Thoen v. U.S.

• Decision Date: 26 June 1985
• Docket Number: No. 85-672,85-672
• Citation: 765 F.2d 1110
• Parties: 32 Cont.Cas.Fed. (CCH) 73,661 Richard L. THOEN, Appellant, v. The UNITED STATES, Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1110

765 F.2d 1110

32 Cont.Cas.Fed. (CCH) 73,661

Richard L. THOEN, Appellant, v. The UNITED STATES, Appellee.

Appeal No. 85-672.

United States Court of Appeals Federal Circuit.

June 26, 1985.

Dale C. Nathan, Nathan, Baska & Lerman, Eagan, Minn., argued for appellant.

Stephen R. Bergenholtz, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for appellee. With him on the brief were Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director and Sandra P. Spooner, Asst. Director; Major Thomas G. Bowe, Office of the Judge Advocate Gen., Dept. of the Army, Washington, D.C., of counsel.

Before DAVIS, BALDWIN and KASHIWA, Circuit Judges.

DAVIS, Circuit Judge.

The main issue is whether the United States Claims Court erred when it (1) entered summary judgment dismissing a portion of Thoen's complaint without notice of its intention to do so at a point in the proceeding when only a partial motion to dismiss on jurisdictional grounds was pending, and (2) entered summary judgment sua sponte as to the remainder of Thoen's complaint. 5 Cl.Ct. 823 (1984) (Lydon, J.). We hold that the applicable Claims Court Rules require that a party be given both notice of a court's intention to consider entry of summary judgment and adequate opportunity to demonstrate why summary judgment is inappropriate. Appellant was not given such proper notice, nor did he have adequate opportunity to counter the grounds on which summary judgment was based. We therefore vacate the judgment and remand for further proceedings consistent with this opinion.

I.

Richard L. Thoen entered into a fixed-price contract with the Army to study roller-bearing friction. The contract called for delivery of monthly progress reports and a final technical report at the completion of the project. After encountering unforeseen difficulties with the project, Thoen requested and received several extensions of time to complete it, and the final completion date was set at April 30, 1982. The parties agreed that the contract price--$24,880--would remain unchanged by the extensions.

As of April 30, 1982, Thoen had failed to submit a final technical report. On May 12 of that year the Government's contracting officer sent Thoen a letter asking him to show cause why the contract should not be terminated for default. Thoen responded by stating that the project was more complicated than originally anticipated and that he had overrun his budget. He also expressed his belief that the Army had orally promised him follow-on contracts to study tooth friction in gears. These projects did not receive funding, and no contracts were forthcoming. In conclusion, Thoen stated that the Army "should not expect me to put aside other work, just to wrap up a contract that would pay me only a small fraction of what I spent."

By a letter to Thoen dated June 21, 1982, the contracting officer issued a final decision terminating the contract for default. Thoen then filed a complaint in the Claims Court, a copy of which he sent to the contracting officer. In the complaint, Thoen set out the pertinent facts and requested four separate items (counts) of relief. These items are (as restated in the Claims Court's opinion):

Item 1 --Judgment for $24,880, the original contract price;

Item 2 --Judgment for the fair price of his services which plaintiff estimates to be at least $105,000. Plaintiff alleges that the additional effort he performed in this regard was requested by defendant's authorized representatives;

Item 3 --Judgment for the value of services realized by defendant in an amount estimated by plaintiff is to be [sic ] ¹ at least $100,000; and

Item 4 --Judgment for $15,000 attorney's fees and costs.

The complaint does not make clear whether items 2 and 3 are sought cumulatively or in the alternative.

The Government did not file an answer, but instead filed a motion for partial dismissal. The Government's position was that the Claims Court did not have jurisdiction over items 2-4 because Thoen had not certified these claims to the contracting officer for an initial decision as required by Sec. 6 of the Contract Disputes Act, 41 U.S.C. Sec. 605 (1982). That provision states:

(a) All claims by the contractor against the government relating to a contract ... shall be submitted to the contracting officer for a decision....

* * *

* * *

(c)(1) ... 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.

The Government never moved for dismissal of item 1, nor did it answer the complaint. ²

The Claims Court handed down its decision in this case on September 4, 1984. As an initial matter, the court noted that the Government's motion is more properly denominated as requesting summary judgment than dismissal because it referenced certain exhibits, affidavits and other matters outside the pleadings. The court then determined that summary judgment in the Government's favor should be entered with prejudice on the entire case.

As to the matters listed in Thoen's items 2-4, the court ruled that it lacked jurisdiction "[a]bsent a contracting officer's final decision on a written and certified claim." 5 Cl.Ct. at 823. Moreover, the court refused to excuse Thoen for his failure to certify his claim with the contracting officer prior to filing the complaint since he knew the extent of his claim even before the Government's decision to terminate the contract. Cf. Tecom, Inc. v. United States, 732 F.2d 935 (Fed.Cir.1984) (claims for less than $50,000 at the time the complaint was filed need not be certified to the contracting officer if the value of the claim surpasses $50,000 with the passage of time).

The Claims Court also entered summary judgment sua sponte as to item 1, the claim for the contract price. Assuming that the allegations in the complaint were true and drawing all inferences in Thoen's favor, the court found to be beyond dispute the fact that the Government contracted for a final report but did not receive one. The court rejected Thoen's argument that the final report would just be an accumulation of data already submitted in the monthly reports. "Plaintiff was only asked to do what he agreed to do under the contract, i.e., to submit a Final Technical Report for approval. [The Army] was entitled to this under the contract." 5 Cl.Ct. at 823. The court declined to consider Thoen's argument that the extra work he performed was induced by the misrepresentation of Army officials regarding follow-on contracts.

The Claims Court entered judgment for the Government dismissing Thoen's complaint in its entirety with prejudice. He filed a timely notice of appeal. His principal contention is that the Claims Court erred in entering summary judgment in the Government's favor without providing him with notice of the court's intention to do so and an opportunity to present reasons why summary judgment would not be appropriate.

II.

Thoen derives his arguments from the Federal Rules of Civil Procedure. Rule 12(b) sets forth the proper procedure to be followed on a party's motion to dismiss. The rule states:

If, on a motion asserting defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

Rule 56, to which Rule 12(b) refers, provides "(c) ... The motion [for summary judgment] shall be served at least 10 days before the time fixed for the hearing." Thoen contends that, under a strict reading of Rule 56(c), the Claims Court should have afforded him ten days' notice that it would consider the case as one for summary judgment.

The Government points out that the Claims Court Rules are not identical to the Federal Rules. While Claims Court Rule 12(b) is identical in all material respects to its counterpart in the Federal Rules, Claims Court Rule 56 makes no mention of a ten-day notice period. The Government concludes that no prior notice is required in the Claims Court.

We cannot accept the Government's conclusion that the applicable rules do not require some period of notice before the court enters a summary judgment. Claims Court Rule 12(b) still requires that, when the court converts a motion to dismiss into a motion for summary judgment, "all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Therefore, the Claims Court Rules contemplate some notice to enable the opposing party to present arguments against the entry of summary judgment, though a definite 10-day period is not required.

Cases from this and other courts underscore the importance of the opportunity for the opposing party to counter a summary judgment motion. In Selva & Sons, Inc. v. Nina Footwear, Inc., 705 F.2d 1316 (Fed.Cir.1983), this court vacated a judgment of the Trademark Trial and Appeal Board because it failed to give Selva notice of and a chance to respond to its decision to convert Nina's motion to dismiss into one for summary judgment. Quoting Davis v. Howard, 561 F.2d 565, 571-72 (5th Cir.1977), this court noted:

The bridling devices [in the last line of Fed.R.Civ.P. 12(b) ] here sustain and insure the most elementary operation of our civil law. The concept of notice, admissibility, and opportunity to be heard are ancient primaries. * * * However correct the conclusion below, we cannot allow the shaving of principles for expediency when those precepts assure order and justice.

705 F.2d at 1322. Moreover, several co...