Avant Assessment, LLC v. United States
| Decision Date | 29 April 2022 |
| Docket Number | 20-1185 |
| Parties | AVANT ASSESSMENT, LLC, Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
Dirk D. Haire and Kristen W. Broz, Fox Rothschild LLP, Washington D.C., for Plaintiff.
Daniel B. Volk, Senior Trial Attorney, U.S. Department of Justice Civil Division, Commercial Litigation Branch, Washington D.C., with whom were Brian M. Boynton, Acting Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Patricia M. McCarthy, Assistant Director, for the Defendant. Major Sherod L. Davis, Sr., U.S. Army Legal Services Agency of counsel.
Avant Assessment, LLC made foreign language testing materials for the U.S. Army to use to gauge the proficiency of its linguists. The Army terminated Avant's contracts for default, which Avant successfully challenged at the Armed Services Board of Contract Appeals ("ASBCA"), which ordered the terminations to be converted to terminations for convenience. Following the ASBCA's order, Avant submitted claims for termination damages and went back to the ASBCA to recover these claimed damages after the contracting officer denied the claims. But Avant sought relief different than it sought from the contracting officer, and the ASBCA dismissed much of Avant's claims for lack of jurisdiction but did enter judgment on the claims over which it had jurisdiction. Avant then submitted new claims to the contracting officer and has appealed their denial to this Court.
The Government moves to dismiss, arguing claim preclusion bars Avant's claims because, according to the Government, Avant could have and should have brought these claims as part of the ASBCA litigation. While the Government is correct that claim preclusion bars a significant portion of the Complaint, it does not bar Avant's claims under the Uniform Commercial Code ("UCC") because Avant did not and could not have known the essential facts to establish those claims when it submitted its claims to the contracting officer that led to the ASBCA litigation. Therefore, the Court grants-in-part the Government's motion to dismiss insofar as it seeks dismissal of the Complaint as to Counts I-III, VII, and VIII, and denies the motion insofar as it seeks dismissal of Counts IV-VI. These Counts are adequately pled and survive the motion to dismiss. The Court also denies the Government's motion to transfer this action to the ASBCA.
In 2010 and 2011, Avant and the U.S. Army entered a series of contracts for Avant to provide foreign language proficiency tests. ECF No. 1 ¶ 18. The contracts at issue are Contract Nos. W9124N-11-C-0015 ("Contract 15"), W9124N-11-C-033 ("Contract 33"), and W9124N-11-C-0109 ("Contract 109") (collectively the "Contracts"). Id. ¶ 5.
The Contracts required Avant to deliver thousands of "acceptable" test items to the Defense Language Institute ("DLI") so that DLI could use these items to assess the foreign language proficiency of military linguists. ECF No. 1-4 at 6[1]; ECF No. 1-5 at 9; ECF No. 1-6 at 11; see also ECF No. 1 ¶¶ 24, 26, 28. The Contracts also memorialize an understanding that the parties anticipated a high rejection rate for Avant's testing materials, providing that the rejection rate would likely be between 30-60%. ECF No. 1-4 at 8 (¶ C.6.1.2); ECF No. 1-5 at 14 (¶ C.6.10.1); ECF No. 1-6 at 14 (¶ C.5.2.2.2). The Government did, in fact, reject a significant number of test items that Avant submitted for approval. ECF No. 1 ¶¶ 50-51.
The Government only had to pay for the items it accepted but retained all intellectual property rights in both accepted and rejected items. Id. ¶¶ 33-34. The Contracts provide the Government "sole ownership and exclusive rights to all deliverables . . . ." Id. ¶ 34 (quoting ECF No. 1-4 at 12 (¶ C.8.1.1); ECF No. 1-5 at 14 (¶ C.6.11.2); ECF No. 1-6 at 16 (¶ C.6.12.2)). But the Contracts do not define what constitutes an "acceptable" item; they only provide that "[t]he Contractor shall follow the test specifications provided by [the Defense Language Institute Foreign Language Center]." Id. ¶¶ 36-37.
During performance, the Parties did not see eye to eye on how the Contracts were going. In 2013, the Government terminated the Contracts for cause because Avant failed to "timely perform" or failed to "deliver the required number of acceptable items." Id. ¶ 72. Avant challenged the Government's terminations for cause at the ASBCA, seeking to have the terminations converted to terminations for convenience. Id. ¶ 82. The ASBCA agreed with Avant and ordered the terminations converted to terminations for convenience. Id. ¶ 6; see also ECF Nos. 1-1 at 2; 1-2 at 2; and 1-3 at 7. Further, the ASBCA concluded that "Avant is entitled to recover under FAR § 52.212-4(1), in the context of a termination for convenience settlement proposal[ ] to be presented to the contracting officer." ECF No. 1 ¶ 86 (quoting ECF No. 1-3 at 5-6).
In June and August 2016, Avant submitted its settlement proposals to the contracting officer. Id. ¶¶ 87-89. In these proposals, Avant claimed that the Army had constructively accepted the "rejected" test materials and that the materials met the acceptance standards. Id. ¶ 93. The Army, however, did not engage with Avant on these proposals and Avant appealed the Army's deemed denial of its claims to the ASBCA. Id. ¶¶ 91-92.
During the ASBCA litigation, Avant asserted claims that the Government had constructively accepted its rejected testing materials by retaining them or had improperly rejected them. Because these claims were not presented to the contracting officer, the ASBCA held that it lacked jurisdiction over these claims "because those claims are based upon operative facts that were not already presented in the 2016 claims that are the subject of these appeals." ECF No. 1-11 at 3. Avant did not appeal the ASBCA's decision, which became final.
Avant then submitted supplemental settlement proposals and certified claims for each of the Contracts. ECF No. 1 ¶¶ 95-98. These supplemental proposals put forward the claims that the ASBCA had dismissed for lack of jurisdiction and added new claims for the test items that the Army formally rejected but then used. According to Avant, this means the Army constructively accepted these materials under UCC § 2-606(1). Id. ¶¶ 95-98; see also ECF Nos. 1-12, 1-13, 1-14. Avant's supplemental proposals were deemed denied on September 13, 2019, ECF No. 1 ¶ 99, and Avant timely filed this action.
"'A motion to dismiss . . . for failure to state a claim upon which relief can be granted is appropriate when the facts asserted by the plaintiff do not entitle him to a legal remedy.'" United Pac. Ins. Co. v. United States, 464 F.3d 1325, 1327 (Fed. Cir. 2006) (quoting Boyle v. United States, 200 F.3d 1369, 1372 (Fed. Cir. 2000)). As the Supreme Court explained, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). And to be "plausible on its face," it "does not need detailed factual allegations." Twombly, 550 U.S. at 555; see also Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009) (). In other words, the complaint must contain enough detail "to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (citations omitted). "Conclusory allegations of law and unwarranted inferences of fact do not suffice to support a claim." Bradley v. Chiron Corp., 136 F.3d 1317, 1322 (Fed. Cir. 1998) (citations omitted). Nevertheless, the Court "must assume all well-pled factual allegations are true and indulge in all reasonable inferences in favor of the nonmovant." United Pac. Ins. Co., 464 F.3d at 1327-28 (quoting Anaheim Gardens v. United States, 444 F.3d 1309, 1314-15 (Fed. Cir. 2006)).
A Rule 12(b)(6) dismissal may be appropriate based on an affirmative defense such as claim preclusion. Larson v. United States, 89 Fed.Cl. 363, 382 (2009), aff'd, 376 Fed.Appx. 26 (Fed. Cir. 2010). "Affirmative defenses that have been considered under a Rule 12(b)(6) motion to dismiss include, among others, 'various types of estoppel' and 'the barring effect of [claim preclusion].'" Corrigan v. United States, 82 Fed.Cl. 301, 304 (2008) (quoting 5B Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2008)). "As claim preclusion rests on a final judgment on the merits, it can quite properly and naturally be raised via a merits-based RCFC 12(b)(6) motion." Chisolm v. United States, 82 Fed.Cl. 185, 193 (2008), aff'd, 298 Fed.Appx. 957 (Fed. Cir. 2008) (citations omitted).
In Counts I-III, Avant seeks damages under FAR § 52.212-4(1) for the Government's termination of the Contracts and subsequent refusal to pay termination for convenience damages. ECF No. 1 ¶¶ 1, 101-07 (Count I), 108-14 (Count II), 115-21 (Count III). In Counts IV-VI Avant seeks damages under UCC § 2-606(1) based on the Government's implied acceptance of items that Avant provided to the Government that the Government rejected but then used without paying Avant. Id. ¶¶ 2, 122-28 (Count IV), 129-35 (Count V), 136-42 (Count VI). In Count VII, Avant seeks damages via a theory of equitable estoppel. Id. ¶¶ 3, 143-50. And in Count VIII, Avant seeks a Declaratory Judgment covering the percentage of work that it performed before the Government's notice of termination of the Contracts. Id. ¶¶ 4, 151-58. Both Count VII and VIII relate to...
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