U.S. v. TDC Management Corp., Inc.
| Decision Date | 03 June 1994 |
| Docket Number | No. 92-5369,92-5369 |
| Citation | 24 F.3d 292 |
| Parties | , 63 USLW 2016, 39 Cont.Cas.Fed. (CCH) P 76,670 UNITED STATES of America, Appellant, v. TDC MANAGEMENT CORPORATION, INC.; Conrad T. Monts, Appellees. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (89cv01533).
Paul D. Scott, Atty., U.S. Dept. of Justice, Washington, DC, argued the cause for appellant. With him on the briefs were Eric H. Holder, U.S. Atty., Douglas N. Letter and Michael F. Hertz, Attys., U.S. Dept. of Justice, Washington, DC. Ronald H. Clark, Washington, DC, entered an appearance.
Dennis F. Nee, Washington, DC, argued the cause for appellee. With him on the brief was Peter L. Goldman, Washington, DC.
Before MIKVA, Chief Judge, WALD and EDWARDS, Circuit Judges.
Opinion for the Court filed by Chief Judge MIKVA.
TDC Management Corporation ("TDC") entered into a cost-reimbursement contract with a federal agency to implement a Demonstration Bonding Program pairing minority business enterprises with private investors. When the Program failed to progress as expected, the agency terminated it for convenience and disallowed $441,972 of the $928,916 TDC claimed as contract-related expenditures. Appellees, TDC Management Corporation and its President, appealed these cost disallowances to the Department of Transportation Board of Contract Appeals ("DOTBCA" or "Board"). Before DOTBCA rendered its verdict, the United States brought suit in district court alleging that TDC violated the False Claims Act by misrepresenting in monthly reports its actual progress implementing the Program.
The Board held that appellees were entitled to cost-reimbursements in all cost categories that the agency sought to disallow and that appellees had not breached the contract for nonperformance. Based on the collateral estoppel effect of the Board's findings, appellees moved for summary judgment in district court on the government's False Claims Act claim. The district court granted TDC's motion. We now affirm in part and reverse in part.
TDC Management Corporation contracted with the Urban Mass Transportation Administration ("UMTA"), an instrumentality of the Department of Transportation, to implement and administer a Program assisting minority business enterprises ("MBEs") in securing bonding from sureties when bidding on large transportation construction projects. Specifically, TDC agreed to seek out private investors willing to contribute management assistance and up to $3 million in collateral to the MBEs in return for a percentage of the profits on construction projects. UMTA was to match the collateral that investors contributed. By the terms of the Program, TDC was to serve as an ombudsperson between the parties, with no financial interest in Program operations.
Pursuant to its contract with UMTA, TDC submitted monthly progress and expenditure reports to UMTA. UMTA reimbursed TDC monthly for documented expenditures. The government claims that TDC's reports overstated its progress in attracting investors and failed to disclose that, contrary to the Program design, TDC sought to obtain a financial interest in Program operations. The government claims that UMTA would not have made payments to TDC had it been aware of either of these facts.
UMTA first learned of TDC's alleged misrepresentations in December 1984. On April 5, 1985, it issued a termination for convenience. UMTA had, to that point, paid TDC $747,944 for contract-related expenditures. On June 1, 1985, TDC submitted a termination settlement proposal seeking an additional $216,133 in contract reimbursements. In May 1986, a UMTA contracting officer held that only $486,944 of the total $928,916 claimed by TDC over the life of the contract were "allowable, allocable, and reasonable." The officer categorically disallowed TDC's undocumented travel costs, computer costs, excessive per diem charges, cost overruns, and costs associated with TDC's Los Angeles office. The officer requested that TDC reimburse UMTA for the $261,615 overpayment that TDC had already received.
TDC appealed the contracting officer's decision to DOTBCA, claiming that it was entitled to an additional $143,852 in cost-reimbursements from UMTA plus $9,830 in termination costs. UMTA raised three affirmative defenses to TDC's claims: (1) TDC failed to perform the tasks in the contract statement of work; (2) TDC obtained the contract "by fraud and misrepresentation"; and (3) TDC "perpetrated frauds ... in presenting vouchers for payment of costs claimed" under the contract. UMTA also filed a counterclaim, grounded in restitution and breach of contract, seeking recovery of all contract payments already made to TDC.
Pursuant to the Contract Dispute Act of 1978, 41 U.S.C. Sec. 605, the Board held that its jurisdiction extended only to those costs that the contracting officer had disallowed. As such, the Board would not consider UMTA's claim that TDC was not entitled to any monies under the contract. Nonetheless, the Board would consider "any applicable reason for disallowance [of costs the contracting officer denied] regardless of whether or not such reason was stated in the Contracting Officer's decision."
On October 15, 1987, the government moved to suspend DOTBCA's contract dispute proceeding pending conclusion of a Department of Justice criminal investigation into possible fraud charges against TDC. DOTBCA granted this motion and stayed its proceedings until February 1, 1988. The government ultimately declined to file criminal fraud charges against TDC but, on May 26, 1989, it filed a civil action under the False Claims Act and the common law alleging that TDC knowingly submitted false progress reports to UMTA. The government claimed that TDC's monthly progress reports misrepresented its actual progress in attracting investors and sureties willing to participate in the Demonstration Bonding Program and concealed TDC's substantial deviations from agreed-upon Program terms.
Claiming that DOTBCA lacked jurisdiction to hear cases involving issues of fraud, the government moved to suspend the Board's contract dispute proceedings until the conclusion of the government's civil suit against TDC. The Board recognized that its jurisdiction, as defined by the Contract Dispute Act of 1978, did not extend to "settl[ing], compromis[ing], pay[ing] or otherwise adjust[ing] any claim involving fraud." 41 U.S.C. Sec. 605(a). Nonetheless, the Board denied the government's motion and announced that it would "proceed in accordance with its statutory jurisdiction, to ascertain the amounts of costs incurred which were allocable to [the] contract and were reasonable." The Board recognized that this determination "may well have collateral effect beyond the categories of costs addressed in the Contracting Officer's decision." Nonetheless, the Board assumed that the district court would "proceed in accordance with its statutory jurisdiction to ascertain whether TDC wilfully submitted false progress reports."
After an administrative trial, the Board invalidated UMTA's categorical cost disallowances of TDC's reimbursement claims finding that TDC's monthly progress reports had notified UMTA of the very categories and types of expenditures that UMTA later sought to disallow. In addition, the Board held that TDC had not breached its contract through nondelivery of the end product. The United States Court of Appeals for the Federal Circuit affirmed the Board's ruling. Skinner v. TDC Management Corp., 975 F.2d 869 (Fed.Cir.1992). Based on the collateral estoppel effect of the Board's decision, TDC moved for summary judgment in the government's False Claims Act case against TDC. The district court granted TDC's motion and this appeal followed.
If a disputed issue of fact was "actually litigated and necessarily decided by a final disposition on the merits" in a prior litigation between the same parties, the parties are collaterally estopped from relitigating that issue in a subsequent proceeding. Nat'l Post Office Mail Handlers v. American Postal Workers, 907 F.2d 190, 192 (D.C.Cir.1990). A party may be collaterally estopped by administrative as well as judicial determinations. See Paramount Transport Systems v. Chauffeurs, Teamsters & Helpers, 436 F.2d 1064 (9th Cir.1971). We review de novo the district court's determination that the Board's factual findings collaterally estop the government's False Claims Act claim.
UMTA claimed before the Board that TDC was not entitled to payment under the contract because TDC had breached its contract with UMTA through "nondelivery of the end product." The Board found, however, that the UMTA contract was a "best efforts" contract "obligating [TDC] to perform its best efforts to locate investors and sureties and obtain their tentative agreement" to participate in the Demonstration Bonding Program. As such, UMTA's breach of contract claim turned on whether TDC made a good faith effort to produce an operational program, not on whether those efforts proved successful.
TDC's monthly progress reports summarize TDC's efforts to implement the Demonstration Bonding Program. Based on the record before us, those reports are the only account of TDC's progress and setbacks in implementing the Program. Thus, the Board could not have ruled that TDC "made substantial progress towards producing an operational Program," without crediting the veracity of TDC's reports. Because the Board implicitly found that TDC's monthly reports accurately reflected TDC's Program progress, the government is collaterally estopped from relitigating the accuracy of those reports in its False Claims Act claim.
The government's False...
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