U.S. v. Renda Marine Inc.

Decision Date30 September 2010
Docket NumberNo. 4:08–cv–443.,4:08–cv–443.
Citation750 F.Supp.2d 755
PartiesUNITED STATES of America, Plaintiff,v.RENDA MARINE, INC., Defendant.
CourtU.S. District Court — Eastern District of Texas

OPINION TEXT STARTS HERE

Paul Alexander Petty, U.S. Army Corps of Engineers, Galveston, TX, John Robert Kresse, Washington, DC, for Plaintiff.Terry L. Salazar, Brent Samuel Lee, Quilling Selander Cummiskey & Lownds PC, Dallas, TX, for Defendant.

MEMORANDUM OPINION & ORDER DENYING DEFENDANT'S MOTION FOR PARTIAL DISMISSAL FOR LACK OF JURISDICTION, GRANTING PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS, AND DENYING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT

RICHARD A. SCHELL, District Judge.

Before the court are:

Defendant Renda Marine, Inc.'s Motion for Partial Dismissal for Lack of Subject Matter Jurisdiction (Dkt. 14.);

Plaintiff United States' Motion for Judgment on the Pleadings (Dkt. 15.); and

Defendant Renda Marine, Inc.'s Motion for Partial Summary Judgment (Dkt. 16.).

Having considered the parties' motions, the responsive briefing, and the relevant legal principals, Defendant Renda Marine, Inc.'s Motion for Partial Dismissal for Lack of Subject Matter Jurisdiction (Dkt. 14.) is DENIED, Plaintiff United States' Motion for Judgment on the Pleadings (Dkt. 15.) is GRANTED, and Defendant Renda Marine, Inc.'s Motion for Partial Summary Judgment (Dkt. 16.) is DENIED.

I. BACKGROUND

This is a government contract case. Renda Marine, Inc. (Renda) is a Texas corporation located in Roanoke, Texas. In October 1998, the Army Corps of Engineers (“the Corps”) entered into a contract with Renda to dredge a reach of the Houston Ship Channel known as the Upper Bayou and to construct containment levees and other structures at the Lost Lake Placement Area, a disposal facility for dredge material (“the Upper Bayou Contract”). During performance of the Upper Bayou Contract, Renda experienced difficulties with its dredging and construction work. According to Renda, it encountered unexpected site conditions that made completion of the work at the original contract price impossible. Because of these difficulties, Renda sought additional compensation from the Corps to complete the work. Renda and the Corps agreed on an amount of additional compensation for some of the issues encountered, but were unable to agree on the final amount of additional compensation. To resolve these disputes, Renda submitted claims for additional compensation to a contracting officer pursuant to the Contract Disputes Act (“CDA”). Renda's claims were considered by a contracting officer and when Renda was not awarded the entire amount sought, it filed suit in the Court of Federal Claims (“CFC”). See Renda Marine, Inc. v. United States, 66 Fed.Cl. 639 (2005), aff'd, 509 F.3d 1372 (Fed.Cir.2007).

On November 26, 2002, while Renda's suit was pending before the CFC, the contracting officer issued a final decision under the contract asserting six separate government claims against Renda. The total amount of these government claims was $11,860,016. Under the CDA, Renda had 90 days to appeal this decision to the Armed Services Board of Contract Appeals or twelve months to initiate an action in the CFC. Renda did not pursue either course. Instead, on July 1, 2004, Renda sought leave to amend its complaint in the ongoing CFC litigation to challenge the contracting officer's decision. The CFC denied Renda's motion for leave to amend and the Federal Circuit affirmed. Renda Marine, Inc. v. United States, 509 F.3d 1372, 1378–79 (Fed.Cir.2007).

The United States filed this lawsuit on behalf of the Corps to enforce the decision of the CFC. In Count I, the United States alleges that Renda owes the Corps $11,860,016 relating to the Upper Bayou Contract. According to Plaintiff, this government claim was resolved in a final decision of a contracting officer and determined to be final and conclusive by the CFC. In Count II, the United States seeks repayment of $3,083,833 that the Corps paid Renda in excess of the original contract price on the Upper Bayou Contract. According to the United States, the CFC determined Renda was not entitled to this amount. Although Renda admits to the contract disputes alleged by the United States, it denies that the United States has enforceable judgments against it.

On September 30, 2009, Defendant filed a motion for partial dismissal (Dkt. 14.), arguing this court lacks subject matter jurisdiction over Count II of the Complaint. Then on October 2, 2009, Plaintiff filed a motion for judgment on the pleadings (Dkt. 15.) and Defendant filed a motion for partial summary judgment (Dkt. 16.). In its motion for judgment on the pleadings, Plaintiff seeks entry of judgment on Counts I and II of its Complaint. According to Plaintiff, Defendant's Answer does not state any defenses that bar entry of judgment for the United States. In its motion for partial summary judgment, however, Defendant argues that the statute of limitations bars Plaintiff's Count I claims as a matter of law.

II. DEFENDANT'S MOTION FOR PARTIAL DISMISSAL FOR LACK OF SUBJECT MATTER JURISDICTION

In its motion for partial dismissal and its response to Plaintiff's motion for judgment on the pleadings, Defendant argues this court lacks subject matter jurisdiction to consider Count II because Plaintiff's claim for $3,083,833 is an unresolved contract dispute governed by the procedures set forth in the CDA. According to Defendant, the lawsuit in the CFC involved Renda's claim for $906,364 in additional payment, not a counterclaim by the United States for $3,083,833. (Def.'s Mot. to Dismiss at 8.) Defendant argues that because the United States' claim for $3,083,833 has not been the subject of a contracting officer's decision and was not adjudicated in the CFC, this court lacks jurisdiction to consider Count II. Plaintiff disagrees with Defendant's characterization of the CFC decision and argues that Count II is a claim for unjust enrichment, not a contract dispute:

Count II relies on the CFC's decision that Renda was not entitled to that amount. We are asking this Court to resolve the United States' claim that Renda was unjustly enriched by the government's payment had and received. But we are not asking this Court to resolve a government contract dispute that requires a CFC decision to ensure national uniformity in government contract law.

(Pl.'s Resp. to Def.'s Mot. to Dismiss at 6–7 (quotation omitted).) Therefore, according to Plaintiff, Count II is within the jurisdiction of this court because the CFC determined Renda was not entitled to the $3,083,833 payment.

A. Standard of Review

A federal court's jurisdiction is limited and only extends to cases “arising under the Constitution, laws, or treaties of the United States,” or in cases where the amount in controversy exceeds $75,000. 28 U.S.C. § 1331, 1332. A challenge to subject matter jurisdiction “may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment.” Arbaugh v. Y & H Corp., 546 U.S. 500, 506, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). In considering a motion to dismiss for lack of subject matter jurisdiction, a district court may consider: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” St. Tammany Parish v. Fed. Emergency Mgmt. Agency, 556 F.3d 307, 315 (5th Cir.2009) (quotations omitted). The party asserting jurisdiction has the burden of proof. Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001). “Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist.” Id.

As a general rule, federal district courts have original jurisdiction over “all civil actions, suits or proceedings commenced by the United States ....” 28 U.S.C. § 1345. However, the Contract Disputes Act of 1978 (“CDA”) was enacted to narrow that jurisdiction in lawsuits between federal government contractors and the United States. See 41 U.S.C. § 601, et seq. The CDA applies to any express or implied contract entered into by an executive agency for: (1) the procurement of property, other than real property in being; (2) the procurement of services; (3) the procurement of construction, alteration, repair or maintenance of real property; or, (4) the disposal of personal property.” Id. at § 602(a)(1)-(4). Under the framework created by the CDA, all disputes over government contracts are considered first by a contracting officer:

[a]ll claims by a contractor against the government relating to a contract shall be in writing and shall be submitted to the contracting officer for a decision. All claims by the government against a contractor relating to a contract shall be the subject of a decision by the contracting officer.

Id. at § 605(a). The contracting officer's decision may be appealed through an agency board of contract appeals or by filing suit in the CFC. Id. at § 607, 609. The effect of the CDA, therefore, is to divest district courts of jurisdiction over contract disputes between the United States and federal contractors. However, nothing in the statute prevents a district court from assessing “the finality and unreviewability of an order” after the merits of the contract dispute have been decided. United States v. Kasler Elec. Co., Inc., 123 F.3d 341, 344 (6th Cir.1997); see also Seaboard Lumber Co. v. United States, 903 F.2d 1560, 1562 n. 4 (Fed.Cir.1990) (“The government may obtain a judgment on the basis of [a final] decision in a state or federal court without litigating the merits.”).

B. Analysis

In the present case, resolution of subject matter jurisdiction requires the court to consider the meaning and scope of the CFC's decision. The $3,083,833 Plaintiff seeks in Count II relates to what is known as the “Flare Area” 1 claim. As Judge Hewitt explained in the CFC opinion,...

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