In the United States Court of Federal Claims

No. 20-1784

(Filed: July 13, 2022)

CHEVRON U.S.A. INC., et al.,

Plaintiffs,

v.

UNITED STATES,

Defendant.

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Motion for partial summary judgment; 

disputes regarding avgas contracts entered 

during World War II

Michael W. Kirk, Cooper & Kirk, PLLC, Washington, D.C. for plaintiffs. With him on

the briefs were Vincent J. Colatriano, J. Joel Alicea, and Tiernan B. Kane, Cooper & Kirk, 

PLLC, Washington, D.C., Christopher H. Marraro, Baker & Hostetler LLP, Washington, D.C., 

and Bridget S. McCabe, Baker & Hostetler LLP, Los Angeles, California.

Matthew P. Roche, Trial Attorney, Commercial Litigation Branch, Civil Division, United 

States Department of Justice, Washington, D.C. for the United States. With him on the briefs 

were Brian M. Boynton, Principal Deputy Assistant Attorney General, Civil Division, Patricia 

M. McCarthy, Director, and Franklin E. White, Jr., Assistant Director, Commercial Litigation 

Branch, Civil Division, United States Department of Justice, Washington, D.C.

OPINION & ORDER

LETTOW, Senior Judge.

Pending before the court is plaintiffs’ motion for partial summary judgment as to seven 

affirmative defenses raised in defendant’s answer to plaintiffs’ complaint: laches, contributory 

negligence, proximate cause, res judicata, offset of damages to account for insurance payments, 

prior material breach, and release. See Pls.’ Mot. for Partial Summary J. (“Pls.’ Mot.”), ECF No. 

32; Def.’s Answer ¶¶ 1-9, ECF No. 27.1 Plaintiffs’ partial summary judgment motion has been

fully briefed. See Def.’s Opp’n, ECF No. 42; Pls.’ Reply, ECF No. 45. For the reasons stated, 

plaintiffs’ motion is DENIED IN PART and GRANTED IN PART.

1 Plaintiffs are Chevron U.S.A. Inc., Texaco Downstream Properties Inc., and Union Oil 

Company of California (together, the “oil companies”).
2

BACKGROUND2

This case involves seven contracts entered into by the United States with oil companies to 

produce high-octane aviation gasoline (“avgas”) during World War II as part of the war effort. 

Compl. ¶ 12, ECF No. 1; see also Compl., Exs. A-G, ECF Nos. 1-1 to 1-7. The contracts 

provided small profits for the oil companies, and, in exchange, they obligated the government to 

“indemnify the [o]il [c]ompanies for the costs imposed on them resulting from any later-enacted 

laws, including the costs of cleaning up wastes associated with the wartime production of avgas.” 

Compl. ¶¶ 13-14. Specifically, the contracts stated that, “Buyer shall pay in addition to the 

prices as established . . . any new or additional taxes, fees, or charges, other than income, excess 

profits, or corporate franchise taxes, which Seller may be required by any municipal, state, or 

federal law . . . to collect or pay by reason of the production, manufacture, sale or delivery of 

[avgas].” Compl., Ex. A at 17 (representative of other contractual provisions). 

Decades after the conclusion of World War II and the termination of the avgas contracts, 

Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act 

(“CERCLA”) in 1980 and the Hazardous and Solid Waste Amendments to the Resource 

Conservation and Recovery Act (“RCRA”) in 1984. Comp. ¶ 37, see also 42 U.S.C. § 9601 et

seq; 42 U.S.C. § 6901 et seq.. CERCLA imposes liability on facilities where hazardous 

substances have been disposed and remedial measures are required, while RCRA mandates 

requirements for disposal of hazardous waste and the closing and retrofitting of facilities. 

Compl. ¶¶ 38, 41. The oil companies aver that they incurred expenses pursuant to actions under 

both CERCLA and RCRA relating to disposal of avgas waste. Compl. ¶¶ 39-42. According to 

plaintiffs, the government is responsible for these expenses pursuant to the indemnification 

provision in the avgas contracts. Compl. ¶ 42. 

Under the Contract Settlement Act, the oil companies may bring claims pursuant to 

wartime contracts before the General Services Administration (“GSA”), which plaintiffs did on 

June 9, 2020. Compl. ¶ 51.3

 GSA denied the oil companies’ claims on September 8, 2020, after 

which plaintiffs filed their pending claims in this court on December 7, 2020. Compl. ¶ 51. The 

government moved to dismiss in part the oil companies’ claims for lack of subject-matter 

jurisdiction and failure to state a claim upon which relief can be granted. Def.’s Mot. to Dismiss, 

ECF No. 7. The court denied defendant’s motion. See Chevron U.S.A. v. United States, 155 

Fed. Cl. 344, 348 (2021). Defendant thereafter filed its answer to plaintiffs’ complaint and 

raised affirmative defenses, seven of which are the subject of plaintiffs’ present summary 

judgment motion: laches, contributory negligence, proximate cause, res judicata, offset of 

damages to account for insurance payments, prior material breach, and release.

2 The recitations that follow do not constitute findings of fact, but rather are recitals 

attendant to the pending motions and reflect matters drawn from the complaint, the parties’ 

briefs, and records and documents appended to the complaint and briefs.

3 “Congress repealed the [Contract Settlement Act] in 2011.” Chevron, 155 Fed. Cl. at 

350. The repealing statute, however, “contained a savings clause” that preserves the court’s 

jurisdiction over this case and others like it. Id.
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STANDARDS FOR DECISION

Summary judgment shall be granted “if the movant shows that there is no genuine dispute 

as to any material fact and the movant is entitled to judgment as a matter of law.” Rule 56(a) of

the Rules of the Court of Federal Claims (“RCFC”). A material fact is one that “might affect the 

outcome of the suit.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (interpreting 

Fed. R. Civ. P. 56).4

 A genuine dispute exists when the finder of fact may reasonably resolve the 

dispute in favor of either party. Id. at 250.

The movant bears the burden of demonstrating the absence of any genuine disputes of 

material fact, see Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986), and must “cit[e] to 

particular parts of materials in the record, including depositions, documents, electronically stored 

information, affidavits or declarations, stipulations[,] . . . admissions, interrogatory answers, or 

other materials,” RCFC 56(c)(1)(A). The court may consider other materials in the record even 

if not cited by the parties. See RCFC 56(c)(3). “[T]he inferences to be drawn . . . must be 

viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. 

Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting United States v. Diebold, Inc., 369 

U.S. 654, 655 (1962)). If the record taken as a whole “could not lead a rational trier of fact to 

find for the non-moving party, there is no ‘genuine issue for trial’” and summary judgment is 

appropriate. Id. (quoting First Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

ANALYSIS

The oil companies move for partial summary judgment on seven of the affirmative 

defenses that the government raised in its answer to plaintiffs’ complaint. Defendant voluntarily 

withdrew the affirmative defense of res judicata in its opposition brief. See Def.’s Opp’n at 13. 

Furthermore, it avers that it raised the affirmative defense of release only to preserve the issue 

for appeal and that it will not brief or argue the point in response to plaintiffs’ partial summary 

judgment motion. See id. at 24-25. Therefore, plaintiffs’ motion is GRANTED as to 

defendant’s affirmative defenses of res judicata and release. The remaining questions are

whether, as a matter of law, the oil companies are entitled to summary judgment on the 

government’s affirmative defenses of laches, contributory negligence, proximate cause,

insurance offsets, and prior material breach.

A. Laches

Plaintiffs and the government dispute whether the Contract Settlement Act contained an 

express limitations period for bringing a war contractor claim, the answer to which determines 

whether the government may invoke the equitable defense of laches to bar plaintiffs’ present 

claims. “Laches is ‘a defense developed by courts of equity’ to protect defendants against 

‘unreasonable, prejudicial delay in commencing suit.’” SCA Hygiene Prods. Aktiebolag v. First 

Quality Baby Prods., LLC, ___ U.S. ___, 137 S.Ct. 954, 960 (2017) (quoting Petrella v. Metro4 Because RCFC 56 mirrors Fed. R. Civ. P. 56, the rules should be interpreted in pari 

materia. 
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Goldwyn-Mayer, Inc., 572 U.S. 663, 678 (2014)). “[T]he ‘principal application’ of laches ‘was, 

and remains, to claims of an equitable cast for which the [l]egislature has provided no fixed time 

limitation.’” Id. at 961 (quoting Petrella, 572 U.S. at 678). “[T]he well-established general rule, 

often repeated by [the Supreme] Court, [is] that laches cannot be invoked to bar a claim for 

damages incurred within a limitations period specified by Congress.” Id. at 963 (citing cases). 

The Contract Settlement Act laid out a back-and-forth procedure for contracting agencies 

and war contractors to settle outstanding claims. First, “[w]henever the contracting agency 

responsible for settling any termination claim has not settled the claim by agreement or has so 

settled only a part of the claim, . . . the contracting agency at any time may determine the amount 

due on such claim or such unsettled part, and prepare written findings indicating the basis of the 

determination, and deliver a copy of such findings to the war contractor.” 41 U.S.C. § 113(a) 

(1992) (emphasis added). Second, “[w]henever any war contractor is aggrieved by the findings 

of a contracting agency on his claim or part thereof or by its failure to make such findings in 

accordance with subsection (a) of this section, he may bring suit against the United States for 

such claim or such part thereof, in the United States Court of Federal Claims.” Id. at § 113(b) 

(emphasis added). Finally, “[a] war contractor may initiate proceedings in accordance with 

subsection (b) of this section” within 90 days of receiving the contracting agency’s decision or 

findings per Subsection (a) or within 1 year if the agency fails to “deliver such findings.” Id. at 

§ 113(c)(2). 

Plaintiffs contend that Subsection 113(c)’s 90-day provision is the statute of limitations

that triggers the application of the rule against permitting the laches defense when Congress has 

specified a limitations period. See Pls.’ Mot. at 4-8. On the other hand, as the government 

observes, see Def.’s Opp’n at 4-7, Subsection 113(c) does not specify a limitations period in 

which a war contractor must bring a claim to a contracting agency. Rather, it specifies when the 

contractor must bring a claim to this court after raising it to the contracting agency. In these

circumstances, 41 U.S.C. § 113 (1992) must be read in context to give meaning to the statute as a 

whole. See Massachusetts v. Morash, 490 U.S. 107, 115 (1989) (“[I]n expounding a statute, we 

are not guided by a single sentence or member of a sentence, but look to the provisions of the 

whole law.” (internal alterations omitted) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 

51 (1987))). Subsection 113(c)(2) operates in conjunction with Subsections 113(a) and (b), 

which use the terms “[w]henever” and “at any time” when referring to the bringing and resolving

of a war contractor’s claim. These words indicate Congress’ intent to permit later-arising claims 

and to not impose a time limit on contractors. Cf. Ford Motor Co. v. United States, 378 F.3d 

1314, 1319 (Fed. Cir. 2004) (considering whether the government could be held liable to 

appellant for CERCLA damages that accrued post-contract termination and apparently agreeing 

with appellant’s argument that “the CSA explicitly contemplated later-arising claims, and set no 

period of limitations”). Per SCA Hygiene, the government cannot invoke the equitable defense 

of laches because Congress indeed specified the limitations period to apply to claims under the 

Act, i.e., “[w]henever” and “at any time.” 

The court therefore GRANTS plaintiffs’ summary judgment motion as to the 

government’s affirmative defense of laches. 
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B. Contributory Negligence

The oil companies and the government present contrasting interpretations of the avgas 

contracts’ “any new or additional . . . charges” clause. Plaintiffs construe the clause to fully 

indemnify them even against their own negligence, see Pls.’ Mot. at 8-10, while the government 

distinguishes the clause from similar clauses that the Federal Circuit has held were broad enough 

to indemnify a contractor’s own negligence, see Def.’s Opp’n at 9-10 (distinguishing Shell Oil 

Co. v. United States, 751 F.3d 1282, 1294 (Fed. Cir. 2014) and E.I. Du Pont de Nemours and 

Co., Inc. v. United States, 365 F.3d 1367, 1370 (Fed. Cir. 2004)). “[A] contractual provision 

should not be construed to permit an indemnitee to recover for his own negligence unless the 

court is firmly convinced that such an interpretation reflects the intention of the parties.” United 

States v. Seckinger, 397 U.S. 203, 211 (1970). In other words, “the mutual intention of the 

parties to this effect should appear with clarity from the face of the contract.” Id. at 212. Yet, “a

clause that is intended to encompass indemnification for the indemnitee’s negligence” need not 

necessarily “include an ‘indemnify and hold harmless’ clause or . . . explicitly state that 

indemnification extends to injuries occasioned by the indemnitee’s negligence.” Id. at 212 n.17. 

Here, the relevant avgas contracts do not explicitly indemnify the oil companies against 

their own negligence. Nor is it evident that the Federal Circuit held that, as a matter of law, the 

“any new or additional . . . charges” provision of the contracts applied to claims arising from 

plaintiffs’ own negligence. See Shell Oil, 751 F.3d at 1294 (“The relevant provision in Du[]Pont

made no mention of new or additional charges, yet was nonetheless found to encompass 

unforeseeable CERCLA liability. The avgas contracts’ promise to reimburse for ‘new or 

additional’ charges must similarly extend to ‘all claims, foreseeable or not.’” (quoting Du Pont, 

365 F.3d at 1373)). Nonetheless, the discussion in Shell Oil was focused on whether that 

contractual language was broad enough to encompass unforeseeable claims arising from the yetto-be-enacted CERCLA. Plaintiffs may therefore only succeed by demonstrating that the “any 

new or additional . . . charges” clause gives rise to an inference that the parties intended to 

indemnify the oil companies against their own negligence. Drawing all reasonable inferences in 

the government’s favor as the party opposing the summary judgment motion, the court concludes 

that there exists a genuine dispute as to whether the “any new or additional . . . charges” clause 

demonstrates the parties’ mutual intent to indemnify plaintiffs for their own negligence. 

Resolution of the dispute would be aided by development of the factual context in which it 

arises.

Plaintiffs’ summary judgment motion therefore is DENIED as to defendant’s affirmative 

defense of contributory negligence. 

C. Proximate Cause

The oil companies dispute the government’s affirmative defense that some of plaintiffs’ 

claimed damages were not proximately caused by reason of the avgas contracts. See Pls.’ Mot. 

at 11-12. Plaintiffs reason that because the Federal Circuit has interpreted the “any new or 

additional . . . charges” clause to indemnify the oil companies against “all claims, foreseeable or 

not,” the government cannot conduct discovery into whether plaintiffs’ claimed damages were 

proximately caused by reason of the avgas contracts, i.e., foreseeability of damages. Id.
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(emphasis omitted) (quoting Shell Oil, 751 F.3d at 1295). The government responds that the 

Federal Circuit’s interpretation of the avgas contracts refers to unforeseeable claims but does not 

eliminate plaintiffs’ burden to prove foreseeability when it comes to damages. See Def.’s Opp’n 

at 11-13. 

“To recover for breach of contract, a party must allege and establish,” inter alia, 

“damages caused by the breach.” San Carlos Irr. and Drainage Dist. v. United States, 877 F.2d 

957, 959 (Fed. Cir. 1989). To satisfy this requirement, one must show “(1) the damages were 

reasonably foreseeable by the breaching party at the time of contracting; (2) the breach is a 

substantial causal factor in the damages; and (3) the damages are shown with reasonable 

certainty.” Indiana Michigan Power Co. v. United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005); 

see also Shell Oil Co. v. United States, 130 Fed. Cl. 8, 34 (2017), aff’d, 896 F.3d 1299 (Fed. Cir. 

2018). The parties’ disagreement boils down to a difference of opinion about whether the 

contract’s indemnity clause covered unforeseeable claims and unforeseeable damages. This

disagreement demonstrates the existence of “material factual disputes about the scope of the 

contract,” which renders summary judgment on an element of plaintiffs’ burden of proof as to 

damages “inappropriate.” New England Specialty Servs., Inc. v. United States, 148 Fed. Cl. 413, 

417 (2020).5

 

Plaintiffs’ summary judgment motion therefore is DENIED as to defendant’s affirmative 

defense of proximate cause.

D. Insurance Offset

Plaintiffs argue that the remote transaction and collateral source rules preclude

defendant’s affirmative defense that potential damages should be offset by any insurance 

payments that the oil companies received in relation to the avgas cleanup costs underlying the 

present dispute. See Pls.’ Mot. at 15-19. Defendant responds that the remote transaction and 

collateral source rules do not apply and contends that plaintiffs seek a double recovery by 

preventing discovery into insurance payments. See Def.’s Opp’n at 13-22. 

Foundational principles in contract law entitle the non-breaching party to recover 

“damages based on his expectation interest” in the contract “as measured by . . . the loss in the 

value to him of the other party’s performance caused by its failure or deficiency.” Restatement 

(Second) of Contracts § 347. However, “[n]o matter how reprehensible the breach, damages are 

generally limited to those required to compensate the injured party for lost expectation, for it is a 

fundamental tenet of the law of contract remedies that an injured party should not be put in a 

better position than had the contract been performed.” LaSalle Talman Bank, F.S.B. v. United 

States, 317 F.3d 1363, 1371 (Fed. Cir. 2003) (quoting Farnsworth on Contracts 193 (2d ed. 

1998)). Similarly, “[t]he principle that a party’s liability is not reduced by payments or other 

5 This result is not an invitation for the government to relitigate any prior holdings of the 

Federal Circuit as to the scope of the avgas contracts’ indemnity provision regarding 

foreseeability of CERCLA liability.
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benefits received by the injured party from collateral sources is less compelling in the case of a 

breach of contract than in the case of a tort.” Restatement (Second) of Contracts § 347, cmt. e. 

Nevertheless, in the context of similar avgas litigation, the court has explained:

Because of the “the endlessness and futility of the effort to follow every 

transaction to its ultimate result,” the law does not generally “go beyond the first 

step” in calculating damages. Southern Pac. Co. v. Darnell-Taenzer Lumber Co., 

245 U.S. 531, 533-34, 38 S.Ct. 186, 62 L.Ed. 451 (1918). Paradigmatic of remote 

transactions that do go beyond the first step, and are thus irrelevant for calculating 

damages, are those involving insurance recoveries. See id. at 534, 38 S.Ct. 186 

(noting that the recovery of insurance is not something with which defendants are 

concerned). “An injured party’s recovery from third parties does not decrease the 

amount of the wrongdoer’s liability.” Wisconsin Elec. Power Co. v. United States, 

90 Fed. Cl. 714, 794 (2009).

Shell Oil Co. v. United States, 148 Fed. Cl. 781, 796 (2020), aff’d on other grounds, 7 F.4th 1165 

(Fed. Cir. 2021). As a matter of law, the oil companies are entitled to summary judgment on 

defendant’s insurance offset defense because such paradigmatic remote transactions are 

irrelevant to calculating damages stemming from defendant’s alleged breach of contract. 

The oil companies’ motion is therefore GRANTED as to the government’s insurance 

offset affirmative defense.

E. Prior Material Breach

The oil companies dispute the government’s affirmative defense of prior material breach 

based on plaintiffs’ failure to obtain liability insurance that would cover the United States as an 

additional insured. See Pls.’ Mot. at 19-21. They contend that the avgas contracts at issue here 

did not require the oil companies to obtain liability insurance and, alternatively, that the 

government waived its right to claim breach of contract based on failure to obtain liability 

insurance even if the contracts did require it. Id. The government concedes that the avgas 

contracts do not support the affirmative defense of prior material breach because they did not 

obligate the oil companies to obtain liability insurance; however, it contends that discovery may 

reveal a post-formation change to the parties’ contractual duties. See Def.’s Opp’n at 22-24. If 

not, the government promises to voluntarily withdraw the affirmative defense of prior material 

breach. See id. at 24. The parties’ arguments turn on a factual question—whether a postformation change of contract occurred—which would be inappropriate to address before 

permitting “adequate time for discovery.” Celotex, 477 U.S. at 322. 

The oil companies’ motion is therefore DENIED as to the government’s affirmative 

defense of prior material breach.
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CONCLUSION

In summary, the oil companies’ summary judgment motion is GRANTED IN PART and 

DENIED IN PART. Plaintiffs’ motion is granted as to the government’s affirmative defenses of 

laches, insurance offset, res judicata, and release; however, it is denied as to contributory 

negligence, proximate cause, and prior material breach. 

It is so ORDERED.

s/ Charles F. Lettow

Charles F. Lettow

Senior Judge