Flandreau Santee Sioux Tribe v. United States
| Decision Date | 11 July 2022 |
| Docket Number | 4:20-CV-4142 |
| Citation | 610 F.Supp.3d 1225 |
| Parties | FLANDREAU SANTEE SIOUX TRIBE, a federally recognized Indian tribe, Plaintiff, v. UNITED STATES of America; Alex M. Azar II, in his official capacity as Secretary of the United States Department of Health and Human Service; Radm Michael D. Weahkee, in his official capacity as Director of the Indian Health Service ; and David Bernhart in his official capacity as Secretary of the United States Department of Interior, Defendants. |
| Court | U.S. District Court — District of South Dakota |
Seth C. Pearman, Flandreau Santee Sioux Tribe, Flandreau, SD, Brandt B. Fenner, Pro Hac Vice, Peebles Kidder Bergin & Robinson LLP, Washington, DC, John Nyhan, Pro Hac Vice, Peebles Kidder LLP, Sacramento, CA, Shannon R. Falon, Johnson, Janklow, Abdallah & Reiter, LLP, Sioux Falls, SD, for Plaintiff.
Meghan K. Roche, U.S. Attorney's Office, Sioux Falls, SD, for Defendants.
On September 30, 2021, on motion by Defendants, this Court dismissed Counts II and III of Plaintiff Flandreau Santee Sioux Tribe's ("the Tribe") complaint in full and dismissed Count VI in part. Pending before the Court is the Tribe's Motion for Reconsideration pursuant to Rule 59(b) of the Federal Rules of Civil Procedure, and in the alternative, Motion to Amend pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. For the following reasons, the Tribe's motion is denied.
In its complaint, the Tribe alleges that Defendants failed to pay the full amount of contract support costs due to it in violation of their obligations under the Tribe's Indian Self Determination Education and Assistance Act ("IDEAA") contracts for fiscal years 2011 through 2013 and in violation of the ISDEAA, Defendants moved to dismiss Counts II, III and VI of the Tribe's complaint. Counts II and III involve claims for breach of contract. In Count II, the Tribe alleged IHS "failed to calculate and pay the administrative costs of operating the third-party revenue-funded portion of the IHS contracts" by "fail[ing] to include third-party revenues in the IHS direct program base against which the Tribe's indirect cost rate was applied[.]" (Doc. 1, ¶¶ 61-62). In Count III, the Tribe sought damages in the form of lost third-party services and revenues. (Doc. 1, ¶ 65). The Tribe alleged that IHS's failure to pay the Tribe's administrative costs associated with operating the third-party revenue-funded portion of the IHS contracts caused the Tribe to divert program dollars to cover fixed administrative and overhead costs. (Doc. 1, ¶ 36). It was alleged that absent IHS's failure to pay the full amount of indirect contract support costs, these program dollars would have been available for additional program services from which the Tribe could have received additional third-party revenue. (Doc. 1, ¶ 36). In Count VI, the Tribe alleged that IHS's failure to pay the Tribe the full contract support costs was also in breach of its statutory duties under 25 U.S.C. § 5325(a)(2)-(3).
On September 30, 2021, the Court issued its Memorandum Opinion and Order granting Plaintiff's Motion to Dismiss Counts II and III as well as the Tribe's Count VI statutory violation claims for lost third-party revenues and for unpaid contract support costs on the third-party revenue-funded portion of the Tribe's operations. (Doc. 36). The Court concluded that the Tribe had failed to present such claims to the contracting officer for a final decision—a prerequisite to the Court's jurisdiction over such claims.
The Court stated in its decision that "[b]ecause a contracting officer's final decision is a prerequisite to the court's jurisdiction [under the Contract Disputes Act ("CDA")] the court may not consider ‘new’ claims a contractor failed to present to the contracting officer. (Doc. 36 at 393) (citing K-Con Bldg. Sys., Inc. v. United States , 778 F.3d 1000, 1005 (Fed. Cir. 2015) ). The purpose of the CDA presentation requirement is to provide the contracting officer with "adequate notice of the basis and amount of [the] claim." (Doc. 36 at 406) (citing Williams v. United States , 118 Fed.Cl. 533, 539 (2014) ). "[M]erely adding factual details or legal argumentation does not create a different claim, but presenting a materially different factual or legal theory ... does create a different claim." (Doc. 36 at 393) (citing K-Con Bldg. Sys., Inc. , 778 F.3d at 1006 ).
The Court noted that "[i]n determining whether the assertion constitutes a new claim, the critical test is whether the contracting officer's right to adjudicate the claim is undermined by circumventing his statutory role ‘to receive and pass judgment on the contractor's entire claim.’ " (Doc. 36 at 393) (citing Cerberonics, Inc. v. United States , 13 Cl.Ct. 415, 418 (1987) ). This approach, "serves the objective of giving the contracting officer an ample pre-suit opportunity to rule on a request, knowing at least the relief sought and what substantive issues are raised by the request." (Doc. 36 at 394) (citing K-Con Bldg. Sys., Inc. , 778 F.3d at 1006 ).
In opposition to the Motion to Dismiss, the Tribe argued that the factual and legal basis of its third-party revenue-based claims were presented to the contracting officer because they arose out of the Tribe's claim that IHS failed to pay the Tribe less than the full amount of contract support costs due to it under its ISDEAA contracts. (Doc. 24 at 260). After examining the relevant caselaw, the Court concluded that in order for a claim not to be considered a new claim, the factual and legal basis of the third-party revenue-based claims and the amount of relief sought for such claims must have been presented to the contracting officer for a final decision. (Doc. 36 at 403). The Court stated that failure to do so would deprive the contracting officer with an opportunity to pass judgment on the Tribe's entire claim since the agency could find that the Tribe was entitled to monetary relief on its shortfall claim on an entirely different basis without ever considering whether third-party revenues should be included in the direct cost base and applied to the indirect cost rate for fiscal years 2011-13. (Doc. 36 at 403) (citing Johnson Controls World Servs., Inc. v. United States , 43 Fed.Cl. 589, 593 (1999) ()).
In examining the Tribe's fiscal year 2011 claims letter, the Court found that it failed to detail the factual or legal basis for its third-party revenue-based claims. (Doc. 36 at 403). The Tribe merely indicated in its fiscal year 2011 form "expectancy and other damages" in the amount of $0. (Doc. 36 at 403). By contrast, in the Tribe's fiscal year 2012-13 Contract Dispute Calculation and Information Form, the Court found that the Tribe alleged at least the factual basis for its claims based on third-party revenues in the Tribe's Claim 7 for Expectancy damages.1 (Doc. 36 at 403-04). However, the Court concluded after examining the relevant caselaw that the Tribe's claim of $0 or "$-" as detailed in its Claim 7 for expectancy damages did not meet the CDA's "sum certain" requirement.
The Tribe argued in opposition to the Motion to Dismiss that it was not precluded from seeking additional damages for its third-party revenue-based claims in federal court. (Doc. 24 at 262). The Court acknowledged that courts have "declined to impose so rigid of a standard as to preclude adjustments in claim amounts ‘based on matters developed in litigation.’ " (Doc. 36 at 409) (citing K-Con Bldg. Sys., Inc. , 778 F.3d at 1004 ). But in order for a court to exercise jurisdiction over a claim, the dollar amount of which has been enlarged in the court over the amount presented to the contracting officer, the Court noted that: (1) the increase in the amount of the claim must be based on the same set of operative facts previously presented to the contracting officer; and (2) the court must find that the contractor neither knew nor reasonably should have known, at the time when the claim was presented to the contracting officer, of the factors justifying an increase in the amount of the claim. (Doc. 36 at 409-10) (citing Al-Juthoor Contracting Co. v. United States , 129 Fed.Cl. 599, 619 (2016) ). The Federal Court of Claims has held that "increases in the amount of a claim due to the mere passage of time" or based on information that was unavailable at the time the claimant filed the claim do not generally change a CDA claim into a new claim. (Doc. 36 at 410-11) (citing Kellogg Brown & Root Servs., Inc. v. United States , 115 Fed.Cl. 46, 54-55, n5 (2014) ; Modeer v. United States, 68 Fed.Cl. 131, 137 (2005) ; Contract Cleaning Main., Inc. v. United States , 811 F.2d 586, 591 (Fed. Cir. 1987) ). For example, Baha v. United States , the court found that a claimant was not precluded from recovering damages for unpaid rent accruing for a consecutive three months after the claim was submitted. (Doc. 36 at 410) (citing Baha v. United States , 123 Fed.Cl. 1, 6 (2015) ). In Baha , at the time the claim was submitted, the claimant did not know how many months in the future the rent would go unpaid. Id. Similarly, Contract Cleaning Maintenance , the court found that a claimant was not precluded from pursuing an enlarged claim because the additional amount sought reflected the contractor's continued operation under the government's extension of the contract. (Doc. 36 at 411) (citing Contract Cleaning Maint., Inc. v. United States , 811 F.2d 586, 591 (Fed. Cir. 1987) ). The court in concluded that the increase was "reasonably...
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