Romala Corp. v. U.S.

• Decision Date: 12 March 1991
• Docket Number: No. 90-5134,90-5134
• Citation: 927 F.2d 1219
• Parties: , 37 Cont.Cas.Fed. (CCH) 76,051 ROMALA CORPORATION, A Delaware Corporation, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1219

927 F.2d 1219

19 Fed.R.Serv.3d 1065, 37 Cont.Cas.Fed. (CCH) 76,051

ROMALA CORPORATION, A Delaware Corporation, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 90-5134.

United States Court of Appeals, Federal Circuit.

March 12, 1991.

John M. Lisko, Maxwell, Maxwell, Dick, Walsh & Lisko, Waynesboro, Pa., submitted, for plaintiff-appellant.

Martha H. DeGraff, Atty., Commercial Litigation Branch, Dept. of Justice, Washington, D.C., submitted, for defendant-appellee. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Thomas W. Petersen, Asst. Director.

Before MARKEY, MAYER, and MICHEL, Circuit Judges.

MICHEL, Circuit Judge.

Romala Corporation appeals the May 18, 1990 judgment of the United States Claims Court dismissing its action under the Contract Disputes Act against the government, in which it contended that in terminating a contract for Romala's non-performance, the government breached the contract. Romala Corp. v. United States, 20 Cl.Ct. 435 (1990). Because the Claims Court's findings with respect to the facts at issue were not clearly erroneous, because its interpretation of the contract was correct as a matter of law, and because its application of the correct construction to the found facts involved no error, we affirm. And because Romala's appeal is frivolous, we impose sanctions pursuant to Fed.R.App.P. 38 and hold Romala and its attorney jointly and severally liable to the government for double its costs.

BACKGROUND

In September, 1984 the United States Postal Service advertised that it was interested in leasing a building in Dragoon, Arizona, to be used as a post office. Romala requested and was sent a bid package, which included drawings and specifications of architectural, plumbing, electrical and other requirements for the proposed facility. On October 11, 1984, Romala responded by submitting an executed copy of the Postal Service's standard form contract, titled "Agreement to Lease," offering to lease space for a ten-year term and subsequent five-year terms. Romala's bid, however, deviated from the standard form lease agreement in two respects: First, Romala had struck through all or part of five paragraphs of the general conditions in the form lease. Second, Romala also included with its bid a series of drawings and photographs Within 60 days after having received his copy of the "Agreement to Lease" the lessor shall submit four (4) sets of the preliminary plans and specifications as adapted to the specific site by the lessor's A/E firm. This submittal shall be at the 30% design stage. A final plan review shall be made at the 100% design stage prior to the commencement of construction. (emphasis added.)

with a cover letter stating that they were plans of a prototype facility it had constructed for the Postal Service in the past at other locations. The form lease as submitted included a Paragraph 10, unaltered by Romala, which provided in relevant part:

Romala's president discussed the bid with representatives of the Postal Service from the October, 1984 submission date until March, 1985, when the Postal Service accepted Romala's offer by mailing to Romala an executed copy of the Agreement to Lease. The Postal Service also sent Romala a letter, dated March 28, 1985, stating that the drawings submitted with the bid were being considered as the required 30 percent plans, noting the probable need for their revision, and calling attention to Romala's obligation to submit plans at the "100 percent design stage" before construction could begin. Romala replied with a letter, dated April 10, 1985, to the effect that it considered what it had already submitted, on its prototype facility, to be 100 percent plans.

The parties began a year-long series of discussions and correspondence aimed at reaching agreement on a set of drawings that could be accepted as 100 percent design stage plans. These efforts failed, and Romala then submitted a claim to the Contracting Officer, who denied the claim and terminated the contract for default.

In September, 1987 Romala filed this suit in the United States Claims Court under the Contract Disputes Act of 1978, 41 U.S.C. Secs. 601-613 (1982), alleging that the government's termination of the contract between the parties amounted to a breach. The Claims Court tried the case and on May 18, 1990 issued its decision holding that because the contract required Romala to submit plans at the 100 percent design stage, and because no plans had been submitted that were adequate to be deemed 100 percent design stage plans, the termination for default was not arbitrary or capricious and thus was not a breach of contract. Romala Corp. v. United States, 20 Cl.Ct. 435, 446-47 (1990). Romala being precluded as a matter of law from recovering, the court dismissed the complaint, and this appeal followed.

Our jurisdiction is based on 28 U.S.C. Sec. 1295(a)(3) (1988).

DISCUSSION

I

The Claims Court interpreted the contract to require submission of plans at the 100 percent design stage. This interpretation reflects the explicit language in paragraph 10 as well as the facts as found by the court, and we hold that it is correct as a matter of law.

It is undisputed that while Romala crossed out some provisions in the standard form contract it submitted to the Postal Service, it did not cross out paragraph 10, quoted above, which contained language specifically providing for submission of one set of plans at the "30 percent design stage" and another set at the "100 percent design stage." This language was not inconsistent, as Romala seems to argue, with its submission of its prototype plans in its bid: The Claims Court found, and there certainly can be no clear error here, that the cover letter submitted with the bid stated only that the prototype plans were being submitted, not that Romala would not supply more complete plans. Furthermore, Romala does not argue on appeal any clear error in the Claims Court's finding, based on its weighing of testimony and its inferences from the content and timing of the correspondence between the Postal Service and Romala, that prior to accepting Romala's bid the Postal Service pointed out to Romala's president that additional (i.e., 100 percent) plans would still be required. Nor do we find clear error in the Claims In light of the factual findings by the Claims Court in this case, we hold that the court's construction of the contract to require submission of plans beyond those submitted with the bid proposal is correct as a matter of law. The court found, and Romala has not disputed on appeal, that despite adequate opportunity to do so, Romala never submitted more detailed plans. The court thus correctly determined that the Postal Service's termination of the contract was not arbitrary or capricious. Accordingly, the judgment of dismissal of this suit for breach of contract must be affirmed.

Court's finding that the prior course of dealing between the parties (which in any event was with other postal officials in other postal regions of the country) was not sufficient to constitute a mutual understanding that Romala's preliminary plans must always and everywhere be accepted as 100 percent design stage plans.

II

Having determined that Romala's appeal is entirely without merit, we shall now consider whether it lacked an arguable basis, thus making it frivolous within the meaning of Fed.R.App.P. 38. As we noted in our recent decision in Finch v. Hughes Aircraft Co., 926 F.2d 1574, 1578-79 (Fed.Cir.1991), there are two senses in which an appeal can be held frivolous: First, where an appeal is taken in a case in which "the judgment by the tribunal below was so plainly correct and the legal authority contrary to appellant's position so clear that there really is no appealable issue," the appeal is held to be "frivolous as filed." Id. at 1580. Second, even in cases in which genuinely appealable issues may exist, so that the taking of an appeal is not frivolous, the appellant's misconduct in arguing the appeal may be such as to justify holding the appeal to be "frivolous as argued." Id.

Here, on the one hand, Romala's appeal is a very weak one, with little or no chance of success. On the other hand, the appeal is directed to an arguable issue of contract interpretation, a question of law which we review de novo (although in this case the contract language is explicit and the interpretation is highly influenced by findings of fact that have not been shown to be clearly erroneous). In these circumstances, we consider it a close question whether the mere filing of the appeal is in itself frivolous. But we need not decide whether Romala might have been able to make a non-frivolous argument for reversal here: Regardless of whether the appeal is frivolous as filed, Romala's post-filing conduct, consisting of irrelevant and illogical arguments based on factual misrepresentations and false premises, is the sort of appellate litigation behavior that makes an appeal frivolous as argued, and thus eligible for sanctions.

Romala's basic contention on appeal is that the Claims Court erred in interpreting the contract requirement for plans at the "100 percent design stage" as compelling Romala to submit plans more detailed than those contained in its bid. Romala makes three major arguments in support of this contention, and each and every one of them is frivolous.

First, Romala argues that the contract could not possibly be construed to require 100 percent plans because the Postal Service knew that Romala intended to construct its prototype facility. Citing the prototype drawings it submitted with its bid, Romala argues that "it should have been clear to the Postal Service that Romala was not going to construct the facility in Dragoon, Arizona, based on the standard drawings that were part of the bid package, but instead was going to construct the facility based on its prototype drawings."...