U.S. v. Suntip Co., s. 93-36147

• Decision Date: 06 May 1996
• Docket Number: 94-35977,Nos. 93-36147,s. 93-36147
• Citation: 82 F.3d 1468
• Parties: , 40 Cont.Cas.Fed. (CCH) P 76,925, 96 Cal. Daily Op. Serv. 3157, 96 Daily Journal D.A.R. 5198 UNITED STATES of America, Plaintiff-Appellant, v. SUNTIP COMPANY, Defendant-Appellee. UNITED STATES of America, Plaintiff-Appellant, v. HAMPTON TREE FARMS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1468

82 F.3d 1468

34 Fed.R.Serv.3d 1367, 40 Cont.Cas.Fed. (CCH)

P 76,925,

96 Cal. Daily Op. Serv. 3157,

96 Daily Journal D.A.R. 5198

UNITED STATES of America, Plaintiff-Appellant, v. SUNTIP COMPANY, Defendant-Appellee.

UNITED STATES of America, Plaintiff-Appellant, v. HAMPTON TREE FARMS, INC., Defendant-Appellee.

Nos. 93-36147, 94-35977.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 6, 1995.

Decided May 6, 1996.

Allen L. Lear, United States Department of Justice, Washington, D.C., with whom Gerald M. Alexander and Sean P. Murphy appeared on the briefs, Riley J. Atkins, Assistant United States Attorney, Portland, Oregon, for plaintiff-appellant.

John P. Bledsoe, Lane, Powell, Spears & Lubersky, Portland, Oregon, for defendants-appellees.

Appeal from the United States District Court For the District of Oregon; Robert E. Jones and Helen J. Frye, District Judges, Presiding. Nos. CV-93-00681-REJ, CV-93-00936-HJF.

Before: CANBY, REINHARDT, and JOHN T. NOONAN, Jr. ^* Circuit Judges.

CANBY, Circuit Judge.

These cases arise from disputes over several federal timber sale contracts entered many years ago, separately, by Hampton Tree Farms, Inc., and Suntip Company. The controversy between those two firms and the government has passed through several tribunals and acquired an exquisitely byzantine complexity. The present actions, which we may hope will be the last, were brought by the government to enforce decisions of its contracting officers holding Hampton and Suntip liable for breach of their contracts.

Hampton and Suntip asserted two defenses that are the subject of these appeals. First, they argued that the government's claims were barred under the doctrine of res judicata because they should have been asserted as compulsory counterclaims in earlier litigation brought by Hampton and Suntip. Second, they contended that the government's claims were barred by the six-year statute of limitations, 28 U.S.C. § 2415.

In the Hampton action, the district court held that nine of the government's eleven claims were barred by limitations, and that the remaining two were barred for failure to assert them as compulsory counterclaims in earlier litigation. In the Suntip action, the district court held that all claims were barred for failure earlier to assert them as compulsory counterclaims. The government appeals both decisions.

Background

Both issues on appeal--res judicata and limitations--are affected significantly by the procedural framework established by Congress for resolution of government contract disputes, and by earlier litigation in several forums. It is unfortunately necessary, therefore, to describe these matters, as well as the underlying facts, in some detail.

Beginning in 1978, the United States Forest Service awarded various contracts to Hampton and Suntip for the harvest of timber in National Forests within Oregon. The Forest Service awarded Hampton eleven contracts to cut timber in the Siuslaw National Forest, ¹ and awarded Suntip nine contracts to cut timber in four different National Forests. ² Each contract contains a "termination date" by which time the companies were obliged to cut, remove, and pay for the timber. Neither company performed by the termination dates specified in the contracts. Between March, 1986, and April, 1987, the Forest Service notified Hampton and Suntip that their contracts were in default.

Each contract contains a "Failure to Cut" provision, which states:

In the event of (a) termination for breach, or (b) Purchaser's failure to cut designated timber on portions of Sale Area by Termination date, Forest Service shall appraise remaining Included Timber ... Such appraisal shall be made with the standard Forest Service method in use at time of termination.

Damages due the United States for Purchaser's failure to cut and remove such timber ... shall be the amount by which Current Contract Value plus the cost of resale ... exceeds the resale value at new Bid Rates. If there is no resale, damages due shall be determined by subtracting the value established by said appraisal from the difference between Current Contract Value and Effective Purchaser Credit.

1. The Contract Disputes Act

All of the contracts were subject to the Contract Disputes Act, 41 U.S.C. §§ 601-613. ³ Under that Act, the government's claims against the timber companies must first be submitted for decision by a contracting officer. 41 U.S.C. § 605(a). The Act further provides:

The contracting officer's decision on the claim shall be final and conclusive and not subject to review by any forum, tribunal, or Government agency, unless an appeal is timely commenced as authorized by this chapter.

§ 605(b). One authorized method of appeal is for the contractor, within 90 days of receipt of the contracting officer's decision, to appeal to the agency (here the Department of Agriculture) board of contract appeals. § 606. "A contractor may appeal the board's decision to the Court of Appeals for the Federal Circuit." § 607(g)(1)(A). An alternative method is for the contractor, within twelve months after receipt of the contracting officer's decision, to bring an action for review in the Court of Federal Claims. § 609(a)(1), (3). Either party may appeal a decision of the Court of Federal Claims to the Federal Circuit. 28 U.S.C. § 1295(a)(3).

2. The Contracting Officers' Decisions

In the cases before us the government proceeded to follow the steps prescribed by the Act. Once it had determined that Hampton and Suntip had defaulted, each claim was submitted to a contracting officer who calculated the damages the companies owed the government under the formula stated in the contracts. Between July, 1987, and May, 1988, ⁴ contracting officers issued "Final Decisions" stating the damages that Hampton and Suntip owed to the government by reason of their breach of each contract.

3. The Declaratory Judgment Actions

A few years earlier, when it had become apparent that many timber companies could not carry out harvesting contracts without a loss, the Forest Service adopted a Multi-Sale Extension Policy, which allowed participating companies an additional five years to complete their contracts. See 48 Fed.Reg. 54812 (1983). In return, the participating companies agreed to request no further extensions and to certain contract modifications. To qualify, companies were required to submit their Multi-Sale Extension Plans by February 15, 1984. Neither Hampton nor Suntip submitted Plans by this deadline, because they relied on an injunction issued by the district court in other litigation, North Side Lumber Co. v. Block, No. 83-490 (D.Or. Feb. 15, 1984).

The district court's injunction in North Side was vacated by this court on February 20, 1985. ⁵ North Side Lumber Co. v. Block, 753 F.2d 1482 (9th Cir.), cert. denied, 474 U.S. 919, 931, 106 S.Ct. 248, 265, 88 L.Ed.2d 256, 271 (1985). Many of the companies in the plaintiff class settled with the Forest Service, and were allowed to file late Multi-Sale Extension Plans. Hampton and Suntip did not settle. In May 1985, they both filed Multi-Sale Extension Plans, which the Forest Service rejected as untimely.

Hampton responded in June 1985 by bringing an action in the district court for declaratory and injunctive relief requiring the Forest Service to accept their Multi-Sale Extension Plans. After receiving several contracting officers' decisions, Hampton filed an amended and supplemental complaint on April 7, 1988, alleging wrongful termination of the contracts and related claims. In answering the Supplemental Complaint on April 27, 1988, the United States did not assert a counterclaim for the damages Hampton owed it for breaching the contracts. In October, 1989, Hampton filed a Supplement to its First Amended Complaint, and again in answering on November 17, 1989, the government did not assert a counterclaim against Hampton.

On December 10, 1987, Suntip initiated an action in district court, seeking declaratory and injunctive relief similar to that sought by Hampton. In April 1988, the government answered the complaint without asserting a counterclaim for the damages Suntip owed it for breaching the contracts. Suntip filed a supplement to its complaint on October 30, 1989. The government filed an answer to Suntip's supplemental pleading on November 17, 1989, again without asserting its damages claims as compulsory counterclaims.

The district court granted summary judgment for Hampton and Suntip, holding that Hampton and Suntip's Plans had been timely, even though they were submitted past the regulatory deadline, because they were submitted while the North Side injunction was still in effect. Hampton Tree Farms, Inc. v. Block, No. 85-1085, 1987 WL 115596 (D.Or. Apr. 20, 1987); Suntip Co. v. Yeutter, No. 87-1360, 1990 WL 357213 (D.Or. May 7 1990). On appeal, the cases were consolidated and this court reversed, holding that, once the North Side injunction was held to be void, rights acquired under it could not be enforced. Hampton Tree Farms, Inc. v. Yeutter, 956 F.2d 869, 871 (9th Cir.), cert. denied, 506 U.S. 816, 113 S.Ct. 56, 121 L.Ed.2d 25 (1992). We also held that the Forest Service's refusal to accept Hampton's and Suntip's late Plans was not arbitrary, because the other applicants whose untimely Plans had been accepted had settled with the Forest Service, and Hampton and Suntip had not. Id. at 872.

4. The Court of Federal Claims Actions

Hampton and Suntip did not stake everything on their action in district court for declaratory and injunctive relief. Between March 4, 1988 and May 24, 1989, they filed actions in the Court of Federal Claims contesting the various decisions of the contracting officers. ⁶ The actions all were filed within the requisite one year of the contracting officers' decisions. See 41 U.S.C. § 609(a)(3). Shortly after filing the first action, Hampton asked the Court of Federal Claims to stay its hand until the...