Teller Environmental Systems, Inc. v. U.S.

• Decision Date: 01 October 1986
• Docket Number: No. 85-2676,85-2676
• Citation: 802 F.2d 1385
• Parties: 33 Cont.Cas.Fed. (CCH) 74,613 TELLER ENVIRONMENTAL SYSTEMS, INC., Appellant, v. UNITED STATES of America, Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1385

802 F.2d 1385

33 Cont.Cas.Fed. (CCH) 74,613

TELLER ENVIRONMENTAL SYSTEMS, INC., Appellant, v. UNITED STATES of America, Appellee.

Appeal No. 85-2676.

United States Court of Appeals Federal Circuit.

Oct. 1, 1986.

Brian M. Hurley, Rackemann, Sawyer & Brewster, Boston, Mass., argued for appellant. With him on the brief was A. James Casner, III.

Howard Lipper, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for appellee. With him on the brief were Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, M. Susan Burnett, Asst. Director and Thomas W. Petersen, Asst. Director; Ed Connelly, Office of the Gen. Counsel, Dept. of the Navy, Washington, D.C., William H. Mahn, U.S. Navy, San Francisco, Cal., of counsel.

Before NIES, BISSELL and ARCHER, Circuit Judges.

ARCHER, Circuit Judge.

DECISION

Teller Environmental Systems, Inc. (Teller) appeals from the decision of the Armed Services Board of Contract Appeals (ASBCA or board), ASBCA Docket No. 25550, holding Teller liable to the government for correcting defective repair work performed by Teller. Although the contracting officer determined the amount of damages, the board did not, but instead "remanded" the case to the parties for such determination. We hold that this is not a final decision of the board, as required by 28 U.S.C. Sec. 1295(a)(10) (1982) to give this court appellate jurisdiction, and dismiss without prejudice.

OPINION

I.

On May 30, 1974, the United States Navy (Navy) awarded Teller a contract for furnishing and installing equipment for cleansing exhaust gases emitted by engines under test in Navy jet engine facilities located in Norfolk, Virginia, and Jacksonville, Florida. During the course of performance, one of Teller's workmen accidentally caused a fire that damaged the concrete of one of the exhaust stacks of the Norfolk facility in which Teller's equipment was being installed. Teller acknowledged responsibility for the accident and carried out repairs to the concrete according to instructions that had been approved by the Navy. On or about August 16, 1976, the Navy informed Teller that its repair work was acceptable. Teller then completed its contract and requested payment of the unpaid balance of the contract price.

At a later point in time, not specified in the record, "cracking" began to appear in the repaired surface of the exhaust stack. In a letter to Teller dated January 16, 1979, the Navy took the position that there were defects in Teller's performance of the repair work and requested Teller to submit its plan for correcting these defects. When Teller did not agree that it was responsible for the failure of the repairs, the Navy undertook an extensive investigation to determine the causes of the failure. By letter dated December 3, 1979, the Navy informed Teller that it had concluded, based upon reports of consultants, that Teller was responsible for the failure of the repairs and inquired of Teller what action it intended to take to provide adequate repairs. Teller responded on January 9, 1980, rejecting the Navy's finding that it was responsible for the failure. The Navy then developed specifications for doing the necessary corrective work and awarded a contract to be performed by another contractor. By October 31, 1980, the corrective work was completed under that contract and accepted and paid for by the Navy.

Despite repeated demands for the unpaid balance due under its contract totalling approximately $21,100, the Navy delayed paying Teller. On June 28, 1979, Teller was informed by the Navy that there would be no further payments under the contract until the matter of liability for correcting the defects in the repair of the fire damage was determined. Teller thereafter submitted a formal claim for the unpaid contract price to the contracting officer. The Navy, by way of offset and for affirmative relief, asserted damages against Teller for the defective repair work. On October 3, 1980, the final decision of the contracting officer (CO) allowed the Navy's offset against Teller's request for payment of the unpaid contract price and assessed the Navy's affirmative claim for damages against Teller in the net amount of $80,660. ¹ Teller did not agree with this decision and timely appealed to the board. ²

On March 28, 1985, the board rendered a decision adverse to Teller on the question of liability for the 1980 corrective work. The board determined that there were latent defects in the repair work performed by Teller on account of the fire damage, and held Teller liable under the terms of the contract for the costs incident to the performance of the corrective work. The allowed claim was then remanded to the parties for determination of the amounts due the government.

In its decision, the board stated that there was only a single claim at issue, relating to Teller's negligent repair work, which involved several items of damages. Noting its de novo jurisdiction, 41 U.S.C. Sec. 605(a) (1982), to review the contracting officer's decision, the board held that it could consider additional items of damages not presented to the contracting officer so long as the increased damages were within the scope of the claim.

II.

As an initial matter, the government has raised the issue of the court's jurisdiction to hear this appeal because the decision of the board determined only the liability of Teller, leaving the amount of damages payable to the government to be decided pursuant to the remand to the parties. It contends this is not a final decision of the board within the meaning of 28 U.S.C. Sec. 1295(a)(10) (1982). ³

Teller notes preliminarily that uncertainty about the finality of the board's decision, resulting from the board's practice of bifurcating the issues of entitlement and quantum, presents a procedural dilemma for a contractor. By waiting to appeal until there is an order or decision to pay a specific amount, a contractor runs the risk of being barred by the statutory time limit for appeal if the earlier liability determination constitutes a final decision. On the other hand, filing an appeal after the liability determination can, at most, result in a dismissal of the appeal without prejudice. This reasoning led Teller to file an appeal from the board's decision of liability.

Teller, nevertheless, believes that the liability determination should be considered a final decision because "there is nothing left before the Board for it to decide ... and nothing in the record ... suggests that the Board has in any sense retained jurisdiction over the matter." In Teller's view, the board's "remand" to the parties makes it clear that the unresolved damages question is not before the board. And thus, Teller contends that the liability decision of the board is separately appealable.

The government counters with arguments that the statutory language clearly requires liability and damages to be treated as part of the same claim, that courts and boards have adopted this treatment, and that judicial economy favors a decision on both questions prior to appeal.

III.

The doctrine of "finality," under the historic federal rule, has generally allowed appellate review only where a judgment has wholly disposed of a case, adjudicating all rights and ending litigation on the merits. Flanagan v. United States, 465 U.S. 259, 263, 104 S.Ct. 1051, 1054, 79 L.Ed.2d 288 (1984); Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373, 101 S.Ct. 669, 672, 66 L.Ed.2d 571 (1981); Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978). For purposes of district court review under 28 U.S.C. Sec. 1291, a final decision is one which "leaves nothing for the trial court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945). It is well recognized that the requirement of finality is founded upon a policy that stands against piecemeal litigation and delays caused by appeals of nonfinal decisions. Id. at 233, 65 S.Ct. at 633. See Cabot Corp. v. United States, 788 F.2d 1539, 1542 (Fed.Cir.1986); Newpark Shipbuilding & Repair, Inc. v. Roundtree, 723 F.2d 399, 401 (5th Cir.1984) (en banc ).

In line with these principles, a judgment encompassing both liability and damages has been the prerequisite of appellate review. Thus, in Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737, 744, 96 S.Ct. 1202, 1206, 47 L.Ed.2d 435 (1976), the court held that the issue of damages and liability are a single claim and that both must be resolved to constitute a final decision within the meaning of 28 U.S.C. Sec. 1291. See McGourkey v. Toledo & Ohio Railway, 146 U.S. 536, 545, 13 S.Ct. 170, 172, 36 L.Ed. 1079 (1892). Without a determination of damages, other circuit courts have consistently held that finality is lacking, thus precluding appellate jurisdiction under 28 U.S.C. Sec. 1291. See Newpark Shipbuilding & Repair, Inc., 723 F.2d at 401; Freeman United Coal Mining v. Director, Office of Workers' Compensation Programs, United States Department of Labor, 721 F.2d 629, 630 (7th Cir.1983), and cases cited therein.

Teller recognizes that in the usual district court case the issues of liability and damages are resolved in the same proceeding and that the final judgment entered addresses all issues, but urges that the administrative setting can be distinguished. It points to the practice of the board in separating the damages issue for remand after it determines liability. According to Teller, ...