Southwest Marine, Inc. v. US, C-87-4192 RFP.

• Decision Date: 09 January 1988
• Docket Number: No. C-87-4192 RFP.,C-87-4192 RFP.
• Citation: 680 F. Supp. 1400
• Court: U.S. District Court — Northern District of California
• Parties: SOUTHWEST MARINE, INC., a California corporation, on behalf of Universal Painting & Sandblasting Corp., a California corporation, Plaintiffs, v. UNITED STATES of America, and United States Department of the Navy, Defendants.

680 F. Supp. 1400

SOUTHWEST MARINE, INC., a California corporation, on behalf of Universal Painting & Sandblasting Corp., a California corporation, Plaintiffs, v. UNITED STATES of America, and United States Department of the Navy, Defendants.

No. C-87-4192 RFP.

United States District Court, N.D. California.

January 9, 1988.

Robert C. Nicholas, Haas & Najarian, San Francisco, for plaintiffs.

Rand R. Pixa, Torts Branch, Civ. Div., U.S. Dept. of Justice, San Francisco, for defendants.

INTRODUCTION

PECKHAM, Chief Judge.

This case involves a contractual dispute arising out of the overhaul of the U.S.S. Mount Vernon. The nominal plaintiff, Southwest Marine, Inc. (SWM), was awarded the general contract for overhauling the U.S.S. Mount Vernon. SWM subsequently entered into a subcontract with Universal Painting and Sandblasting Corporation (UPS), the real party in interest in this case. UPS was to perform various sandblasting and painting jobs on the U.S.S. Mount Vernon.

During the overhaul, numerous disputes arose. Both SWM and UPS accused the Navy, inter alia, of having misrepresented the condition of the U.S.S. Mount Vernon when it solicited bids. Under the terms of the Contract Disputes Act of 1978, 41 U.S. C. §§ 601-13 (1982), SWM presented thirteen of its own claims as well as the claim of its subcontractor, UPS, to the officer in charge of administering the contract ("the contracting officer"). The contracting officer denied each of the claims, in whole or in part. On December 9, 1986, SWM appealed the denial of its thirteen claims to the Armed Services Board of Contract Appeals (the Board). SWM filed this district court action on behalf of UPS on August 12, 1987. The defendant now moves to transfer this case to the Board so that it may be consolidated with the other appeals currently pending before the Board.

DISCUSSION

The Contract Disputes Act of 1978 was adopted to establish "a fair, balanced, and comprehensive statutory system of legal and administrative remedies in resolving Government contract claims." S.Rep. No. 1118, 95th Cong., 2d Sess. 1, reprinted in 1978 U.S.Code Cong. & Admin.News 5235, 5235. The Act "applies to any express or implied contract ... entered into by an executive agency for ... the procurement of services or the alteration, repair or maintenance of real property." 41 U.S.C. § 602(a). Thus the Act clearly applies to the present dispute. Under the Act, an aggrieved contractor must first present its claims to the contracting officer. If the contracting officer denies a claim, the contractor can elect to appeal the officer's decision either directly to court, see 41 U.S. C. § 609, or to the appropriate agency board of contract appeals. See 41 U.S.C. §§ 606-07. The determinations of these boards are subject to judicial review. See 41 U.S.C. § 607(g).

Direct challenges to the contracting officer's decisions generally must be made in the Claims Court. Appeals from board determinations generally lie in the Court of Appeals for the Federal Circuit. Direct appeals from officer's decisions and appeals from the boards are treated differently, however, when they arise from maritime contracts. The Act preserves the traditional jurisdiction of the district courts, sitting in admiralty, to hear appeals such as the one involved in the present case. See 41 U.S.C. § 603. Indeed, the jurisdiction of the district courts over maritime contract claims is exclusive vis-a-vis the Claims Court. See Whitey's Welding & Fabrication, Inc. v. United States, 5 Cl.Ct. 284 (1984).¹

The government's motion raises two distinct questions. First, does 41 U.S.C. § 609(d) give this court the power to transfer this case to the Armed Services Board of Contract Appeals? Second, if so, should this court exercise that power given the circumstances of this case? These questions will be analyzed in turn.

1) Power to Transfer

The question of whether a district court, sitting in admiralty, may invoke 41 U.S.C. § 609(d) to transfer a case appears to be one of first impression. In order to determine the scope of section 609(d), we must of course start with the language of the statute itself:

If two or more suits arising from one contract are filed in the United States Claims Court and one or more agency boards, for the convenience of parties or witnesses or in the interest of justice, the United States Claims Court may order the consolidation of such suits in that court or transfer any suit to or among the agency boards involved.

41 U.S.C. § 609(d).

The plaintiff argues, correctly, that the plain language of the Act confers transfer power on the Claims Court alone. Because the statute does not mention the district courts, the plaintiff concludes that this court does not have the power to transfer its case to the Board. The government responds that the plaintiff's reading of the statute is overly literal. In the government's view, the structure of the Act as a whole makes it plain that Congress meant for the district courts to have transfer power under section 609(d).

In order to analyze the government's argument, it is necessary to consider the Act's legislative history. As was discussed in Whitey's Welding, 5 Cl.Ct. at 286-87, the original Senate version of the Act would have eliminated the traditional admiralty jurisdiction of the district courts over maritime contract claims. See id. at 286 (citing S. 3178, 95th Cong., 2d Sess. § 3 (1978)). All direct appeals from the decisions of contracting officers, including those involving maritime contract claims, would have been heard by the Claims Court. Similarly, all appeals from the agency boards would have been heard by the Court of Appeals for the Federal Circuit.

During hearings on the Senate bill, testimony by representatives of the Department of Justice "convinced the committees that the current sole jurisdiction over all admiralty cases should remain in the district courts where great expertise has been developed over the years on such cases." The committees therefore deleted the provisions giving the Court of Claims jurisdiction over maritime contracts.

Id. at 286 (quoting S.Rep. No. 1118, 95th Cong., 2d Sess. 8, reprinted in 1978 U.S. Code Cong. & Admin.News 5235, 5242). The bill was later amended by the insertion of 41 U.S.C. § 603² in order to make it absolutely clear that the district courts retained their jurisdiction over maritime contracts.

When the Senate reinstated the district courts' admiralty jurisdiction, it did not make conforming changes to that part of the bill which eventually became 41 U.S.C. § 609. See 124 Cong.Rec. 36,267-68 (1978); cf. id. at 37,076 (remarks of Representative Kindness) (urging the House to acquiesce in the Senate amendments, despite their questionable workmanship, because of the impending end of the legislative session). Section 609, which specifies the procedures for the direct appeal of the decisions of contracting officers, on its face applies only to "the United States Claims Court," not to "the United States Claims Court and the district courts in cases involving maritime contracts under section 603."³ There is no indication in the legislative history that the failure to include the district courts within the terms of section 609 was intentional. The government therefore argues that section 609(d) should be read as if it stated that "either the United States Claims Court, or the district courts sitting in admiralty" may transfer suits to the boards.

The government's position has considerable merit. The Act preserves the Admiralty jurisdiction of the district courts only "to the extent that it is not inconsistent with" the remaining provisions of the Act. 41 U.S.C. § 603. Thus before they can elect to bring maritime claims in the district courts, contractors must comply with the procedural requirements of the Act, e.g., by presenting their claims to the contracting officer. See River & Offshore Services Co. v. United States, 651 F.Supp. 276, 281 (E.D.La.1987) (holding that section 603, "rather than completely excluding maritime contracts from the CDA, simply vests appeals from the administrative determinations of claims in the district courts").

The question, then, is whether section 609(d) is one of those procedural provision of the Act which is equally applicable in the district courts and the Claims Court. There is no cogent reason, discernable from the structure of the Act or its legislative history, why Congress would have desired to grant transfer power to the Claims Court alone. We do not agree with plaintiff's contention that a transfer power would be inconsistent with the stated desire of Congress to preserve the admiralty jurisdiction of the district courts. Congress meant only to prevent the Claims Court from assuming jurisdiction over maritime contract claims. It clearly did not intend to prevent agency boards from hearing such claims. See 41 U.S.C. § 603 (giving the district courts the power to review board determinations of maritime contract claims). A discretionary power in the district courts to transfer cases in no way derogates from the admiralty jurisdiction of the district courts. Rather, such power enables the district courts to prevent inefficient and piecemeal appeals to different fora of disputes arising under a single contract. The purpose of the Act—i.e., the orderly resolution of government contract disputes—will be more readily accomplished if the district courts have the same power to transfer and to consolidate cases as does the Claims Court. For these reasons, section 609(d) should be read as applying to the district courts in cases arising under the Act.

2) Appropriateness of a Transfer

Having determined that this court has the power to invoke section 609(d), the next question we must face is whether a transfer to the board is called for in this case. Section 609(d) leaves this decision squarely within the discretion of the trial court. The statute allows transfers if they are...