California v. United States

• Decision Date: 31 May 2020
• Docket Number: No. 17-206C,17-206C
• Parties: STATE OF CALIFORNIA, acting by and through BETTY T. YEE, STATE CONTROLLER, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Claims Court

STATE OF CALIFORNIA, acting by and throughBETTY T. YEE, STATE CONTROLLER, Plaintiff, v. UNITED STATES, Defendant.

No. 17-206C

United States Court of Federal Claims

May 31, 2020

Motion for Pre- and Post-Judgment Interest; Contract Disputes Act; Prompt Payment Act.

Martin Lobel, Lobel, Novins & Lamont, LLP, Washington, D.C. for plaintiff.

Rafique Anderson, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With him were Zachary J. Sullivan, Trial Attorney, Commercial Litigation Branch, Civil Division, Allison Kidd-Miller, Assistant Director, Commercial Litigation Branch, Civil Division, Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, Civil Division, and Joseph H. Hunt, Assistant Attorney General, Civil Division. Of counsel was Amy M. Siadak, Attorney-Advisor, General Law, Office of the Solicitor - Rocky Mountain Region, United States Department of the Interior.

OPINION

HORN, J.

FINDINGS OF FACT

In the above-captioned case, after this court issued a decision, and after the United States Court of Appeals for the Federal Circuit issued a decision and mandate, and the case was remanded to this court, plaintiff filed for consideration of additional issues in this court.¹ Plaintiff's amended complaint in this court initially sought redress in the amount of $296,459.94, plus interest.² Plaintiff disputed defendant's interpretation of cooperative the agreement language pertaining to reimbursement calculation methods between the State of California and the United States for fiscal years 2011-2014. Plaintiff argued that language in the cooperative agreement permitted the state to choose between using its state method for calculating reimbursement and the United States Office of Management and Budget (OMB) reimbursement method. Plaintiff elected to use its state calculation method to calculate salary, fringe benefits, and indirect costs. Defendant argued that the language of the cooperative agreement required plaintiff to follow the OMB method for calculating reimbursement amounts. According to defendant, this interpretation resulted in the defendant finding that it had over-compensated plaintiff by $296,459.94, which defendant concluded was due to plaintiff's choice to use its reimbursement method, thereby calculating costs differently from the OMB method. Defendant subsequently proceeded to withhold payment to make up for the $296,459.94 difference.

Plaintiff initially filed suit in the United States District Court for the District of Columbia, which transferred the case to the United States Court of Federal Claims. In this court, plaintiff argued that using the state's reimbursement method was permissible under the language in the contract, and that plaintiff was entitled to the $296,459.94 for the years 2011 to and including 2014, along with interest. Defendant argued that the contract language required that plaintiff should have used OMB's method for calculating cost reimbursement. On December 20, 2017, this court granted defendant's motion for summary judgment, denied plaintiff's cross-motion for summary judgment, and dismissed plaintiff's complaint.³ See generally Yee v. United States, 135 Fed. Cl. 718 (2017), rev'd, 777 F. App'x 484 (Fed. Cir. 2019). On February 9, 2018, plaintiff appealed this court's decision to the United States Court of Appeals for the Federal Circuit. The Federal Circuit reversed the ruling on June 12, 2019 in a non-precedential, unpublished opinion on the single issue of contract interpretation, finding plaintiff's interpretation of the contract language to be permissible. See generally Yee v. United States, 777 F. App'x 484 (Fed. Cir. 2019). The Federal Circuit issued its mandate on August 16, 2019 and remanded the case to this court.

Following the decision, mandate, and remand by the Federal Circuit, plaintiff and defendant filed a joint status report in this court on September 5, 2019, in which plaintiff raised two issues which had previously not been considered by either this court or the Federal Circuit on appeal. Plaintiff asserted that it was entitled to additional monies, and that plaintiff was entitled to pre-judgment and post-judgment interest. Plaintiff subsequently filed a motion in this court to amend its previously amended complaint on September 16, 2019, to adjust the amount in remedy from $296,459.94 to $339,861.88 by adding alleged damages from the fiscal year 2015, a year not pled in the original complaint, or in the amended complaint, or reviewed by the Federal Circuit, to the damages pled in the amended complaint for the time period covering fiscal years 2011 to and including 2014. Plaintiff asserted it had only recently become aware of the existence of the 2015 costs allegedly owed to the State of California and asserted that plaintiff had promptly notified defendant in June 2019 of the payments allegedly due for the 2015 contract year. Defendant filed a response in this court on September 30, 2019, opposing plaintiff's motion on the grounds that plaintiff's motion would cause undue delay, unfair prejudice and futility. On November 11, 2019, this court denied plaintiff's motion, concluding that "it would be inappropriate to grant plaintiff's motion to amend its pleading for the above-captioned, previously resolved case in which fiscal year 2015 was not included in plaintiff's original, or transfer, complaint, reviewed by this court, or included in the Federal Circuit's decision and mandate."

On September 16, 2019, plaintiff filed another motion, alleging entitlement to pre-judgment and post-judgment interest. The entirety of plaintiff's argument in its motion for interest states:

When the Court of Appeals issued its Mandate on August 16, 2019, it effectively transferred jurisdiction back to this Court (Fed. R. App P. 41) which now is required to act as if it granted plaintiff's Motion for Summary Judgment and order the relief sought. Plaintiff is entitled to pre and post-judgment interest under the Contract Disputes Act, 41 U.S.C. § 611, the Prompt Payment Act, 31 U.S.C. § 3901 and 48 C.F.R. § 2.101. See, Sarang Corp. v. U.S., 76 Fed. Cl. 560 (2007); Bay County Florida v. U.S., 117 Fed. Cl. 131 (2014).

There is no question that the plaintiff submitted a "claim" (Sarang at 564-5) on July 29, 2015 when it filed a protest to ONRR's [Department of Interior Office of Natural Resources Revenue, State, and Tribal Support] decision to recoup money based on its misreading of the contract. The protest was turned down by the defendant on October 7, 2015. Plaintiff appealed the decision on October 29, 2015 and was denied in a final agency action on January 13, 2016. Id. at 564. As the Court of Appeals found, "Interior and the State of California contracted for use of state employee labor. In exchange for use of that labor, Interior agreed to reimburse the State for allowable costs. The contract allowed certain costs to be calculated and billed using the State's practice. The State did so." Although the defendant claims that a cooperative agreement is not a contract, that is not the law of the case or supported by the relevant statutes (See 31 U.S.C. § 3902(a), 30 U.S.C. § 1732, 31 U.S.C. § 6305). Whether it's called a cooperative agreement or a contract, the Court of Appeals ruled it was a contract to procure services. ONRR contracted with California to procure the use of its auditors to audit federal oil and gas production within the State and independently audited California's performance under the contract every year.

Plaintiff, the State of California is entitled to interest from the date of its claim, July 29, 2015, until payment of the amount owed is received. 41 U.S.C. § 7109(a) [sic] 41 U.S.C. § 611. The interest rate is set by the Secretary of the Treasury, 5 C.F.R. § 1315.10, and can be found for the relevant periods on the web at https://fiscal.treasury.gov/prompt-payment/rates.html. This is not a difficult task as is shown by the calculations the Controller's Office did which are attached as Exhibit 1.

Accordingly, plaintiff respectfully requests the Court to issue an Order granting its Motion.

(emphasis in original; footnotes and internal citations omitted).

In response, defendant argues that plaintiff is not entitled to pre- or post-judgment interest, first arguing that plaintiff waived its right to include such a claim in the present proceedings before this court by failing to raise the argument in a timely fashion. According to defendant, "California has waived any argument that the CDA [Contract Disputes Act] applies because California failed to raise it until after this case was over." Defendant also asserts that interest as a remedy is precluded in cases against the United States government, except for (1) in situations mandated by statute or (2) provided for within a contract, which defendant argues does not apply to the above caption case, and argues that the agreement at issue is like other cooperative agreements entered into by the Department of the Interior under the Federal Oil and Gas Royalty Management Act of 1982 and characterizes such cooperative agreements as existing outside the coverage of the Contract Disputes Act and Prompt Payment Act. Defendant also argues that the Federal Circuit repeatedly referred to the agreement as a "cooperative agreement" throughout the decision.⁴ Alternatively, defendant asserts that if the Contract Disputes Act is found to cover the agreement, defendant claims that plaintiff nevertheless failed to meet the jurisdictional requirements necessary to bring suit under the Contract Disputes Act. Defendant argues that "even if this agreement was not a cooperative agreement, but instead a procurement contract covered by the CDA (which it is not), this Court would lack jurisdiction because California never met the jurisdictional prerequisites under the CDA to even bring suit in this Court." Regarding the Prompt Payment Act, defendant...