Envtl. Safety Consultants Inc v. The United States

• Decision Date: 21 October 2010
• Docket Number: No. 10-191 C,10-191 C
• Parties: ENVIRONMENTAL SAFETY CONSULTANTS, INC., ET AL., Plaintiffs, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

ENVIRONMENTAL SAFETY CONSULTANTS, INC., ET AL., Plaintiffs,

v.THE UNITED STATES, Defendant.

No. 10-191 C

United States Court of Federal Claims.

Filed: October 21, 2010

Motion to Dismiss; Contract Disputes Act; Punitive Damages; Prompt Payment Act; Takings Clause.

Francis O. Kadiri, Stone Mountain, GA, for plaintiffs.

David D'Alessandris, Washington, DC, with whom were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Bryant G. Snee, Deputy Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, for defendant.

OPINION AND ORDER

HEWITT, Chief Judge

Before the court are plaintiffs' Complaint (Complaint or Compl.), Docket Number (Dkt. No.) 1, filed March 30, 2010; Defendant's Motion to Dismiss (defendant's Motion or Def.'s Mot.) and Defendant's Appendix (Def.'s App.), Dkt. No. 6, filed June 1, 2010; Plaintiffs' Brief in Opposition to Defendant's Motion to Dismiss (plaintiffs' Response or Pls.' Resp.), Dkt. No. 7, and Plaintiffs' Appendix (Pls.' App.), Dkt. No. 8, filed July 2, 2010; and Defendant's Reply in Support of Motion to Dismiss (defendant's Reply or Def.'s Reply), Dkt. No. 9, filed July 16, 2010. Defendant moves to dismiss plaintiffs' contract claims for lack of jurisdiction pursuant to Rule 12(b)(1) of the Rules of the United States Court of Federal Claims (RCFC). Def.'s Mot. 1. Defendant also moves to dismiss plaintiffs' Fifth Amendment takings claim and plaintiffs' allegation of a violation of the Prompt Payment Act for failure to state a claim upon which relief can be grantedpursuant to Rule 12(b)(6) of the RCFC. Id. For the following reasons, the court GRANTS IN PART and DENIES IN PART defendant's Motion to Dismiss.

I. Background

Plaintiffs are Environmental Safety Consultants, Inc. (ESCI) and Peter C. Nwogu (Nwogu), who is the founder, owner, President and Project Manager of ESCI. Compl. ¶ 6. Plaintiffs' claims relate to contracts ESCI entered into with the United States Department of the Navy, the United States Army Corps of Engineers and the National Parks Service.

A. ESCI's Contract with the United States Department of the Navy¹

On November 13, 1995 ESCI entered into Contract No. N62470-95-C-2399 FY 95 with the United States Department of the Navy (Navy) to remove storage tanks and contaminated materials from the Naval Weapons Station in Yorktown, Virginia.² Compl. ¶ 8; Plaintiffs' Exhibit (PX) 12 (Envtl. Safety Consultants, Inc., ASBCA No. 51722, 02-2 BCA ¶ 31, 951) 1.³ The estimated cost of the work was $561,764.25. Compl. ¶ 10; PX 2 (Offer) box 22. On June 12, 1998 the Navy's Contracting Officer (CO) issued a final decision terminating ESCI's contract for default and notifying ESCI of its appeal rights.⁴ Compl. ¶ 32; PX 12 (Envtl. Safety Consultants, Inc., ASBCA No. 54615, 07-1 BCA ¶ 33, 483) 22.

ESCI filed a notice of appeal, docketed as ASBCA No. 51722, with the Armed Services Board of Contract Appeals (ASBCA) on August 26, 1998, ⁵ in which it appealed "each and every aspect of the decision of June 6, 1998 of the Contracting Officer to Terminate the... Contract for Default." PX 11 (Notice of Appeal) 1; PX 12 (Envtl. Safety Consultants, Inc., ASBCA No. 51722, 02-2 BCA ¶ 31, 951) 3. In its complaint to the ASBCA, ESCI requested two forms of relief: first, that the termination for default either be reversed or converted into a termination for the convenience of the government, and second, that the ASBCA award ESCI $334,687.85 for work completed on the contract. PX 11 (Notice of Appeal) 6; Compl. ¶ 35; PX 12 (Envtl. Safety Consultants, Inc., ASBCA No. 51722, 02-2 BCA ¶ 31, 951) 3. On July 8, 2002 the ASBCA dismissed ESCI's affirmative monetary claim without prejudice because a properly certified claim had not been presented to a Contracting Officer, and ESCI's monetary claim was therefore outside the jurisdiction of the ASBCA. PX 12 (Envtl. Safety Consultants, Inc., ASBCA No. 51722, 02-2 BCA ¶ 31, 951) 5. The ASBCA has not yet ruled on ESCI's claim concerning the validity of the termination for default.

ESCI filed a motion for reconsideration of the ASBCA's dismissal of the monetary claim, which the ASBCA denied on October 18, 2002. Envtl. Safety Consultants, Inc., ASBCA No. 51722, 03-1 BCA ¶ 32, 057. ESCI then filed a motion requesting that the ASBCA's denial of ESCI's motion for reconsideration be reissued with a later date so that ESCI could appeal the ASBCA's decision to the United States Court of Appeals for the Federal Circuit (Federal Circuit), which the ASBCA denied on May 19, 2003. Envtl. Safety Consultants, Inc., ASBCA No. 51722, 03-2 BCA ¶ 32, 260.

ESCI then filed an appeal with the Federal Circuit, which was dismissed on August 20, 2003 because ESCI failed to pay the docketing fee. Envtl. Safety Consultants, Inc. v. Johnson, 74 F. App'x 54 (Fed. Cir. 2003) (unpublished). ESCI paid the filing fee, and the court reinstated the appeal on September 4, 2003. Envtl. Safety Consultants v. Johnson, 75 F. App'x 763 (Fed. Cir. 2003) (unpublished). ESCI failed to comply with the court's order to obtain counsel, so the court dismissed the appeal on December 17, 2003 for failure to prosecute. Envtl. Safety Consultants, Inc. v. Johnson, 85 F. App'x 204 (Fed. Cir. 2003) (unpublished).

Concurrent with its appeal to the Federal Circuit, on October 22, 2003 ESCI submitted a certified claim for equitable adjustment to a Contracting Officer, seeking $457,011.02 for additional work ESCI was required to perform. PX 12 (Envtl. Safety Consultants, Inc., ASBCA No. 54615, 07-1 BCA ¶ 33, 483) 9-14. The Contracting Officer has not issued a final decision for this claim. Id. at 10. On May 17, 2004 ESCI filed an appeal with the ASBCA, docketed as ASBCA No. 54615, in which ESCI appealed "each and every aspect of the decision of the Contracting Officer for failure to issue decisions amounting to denial of Request for Equitable Adjustment received by the Contracting Officer on October 22, 2003." Id. at 9. On January 31, 2007 the ASBCA dismissed all of ESCI's claims, holding that the Board did not have jurisdiction to hear the claims because they were untimely under the Contract Disputes Act, 41 U.S.C. § 605(a) (2006).⁶ Id. at 44. On March 29, 2007 ESCI filed a motion for reconsideration with the ASBCA, which the ASBCA dismissed as untimely on June 18, 2007. PX 12 (Envtl. Safety Consultants, Inc., ASBCA No. 54615, 07-2 BCA ¶ 33613) (referring to the ASBCA's strict enforcement of Board Rule 29, which requires a party seeking a motion for reconsideration of an ASBCA decision to file the motion within thirty days from that party's receipt of a copy of the ASBCA's decision) 3-6.

Additionally, on December 3, 2001 the Contracting Officer issued a final decision which assessed $167,691.75 in liquidated damages against ESCI and notified ESCI of its rights of appeal. PX 12 (Envtl. Safety Consultants, Inc., ASBCA No. 54615, 07-1 BCA ¶ 33, 483) 26. There is no evidence in the procedural history that ESCI ever appealed the Contracting Officer's December 3, 2001 final decision. See id.; see also Nwogu v. United States, No. 09-268C, 2010 U.S. Claims LEXIS 669, at *8 (Fed. Cl. Aug. 30, 2010). ("Based on the record before the court... it appears that ESCI never timely appealed the contracting officer's assessed reprocurement costs and liquidated damages....").⁷

In this case, plaintiffs contend that defendant breached its contract with ESCI by failing to pay ESCI for completed work and by forcing ESCI to transfer its contract to a local contractor. Compl. ¶¶ 60, 61. Plaintiffs also contend that the Navy waived its right to liquidated damages because it acted unreasonably and in bad faith in causing extensive delays in the completion of the contract. Compl. ¶ 64. Finally, plaintiffs contend that defendant violated the Prompt Payment Act. Compl. ¶ 60. Plaintiffs seek judgment in their favor in the amount of $457,011.02, plus interest, costs and fees. Compl. ¶ 65.

B. ESCI's Contract with the United States Army Corps of Engineers

On September 29, 1995 ESCI entered into Contract No. DACW 38-95-C-0102 with the United States Army Corps of Engineers (USACE) to construct "four Reverie Aquatic Habitat Units and Riprap protection for two bridges" in Mississippi. Compl. ¶ 38. On August 22, 1996 a USACE Contracting Officer terminated ESCI's contract for default. Compl. ¶ 44. On October 10, 1 996 the Contracting Officer issued the final decision terminating ESCI's contract for default and notified ESCI of its appeal rights. PX 14 (Envtl. Safety Consultants, Inc., ASBCA No. 54995, 06-1 BCA ¶ 33, 230) 2. ESCI received the Contracting Officer's final decision no later than October 22, 1996, on which date ESCI's attorney requested that the Contracting Officer "convert the default termination to a 'no cost termination settlement.'" Id. The Contracting Officer denied ESCI's request on December 4, 1996. Id. There is no evidence in the procedural history that ESCI ever appealed the Contracting Officer's October 10, 1996 final decision of the termination for default to the ASBCA. Id.

In a letter dated September 23, 2002, ESCI submitted a request for equitable adjustment to the Contracting Officer, seeking $98,639.18 for work completed on the contract. Id. ESCI resubmitted this request on March 16, 2003. Id. In an April 23, 2003letter, the Contracting Officer issued a final decision that denied ESCI's request for equitable adjustment and informed ESCI of its right to appeal.⁸ Id. ESCI received the Contracting Officer's final decision on May 20, 2003. Id. ESCI sent a letter dated May 30, 2003 to the Contracting Officer characterizing the final decision as a "partial answer to [ESCI's] request for equitable adjustment." Id. The Contracting Officer's June 4, 2003 reply to ESCI clarified that the "April 23, 2003... Final Decision was not a partial answer to [ESCI's request for equitable adjustment]. Instead, it was a total and uncategorical [sic] denial...." Id. at 3.

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