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

Case 1:03-cv-00623-LSM

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Filed 12/06/2004

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
u. S. FINANCIAL CORPORATION

Plaintiff

. No. 03- 623C

(Senior Judge Margolis)

UNITED STATES
Defendant.

S. FINANCIAL' S OPPOSITION TO TO THE GOVERNMENT' S MOTION FOR CONTINUANCE
COMES NOW the Plaintiffu.S.
Financial

Corporation ("u.S.

Financial"),

through

counsel, to respectfully submit this Opposition to the Government' s Motion for Continuance , and

in support thereof states as follows.

1. SUMMARY OF ARGUMENT
The facts are undisputed that after making numerous payments to u.S. Financial in

accordance with an assignment of funds which was incorporated into the W. I.N. N. Group

contract through a contract modification , the Government incorrectly made the final two contract

payments in the amount of $52 686. 53 to the W. I.N. N. Group instead of U. S. Financial. Since
then , the Government has attempted to justify its mistaken payments and escape responsibility

for its errors by first challenging the assignment of funds and now by challenging the contract

modification. All material facts necessary to resolve this matter on summary judgment are
before the Court. Therefore , the Government' s Motion for Continuance should be denied.

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II.

THE ASSIGNMENT OF FUNDS BETWEEN u.S. FINANCIAL AND THE W.I. N. GROUP COMPLIES WITH THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT

It is undisputed that there is an assignment of funds between U. S. Financial and the
I.N. N. Group. It is also undisputed that U. S. Financial is a financial institution , that U.

Financial provided notice to the Government of the assignment of funds , and that the

Government made payments to u.S. Financial in accordance with the assignment of funds.
The purpose of the Assignment of Claims Act was to allow small contractors such as
I.N. N. Group the ability to participate in the performance of Government contracts by being

able to receive financial help as a result of the security of the Government' s contract payments.
First National City Bank v.

United States 548 F.2d 928 934 (CI.Ct. 1977). Here , the W. I.N.

Group was able to participate in the subject contract as a result of the security of the
Government' s contract payments through the assignment of funds between U. S. Financial and
the W.I.

N. Group. The disbursement ofthe contract funds was governed by an escrow

agreement between U. S. Financial , the W. I.N. N. Group, and M. c. Dean, Inc. ("Dean ). No
money was loaned by u.S. Financial to the W. I.N. N. Group for the performance of the contract.

All material facts necessary for the Court to decide whether the assignment of funds
between U. S.

Financial and the W. I.N. N. Group strictly complies with the necessary elements of

the Assignment of Claims Act are before the Court. Therefore , the Government's Motion for
Continuance should be denied.
III.

THE GOVERNMENT WAIVED ANY NONCOMPLIANCE WITH THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT

Notice of the assignment of funds between the W. I.N. N. Group and U. S. Financial and the
assignment of funds were provided to the Government by u.S. Financial. The assignment of

funds underwent legal review by the Government and was incorporated into a modification to the

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contract. The Government waived any noncompliance with the provisions of the Assignment of
Claims Act by incorporating the assignment of funds into the contract. Norwest Bank Arizona

United States 37 Fed. Cl. 605 609- 610 (1997).
The Government' s new argument that the modification is void is preposterous. The

Government' s Motion for Continuance states "Mr. Phillips admits that neither W.I.

N. nor U.

Financial (nor Dean) disclosed the nature ofthe underlying escrow agreement to the Contracting
Officer.
See

Government's Motion , p. 12 , citing Mr. Phillips ' Affidavits. Thus , the

Government' s entire "misrepresentation" argument is premised upon a phrase in the notice of

assignment that it was being provided to the Government "pursuant to the provisions of the
Assignment of Claims Act of 1940 as amended.
See

Government' s Motion , pp. 12- 13. The

notice of assignment of funds was provided to the Government pursuant to the Assignment of

Claims Act. There was no other reason to provide the notice of assignment of funds to the
Government.

Neither the submission of the notice of assignment of funds to the Government nor the
failure to disclose " provides any basis for voiding the contract modification. C &
Commercial Contractors v.

United States 34 Fed. Cl. 246 256 (1996) (" . . . four conditions

must be met before a contract may be voided for misrepresentation: (1) a misrepresentation was
made; (2) the misrepresentation was either fraudulent or material; (3) reliance; and (4)

justification in reliance ). None of these conditions are present here.
All material facts necessary for the Court to decide whether the Government waived any
noncompliance with the provisions of the Assignment of Claims Act by incorporating the

assignment of funds into the contract are before the Court. Therefore, the Government' s Motion
for Continuance should be denied.

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IV. CONCLUSION
For the foregoing reasons , u.S. Financial respectfully requests the Court to deny the
Government's Motion for Continuance and grant U. S. Financial's Cross- Motion for Summary
Judgment.

Respectfully submitted
Dated: December 6 , 2004

sf Paul V. Waters Spriggs & Hollingsworth 1350 I Street , N. Washington , D. c. 20005 (202) 898- 5800
Attorneys for
S.

Financial Corporation

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CERTIFICATE OF FILING
I HEREBY CERTIFY that on this the 6th day of December 2004 , a copy of the foregoing Plaintiffs Motion to Strike Government' s Affidavit was filed electronically. I understand that notice ofthis filing will be sent to all parties by operation of the Court' s electronic filing system. Parties may access this filing through the Court' s electronic filing system.
sf Paul V. Waters