Burnside-Ott Aviation Training Center, Inc. v. U.S.

• Decision Date: 17 February 1993
• Docket Number: BURNSIDE-OTT,No. 92-5034,92-5034
• Citation: 985 F.2d 1574
• Parties: 38 Cont.Cas.Fed. (CCH) P 76,479 AVIATION TRAINING CENTER, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1574

985 F.2d 1574

38 Cont.Cas.Fed. (CCH) P 76,479

BURNSIDE-OTT AVIATION TRAINING CENTER, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 92-5034.

United States Court of Appeals Federal Circuit.

Feb. 17, 1993.

Harvey G. Sherzer, Howrey & Simon, Washington, DC, argued for plaintiff-appellant.

Deborah A. Bynum, Atty., Commercial Litigation Branch, Dept. of Justice, Washington, DC, argued for defendant-appellee. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Sharon Y. Eubanks, Asst. Director.

Before RICH, MICHEL, and RADER, Circuit Judges.

MICHEL, Circuit Judge.

Burnside-Ott Aviation Training Center, Inc. (Burnside-Ott) brought suit in the United States Claims Court (now the United States Court of Federal Claims) under the Contract Disputes Act of 1978 (CDA) claiming entitlement to additional compensation for services performed under a contract with the Navy as a result of having to reclassify its technician employees to the higher paid classification of aircraft workers. Burnside-Ott claimed entitlement under five alternative theories: the Price Adjustment Clause (Count I), the Changes Clause (Count II), breach of contract (Count III), equitable estoppel (Count IV), and mutual mistake (Count V).

The Claims Court dismissed Counts I-III for lack of jurisdiction, holding that the claims arose exclusively out of the labor standards provisions of the contract which require resolution of any disputes by the Department of Labor (DOL). Burnside-Ott Aviation Training Ctr. v. United States, 24 Cl.Ct. 553, 561, 562, 563 (1991). Because Counts I-III do not arise exclusively out of the labor standard provisions of the contract, we reverse as to those counts. Moreover, that portion of the Claims Court's decision that, despite the court having found no jurisdiction, nevertheless discussed and decided the merits of Counts I-III, is vacated.

The Claims Court granted summary judgment in favor of the United States on Counts IV and V, concluding that Burnside-Ott could not create a genuine issue of material fact on any issue that would entitle it to prevail because the claims were barred as a matter of law. Id. at 565, 569. Because Burnside-Ott's equitable estoppel and mutual mistake claims were not barred as a matter of law and because Burnside-Ott was not given an adequate opportunity to discover evidence which might have shown a genuine issue of material fact with respect to those counts, we vacate as to Counts IV and V. The case is remanded for further proceedings in accordance with this opinion.

I. BACKGROUND

A. Facts Leading to Suit

In 1981, the Navy contracted (Contract I) with Burnside-Ott for helicopter maintenance services at Whiting Field Naval Air Station, Florida. Wage Determination 81-77 (WD 81-77), ¹ issued by the DOL under the Service Contract Act of 1965, 41 U.S.C. § 351 et seq. (1988), was incorporated into the contract. Under WD 81-77, aircraft workers were paid at a higher rate than technicians. Burnside-Ott employed both aircraft workers and technicians to perform the contract. When the DOL increased the minimum wage set forth in WD 81-77, the contract was amended to incorporate the minimum wage increase, and the Navy reimbursed Burnside-Ott for its increase in wage costs.

In 1984, the Navy contracted (Contract II) with Dynalectron Corp. for the same services at Whiting. This contract incorporated the latest WD 81-77 (Rev. 5), which included wage classifications for both aircraft workers and technicians.

Later in 1984, in anticipation of entering into a third contract for the same services, the Navy submitted to the DOL a "Notice of Intention to Make a Service Contract" ("Form 98-A" or "SP 98"). In that form, the Navy was required to list the type of labor classifications that it believed would be necessary to perform the contract. The Navy did not include technicians on the list. 24 Cl.Ct. at 555.

In 1985, the Navy again contracted (Contract III) with Burnside-Ott for the same maintenance services at Whiting. This contract also incorporated the latest WD 81-77 (Rev. 6), which included wage classifications for both aircraft workers and technicians. Shortly after Burnside-Ott began performance of the contract, technicians employed by Burnside-Ott filed a complaint with the DOL challenging their classification as technicians. At the request of the DOL after its investigation and upon prompting by the Navy, Burnside-Ott submitted a conformance request to the DOL. ²

Before the DOL issued its ruling on the conformance request, the NAVY submitted another Form 98-A to the DOL in preparing to award the first option year of Contract III. In that form, the Navy again did not include a classification for technicians. On October 1, 1986, the DOL issued new wage determinations, WD 81-1143 and WD 85-1248, which increased the wages for all classifications of employees and did not include a labor classification for technicians. These new wage determinations replaced WD 81-77 (Rev. 6) and were incorporated into Contract III (Modification 20). Modification 20 became effective at the start of the first option year of Contract III, i.e., on October 1, 1986.

On December 15, 1986, the DOL rejected Burnside-Ott's conformance request and ordered Burnside-Ott to reclassify its technicians as higher paid aircraft workers for the base year of the contract. On May 28, 1987, the Navy submitted a request for review and reconsideration of the DOL's December 15, 1986 ruling. The Wage and Hour Division of the DOL denied the petition. On February 5, 1988, Burnside-Ott petitioned for a formal review of the Wage and Hour Division's ruling. On January 10, 1989, the Deputy Secretary of Labor upheld the prior DOL decisions, relying in part on the Form 98-A submitted by the Navy.

Upon receiving the DOL's final decision, Burnside-Ott paid the employees that it had hired as technicians the higher rate required for aircraft workers. Because of the DOL ruling and Modification 20, Burnside-Ott paid a correspondingly higher rate both for the base year of the contract and for the first option year of the contract. On August 23, 1989, Burnside-Ott submitted a claim to the contracting officer for an equitable adjustment, seeking reimbursement for its increased costs. The contracting officer denied the claim on November 9, 1989. On October 25, 1990, ³ Burnside-Ott filed suit in the United States Claims Court seeking damages in the amount of $3,166,691.61 under the CDA.

B. Proceedings Before the Claims Court

In the Claims Court, Burnside-Ott based its claim for relief on five alternative bases: (1) the Price Adjustment Clause of the contract, which provides that the contractor is entitled to a price adjustment for all increased wage costs resulting from an increased wage determination (Count I), (2) the Changes Clause of the contract, which provides for an equitable adjustment to compensate for a change in the services to be performed (Count II), (3) breach of contract based on the Changes Clause of the contract because the change under the contract allegedly so fundamentally altered the undertakings of the parties that it constituted a breach (Count III), (4) equitable estoppel based on the Navy's conduct, verbal representations of support, and acquiescence by silence over the course of three separate contracts, by which the Navy encouraged Burnside-Ott's classification of its employees as technicians (Count IV), and (5) mutual mistake because at the time of contracting both parties believed that technicians were properly employed under the contract (Count V).

On April 12, 1991, prior to the initiation of discovery by either party, the United States filed a motion to dismiss for lack of subject matter jurisdiction and failure to state a claim upon which relief could be granted. The government attached documents in support of its motion, and apparently in anticipation of the court's treatment of the motion as a motion for summary judgment under RUSCC 12(b), the government noted its objection to such treatment on the jurisdictional question. On May 13, 1991, Burnside-Ott filed its Opposition to the Defendant's Motion to Dismiss, in which it also specifically objected to the conversion of the government's motion to dismiss into a motion for summary judgment. The Claims Court conducted a teleconference on June 4, 1991, in which it informed the parties that it would treat the government's motion to dismiss as a motion for summary judgment.

On June 4, 1991, the Claims Court issued an order allowing Burnside-Ott 30 days from the date of the order "to conduct discovery limited to that which is necessary to respond to defendant's motion for summary judgment." The Claims Court ordered Burnside-Ott to file "[o]n or before July 5, 1991 ... a supplemental response addressing those issues not briefed fully in its original May 13, 1991 response." On June 11, 1991, Burnside-Ott served a Request for Admissions, Interrogatories, a Request for Production of Documents, and a Notice of Deposition on the government.

On June 17, 1991, the government filed a motion for reconsideration of the Claims Court's June 4, 1991 order. In it, the government noted that under the normal rules of the Claims Court it should have 30 days in which to respond to Burnside-Ott's discovery request and that unless the court extended the July 5, 1991 date that it had set for Burnside-Ott's supplemental response, Burnside-Ott's supplemental response would be due before Burnside-Ott had an opportunity to review the government's responses to its discovery requests. In response, on June 24, 1991, the Claims Court issued an order allowing the government until June 28, 1991 to respond to discovery and extending the date that Burnside-Ott's supplemental response was due to July 12, 1992. The court stated:

The court's purpose in granting a 30 day discovery period was to give plaintiff a limited opportunity to...