United States Court of Appeals for the Federal Circuit 

2006-5096, -5117 

 

CHAPMAN LAW FIRM CO., 

 Plaintiff-Appellant, 

v. 

GREENLEAF CONSTRUCTION CO., INC., 

 

 Plaintiff-Appellee, 

v. 

UNITED STATES, 

Defendant-Cross Appellant, 

and 

MICHAELSON, CONNOR & BOUL, INC., 

 

 Defendant-Appellee. 

James S. DelSordo, Cohen Mohr, LLP, of Washington, DC, argued for plaintiffappellant. 

Alexander J. Brittin, Brittin Law Group, PLLC, of McLean, Virginia, argued for 

plaintiff-appellee. 

Sameer Yerawadekar, Trial Attorney, Commercial Litigation Branch, Civil 

Division, United States Department of Justice, of Washington, DC, argued for 

defendant-cross appellant. With him on the brief were Peter D. Keisler, Assistant 

Attorney General, and Mark A. Melnick, Assistant Director. Of counsel on the brief were 

Kimberly Nash, Senior Trial Counsel, and Robert J. Brown, Attorney-Advisor, 

Procurement & Administrative Law Division, United States Department of Housing and 

Urban Development, of Washington, DC. 

Margaret A. Dillenburg, Law Offices of Margaret Dillenburg, P.C., of Washington, 

DC, for defendant-appellee. 

 

Appealed from: United States Court of Federal Claims 

Judge Thomas C. Wheeler 
United States Court of Appeals for the Federal Circuit 

2006-5096, -5117 

CHAPMAN LAW FIRM CO., 

 Plaintiff-Appellant, 

v. 

GREENLEAF CONSTRUCTION CO., INC., 

 Plaintiff-Appellee, 

v. 

UNITED STATES, 

 Defendant-Cross Appellant, 

and 

MICHAELSON, CONNOR & BOUL, INC., 

 Defendant-Appellee. 

 __________________________ 

DECIDED: June 11, 2007 

 __________________________ 

Before NEWMAN, LOURIE, and PROST, Circuit Judges. 

Opinion for the court filed by Circuit Judge PROST. Circuit Judge NEWMAN concurs in 

part and dissents in part. 

PROST, Circuit Judge. 

 Chapman Law Firm Co. (“Chapman”) appeals a June 7, 2006, decision by the 

United States Court of Federal Claims declining to dismiss a bid protest filed by 

Chapman in light of a proposed corrective action by the United States that the court 
determined lacked a rational basis and was contrary to law. Chapman Law Firm Co. v. 

United States, 71 Fed. Cl. 124 (2006) (“Chapman I”). The United States cross-appeals 

the Court of Federal Claims’ rejection of its proposed corrective action and the court’s 

refusal to dismiss the case after the United States proposed a second, revised 

corrective action. Chapman Law Firm Co. v. United States, No. 06-CV-330 (Fed. Cl. 

June 20, 2006) (“Chapman II”). We affirm the Court of Federal Claims’ denial of the 

motion to dismiss in light of the first proposed corrective action; however, because the 

Court of Federal Claims improperly entered judgment for plaintiffs rather than 

dismissing the case after the United States proposed its revised corrective action, we 

reverse and remand for the Court of Federal Claims to dismiss. 

I. BACKGROUND 

This case arises out of a bid protest filed by Chapman in relation to a competitive 

procurement initiated in August 2003 by the United States Department of Housing and 

Urban Development (“HUD”) for management and marketing services for single-family 

housing owned by HUD in Michigan and Ohio. As part of this procurement, HUD 

employed a “cascading” procedure in which small businesses were first considered for 

the contract. Only if there was inadequate competition among small businesses would 

non-small businesses be considered. 

Chapman, which competed as a small business, was awarded the contract on 

September 30, 2005. On April 19, 2006, however, HUD decided to terminate 

Chapman’s contract for convenience and issue a new competitive solicitation pursuant 

to Federal Acquisition Regulation § 15.206(e). In response, Chapman filed a bid protest 

action in the Court of Federal Claims, contesting HUD’s termination of Chapman’s 

2006-5096, -5117 2
contract, cancellation of the existing solicitation, and issuance of a new solicitation. 

Michaelson, Connor & Boul, Inc. (“MCB”), the incumbent contractor, and Greenleaf 

Construction Co., Inc. (“Greenleaf”), a competing offeror for the contract whose small 

business status was disputed by Chapman, intervened. 

On May 19, 2006, the United States filed a motion to dismiss the protest action 

pursuant to Federal Rule of Civil Procedure 12(b)(6), based on HUD’s decision to 

implement voluntary corrective action. As part of this corrective action, HUD proposed 

reinstating Chapman’s contract and the original solicitation, and canceling a proposed 

“bridge” contract with MCB. The Court of Federal Claims, however, declined to rule on 

the United States’ motion to dismiss until it received further information regarding the 

specifics of the proposed corrective action. On May 30, 2006, the United States 

provided the requested supplemental information in support of its motion to dismiss, 

indicating that HUD would: (1) reinstate Chapman’s previously awarded contract, but 

issue a stop work order against the contract so that corrective action could be taken; (2) 

issue an amendment to all offerors in the competitive range at both small business and 

unrestricted competition tiers identifying various changes that had occurred since the 

original solicitation was issued; (3) issue a discussion letter to Chapman to review 

matters raised in a January 17, 2006, Government Accountability Office (“GAO”) bid 

protest decision; and (4) request a final proposal revision from Chapman, ostensibly the 

only offeror in the small business tier, prior to requesting and reviewing proposals 

submitted by other offerors at the unrestricted tier. The Court of Federal Claims, 

however, denied the United States’ motion to dismiss, finding that the proposed 

corrective action lacked a rational basis and was contrary to law because, among other 

2006-5096, -5117 3
things, it did not include Greenleaf in the small business tier despite an intervening 

determination by the Small Business Administration (“SBA”) that Greenleaf was indeed 

a small business. 

In response, HUD indicated it would proceed with the reevaluation in the manner 

suggested by the Court of Federal Claims, including both Chapman and Greenleaf in 

the small business tier. The United States then renewed its motion to dismiss. Rather 

than granting the renewed motion to dismiss, though, the Court of Federal Claims 

instead entered judgment in favor of Chapman and Greenleaf. In doing so, the Court of 

Federal Claims noted that Chapman and Greenleaf “were instrumental in achieving the 

final outcome,” and “[t]hrough their persistence . . . [had] materially altered the legal 

relationship among the parties.” Chapman II, slip op. at 2. Furthermore, the Court of 

Federal Claims noted that granting the motion to dismiss might limit Chapman and/or 

Greenleaf from applying for attorney fees under the Equal Access to Justice Act 

(“EAJA”), but that the entry of judgment for plaintiffs would leave open the opportunity 

for Chapman and/or Greenleaf to pursue them at a later date. Id. Chapman appeals 

the Court of Federal Claims’ denial of the United States’ original motion to dismiss. The 

United States cross-appeals the same issue, as well as the Court of Federal Claims’ 

entry of judgment rather than granting the renewed motion to dismiss. We have 

jurisdiction pursuant to 28 U.S.C. § 1491. 

II. DISCUSSION 

A. Standard of Review 

This court reviews the Court of Federal Claims’ conclusions of law de novo. 

Glendale Fed. Bank, F.S.B. v. United States, 239 F.3d 1374, 1379 (Fed. Cir. 2001). 

2006-5096, -5117 4
However, within that context, the review of an agency’s procurement decision is 

narrowly circumscribed. Prineville Sawmill Co. v. United States, 859 F.2d 905, 909 

(Fed. Cir. 1988); NFK Eng’g, Inc. v. United States, 805 F.2d 372, 376 (Fed. Cir. 1986). 

This court can only set aside an agency’s action that is “arbitrary, capricious, an abuse 

of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); see

Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057 (Fed. Cir. 2000). 

Similarly, our review of the denial of a motion to dismiss a complaint pursuant to 

Rule 12(b)(6) of the Court of Federal Claims is also limited. The court must determine 

“whether the claimant is entitled to offer evidence to support the claims,” not whether 

the claimant will ultimately prevail. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). In 

doing so, the court “must accept as true all factual allegations in the complaint, and . . . 

indulge all reasonable inferences in favor of the non-movant.” Sommers Oil Co. v. 

United States, 241 F.3d 1375, 1378 (Fed. Cir. 2001). “[U]nless it appears beyond doubt 

that the plaintiff can prove no set of facts in support of his claim which would entitle him 

to relief,” the complaint should not be dismissed. Conley v. Gibson, 355 U.S. 41, 45-46 

(1957). 

B. Review of the Proposed Corrective Action 

On appeal, Chapman and the United States both argue that the Court of Federal 

Claims erred when it determined that the Government’s first proposed corrective action 

was unreasonable. According to Chapman, the Court of Federal Claims’ finding that 

Greenleaf should be included in the small business tier of the competitive range is in 

error since the SBA decision that Greenleaf was a small business came after the 

contract was awarded to Chapman. According to the Government, the Court of Federal 

2006-5096, -5117 5
Claims erred because the Government’s first proposed corrective action placed the 

parties in the same positions they occupied prior to the events giving rise to the protest 

and rendered all of Chapman’s and Greenleaf’s legally cognizable claims either moot or 

premature. We reject each of these arguments. 

First, the SBA determination that Greenleaf was a small business applies to this 

procurement because there had not been a binding final award. Moreover, the 

Government was requesting a revised proposal from Chapman and possibly other 

offerors. Second, the Government’s argument that its first proposed corrective action 

rendered all of Chapman’s and Greenleaf’s claims moot or premature is also incorrect, 

as the corrective action effectively left out Greenleaf. Simply put, the Court of Federal 

Claims’ inquiry into the reasonableness of the Government’s first proposed corrective 

action, and the court’s subsequent determination that the proposed corrective action 

was not reasonable, were proper. 

C. Denial of the Renewed Motion to Dismiss 

The Government also cross-appeals the Court of Federal Claims’ refusal to 

dismiss the case in response to the revised proposed corrective action, which included 

both Chapman and Greenleaf in the small business tier. 

Rather than granting the motion to dismiss, the Court of Federal Claims entered 

judgment in favor of Chapman and Greenleaf. In so doing, the Court of Federal Claims 

stated that Chapman and Greenleaf “materially altered the legal relationship among the 

parties.” Chapman II, slip op. at 2. Considering that “[g]ranting [the Government’s] 

renewed motion to dismiss might limit Chapman, and possibly Greenleaf, from applying 

2006-5096, -5117 6
for attorneys’ fees,” the Court of Federal Claims entered judgment to leave open the 

opportunity of applying for such fees. Id.

In its holding, the Court of Federal Claims appears to have borrowed language 

from Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health 

and Human Resources, 532 U.S. 598, 605 (2001), in which the Supreme Court rejected 

the use of the “catalyst theory” as justification for the recovery of attorney fees. In 

Brickwood Contractors, Inc. v. United States, 288 F.3d 1371, 1380 (Fed. Cir. 2002), we 

held that this rejection extended to the EAJA fee context as well. Under the catalyst 

theory, a plaintiff is considered a “prevailing party” if it achieves the desired result 

because the lawsuit brought about a voluntary change in the defendant’s conduct—no 

judicially sanctioned change in the legal relationship of the parties is required. In 

Buckhannon, the Supreme Court rejected this theory, saying that 

[a] defendant’s voluntary change in conduct, although perhaps 

accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the 

necessary judicial imprimatur on the change. [Precedent] counsel[s] 

against holding that the term ‘prevailing party’ authorizes an award of 

attorney’s fees without a corresponding alteration in the legal relationship 

of the parties. 

532 U.S. at 605. 

Merely stating that there has been an alteration in the legal relationship of the 

parties as the Court of Federal Claims did, however, is insufficient, by itself, to avoid 

running afoul of the Supreme Court’s pronouncement in Buckhannon; our precedent 

requires that there must be an actual, court-ordered alteration in the legal relationship in 

the parties in the form of an entry of judgment or a consent decree. See Brickwood, 

288 F.3d at 1380. 

2006-5096, -5117 7
Here, the court’s entry of judgment was not only unnecessary, it was improper. 

None of the parties objected to the substance of the revised proposed corrective action. 

The only opposition to the Government’s motion to dismiss was raised by Chapman, 

and that was only because Chapman wanted attorney fees. In fact, Chapman indicated 

it was amenable to a dismissal—provided the court indicated it was a “prevailing party” 

for EAJA purposes. 

Although securing attorney fees may understandably affect a party’s litigation 

strategy, the availability of EAJA fees is not an appropriate consideration for a court 

when determining how to dispose of a case. When, during the course of litigation, it 

develops that the relief sought has been granted or that the questions originally in 

controversy between the parties are no longer at issue, the case should generally be 

dismissed. And while the Supreme Court has recognized an exception to this rule when 

the defendant voluntarily ceases the challenged practice, see Ne. Fla. Chapter of the 

Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 662 (1993), 

the exception does not apply to this case.1 As explained in County of Los Angeles v. 

Davis, 440 U.S. 625, 631 (1979), the voluntary cessation exception may be refuted 

when there clearly is no “reasonable expectation” that the alleged violation will recur and 

“interim relief or events have completely and irrevocably eradicated the effects of the 

alleged violation.” (Citations omitted). 

 1

 Although the Court of Federal Claims’ opinion states that “[t]his is not a 

case where the procuring agency voluntarily elected to follow a proper remedial course,” 

Chapman II, slip op. at 2, the opinion is simply incorrect. The fact that the Government 

revised its proposed corrective action after the Court of Federal Claims rejected its first 

proposal does not make the revised proposal any less voluntary. 

2006-5096, -5117 8
Here, the Court of Federal Claims had already determined that the revised 

corrective action was reasonable, and was required to assume that the Government 

would carry out the corrective action in good faith. See T&M Distribs., Inc. v. United 

States, 185 F.3d 1279, 1285 (Fed. Cir. 1999) (“Government officials are presumed to 

act in good faith, and ‘it requires “well-nigh irrefragable proof” to induce a court to 

abandon the presumption of good faith.’” (quoting Kalvar Corp. v. United States, 543 

F.2d 1298, 1301-02 (Ct. Cl. 1976))). The revised corrective action adequately 

addressed the effects of the challenged action, and the Court of Federal Claims had no 

reasonable expectation that the action would recur. Accordingly, the Court of Federal 

Claims should have dismissed the case. Entering judgment for plaintiffs was, therefore, 

improper. 

III. CONCLUSION 

 We affirm the Court of Federal Claims’ denial of the Government’s motion to 

dismiss in light of its first proposed corrective action; however, because the Court of 

Federal Claims improperly entered judgment for plaintiffs after the Government revised 

its proposed corrective action, we reverse and remand for the Court of Federal Claims 

to dismiss the complaint. 

COSTS 

 No costs. 

AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED

NEWMAN, Circuit Judge, concurring in part, dissenting in part. 

 I would affirm the rulings of the Court of Federal Claims as to not only 

Chapman’s appeal, but also the government’s cross-appeal. 

2006-5096, -5117 9