Groundbreaker Dev. Corp. v. The United States

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GROUNDBREAKER DEVELOPMENT CORPORATION, Plaintiff, v. THE UNITED STATES, Defendant.

No. 22-578C

United States Court of Federal Claims

January 12, 2023

RCFC 12(b)(1); Motion to Dismiss for Lack of Subject-Matter Jurisdiction; Failure to Submit Monetary Claims to Contracting Officer Before Initiating Suit; Standing of Corporation to Bring Suit

David Hilton Wise, Fairfax, VA, for plaintiff.

Nathanael B. Yale, United States Department of Justice Washington, DC, for defendant.

OPINION AND ORDER

MARGARET M. SWEENEY, Senior Judge.

The United States Army Corps of Engineers ("Corps") terminated its contract with plaintiff Groundbreaker Development Corporation ("Groundbreaker") for default. Groundbreaker challenges the default termination seeks conversion of the termination into one for the convenience of the government, and asserts claims for breach of contract and equitable adjustment of the contract price. Defendant moves to dismiss all of these claims for lack of standing. In addition, defendant moves to dismiss the latter two claims for lack of subject-matter jurisdiction. Groundbreaker opposes the motion but also seeks leave to amend its complaint to cure any perceived defects in its pleading. For the reasons set forth below, the court grants defendant's motion in part, grants Groundbreaker's request to amend its complaint to address the standing issue, and denies Groundbreaker's request to amend its complaint regarding the breach-of-contract and equitable adjustment claims.

I. BACKGROUND

Groundbreaker and the Corps entered into their contract on April 20, 2020, pursuant to which Groundbreaker would install a water line at Northfield Brook Lake in Thomaston, Connecticut. Compl. ¶¶ 10, 16. On February 17, 2021, the Corps issued a show cause notice alerting Groundbreaker that a termination for default was being contemplated. Compl. Ex. 5 at 1. The Corps then issued a notice of termination for default on May 26, 2021. Compl. Ex. 9.

Groundbreaker appealed that decision to this court on May 26, 2022, relying on the Tucker Act, 28 U.S.C. § 1491, and the Contract Disputes Act of 1978 ("CDA"), 41 U.S.C. §§ 7101-7109, to establish jurisdiction for its claims. Compl. ¶ 5. In Count I of the complaint, which is titled "Wrongful Termination," Groundbreaker contends that the Corps' termination for default was improper, and states that it "is entitled to all rights and damages, including settlement expenses, for the wrongful termination for default [as] if the termination had been issued for the convenience of the Government." Id. ¶¶ 115-116.

In Count II of the complaint, which is titled "Violation of Statutory and Regulatory Mandate to Make Payments," the court discerns two distinct claims.^[1] The first claim is for breach of contract due to the nonpayment of monies allegedly owed for work performed on the contract, in the amount of $63,952.65. See id. ¶ 118 ("As part of its obligations under the Contract, the Government is required to pay [Groundbreaker] for all work performed on the Project . . . ."); see also id. ¶¶ 61-65 (alleging that Groundbreaker submitted an invoice to the Corps for completed contract work for $63,952.65, which remains unpaid). The court refers to this claim as the "nonpayment claim."

The second claim in Count II is for compensation for additional work performed by Groundbreaker due to alleged constructive changes to the contract, in the amount of $30,000. See id. ¶ 118 (requesting an equitable adjustment of the contract price flowing from constructive changes to the contract); see also id. ¶¶ 75-92 (presenting allegations under the rubric "Constructive Changes to the Contract" and contending that "[t]he value of this extra work exceeds $30,000"); id. at 18 (seeking relief in the total amount of $93,952 for "an equitable adjustment and damages"). The court refers to this claim as the "equitable adjustment claim."

Defendant moves to dismiss all of Groundbreaker's claims on the basis that Groundbreaker is a terminated corporation under the laws of Virginia where it was incorporated and thus lacks standing to bring this suit. Further, defendant moves to dismiss Groundbreaker's nonpayment and equitable adjustment claims on the additional ground that these claims were not presented to the contracting officer ("CO") for the Corps. In opposition, Groundbreaker contends that its standing is not based on its original incorporation in Virginia, but on its de facto corporation status in Connecticut. In addition, Groundbreaker argues that because the nonpayment and equitable adjustment claims are based on the same facts as its default termination claim, it did not need to submit its own claims to the CO. Groundbreaker further requests that it be allowed to amend its complaint to cure defects identified by defendant where amendment is deemed "appropriate" by the court. Pl.'s Opp'n 13-14. Defendant's motion to dismiss has been fully briefed and the court deems oral argument to be unnecessary.

II. STANDARDS OF REVIEW

Defendant brings its motion to dismiss under Rule 12(b)(1) of the Rules of the United States Court of Federal Claims ("RCFC"), which pertains to the court's subject-matter jurisdiction. In determining whether subject-matter jurisdiction exists, the court "must accept as true all undisputed facts asserted in the plaintiff's complaint and draw all reasonable inferences in favor of the plaintiff." Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir. 2011). Faced with a motion to dismiss for lack of subject-matter jurisdiction, the plaintiff bears the burden of proving, by a preponderance of evidence, that the court possesses subject-matter jurisdiction. Id. If jurisdictional facts are challenged, the court is not limited to the pleadings in determining whether it possesses subject-matter jurisdiction to entertain the plaintiff's claims. Banks v. United States, 741 F.3d 1268, 1277 (Fed. Cir. 2014); Pucciariello v. United States, 116 Fed.Cl. 390, 400 (2014). If the court finds that it lacks subject-matter jurisdiction over a claim, RCFC 12(h)(3) requires the court to dismiss that claim.

A claim that survives a jurisdictional challenge remains subject to dismissal under RCFC 12(b)(6) if it does not provide a basis for the court to grant relief. See Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002) ("A motion to dismiss . . . for failure to state a claim upon which relief can be granted is appropriate when the facts asserted by the claimant do not entitle him to a legal remedy."). To survive an RCFC 12(b)(6) motion to dismiss, a plaintiff must include in its complaint "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."). In other words, a plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). Although the court must "accept as true all of the factual allegations contained in the complaint," Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Twombly, 550 U.S. at 555-56), legal conclusions in the complaint are not presumed to be true, Iqbal, 556 U.S. at 678. Under RCFC 12(b)(6), "[t]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 814-19 (1982).

III. ANALYSIS

A. Subject-Matter Jurisdiction

The Tucker Act, pursuant to 28 U.S.C. § 1491(a)(2), confers upon the United States Court of Federal Claims ("Court of Federal Claims") jurisdiction to entertain claims arising under the CDA. For such jurisdiction to exist, a contractor must first submit a timely written claim, generally within six years of its accrual date, to the CO. See 41 U.S.C. § 7103(a)(1)-(2), (4)(A). This jurisdictional prerequisite is often referred to as the CDA's presentment requirement. See, e.g., Arctic Slope Native Ass'n v. Sebelius, 583 F.3d 785, 793 (Fed. Cir. 2009) (stating that under the CDA "the presentment of claims to a contracting officer . . . is a prerequisite to suit in the Court of Federal Claims"). Next, the CO must issue a timely written decision. 41 U.S.C. § 7103(a)(3), (f). Lastly, the contractor must file an appeal with this court "within 12 months from the date of receipt of a contracting officer's decision." Id. § 7104(b)(3).

1. Presentment Requirement for a Contractor's Monetary Claims in the Circumstances of a Termination for Default

When a contractor has been terminated for default, it is not excused from the presentment requirement for monetary claims it may wish to litigate before this court. See, e.g. Fed. Contracting, Inc. v. United States, 128 Fed.Cl. 788, 795-96 (2016) (holding that a default termination could not be construed to be a final decision on the contractor's breach-of-contract claims because those claims had not been presented to the CO). This rule, applied in the context of default terminations, follows the more general rule that the court cannot consider CDA claims that were not the subject of a CO's final decision. See, e.g., England v. Swanson Grp., Inc., 353 F.3d 1375, 1379 (Fed. Cir. 2004) ("[J]urisdiction over an appeal of a contracting officer's decision is lacking unless the contractor's claim is first presented to the contracting officer and that officer renders a final decision on the claim."); see also M. Maropakis Carpentry, Inc. v. United States, 609 F.3d...