Placeway Const. Corp. v. U.S., 90-5017

• Decision Date: 07 August 1990
• Docket Number: No. 90-5017,90-5017
• Citation: 920 F.2d 903
• Parties: 36 Cont.Cas.Fed. (CCH) 75,967 PLACEWAY CONSTRUCTION CORPORATION, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 903

920 F.2d 903

36 Cont.Cas.Fed. (CCH) 75,967

PLACEWAY CONSTRUCTION CORPORATION, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 90-5017.

United States Court of Appeals Federal Circuit.

Decided Aug. 7, 1990.

Order on Grant of Rehearing in part Nov. 14, 1990.

Vincent J. Zichello, of Bergadano, Zichello & Babchick, New York City, for plaintiff-appellant.

Julie A. Helitzer, of the Civ. Div., Dept. of Justice, Washington, D.C., for defendant-appellee. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, and Thomas W. Petersen, Asst. Director. Also on the brief was George Kuehnle, of the U.S. Coast Guard, Washington, D.C.

Before MAYER, Circuit Judge, SKELTON, Senior Circuit Judge, and MICHEL, Circuit Judge.

MICHEL, Circuit Judge.

Placeway Construction Corp. (Placeway) appeals the United States Claims Court's order of September 11, 1989, dismissing its complaint for lack of jurisdiction because, inter alia, the court concluded that the contracting officer (CO) had not made a final decision as to a government claim against Placeway. See Placeway Constr. Corp. v. United States, 18 Cl.Ct. 159 (1989). We affirm the Claims Court's dismissal of Placeway's count seeking declaratory judgment because the Claims Court is without jurisdiction to grant such relief with regard to disputes over contracts that have already been awarded. We vacate the dismissal of the remaining counts and remand for further proceedings consistent with this opinion because the CO effectively rendered a final decision on all the claims presented, and the Claims Court has jurisdiction otherwise.

BACKGROUND

In 1983 Placeway entered into a contract with the United States Coast Guard (government) to construct residential housing on Governors Island, New York. The construction was completed December 20, 1984, after the completion date specified by the contract. Appendix at 108, Placeway Constr. Corp. v. United States, No. 90-5017 (Fed.Cir. filed Feb. 23, 1990) [hereinafter App.]. Placeway asserts that it submitted a voucher to the CO on January 21, 1985, requesting payment of the remaining contract price balance, $297,226.12. Id. at 24. The balance was not paid. On May 28, 1986, Placeway submitted to the CO a written demand for payment of: (1) the contract price balance, (2) thirty-one specified adjustments for additional work, and (3) extended overhead expenses based on various delays allegedly caused by, or the responsibility of, the government. Placeway, 18 Cl.Ct. at 161. None of these claims were certified under the Contract Disputes Act, 41 U.S.C. Sec. 605(c) (1988). On September 4, 1986, the CO denied Placeway's demands. The CO decided that the contract price balance due would not be "released" because Placeway had failed to complete the contract "in a timely manner," delaying the government in issuing start-work notices to two other contractors scheduled to do work on Governors Island who might later submit delay claims against the government. App. at 108-09. Placeway disputes any liability for these other contracts, asserting they are unrelated to its contract with the government.

On June 26, 1987, Placeway filed a complaint in the Claims Court containing six counts: Count I seeks a declaratory judgment that the government cannot withhold the contract price balance due Placeway. Count II seeks a money judgment in the amount of the contract price balance, $297,226.12, plus interest. Count III seeks an equitable adjustment of $50,000.00, plus interest, alleging underpayment of wages due to defective specifications. Count IV seeks an equitable adjustment of $27,366.00, for increased performance costs because of alleged differing site conditions. Count V seeks twenty-two adjustments, totaling $140,251.95, for additional costs incurred because of alleged change orders, constructive changes, and defective specifications.

Count VI seeks extended overhead costs, totaling $119,585.91, plus interest, for several delays allegedly caused by, or the responsibility of, the government. Placeway, 18 Cl.Ct. at 162; App. at 21-30.

The government moved to dismiss for lack of certification, and the Claims Court dismissed all the counts for lack of jurisdiction. Placeway timely appealed; we have jurisdiction pursuant to 28 U.S.C. Sec. 1295(a)(3) (1988). We review the question of jurisdiction de novo. See 41 U.S.C. Sec. 609(b) (1988).

OPINION

I. Declaratory Judgment Claim

The United States Claims Court correctly noted that its predecessor court, the United States Court of Claims, did not have jurisdiction over claims seeking relief other than money damages. See United States v. King, 395 U.S. 1, 4-5, 89 S.Ct. 1501, 1502-03, 23 L.Ed.2d 52 (1969). However, when Congress created the Claims Court by enacting the Federal Courts Improvement Act of 1982, Congress conferred upon the Claims Court the power to grant equitable relief in limited circumstances. 28 U.S.C. Sec. 1491(a)(3) (1988); see United States v. John C. Grimberg Co., 702 F.2d 1362, 1365-74 (Fed.Cir.1983) (in banc ). The Claims Court's equitable powers, including authority "to grant declaratory judgments," are limited to cases in which a "contract claim" is filed "before the contract is awarded." 28 U.S.C. Sec. 1491(a)(3) (1988) (emphasis added).

In the instant case, Placeway filed its Complaint long after the contract with the government had been awarded. Accordingly, the Claims Court lacks jurisdiction over Placeway's claim for a declaratory judgment. Therefore, we affirm the Claims Court's dismissal of Count I.

II. Contract Price Claim

The Government Claim

The Claims Court determined that "the Government has asserted a right of set off which is tantamount to seeking 'the adjustment ... of contract terms....' " ¹ Placeway, 18 Cl.Ct. at 164 (quoting 48 C.F.R. Sec. 33.201 (1988)). The Claims Court noted that this constituted a government claim. Because certification is not required for government claims, the Claims Court would have jurisdiction over an appeal from a decision of a CO, provided it is final. The Claims Court, however, concluded that because the CO had not yet ascertained the amount of the set off, no final decision was made by the CO, and thus the Claims Court had no jurisdiction to decide the dispute. Id. at 164-65. In particular, the Claims Court observed that the CO's letter contained neither the label "Final Decision" nor the notice of appeal rights that final decision letters normally contain. Id. at 165.

We agree that the set off asserted is a government claim, but we conclude that the CO effectively made a final decision on the government claim. It was undisputed that Placeway had completed performance of the contract. Moreover, the contract price for the work completed was undisputed and was due upon completion of work. Although the CO may have implied that the amount of the claimed set off would be redetermined in the future, the CO effectively granted the government's claim in the amount of $297,057.12 when he declined to pay Placeway the balance due on the contract. That the CO might decide Placeway owed more or less at a later time does not affect the finality of the decision made granting the government a sum certain, $297,057.12.

Generally, exhaustion of administrative remedies should occur before a case is ripe for judicial review. Both issues of liability and of damages should usually be resolved before judicial review is sought. See Teller Envtl. Sys., Inc. v. United States, 802 F.2d 1385, 1388-89 (Fed.Cir.1986). In the instant case, the CO decided that the contract price balance could not be "released" because of Placeway's "failure to complete the subject project in a timely manner" which in turn allegedly caused delays in the government's issuance of notices to proceed on other contractors' projects, potentially incurring liability on the government's part. App. at 108. The CO's decision, however, did determine both liability and damages. He concluded that Placeway was liable because of delayed performance and effectively ruled that damages would be the contract balance, $297,226.12, subject to revision if he concluded that different damages were due at some indeterminate time in the future. ² Accordingly, we conclude that the CO made a final decision on the government claim alleging damages because of Placeway's delay in contract performance. The decision is no less final because it failed to include boilerplate language usually present for the protection of the contractor. Moreover, the CO's decision was adverse to Placeway and thus it could properly appeal to the Claims Court. As a final decision on a government claim, the Claims Court has jurisdiction, even though the claim was not certified. Accordingly, we vacate the Claims Court's dismissal of Count II and remand for further proceedings.

III. Adjustment Claims

There is a potential for contractors to subvert the certification requirement by artificially fragmenting a single claim into separate "claims," each seeking no more than $50,000.00; ³ any greater amount triggers the requirement for certification. Nonetheless, the CDA recognizes that a single government contract may give rise to more than one claim, and that a contractor may pursue his rights by filing "two or more suits" in either one or more fora. 41 U.S.C. Sec. 609 (1988); see, e.g., Warwick Constr., Inc. v. United States, 225 Ct.Cl. 567, 568-69 (1980). Because, when applicable, certification is a prerequisite to Claims Court jurisdiction over government contract disputes, the issue whether certification was required must always be considered. To determine whether two or more separate claims, or only a fragmented single claim, exists, the court must assess whether or not the claims are based on a common or related set of operative facts. If the court will have to review the same or related evidence to make its decision, then only one claim exists. If that claim seeks more than...