Mayfair Const. Co. v. U.S.

• Decision Date: 09 March 1988
• Docket Number: No. 87-1251,87-1251
• Citation: 841 F.2d 1576
• Parties: , 34 Cont.Cas.Fed. (CCH) 75,450 MAYFAIR CONSTRUCTION COMPANY, Appellant, v. The UNITED STATES, Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1576

841 F.2d 1576

56 USLW 2556, 34 Cont.Cas.Fed. (CCH) 75,450

MAYFAIR CONSTRUCTION COMPANY, Appellant, v. The UNITED STATES, Appellee.

No. 87-1251.

United States Court of Appeals, Federal Circuit.

March 9, 1988.

Richard C. Walters, Schnader, Harrison, Segal & Lewis, Washington, D.C., argued for appellant. With him on the brief was Alan H. Kent.

Carolyn E. Galbreath, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for appellee. With her on the brief were Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director and Thomas W. Petersen, Asst. Director. Also on the brief were Larry W. Mohl and Michael S. Moran, Defense Logistics Agency, St. Louis, Mo., of counsel.

Before MARKEY, Chief Judge, BENNETT, Senior Circuit Judge, and BISSELL, Circuit Judge.

BISSELL, Circuit Judge.

Mayfair Construction Company (Mayfair) appeals from a decision of the Armed Services Board of Contract Appeals (ASBCA),

Mayfair Construction Co., ASBCA No. 30800, 87-1 BCA p 19,542, denying Mayfair's appeal. We affirm.

BACKGROUND

On September 5, 1980, the Department of the Air Force awarded a contract to Mayfair for the "Pacer Down" facilities restoration project at McConnell Air Force Base, Kansas, in the amount of $4,176,296. This contract incorporated by reference the March 1979 version of the Defense Acquisition Regulation Disputes clause.

On January 28, 1982, the contracting officer terminated the contract for the convenience of the government. Mayfair submitted a termination settlement proposal to the contracting officer on June 17, 1982, in the amount of $990,937.29. By letter of August 2, 1982, Mayfair's counsel denominated the June 17, 1982 proposal as a claim under the Contract Disputes Act of 1978 (CDA), 41 U.S.C. Sec. 601 et seq. (1982), and enclosed certification of the proposal as a claim.

On December 11, 1984, Mayfair forwarded an updated termination settlement proposal to the contracting officer in the amount of $610,172, and certified this proposal as a claim under the CDA. The proposal included a request for interest from August 2, 1982, to December 10, 1984, in the amount of $146,612.12.

On February 14, 1985, the parties entered into a termination supplemental agreement under which they agreed that the government would pay Mayfair $438,346 for its termination costs. This agreement, however, expressly reserved Mayfair's claim for interest. On the same date, the contracting officer issued a final decision denying Mayfair's claim for interest. Thereafter, Mayfair appealed to the ASBCA, which held that the Disputes clause of the contract defined "claim" to require the existence of a dispute; no dispute existed between the parties, therefore no claim existed; and consequently, no interest would be allowable under the CDA where there was no claim.

ISSUES

1. Whether Mayfair's termination settlement proposal constitutes a claim.

2. Whether Mayfair may recover interest on its termination settlement proposal.

OPINION

I.

The contract at issue specifically incorporated by reference the March 1979 version of the Disputes clause. That clause defined claim as follows:

(b) "Claim" means:

(1) a written request submitted to the Contracting Officer;

(2) for payment of money, adjustment of contract terms, or other relief;

(3) which is in dispute....

44 Fed.Reg. 12,524 (1979) (emphasis added). It is beyond cavil that under this clause, no claim exists unless it involves a dispute.

As a matter of fact, the ASBCA found here that no dispute existed between the parties. It looked to Mayfair's substantial concurrence with an August 1982 government audit report, and the large reductions Mayfair made thereafter in its proposed settlement. It noted that excluding the $146,612.12 interest element of Mayfair's December 1984 settlement proposal, the final settlement agreement for $438,346 gave Mayfair only $25,213.88 less than the $463,559.88 it had requested in December 1984. As a result, the ASBCA characterized Mayfair and the government during this period as being in "a pre-dispute, negotiation posture." Mayfair, 87-1 BCA at 98,744.

We must treat the ASBCA's factual findings as final unless "fraudulent, or arbitrary, or capricious, or so grossly erroneous as to necessarily imply bad faith," or unless those findings are "not supported by substantial evidence." 41 U.S.C. Sec. 609(b) (1982). There is nothing here to suggest these findings are fraudulent, arbitrary, capricious, or grossly erroneous. With respect to the substantial evidence standard, this "means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. National Labor Relations Bd., 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. National Labor Relations Bd., 305 U.S. 197, 229, 59 S.Ct. 206, 216-17, 83 L.Ed. 126 (1938)). In our view, a reasonable fact-finder could have found as the ASBCA did. Therefore, we hold that the ASBCA's conclusion that no dispute existed between Mayfair and the government is supported by substantial evidence. Under the terms of the controlling contractual provision, consequently, Mayfair's termination settlement proposal did not constitute a claim.

Mayfair attempts to resist this result with two arguments. First, Mayfair states that a revised Disputes clause that did not require a claim to be disputed superseded the March 1979 Disputes clause in Mayfair's contract. Mayfair notes that the new clause was issued on April 30, 1980, well before the award of the subject contract, on September 5, 1980. This argument, however, does not wash. The new clause applied only to contracts resulting from solicitations issued on or after June 1, 1980. 45 Fed.Reg. 31,035, 31,037 (1980). Because the solicitation for the subject contract was dated February 17, 1980, Mayfair, 87-1 BCA at 98,741, the new clause is inapplicable.

Mayfair also contends that the CDA does not require a claim to be disputed, and as such, the terms of the Disputes clause requiring a dispute are in violation of the statute. In order to dispose of this case, we need not, and do not, decide whether the CDA requires a claim to be disputed. ^* If we were to decide that the CDA requires a dispute, the March 1979 Disputes clause would certainly be valid. If we were to decide that the CDA does not require a dispute, this would not mean that the CDA prohibits the parties from agreeing to such a requirement, and there is nothing in the language of the CDA to suggest such a prohibition. Thus, Mayfair's argument that the March 1979 Disputes clause is in violation of the CDA is without merit.

II

Mayfair's request for interest on its termination settlement proposals is governed by the Court of Claims decision in Nab-Lord Associates v. United States, 682 F.2d 940, 230 Ct.Cl. 694 (1982). There the Court of Claims held that the CDA does not authorize an interest award unless a contractor demands interest on a claim cognizable under the CDA. Id. at 943-44. For the reasons already given, Mayfair's termination settlement proposals were not cognizable claims. Therefore, any demand for interest that relies on these proposals as the underlying basis for an interest demand must fail.

In its December 11, 1984 settlement proposal, Mayfair demanded interest on its August 2, 1982 proposal on the theory that the earlier proposal had been properly certified as a CDA claim. However, because the earlier settlement proposal was not a claim, the demand for interest was unallowable.

Because Mayfair also certified its December 11, 1984 proposal as a CDA claim, it alleges that interest should run on the interest component of that "claim." We may dispose of this argument without reaching the broader issue of whether the CDA permits interest to run on an interest claim. Having held that the interest component of the December 1984 proposal was unallowable, no corpus remains on which interest can run. Therefore, no basis exists on which Mayfair may recover interest.

AFFIRMED.

BENNETT, Senior Circuit Judge, dissenting.

I respectfully dissent. The majority concludes that substantial evidence supports the board's conclusion that no "dispute" existed between the parties since the government's final settlement payment was "only" $25,213.88 less than Mayfair's second termination settlement proposal, which had been certified as a claim pursuant to the requirements of the Contracts Disputes Act (CDA), 41 U.S.C. Sec. 605(c)(1) (1982). That alone provides ample reason to dissent since, in my view, a disagreement over $25,213.88 is a quite substantial and sufficient dispute, even assuming that a dispute was indeed needed for the existence of a CDA claim under the terms of the subject contract. However, the issue over the existence of a dispute is not even that close, as the evidence of dispute was far greater than a disagreement over $25,213.88.

Following the government's termination for convenience of the Mayfair contract on January 28, 1982, Mayfair submitted a termination settlement proposal in the amount of $990,937.29. On August 2, 1982, Mayfair identified and certified the settlement proposal as a claim under the CDA. Over 2 years later, in December 1984, Mayfair submitted a second certified settlement "proposal" in the amount of $463,559.88 (not including an amount claimed as interest on that figure). It was not until May 28, 1985, that the government paid Mayfair $438,346, which represented the second proposal amount minus the disputed $25,213.88, in settlement of its termination for convenience claim.

Thus, Mayfair did not receive the government's final payment until 40 months after the government terminated the contract and the final payment received was $552,591.29 less than Mayfair's initial settlement proposal, which had been certified as a CDA claim almost 3 years before. In light of the time taken to resolve the amount due following the government's termination and the...