs of reconstructing the road, and both sides understood that negotiators at the Forest level could not enter a final agreement, but could only recommend actions to the Regional Forester. 3 Cl. Ct. at 332, 339. Ultimately, the Regional Forester determined that the Forest Service was not required to make a cost share agreement with the plaintiff, but might make contributions to the costs of reconstruction "`based on benefits to the public in relation to management of National Forest lands.'" Id. at 334-35. The Claims Court declined to find an implied-in-fact contract in part because the Forest Service representatives lacked authority to bind the Government in contract. Id. at 340. This Court reached the same conclusion regarding the grazing permit in Hage, ruling that the Forest Service did not have the authority to bind the Government in contract, "[e]ven if the plaintiffs believed the permit to be a contract." 35 Fed. Cl. at 167. 2. The Government Clearly Stated That The Sweetwater Would Have To Use Fords As Its Means Of Access If The Bridges Failed
Even if Mr. Rossman did possess the authority to bind the Government to a promise to replace the bridges, he and the other Forest Service representatives expressly stated at the June 12, 1995 meeting that they could not promise to replace the bridges, but instead, told The Sweetwater that it would have to use fords as the means of access to the lodge if the bridges failed. DPFF ¶¶ 93-94. This was reasonable in light of the history of the lodge. Mr. Mummery, as a longtime resident of Cody, was personally aware that the bridges had been the responsibility of the permittee. DPFF ¶ 18. The usage of the road for purposes other than the lodge was light, -16-
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and principally occurred during the hunting season, by hunters who used high-clearance vehicles to hunt from the road or tow horse trailers up the road. DPFF ¶¶ 14-15. The Forest Service witnesses provided uncontradicted testimony that after Sweetwater Road was closed to vehicular access by the public in 2001, there were almost no complaints from the public. DPFF ¶ 180. Fords are used on other roads in the Shoshone National Forest and other national forests that are open to the public for recreational purposes. DPFF ¶ 98. At trial, Mr. Mummery admitted that he did not have any problem with using fords to operate his lodge, but quibbled that the word "temporary" should have been inserted into Mr. Rossman's summary of the June 12, 1995 meeting. DPFF ¶¶ 95-96. However, it is undeniable that Sweetwater Road was identified on the 1990 Shoshone National Forest map that was in effect in 1995 as a "high-clearance" road. DPFF ¶ 6. In addition, both Forest Engineer Jim Fischer and Wapiti District Ranger Brent Larson testified that signs were posted on the road, probably in the 1993-95 period, stating that the road was not maintained by the Forest Service for passenger car vehicles. DPFF ¶¶ 10-12. Although Mr. Mummery vehemently denied that such a sign was ever posted (Tr. 2921:9-15), it is noteworthy that Mr. Mummery's recollections regarding the presence or absence of signs on Sweetwater Road have evolved as this case has progressed. In paragraph 13 of his declaration in support of The Sweetwater's February 2004 cross-motion for summary judgment, he swore that "[n]o warning signs of any type were ever placed at the bridges from 1995 to the present." DPFF ¶ 76. However, at trial, Mr. Mummery testified that he clearly recalled seeing the "Weight Limit 3 Tons" warning signs in 1995 when he visited the lodge, which he claimed led him to conclude that the bridges were safe if used by vehicles weighing less than 3 tons. DPFF ¶ 77.
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In light of Mr. Rossman's express refusal to assume any duty to replace the bridges, plaintiff is precluded from expanding the scope of any implied duties to cooperate and not hinder to include an implied duty to repair or replace the bridges. This Court should not now rewrite the results of the alleged negotiation session, and imply into the permit a contractual duty that is much broader than the duties the Forest Service was prepared to assume in the MOU that it offered to The Sweetwater. JX 3. Plaintiff has failed to distinguish the circumstances of this case from Walter Dawgie Ski Corp. v. United States, 30 Fed. Cl. 115, 129-31 (1993), in which this Court rejected a very similar claim by a ski resort owner who contended that the term special use permit issued to him required the Forest Service to provide vehicular access to the permitted site at all times. In Walter Dawgie, the only paved route of access to the ski resort was closed by road construction from 8:30 a.m. to 4:30 p.m. Monday through Thursday, which the permittee claimed had a significant impact on its ability "to conduct business during regular business hours." Id. at 118, 122. The plaintiff contended that the permit gave rise to an implied duty not to hinder the resort operator in performing the obligations allegedly required by the permit. Id. at 129. The Court ruled that "[w]hile the duty not to hinder performance assuredly incorporates certain assurances of access, the Forest Service never assured [the permittee], expressly or impliedly, of unlimited and uninterrupted access to the permitted property," and granted summary judgment for defendant. Id. at 131 (emphasis added). Similarly, the Forest Service never assured The Sweetwater of bridges to provide unlimited and uninterrupted access to the lodge for all forms of vehicles in all weather conditions.
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C.
The Alleged Actions Of The Forest Service After The Permit Issued Did Not Breach Any Implied Duties To Cooperate And Not Hinder
Plaintiff asserts that after the permit issued in August 1995, the Forest Service violated what plaintiff asserts was an implied duty for the Forest Service to "do its best" to secure funding to replace the bridges. Plaintiff relies upon S.A. Healey Co. v. United States, 216 Ct. Cl. 172, 576 F.2d 299 (1978), which is fundamentally different from this case. In S.A. Healey, the plaintiff submitted to the contracting agency a proposed construction program that projected expected earnings for each of the four years of the contract. 576 F.2d at 301. The authorized representative of the contracting officer approved the proposed program, including the earnings. Id. The agency then requested from Congress $1,800,000 in earnings for the second year of the contract, much less than the approved amount of $4,887,000. Id. at 302. The court agreed with plaintiff's assertion that "after approving the proposed schedule, the government had a duty to facilitate that schedule, by requesting full fiscal year funding of Congress." Id. at 303 (emphasis added). The court applied the implied duty to cooperate to an express agreement of the parties: the amount of earnings that the contracting officer's authorized representative had approved for payment by the Government. In contrast, even plaintiff concedes that the Forest Service representatives at the June 1995 meeting made clear that they lacked the authority to enter any agreement that granted The Sweetwater any right that the Forest Service would replace the Sweetwater bridges. The court's ruling in S.A. Healey is consistent with a more recent decision of the Federal Circuit holding that "implied covenants of good faith and fair dealing are limited to assuring compliance with the express terms of the contract." Bradley, 136 F.3d at 1326. The court's ruling in S.A. Healey is also consistent with this Court's ruling in Son Broadcasting, -19-
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which enforced what the Court found to be an express right that the Forest Service granted the permittee in the permit. 52 Fed. Cl. at 825. The language in the permit issued to The Sweetwater on which plaintiff relies the requirement that The Sweetwater "maintain[] and operat[e] a public resort" does not grant a right to the permittee, but instead imposes a duty upon it. JX 1. District Ranger Brent Larson's February 20, 1997 letter to the prospective purchasers of the lodge, Ray and Judi Sutherland, confirmed that it was unlikely that the Forest Service would obtain funding to replace the bridges: "access would more likely become seasonal fords of the Sweetwater River should the condition of the bridges deteriorate . . . . funding for replacement of these bridges is not currently available, and the lik[e]lihood of obtaining adequate funding to replace these bridges in the future is low." JX 11. It was only at Mr. Mummery's insistence that Mr. Larson sent a second letter dated February 27, 1997 that stated that "[r]eplacement bridges for these two bridges crossing Sweetwater Creek are currently included in the Forest's Capital Improvement Program for FY 1999." JX 12. However, Mr. Larson also stated that funding for the project "is subject to Congressional approval, and I cannot guarantee it will be available at that time." Id. As Mr. Larson had already informed Mr. Mummery in the February 20, 1997 letter, it was unlikely that the Forest would obtain sufficient funds to replace the bridges, because Congress was unlikely to appropriate sufficient funds to permit the Shoshone National Forest to fund all projects in its Capital Improvement Program ("CIP"). JX 11. Moreover, Mr. Larson's February 27, 1997 letter was incapable of binding the Forest Service to obtain or seek funding to replace the bridges. Unlike the authorized representative of the contracting officer, who approved the earnings in S.A. Healey, Mr. Larson lacked
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authority to approve the project to replace the bridges. Like Mr. Rossman, he was not a contracting officer, and pursuant to the Forest Service Manual ("FSM"), only held authority to administer the permit, not to alter its terms. DX 37 (FSM 2704.22). Rebecca Aus, who had become Forest Supervisor in August 1996, made clear upon her arrival that she followed the delegation of authority set forth in the Forest Service Manual. Tr. 1315:13-1314:9. Mr. Larson was not authorized to issue a new permit for The Sweetwater's lodge that changed the terms of the permit in any way, and thus was not authorized to bind the Government to a commitment to fund the replacement of the bridges. DX 37 (FSM 2704.34). Plaintiff has accused the Forest Service of numerous other actions and omissions that erroneously presume that, by issuing a permit that required The Sweetwater to operate a public resort, the Forest Service had assumed a contractual duty to "do its best" to seek funding to replace the bridges, so that vehicles could reach the lodge at all times. However, as this Court noted in Walter Dawgie, the duty not to hinder does not imply an unlimited right of access, but at most, implied only that the Forest Service would permit The Sweetwater to access the lodge using fords. Walter Dawgie, 30 Fed Cl. at 131. Thus, even if the permit did give rise to an implied duty to provide access, the Forest Service has not failed to fulfill this duty. Plaintiff concedes that he has never asked that the Forest Service install fords, and has never attempted to operate the lodge using fords, and thus has breached any duty to cooperate that arises from the permit. DPFF ¶ 154. Cedar Lumber v. United States, 5 Cl. Ct. 539, 459 (1984) ("there is an implied obligation on both parties to cooperate and not to hinder the performance of the other party") (emphasis added). Moreover, neither Mr. Larson nor Mr. Fischer, who plaintiff accuses of perpetrating these alleged misdeeds, were authorized to bind the Government to procure replacement
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bridges. Neither was a contracting officer or held a warrant, so they could not agree to assume any contractual duties that were not present when the permit issued, particularly any duties that required the Forest Service to incur the substantial expense of replacing the bridges. DPFF ¶¶ 157-58. Mr. Fischer was also not a line officer, and possessed no authority to issue or administer permits. FSM 2704.34. As District Ranger, Mr. Larson possessed authority to administer the permit, but did not possess authority to determine how the Shoshone National Forest balanced the competing demands with the Capital Improvement Program. That authority was reserved to the Forest Supervisor, Rebecca Aus, who was responsible for "integration of special use activities with other resources management." DX 37 (FSM 2704.22). Even Ms. Aus, however, was not a contracting officer, and thus was not authorized to enter contracts to replace the Sweetwater bridges. DPFF ¶ 159. Even if there were a duty to seek funds to replace the bridges, the Government has not breached that duty. If a plaintiff shows that by action or omission the Government has not cooperated in the contractor's performance, then the Government may still "negate liability by showing that the government conducted itself in a diligent, good faith manner" (emphasis added). Cedar Lumber, 5 Cl. Ct. at 550. Government officials are presumed to act in good faith, and a contractor "can overcome this presumption only if it shows through 'well-nigh irrefragable proof' that the government had a specific intent to injure it." Caldwell & Santmyer, Inc. v. Glickman, 55 F.3d 1578, 1581 (Fed. Cir. 1995) (quoting Torncello v. United States, 681 F.2d 756, 770, 213 Ct. Cl. 20 (1982)); accord T&M Distributors, Inc. v. United States, 185 F.3d 1279, 1285 (Fed. Cir. 1999). There is no evidence that the Forest
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Service has demonstrated a specific intent to injure The Sweetwater by not funding the repair or replacement of the Sweetwater bridges. The Shoshone National Forest sought to secure funding to replace the Sweetwater bridges through the Forest Service's CIP Program. In fiscal year 1992, a March 1992 CIP proposal to replace the bridges was accepted into the "hopper" of projects eligible for funding. DPFF ¶ 20. However, in 1994, the CIP proposal to replace the Sweetwater bridges was indefinitely postponed because of a lack of funds. DPFF ¶ 24. In June 1996, Mr. Fischer told Jeff Mummery that the proposal to replace the bridges had been put back into the CIP program. DPFF ¶ 151. As discussed above, Mr. Larson told Mr. Mummery in the February 20, 1997 letter that a request for CIP funding had been made to replace the bridges in fiscal year 1999. JX 11. However, the project was postponed to fiscal year 2000, probably because of a lack of funds and engineering personnel. DPFF ¶ 160. Mr. Fischer testified that during fiscal year 2000, as the result of conversations he had with Mr. Larson and Ms. Aus, replacement of the bridges was indefinitely postponed. DPFF ¶ 166. Ms. Aus determined that the project should be once again indefinitely postponed because any available CIP money was better spent on campgrounds than on replacing the Sweetwater bridges, which were on a Level 2 road that was by definition a lowmaintenance road for high-clearance vehicles. DPFF ¶ 167-68. This course of conduct does not manifest any specific intent to injure The Sweetwater. Caldwell & Santmyer, 55 F.3d at 1581. The Shoshone has had limited funding and personnel to devote to CIP projects, and has devoted its resources toward recreational projects such as campgrounds that offer the greatest value to the public. Devoting resources to higher-priority projects than replacing the Sweetwater bridges does not, as a matter of law,
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evidence any bad faith sufficient to violate any duty of good faith and fair dealing. This is particularly true when The Sweetwater understood, when it bought the lodge, that a higherlevel Forest Service line officer might decide not to fund the proposal to replace the bridges. DPFF ¶ 91. Ultimately, both Mr. Fischer and Mr. Larson lacked the authority granted to Ms. Aus. Plaintiff erroneously assumes that because Ms. Aus had delegated to Mr. Larson day-to-day administration of the permit issued to The Sweetwater, and that because Mr. Fischer represented the Shoshone in regional discussions about prioritizing capital improvement program projects, that Ms. Aus had ceded all her authority to decide whether to replace the Sweetwater bridges. These assertions are inconsistent with Ms. Aus's testimony regarding in her involvement in the decision-making process. DPFF ¶ 167-68. Plaintiff's assertion regarding Ms. Aus's alleged lack of authority is also contradicted by the respective responsibilities that the Forest Service Manual establishes for line officers: 2704.22 Forest Supervisor. It is the responsibility of the Forest Supervisor to: 1. Provide management direction that ensures integration of special use activities and objectives into the programs and projects at the Ranger District level. 2. Ensure integration of special use activities with other resources management in developing and implementing the National Forest land and resource management plan. . . . 2704.23 District Ranger. Each District Ranger is responsible for all special use activities on the District. Except for those responsibilities specifically reserved by the Forest Supervisor, it is the responsibility of the District Ranger to: 1. Assure high-quality on-the-ground administration of the special-uses program. FSM 2704.22-23 (emphasis added). Ms. Aus only delegated to Mr. Larson responsibility to administer the permit on a day-to-day basis. Thus, as Forest Supervisor, Ms. Aus reserved
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her responsibility to determine whether the Shoshone's limited funds were better spent on other Forest Service resources, such as heavily used campgrounds on the Yellowstone Highway, rather than on replacing the Sweetwater bridges. In sum, the permit did not give rise to any implied duties to replace the bridges or seek funding for that purpose. Even if the Court concludes that such a duty did arise, the Forest Service has acted in good faith, and did not breach any implied duties to cooperate and not hinder. IV. The Forest Service Has Not Violated Clause 15 Of The Permit, As Asserted In Count II Plaintiff has asserted that clause 15 of the permit requires the Forest Service to compensate The Sweetwater if the Forest Service "terminates lodge operations under the permit for