H. Landau & Co. v. U.S.
| Decision Date | 18 September 1989 |
| Docket Number | No. 89-1199,89-1199 |
| Citation | 886 F.2d 322 |
| Parties | 35 Cont.Cas.Fed. (CCH) 75,719 H. LANDAU & COMPANY, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
Ruth E. Ganister, Rosenthal and Ganister, West Chester, Pa., argued, for plaintiff-appellant.
Stephen J. McHale, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued, for defendant-appellee; with him on the brief were John R. Bolton, Asst. Atty. Gen. and David M. Cohen, Director.
Before MARKEY, Chief Judge, and NEWMAN, and BISSELL, Circuit Judges.
H. Landau & Co. (Landau) appeals the United States Claims Court's judgment granting the government's summary judgment motion and dismissing the complaint. See H. Landau & Co. v. United States, 16 Cl.Ct. 35 (1988). We vacate and remand.
In 1983, the Defense Personnel Support Center (DPSC), pursuant to Section 2(a) of the Small Business Act, 15 U.S.C. Sec. 637(a) (1982 & Supp.V 1987), contracted with the Small Business Administration (SBA) to supply 25,000 sleeping bags. SBA then subcontracted with Carilee, Inc. to supply and deliver the bags to DPSC for $3,613,125. The subcontract provided that "the responsibility for administering this subcontract has been delegated to the [Defense Logistics Agency (DLA) office in Pittsburgh] and that [Carilee] will honor directions of any requests for changes by that [office] in like manner as if issued by SBA."
A modification to the subcontract provided Carilee with advance financing of $1,139,000 and required that any advance payments be made through a joint bank account requiring for withdrawals the signatures of both an authorized SBA representative and an authorized Carilee representative. Robert Harris and Earl Johnson of the Pittsburgh office were designated as the authorized SBA countersignatories although neither was the contracting officer (CO) who entered into the DPSC contract on SBA's behalf. An internal SBA operating procedure, however, required that the CO review any requested disbursements from the account and approve, in writing, the countersigning of any withdrawals.
Carilee began fulfilling the contract and placing orders for cloth with Landau, a textile converter. Due to Carilee's unstable financial situation, Landau was reluctant to extend credit to Carilee. To allay Landau's concern, Harris informed Landau that SBA would provide letters guaranteeing payment of each order, provided adequate funds to cover each invoice existed in the joint bank account at the time letters were to be issued. SBA's counsel and Pittsburgh district director assured Harris that he had the authority to issue such letters under the agreed upon terms. In fact, SBA's law department assisted in drafting and/or approving the specific language used in the letters of guarantee.
The first SBA letter guaranteed payment of about $250,000 for Carilee's initial lots of cloth and was executed by Harris. After delivering the lots and submitting the invoices, Landau was paid in full by checks drawn on the joint account. Harris, on SBA's behalf, issued two more letters, guaranteeing a total of $268,135.78. Another letter, guaranteeing $122,834.30, was Landau contended that an express or implied-in-fact contract with the government required payment of the monies. The Claims Court disagreed and held that neither Harris nor Johnson had actual authority to bind the government because the CO's approval was required before either could countersign checks drawn on the joint account. H. Landau, 16 Cl.Ct. at 37.
issued by Johnson with Harris's approval. Landau delivered $390,970.08 worth of cloth in reliance upon the later three letters. Although SBA was paid in full by DPSC for the sleeping bags, Landau received only $266,568.75 for the cloth delivered under those letters of guarantee. Landau sued the United States, demanding the unpaid balance of $124,401.33.
Whether the Claims Court erred in granting summary judgment and holding that no contract existed between Landau and SBA because Harris and Johnson lacked the authority to obligate the government to guarantee payments.
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