Ford Motor Co. v. U.S.

• Decision Date: 10 August 2004
• Docket Number: No. 03-5092.,03-5092.
• Citation: 378 F.3d 1314
• Parties: FORD MOTOR COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

378 F.3d 1314

FORD MOTOR COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 03-5092.

United States Court of Appeals, Federal Circuit.

Decided: August 10, 2004.

Appeal from the United States Court of Federal Claims, James F. Merow, J Michael W. Kirk, Cooper & Kirk, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Charles J. Cooper and Elisebeth B. Collins.

Kyle Chadwick, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General; and David M. Cohen, Director. Of counsel was Timothy P. McIlmail, Attorney.

Before NEWMAN, SCHALL, and LINN, Circuit Judges.

PAULINE NEWMAN, Circuit Judge.

Ford Motor Company appeals the decision of the United States Court of Federal Claims, denying Ford's claim for certain environmental cleanup costs arising from a World War II bomber contract at Willow Run in Ypsilanti, Michigan.¹ We conclude that Ford is entitled to recover the costs of the environmental cleanup that was required by Federal and State agencies. The decision of the Court of Federal Claims is reversed.

BACKGROUND

In 1941 Ford and the United States Army Air Force entered into Contract No. W535-ac-21216 (the War Contract), a cost-plus-fixed-fee contract to manufacture B-24 Liberator bomber airplanes and spare parts. At the government's direction Ford built the Willow Run Bomber Plant and leased it back from the government for conduct of the contract. Ford also built, leased back, and operated a waste treatment plant to process industrial and sanitary waste from the bomber plant. The manufacturing process included aluminum anodizing and zinc cyanide plating, and produced a discharge of acid and cyanide chemical waste to the waste treatment plant and to a sludge lagoon and surrounding areas. After the war ended, the parties entered into agreements terminating the War Contract. Relevant are various contractual and statutory provisions with respect to later-arising claims.

In 1988 the Michigan Department of Natural Resources, together with the United States Environmental Protection Agency acting under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq., notified Ford and six other entities of certain environmental damage obligations, including cleanup of chemical waste from the War Contract operations at Willow Run. Ford's liability was due solely to the waste and effluent produced during performance of the War Contract. In March 1995 all of the charged entities entered into a consent judgment of liability, and in November 1997 the allocation of cleanup costs was resolved by binding arbitration, with Ford assigned 9.763% of the total. Ford states that it "expended almost $7.2 million defending and discharging the claim." The only issue on appeal of the summary judgment is whether the government is required to reimburse Ford for these costs flowing from the War Contract.

While the state and federal environmental proceedings were pending, on January 20, 1994 Ford wrote to the Air Force Materiel Command, addressed to the "Successor to the Contracting Officer" for the War Contract and stating "this notice is given as provided by the terms of the contract." Ford recited the cleanup issues, reported the ongoing legal proceedings, requested a meeting, and requested reimbursement of the anticipated cleanup assessment. Ford asked that the report of the legal proceedings be furnished to the Judge Advocate General, as required by the procurement regulations. There was no response to this letter.

On March 16, 1995 Ford again wrote to the Air Force, providing updated information concerning the consent judgment of liability. On August 10, 1995 the Director of Contract Law for the Air Force Materiel Command responded by letter; he agreed to serve as the "point of contact," and summarily denied Ford's request for reimbursement. He stated that there was "no basis for recovery or the appointment of a contracting officer."

Meanwhile, the federal and state proceedings continued. In March 1998, after completion of the multi-party arbitration and allocation, Ford wrote to the Director of Contract Law for the Materiel Command, advising of Ford's share of the cleanup costs and requesting reimbursement. Ford directed attention to the Contract Settlement Act of 1944, 41 U.S.C. § 113 (the CSA), and requested written findings in accordance with the provisions of the CSA. Six days later Ford filed a complaint in the United States Court of Federal Claims. That case was dismissed without prejudice in October 1998, and in November 1998 Ford resubmitted to the Air Force a request for written findings under the CSA. The Air Force did not respond to these requests.

In March 1999 Ford filed this suit in the Court of Federal Claims. In Count I, Ford charged the United States with breach of contract for failure to reimburse the environmental cleanup costs as required by the War Contract and the Termination Agreements. Count II was for failure to pay "fair compensation" in violation of § 133(b) of the CSA. Count III alleged a taking without just compensation in violation of the Fifth Amendment. Count IV alleged a taking without due process of law in violation of the Fifth Amendment. Count V alleged failure to reimburse in violation of the Public Debt Clause of the Fourteenth Amendment.

Both sides moved for summary judgment as to Counts I, II, and III. Neither side addressed Counts IV and V, and the Court of Federal Claims held these counts abandoned. The court granted summary judgment in favor of the government on Counts II and III, and dismissed Count I without prejudice. This appeal followed.

DISCUSSION

On appellate review of judgments of the Court of Federal Claims, issues of contract interpretation receive plenary review, as a matter of law. Mass. Bay Transp. Auth. v. United States, 254 F.3d 1367, 1372 (Fed.Cir.2001). Summary judgments also receive plenary review, the appellate tribunal applying the same criteria as did the trial court, with all justifiable factual inferences drawn in favor of the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

A

The parties debate whether Ford followed appropriate procedures. Ford states that it gave notice of the claim in accordance with the provisions of the CSA, and that the government's refusal to provide findings as required by the statute, and its summary denial of the claim, satisfied the procedural requirements.

Under the CSA, if a claim has not been settled by agreement, a contractor may submit a demand for written findings from the contracting agency. The claim is subsequently time-barred if the contractor fails to initiate civil proceedings within ninety days after delivery of the findings or, if no findings are provided, within one year after the demand for findings. The relevant provisions are (with emphases added):

41 U.S.C. § 113(a). Failure to settle claims by agreement; preparation of findings; notice to war contractor

Whenever the contracting agency responsible for settling any termination claim has not settled the claim by agreement or has so settled only a part of the claim, (1) the contracting agency at any time may determine the amount due on such claim or such unsettled part, and prepare written findings indicating the basis of the determination, and deliver a copy of such findings to the war contractor, or (2) if the termination claim has been submitted in the manner and substantially the form prescribed under this chapter, the contracting agency, upon written demand by the war contractor for such findings, shall determine the amount due on the claim or unsettled part and prepare and deliver such findings to the war contractor within ninety days after the receipt by the agency of such demand....

(b) Rights of war contractor

Whenever any war contractor is aggrieved by the findings of a contracting agency on his claim or part thereof or by its failure to make such findings in accordance with subsection (a) of this section, he may bring suit against the United States for such claim or such part thereof, in the United States Court of Federal Claims or in a United States district court, in accordance with sections 1346, 2401, and 2402 of Title 28....

(c) Procedure

Any proceeding under subsection (b) of this section shall be governed by the following conditions:

* * *

(2) A war contractor may initiate proceedings in accordance with subsection (b) of this section (i) within ninety days after delivery to him of the findings by the contracting agency, or (ii) in case of protests or appeal within the agency, within ninety days after the determination of such protest or appeal, or (iii) in case of failure to deliver such findings, within one year after his demand therefor....

The government states that the Air Force was not required to respond to Ford's 1998 demands for findings, that Ford tendered its claim in January 1994, and that when the Air Force denied the claim in August 1995, Ford had 90 days in which to seek judicial review. Ford states that the government's proposed procedure is not that of the statute, and is incorrect.

The CSA statute makes clear that a demand for written findings is a necessary predicate to bringing a claim under the CSA. Ford's January 1994 and March 1995 letters to the Air Force do not contain a demand for findings, and were written before the cost of the cleanup was assessed. The demand for findings was made in March 1998 after Ford's monetary allocation was established, and was repeated in November 1998.

In Somerset Mach. & Tool Co. v. United States, 144 Ct.Cl. 481 (1959), on which the government relies in arguing that Ford's claim is time-barred, the plaintiff submitted termination claims under the CSA, and in February 1956...