Northrop Grumman Computing Sys., Inc. v. United States
| Decision Date | 15 June 2011 |
| Docket Number | No. 07-613C,07-613C |
| Parties | NORTHROP GRUMMAN COMPUTING SYSTEMS, INC., Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Government contract case; Motion to dismiss for lack of jurisdiction - RCFC 12(b)(1); Contract Disputes Act; Requirements for valid claim; Beaconwear -assignor of proceeds of government contract was proper entity to file CDA claim; Adequate notice of basis of claim; Purpose of notice requirement; Failure to reveal assignments rendered claim inadequate; Severin doctrine; Jurisdiction lacking; Motion granted.
OPINIONDavid C. Aisenberg, Looney, Cohen, Reagan & Aisenberg, LLP, Boston, MA, for plaintiff.
Armando A. Rodriguez-Feo, Commercial Litigation, United States Department of Justice, Washington, D.C., with whom was Assistant Attorney General Tony West, for defendant.
Plaintiff, Northrop Grumman Computing Systems, Inc. (Northrop), brings this action seeking damages for the alleged breach of an agreement with the Department of HomelandSecurity, Bureau of Immigration and Customs Enforcement.2 Under that agreement, Northrop leased surveillance software to ICE to be used in intercepting the internet communications of the targets of criminal investigations arising under Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. § 2510, et seq. This case is pending before the court on defendant's motion to dismiss the complaint for lack of jurisdiction. Having carefully reviewed the parties' briefs on this motion, the court hereby GRANTS this motion.
On September 24, 2004, ICE awarded Delivery Order COW-4-D-1025 (Delivery Order) to Northrop pursuant to a preexisting contract between ICE and plaintiff - Contract No. NAS5-01143. According to the Delivery Order, plaintiff was to lease the Oakley software to ICE and perform specific support services for a one-year base period in return for payment of $900,000, with three one-year options at $800,186 per option year - for a total contract price of $3,597,558 if all three options were exercised. On September 28, 2004, ICE provided plaintiff with an "essential use statement" that described the intended use of the Oakley software and was designed to facilitate third-party funding for the Oakley software. From September 30, 2004, to October 18, 2004, ICE executed three modifications to the Delivery Order, adding, inter alia, a first priority clause, a best efforts clause, and a nonsubstitution clause. On October 13, 2004, plaintiff delivered the Oakley software to defendant and was paid $900,000.
To finance the agreement, Northrop relied on ESCgov, with whom Northrop had a preexisting Purchase and Assignment Agreement. Pursuant to this preexisting agreement, on October 22, 2004, ESCgov entered into Equipment Schedule No. 1, in which it agreed to pay Northrop $3,296,093 in exchange for Northrop's assignment to ESCgov of any payments it received under the Delivery Order. On November 19, 2004, ESCgov assigned its rights under Equipment Schedule No. 1 to Citizens Leasing Corporation, n/k/a RBS Citizens, N.A. (Citizens), in exchange for $3,325,252.16. Neither plaintiff, ESCgov, nor Citizens ever notified ICE of these assignments.
On September 30, 2005, ICE informed plaintiff that it would not exercise the first one-year option due to a lack of funds. On September 21, 2006, Northrop filed a "claim" with the contracting officer pursuant to the Contract Disputes Act of 1978 (the CDA), 41 U.S.C. § 601, et seq., "to recover damages resulting from the Government's breach of the provisions of the[Delivery Order] by failing to use best efforts to seek and utilize available funding from all sources, by failing to reserve funds from the annual budget on a first priority designation, and by replacing the software with another system performing similar or comparable functions." The claim requested damages of $2,697,558, because defendant's breach of contract entitled "a contractor to be placed in as good a position as it would have had the breach not been committed by the Government." Alternatively, "if the Government's breaches of the Contract are found to constitute a Termination for Convenience, the amount of . . . damages owed by the Government would be $2,674,032.80." A Northrop official certified that the claim was "made in good faith," "accurate and complete" and stated an accurate damages amount for which defendant was liable. The claim did not mention ESCgov, Citizens or any of the aforementioned assignments. On December 29, 2006, the contracting officer denied this claim.
On August 20, 2007, plaintiff filed a complaint in this court, asserting that defendant breached the Delivery Order by failing to seek funding and exercise the options. The complaint averred that, as a result of this breach, "Northrop Grumman is entitled to recover its damages as described in the contract, including the payments not made under the Contract in the amount of $2,697,558.00, plus interest." On May 20, 2010, the parties' cross-motions for summary judgment were denied, and after supplemental discovery, trial was scheduled to begin on June 13, 2011. On May 13, 2011, defendant filed a motion to dismiss for lack of jurisdiction pursuant to RCFC 12(b)(1), asserting that Northrop had submitted a claim to the contracting officer that failed to provide adequate notice of the nature of the claim and to reveal that the claim was for the losses of a third party. On May 27, 2011, plaintiff filed its response, and on June 2, 2011, defendant filed its reply. On June 3, 2011, the court cancelled the aforementioned trial.
Deciding a motion to dismiss "starts with the complaint, which must be well-pleaded in that it must state the necessary elements of the plaintiff's claim, independent of any defense that may be interposed." Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir. 1997); see also Bell Atl. Corp., 550 U.S. at 555. The plaintiff must establish that the court has subject matter jurisdiction over its claims. Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988); Klamath Tribe Claims Comm. v. United States, 97 Fed. Cl. 203, 208 (2011). The court may look beyond the pleadings and "inquire into jurisdictional facts" to determine whether jurisdiction exists. Rocovich v. United States, 933 F.2d 991, 993 (Fed. Cir. 1991). RCFC 12(d) provides that if "matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment." But, this provision "does not apply to a motion made under Rule 12(b)(1) to dismiss for lack of jurisdiction over the subject matter," under which the court undoubtedly "may address matters outside the pleadings." Reed Island-MLC, Inc. v. United States, 67 Fed. Cl. 27, 32 (2005) (citing Toxgon Corp. v. BNFL, Inc., 312 F.3d 1379, 1383 (Fed. Cir. 2002)); see also Petro-Hunt, L.L.C. v. United States, 90 Fed. Cl. 51, 58 (2009).
The United States "is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit." United States v. Sherwood, 312 U.S. 584, 586 (1941) (citations omitted); see also Dolan v. U.S. Postal Serv., 546 U.S. 481, 498 (2006); Hercules Inc. v. United States, 516 U.S. 417, 422 (1996). Thiscourt has jurisdiction "'only of those [claims] which by the terms of some act of Congress are committed to it.'" Hercules, 516 U.S. at 423 (quoting Thurston v. United States, 232 U.S. 469, 476 (1914)). Such statutes constitute "waiver[s] of sovereign immunity [that] must be strictly construed in favor of the sovereign." Orff v. United States, 545 U.S. 596, 601-02 (2005); see also Lane v. Pena, 518 U.S. 187, 192 (1996).
One such waiver statute, the CDA, "was enacted to 'provide[] a fair, balanced, and comprehensive statutory system of legal and administrative remedies in resolving government contract claims.'" Winter v. FloorPro, Inc., 570 F.3d 1367, 1369 (Fed. Cir. 2009) (quoting S. Rep. No. 95-1118, at 1 (1978)). Before the court may exercise jurisdiction under this statute, see 41 U.S.C. § 609(a), there must be "both a valid claim and a contracting officer's final decision on that claim." M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1327 (Fed. Cir. 2010); see also James M. Ellett Constr. Co., Inc. v. United States, 93 F.3d 1537, 1541-42 (Fed. Cir. 1996). Because the CDA itself does not define when this claim requirement is satisfied, the Federal Circuit has looked to the Federal Acquisition Regulation (FAR) for guidance on this count. See, e.g., Scott Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003). The FAR defines a "claim" as "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." 48 C.F.R. § 2.101; see Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995). "While a CDA claim need not be submitted in any particular form or use any particular wording," the Federal Circuit has stated, "it must contain 'a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.'" M. Maropakis Carpentry, 609 F.3d at 1327 (quoting Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586, 592 (Fed. Cir. 1997)); see also Scott Timber Co., 333 F.3d at 1365.
In the case sub judice, on September 21, 2006, Northrop sent the contracting officer a letter that it asserts was a "claim" under the CDA. Defendant contends otherwise. It argues that this claim was deficient because it failed to reveal that Northrop had assigned its rights under the contract to ESCgov, which, in turn, had assigned those rights to Citizens. Defendant asseverates that Northrop should have revealed that it...
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