J.C. Equipment Corporation v. England

Decision Date05 March 2004
Docket NumberNo. 02-1472.,02-1472.
Citation360 F.3d 1311
PartiesJ.C. EQUIPMENT CORPORATION, Appellant, v. Gordon R. ENGLAND, Secretary of the Navy, Appellee.
CourtU.S. Court of Appeals — Federal Circuit

Samuel A. Anderson, of Crestview, FL argued for appellant.

Jane W. Vanneman, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for appellee. With her on the brief were Robert D. McCallum, Jr., Deputy Assistant Attorney General; and David M. Cohen, Director. Of counsel on the brief was John McMunn, Attorney, United States Department of the Navy, of Daly City, California. Of counsel was Mark L. Josephs, Attorney, United States Department of Justice, of Washington, DC.

Before NEWMAN, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and DYK, Circuit Judge.

FRIEDMAN, Senior Circuit Judge.

In this government contract case, the Armed Services Board of Contract Appeals (Board) rendered two lengthy opinions: one on the contractor's entitlement to recover on the many claims for additional compensation it had submitted to the contracting officer, and the second on the amount of recovery on those claims on which it prevailed (the "quantum" decision). J.C. Equip. Corp., 97-2 B.C.A. (CCH) ¶ 29,197, 1997 WL 545496 (A.S.B.C.A.1997) (J.C.Equip.Corp.I); J.C. Equip. Corp., 2002-1 B.C.A. (CCH) ¶ 31,810, 2002 WL 415627 (A.S.B.C.A.2002) (J.C.Equip.Corp.II). The contractor challenges both of these decisions on numerous grounds. We affirm both of them.

I

The basic facts, as found by the Board in its first (entitlement) decision, are not disputed. They may be summarized as follows:

In August 1984, the appellant J.C. Equipment ("J.C.") entered into a fixed-price contract to repair the fresh water system and tank at a Navy base in California for $623,078. J.C. Equip. Corp. I, 97-2 B.C.A. (CCH) ¶ 29,197 at 145,257 (Finding of Fact ("FF") 1). The contract also required J.C. to "maintain ... two sets of contract drawings showing any deviations, including buried or concealed construction and utility features revealed during construction, and upon completion of the work to deliver the marked-up sets of drawings to" the contracting officer. Id. at 145,274 (FF 116). Work was to begin on August 30, 1984 and be completed by May 27, 1985. Id. at 145,257 (FF 1).

Because of what J.C. described as a "large number of unknown obstructions and pipelines being encountered," work did not proceed smoothly. Id. at 145,259 (FF 14). The parties negotiated and executed "[f]orty-two (42) change order modifications" during the performance of the contract, most of which provided for additional payments to J.C. Id. at 145,283 (FF 175). As the contract provided, each of these "bilaterally executed modifications ... release[d] the Government from further payment to J.C." for the matters covered. Id. at 145,284.

By early 1986, relations between the parties had deteriorated. In an April letter, the Navy directed J.C. to show cause why the contract should not be terminated because of its "failure to diligently prosecute the work." Id. at 145,260 (FF 24). The letter stated that although several unexpected problems were encountered, J.C. "had been fully compensated for each changed condition and the amount of change order work would not be considered an adequate defense for failing to diligently prosecute the work." Id.

Although it is unclear what followed, it is undisputed that in a May 8, 1986 letter, the Navy ordered J.C. to stop work, and on May 15, 1986, "base security removed JC from the base" and work ceased. Id. (FF 25). Subsequently, the "Government acknowledged" that the revised contract completion date was May 9, 1986. Id. (FF 27).

J.C. then filed with the contracting officer a formal claim for an equitable adjustment of slightly more than two million dollars, id. at 145,261 (FF 32), which later was reduced to $1,251,040, id. at 145,288 n. 1. The contracting officer rejected most of these claims but awarded J.C. $17,820. Id. at 145,261 (FF 34).

In its appeal to the Board, J.C. sought recovery on forty-four separate claims. After a hearing that produced a "voluminous" record "consisting of approximately 10 to 15 thousand pages and 1,000 pages of transcript," id. at 145,288 n. 3, the Board allowed nineteen claims in whole or in part and rejected the remaining twenty-five claims. The claims on which J.C. prevailed were "remanded for negotiation and settlement." Id. at passim.

When the parties were unable to settle those claims, J.C. filed a quantum complaint with the Board seeking an equitable adjustment of $289,969.08. J.C. Equip. Corp. II, 2002-1 B.C.A. (CCH) ¶ 31,810 at 157,153. It also contended that "the issuance of the stop work order and termination of the contract was erroneous and must be converted into a termination for the convenience of the Government." Id.

After a further evidentiary hearing, the Board awarded J.C. $10,563.41 but did not extend its time for performance. Id. at 157,203. The Board also held that it lacked jurisdiction to consider J.C.'s request to change the character of the contract termination because J.C. had not raised that issue before the contracting officer. Id. at 157,157-58.

II

The government contends that to the extent J.C.'s appeal challenges the Board's denial of twenty-five of its claims in the entitlement decision, it is untimely, and we therefore have no jurisdiction to consider it. Relying upon our precedent, the government argues that the entitlement decision was a "final" one that J.C. could have appealed and that its failure to do so within the 120-day period for appeal under the Contract Disputes Act of 1978, 41 U.S.C. § 607(g)(1)(A) (2000), precludes it from challenging that decision in its appeal from the Board's quantum decision.

The government's conclusion, however, does not follow from its premise. The fact that the Board's earlier entitlement decision may have had sufficient finality to make it immediately appealable does not mean that the contractor's failure to take such appeal precludes it from challenging that ruling in its appeal from the Board's second decision, which was the Board's "final" action in the case.

Our recent decision in Brownlee v. DynCorp, 349 F.3d 1343 (Fed.Cir.2003), is dispositive of this issue and requires rejection of the government's contention. In that case the Board held for a contractor and remanded for the parties to attempt to settle the amount of recovery — the same procedure it followed in the present case. Id. at 1346. On remand, the government stipulated to the amount it owed, and the Board entered a final judgment for that amount. Id. at 1346-47. The government then appealed from that judgment, challenging only the Board's earlier entitlement ruling in favor of the contractor. Id. at 1347.

This court rejected Dyncorp's contention that the government's challenge to the Board's entitlement ruling was untimely because it was not filed within 120 days of its rendition. The court pointed out that although prior decisions had permitted the parties to appeal from entitlement decisions under similar circumstances, see, e.g., Dewey Electronics Corp. v. United States, 803 F.2d 650, 653-58 (Fed.Cir.1986), no cases "h[e]ld []or suggest[ed] that appeals [we]re required before the question of quantum [wa]s resolved," DynCorp, 349 F.3d at 1347 (emphasis in the original). The court concluded that although "the government could have appealed from the... Board['s entitlement] decision at the time it was rendered," id., the government's later appeal was "not time barred," id. at 1349.

In a supplemental filing here the government sought to distinguish DynCorp because that case involved only a single claim by the contractor, whereas here J.C. asserted multiple claims. The government provides no reason, convincing or otherwise, why this distinction should produce a different result, and we cannot discern any. Indeed, the government's position in this case is inconsistent with the policy underlying the final judgment rule: the avoidance of unnecessary multiple appeals.

Under the government's theory, J.C. was required first to appeal the Board's entitlement decision and then, if it was dissatisfied with the Board's subsequent quantum decision, take a second appeal to challenge that ruling. The government's theory thus could lead to two appeals, while the course J.C. followed permits the entire controversy between the parties to be resolved in a single appeal. We see no reason to follow the cumbersome course the government proposes. In the present appeal, J.C. may litigate questions relating to both the Board's entitlement and quantum decisions.

III

J.C. mounts a broadside attack upon the Board's findings in both opinions, in which it challenges the Board's evaluation of the evidence on a large number of factual issues. In effect, it is asking us to retry the case and to substitute our judgment for that of the Board on many of the Board's factual determinations. Under the Contract Disputes Act, however, Board decisions on factual questions are final unless, among other things, they are not supported by substantial evidence. 41 U.S.C. § 609(b). The evidence supporting the challenged factual determinations is substantial, and there is no occasion for us to discuss that evidence in detail.

Accordingly, we shall address only those legal arguments that warrant discussion.

A. Jack Butler, J.C.'s president, was a principal witness for J.C. The Board found that his testimony was not credible and rejected a number of J.C.'s claims based upon that testimony. J.C. contends that because the Board treated Butler as an "expert" witness, it improperly rejected his testimony and relied on contrary testimony by non-expert witnesses. It urges us to overturn the Board's finding that Butler was not a credible witness and to accept his testimony.

Although the administrative judge stated at the hearing that he...

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