K-Con Bldg. Sys., Inc. v. United States

• Decision Date: 12 February 2015
• Docket Number: No. 2014–5062.,2014–5062.
• Citation: 778 F.3d 1000
• Parties: K–CON BUILDING SYSTEMS, INC., Plaintiff–Appellant v. UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

778 F.3d 1000

K–CON BUILDING SYSTEMS, INC., Plaintiff–Appellant

v.UNITED STATES, Defendant–Appellee.

No. 2014–5062.

United States Court of Appeals, Federal Circuit.

Feb. 12, 2015.

William Atkins Scott, Pederson & Scott, P.C., Charleston, SC, argued for plaintiff-appellant.

Daniel B. Volk, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Stuart F. Delery, Robert E. Kirschman, Jr., Bryant G. Snee.

Before PROST, Chief Judge, NEWMAN and TARANTO, Circuit Judges.

Opinion

TARANTO, Circuit Judge.

K–Con Building Systems, Inc., entered into a contract with the federal government to construct a building for the Coast Guard. Once K–Con finished, the government imposed liquidated damages for delay in completion. K–Con sued in the Court of Federal Claims, seeking two forms of relief. First, it requested remission of the liquidated damages on two grounds—that the contract's liquidated-damages clause was unenforceable and that K–Con was entitled to an extension of the completion date. Second, it requested additional compensation based on work performed in response to government requests that K–Con alleges amounted to contract changes. The Court of Federal Claims held that the contract's liquidated-damages clause is enforceable and that K–Con did not comply with the written-notice precondition for invoking the contract clause governing changes. It also held that K–Con's claim for an extension on the completion date must be dismissed for lack of jurisdiction. We affirm.

Background

On January 20, 2004, K–Con entered into a contract with the Coast Guard, under which K–Con would construct a “cutter support team building” in Port Huron, Michigan, for $582,641. The project was to be completed by November 20, 2004, with K–Con agreeing to pay $589 in liquidated damages for each day of delay. On May 23, 2005, the Coast Guard accepted the building as substantially complete. It withheld payment of $109,554 as liquidated damages for what it calculated to be tardiness of 186 days. No party challenges the calculation.

On July 28, 2005, K–Con sent a letter to the government contracting officer requesting remission of the liquidated damages “wrongfully withheld from the contract.”

J.A. 259, Letter from K–Con to Contracting Officer (July 8, 2005) (first letter). As grounds for remission, K–Con asserted that the “liquidated damages [constituted] an impermissible penalty” and that the Coast Guard “failed to issue extensions to the completion date as a result of changes to the contract.” Id. It provided no details regarding its request for a time extension based on contract changes. After the contracting officer denied K–Con's request for remission, K–Con sued in the Court of Federal Claims under the Contract Disputes Act (CDA), 41 U.S.C. §§ 601 –613 (2006).¹ K–Con sought remission of $109,554 plus interest in liquidated damages on the two grounds asserted in its July 28, 2005 letter. Original Complaint, K–Con Bldg. Sys., Inc. v. United States, No. 05–01054C (Fed.Cl. Sept. 30, 2005).

On December 15, 2006, while litigation in the Court of Federal Claims was underway, K–Con submitted a second letter to the contracting officer. J.A. 263–64, Letter from K–Con to Contracting Officer (Dec. 15, 2006) (second letter). The second letter extensively details the contract changes allegedly made by the Coast Guard during the contract term and asks for a new remedy—$196,126.38 for additional work necessitated by the changes—as well as an extension of the completion date of the contract. The contracting officer denied K–Con's requests. K–Con then amended its complaint in the Court of Federal Claims to add allegations about the matter covered in its second letter and to seek, beyond the liquidated-damages relief, a judgment of $196,126.38 and a 186–day extension. Amended Complaint, K–Con Bldg. Sys., No. 05–01054C (Fed.Cl. Mar. 18, 2007).

The Court of Federal Claims first ruled, in deciding an initial government motion for summary judgment, that the contract's liquidated-damages clause is enforceable. The court later issued two rulings in deciding a second government motion for summary judgment. It held that K–Con did not provide valid written notice regarding contract changes and therefore had not satisfied a precondition to claiming additional compensation under the contract's changes clause. And it dismissed, for lack of jurisdiction, K–Con's time-extension claim for remission of liquidated damages.

K–Con appeals all three rulings. We have jurisdiction under 28 U.S.C. § 1295(a)(3).

Discussion

Whether the Court of Federal Claims had jurisdiction under the CDA is a question of law we decide de novo. Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed.Cir.1995) (en banc). A plaintiff “bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence.” Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed.Cir.1988). “[W]e review a grant of summary judgment by the Court of Federal Claims de novo, drawing justifiable factual inferences in favor of the party opposing the judgment.” Long Island Sav. Bank, FSB v. United States, 503 F.3d 1234, 1244 (Fed.Cir.2007). “Once the moving party has satisfied its initial burden, the opposing party must establish a genuine issue of material fact and cannot rest on mere allegations, but must present actual evidence.”Id.

A

Before turning to the merits, we must determine which issues the Court of Federal Claims had jurisdiction to decide under the CDA. “The CDA grants [the Court of Federal Claims] jurisdiction over actions brought on claims within twelve months of a contracting officer's final decision.” James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1541 (Fed.Cir.1996) (citing 41 U.S.C. § 609(a) ). Jurisdiction requires both that a claim meeting certain requirements have been submitted to the relevant contracting officer and that the contracting officer have issued a final decision on that claim. Id. at 1541–42.

A claim is “ ‘a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.’ ” Reflectone, 60 F.3d at 1575 (quoting regulation then codified at 48 C.F.R. § 33.201 ; current version at 48 C.F.R. § 52.2331). A claim need not “be submitted in any particular form or use any particular wording ... [, but it must provide] a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.” Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586, 592 (Fed.Cir.1987). A contracting officer's final decision on a claim may either be written, 41 U.S.C. § 605(a), or implied from “[a]ny failure by the contracting officer to issue a decision on a contract claim within the period required,” id. § 605(c)(5).

Identifying what constitutes a separate claim is important. We have long held that the jurisdictional standard must be applied to each claim, not an entire case; jurisdiction exists over those claims which satisfy the requirements of an adequate statement of the amount sought and an adequate statement of the basis for the request. See Joseph Morton Co. v. United States, 757 F.2d 1273, 1281 (Fed.Cir.1985) (“Congress did not intend the word ‘claim’ to mean the whole case between the contractor and the Government; but, rather, that ‘claim’ mean each claim under the CDA for money that is one part of a divisible case.”); see also M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1327–32 (Fed.Cir.2010) (reaching different results for different claims in determining Court of Federal Claims jurisdiction). Claim identification is important also for application of the rule that, once a claim is in litigation, the contracting officer may not rule on it—even if the claim is not properly in litigation because it was not properly submitted to and denied by the contracting officer before it was placed in litigation. Sharman Co. v. United States, 2 F.3d 1564, 1571–72 (Fed.Cir.1993) (“Once a claim is in litigation, the Department of Justice gains exclusive authority to act in the pending litigation ... [,] divest[ing] the contracting officer of his authority to issue a final decision on the claim.”) (citing 28 U.S.C. §§ 516 –520 ), overruled on other grounds, Reflectone, 60 F.3d 1572 ; see also John Cibinic, Jr., et al., Administration of Government Contracts 1292–93 (4th ed. 2006) (“The contracting officer's authority to settle claims does not extend to cases in which litigation has commenced in a court.... [N]o final decision may be issued on a matter that is already in litigation.”).

Our longstanding demand that a claim adequately specify both the amount sought and the basis for the request implies that, at least for present purposes, we should treat requests as involving separate claims if they either request different remedies (whether monetary or non-monetary) or assert grounds that are materially different from each other factually or legally. See Contract Cleaning, 811 F.2d at 592 (evaluating the adequacy of a claim on the notice it gives of the remedy requested and the basis for that remedy); 48 C.F.R. § 52.233–1(c) (defining a claim as a written demand for a remedy “as a matter of right”). This approach, which has been applied in a practical way, 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.

We have not treated the different-remedies component as imposing so rigid a standard as to preclude all litigation adjustments in amounts “based upon matters developed in litigation.” Tecom, Inc. v. United States, 732 F.2d 935, 937–38 (Fed.Cir.1984) (“ ‘It would be most disruptive of normal litigation...