Pathman Const. Co., Inc. v. U.S., 86-1537

• Decision Date: 04 May 1987
• Docket Number: No. 86-1537,86-1537
• Citation: 817 F.2d 1573
• Parties: 34 Cont.Cas.Fed. (CCH) 75,250 PATHMAN CONSTRUCTION COMPANY, INC., Appellant, v. The UNITED STATES, Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1573

817 F.2d 1573

34 Cont.Cas.Fed. (CCH) 75,250

PATHMAN CONSTRUCTION COMPANY, INC., Appellant, v. The UNITED STATES, Appellee.

Appeal No. 86-1537.

United States Court of Appeals Federal Circuit.

May 4, 1987.

Jennifer W. Fletcher, Griffin, Cochrane & Marshall, Atlanta, Ga., argued, for appellant. With her on the brief, were John F. Elger and Jeanette R. Hait.

Carol N. Park-Conroy, 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.

Harold I. Rosen, King & King, Chartered, Washington, D.C., was on the brief, for amicus curiae, The Associated Gen. Contractors of America.

Richard C. Johnson, Stuart B. Nibley, Steven L. Briggerman, Harry C. Orenstein and James M. McHale, Seyfarth, Shaw, Fairweather and Geraldson, Washington, D.C., were on the brief, for amicus curiae, Nat. Sec. Indus. Assn.

Before FRIEDMAN and RICH, Circuit Judges, and COWEN, Senior Circuit Judge.

FRIEDMAN, Circuit Judge.

The principal issue in this appeal from the United States Claims Court is whether, under the Contract Disputes Act of 1978, Pub.L. No. 95-563, 92 Stat. 2383 (1978) (codified as amended at 41 U.S.C. Secs. 601-609 (1982 & Supp.1985)) (Disputes Act), the twelve-month period within which a contractor must file in that court a suit challenging a decision of a contracting officer begins to run when the claim submitted to the contracting officer is "deemed denied" because the contracting officer has not decided the claim within the period the Disputes Act specified. The Claims Court held that the limitations period began to run when the claim was deemed denied and dismissed the suit as untimely because it had not been filed within twelve months of such "deemed denial." We hold, however, that the limitations period does not begin to run until the contracting officer renders an actual written decision on the contractor's claim, and we therefore reverse the Claims Court.

I

A. The appellant, Pathman Construction Company, Inc. (Pathman), entered into a contract with the United States General Services Administration (Administration) to install interior furnishings in a federal office building. The project was substantially completed on September 23, 1975, although various finishing items and work under change orders continued into 1976.

On September 28, 1976, Pathman submitted a claim for equitable adjustment of $428,608.17, seeking delay-related costs for itself and its two principal subcontractors. Pathman subsequently amended its claim to $522,907.58. Pathman and representatives of the Administration had numerous meetings in an attempt to settle the claims. Although settlement offers were made and discussed, the parties failed to reach agreement.

On May 10, 1978, the contracting officer informed Pathman that the government acknowledged Pathman's entitlement to an equitable adjustment and offered $202,000.00 in settlement. Pathman rejected the offer. The contracting officer then "requested an audit of [Pathman's] records, relative to [the] contract, for the purpose of determining the extent of ... entitlement to extend overhead costs," and told Pathman that no further action would be taken on its claim until after the auditors had completed review of Pathman's records and submitted their recommendations. The audit was conducted during May, June, and July, and the audit report was issued on August 17, 1978.

Despite repeated requests by Pathman for a decision on its claim, no decision was forthcoming. On February 16, 1981, Pathman submitted a written request to the contracting officer for a final decision. Pathman expressed its concern that the decision of the contracting officer was "long overdue" and its hope that its claim be handled as "expeditiously" as possible. Again, no decision was rendered.

On May 6, 1983, Pathman submitted a second written request for the contracting officer's decision. The request included the certification that is required for claims in excess of $50,000. See 41 U.S.C. Sec. 605(c)(1) (1982). Pathman thereafter made additional written requests that the contracting officer render a decision.

To date, however, no decision has been rendered on Pathman's claim.

B. On March 11, 1985, Pathman filed suit in the Claims Court seeking de novo determination of the claim pursuant to section 10(a) of the Disputes Act. See Pub.L. No. 95-563, Sec. 10(a), 92 Stat. 2383, 2388 (1978) (codified at 41 U.S.C. Sec. 609). That section requires that such an action be filed "within twelve months from the date of the receipt by the contractor of the decision of the contracting officer concerning the claim...." The Act further provides that the failure of the contracting officer "to issue a decision on a contract claim within the period required [under the Act] will be deemed to be a decision by the contracting officer denying the claim and will authorize the commencement of the appeal or suit on the claim as otherwise provided in this Act." Pub.L. No. 95-563, Sec. 6(c)(5), 92 Stat. 2383, 2385 (1978) (codified at 41 U.S.C. Sec. 605).

On the government's motion, the Claims Court dismissed the suit as untimely. The court noted that Pathman had submitted its certified claim with request for final decision to the contracting officer on May 6, 1983. The court held that Pathman's claim had been "deemed denied" sixty days thereafter because at that time the contracting officer had neither (1) rendered a decision on the claim, nor (2) set a definite future date when such decision would be rendered, as the Disputes Act required the contracting officer to do. According to the court, this "deemed denied" decision triggered the running of the twelve-month limitations period for filing suit in the Claims Court. Since Pathman filed suit on March 11, 1985, more than twelve months after its claim was deemed denied on July 5, 1983, the court concluded that Pathman's suit was untimely. Pathman Constr. Co., Inc. v. United States, 10 Cl.Ct. 142 (1986).

II

The decision of the Claims Court that the twelve-month limitation period in the Disputes Act for filing suit in that court begins to run when the contract claim is "deemed denied" stands in juristic solitude. Five other decisions of that court, both before and after the decision in this case, have reached a contrary result. Malissa Co., Inc. v. United States, 11 Cl.Ct. 389, 391 (1986); LaCoste v. United States, 9 Cl.Ct. 313, 315 (1986); Turner Constr. Co.

v. United States, 9 Cl.Ct. 214, 215-16 (1985); Vemo Co. v. United States, 9 Cl.Ct. 217, 220-22 (1985); G & H Mach. Co. v. United States, 7 Cl.Ct. 199, 203 (1985). Three different boards of contract appeals also have come out the other way. Guy F. Atkinson Co., No. 4693 (ENG. BCA Feb. 19, 1987); Roebbelen Eng'g, Inc., 47 F.C.R. 108 (DOT BCA 1986); Blake Constr. Co., Inc., 87-1 BCA p 19523 (VABCA 1986).

We conclude that the language of the Disputes Act, its legislative history, and its basic purpose demonstrate that, contrary to the conclusion of the Claims Court in this case, the twelve-month limitations period for bringing suit in the Claims Court does not begin to run until the contracting officer has issued his decision on the contractor's claim. Accordingly, Pathman's suit was timely filed, and the Claims Court erred in dismissing it.

A. The pertinent provisions of the Disputes Act are sections 6(c) and 10(a)(1), (3). The former provides:

(c)(1) A contracting officer shall issue a decision on any submitted claim of $50,000 or less within sixty days from his receipt of a written request from the contractor that a decision be rendered within that period. For claims of more than $50,000, the contractor shall certify that the claim is made in good faith, that the supporting data are accurate and complete to the best of his knowledge and belief, and that the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable.

(2) A contracting officer shall, within sixty days of receipt of a submitted certified claim over $50,000--

(A) issue a decision; or

(B) notify the contractor of the time within which such a decision will be issued.

(3) The decision of a contracting officer on submitted claims shall be issued within a reasonable time, in accordance with regulations promulgated by the agency, taking into account such factors as the size and complexity of the claim and the adequacy of the information in support of the claim provided by the contractor.

(4) A contractor may request the agency board of contract appeals to direct a contracting officer to issue a decision in a specified period of time, as determined by the board, in the event of undue delay on the part of the contracting officer.

(5) Any failure by the contracting officer to issue a decision on a contract claim within the period required will be deemed to be a decision by the contracting officer denying the claim and will authorize the commencement of the appeal or suit on the claim as otherwise provided in [the Disputes Act]....

Pub.L. No. 95-563, Sec. 6(c), 92 Stat. 2383, 2384-85 (1978) (codified at 41 U.S.C. Sec. 605(c) (1982)).

Section 10(a)(1) provides that "in lieu of appealing the decision of the contracting officer under section 6 to an agency board, a contractor may bring an action directly on the claim in the [United States Claims Court], notwithstanding any contract provision, regulation, or rule of law to the contrary." Pub.L. No. 95-563, Sec. 10(a)(1), 92 Stat. 2383, 2388 (codified as amended at 41 U.S.C. Sec. 609(a)(1)). Section 10(a)(3) states:

(3) Any action under [section 10(a)(1) ] ... shall be filed within twelve months from the date of the receipt by the contractor of the decision of the contracting officer concerning the claim, and shall proceed de novo in accordance with the rules of the appropriate court.

The Act...