United States Court of Appeals 

for the Federal Circuit 

__________________________ 

ROAD AND HIGHWAY BUILDERS, LLC, 

Plaintiff-Appellant, 

v. 

UNITED STATES, 

Defendant-Appellee, 

__________________________ 

2012-5063 

__________________________ 

Appeal from the United States Court of Federal 

Claims in Case No. 09-CV-401, Senior Judge Lawrence S. 

Margolis. 

____________________________ 

Decided: December 20, 2012 

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CARL M. HEBERT, Carl M. Hebert, LTD, of Reno, Nevada, argued for plaintiff-appellant. 

MARTIN F. HOCKEY, JR., Senior Trial Attorney, Commercial Litigation Branch, Civil Division, United States 

Department of Justice, of Washington, DC, argued for 

defendant-appellee. On the brief were STUART F. DELERY, 

Acting Assistant Attorney General, JEANNE E. DAVIDSON, 

Director, HAROLD D. LESTER, JR., Assistant Director, and 

GREGG PARIS YATES, Trial Attorney. 
ROAD AND HIGHWAY BUILDERS v. US 2

__________________________ 

Before RADER, Chief Judge, LOURIE, Circuit Judge, and 

DANIEL, Chief District Judge.*

LOURIE, Circuit Judge. 

Plaintiff-Appellant Road and Highway Builders, LLC 

(“RHB”) appeals from a judgment of the United States 

Court of Federal Claims holding that RHB failed to meet 

its burden of proof that the United States Internal Revenue Service (“IRS”) acted in bad faith when it entered into 

a release to redeem certain real property. See Rd. & 

Highway Builders, LLC v. United States, 102 Fed. Cl. 88 

(2011). Because RHB failed to rebut the presumption 

that the IRS agents discharged their duties in good faith 

by clear and convincing evidence, we affirm the entry of 

judgment against RHB. 

BACKGROUND

This appeal involves an agreement by the IRS to release its right to redeem certain real property at 2640 N. 

Las Vegas Boulevard, Las Vegas, Nevada (“the property”) 

pursuant to I.R.C. § 7425(d) in return for RHB’s payment 

of $100,000 (“the release”).

In 2000, the IRS assigned a taxpayer identification 

number to then newly-incorporated Crystal Cascades, 

LLC. In May 2001, Crystal Cascades, LLC changed its 

name to Crystal Cascades Civil, LLC, but did not notify 

the IRS of the name change and continued using the 

originally-issued taxpayer identification number in its tax 

 * The Honorable Wiley Y. Daniel, Chief District 

Judge, United States District Court for the District of 

Colorado, sitting by designation. 
3 ROAD AND HIGHWAY BUILDERS v. US

filings. In July 2004, deeds of trust were recorded in 

Clark County, Nevada against the property to secure 

certain loans made to Crystal Cascades Civil by a Nevada 

bank. Following failure by Crystal Cascades Civil to fully 

pay its employment taxes in 2003 and 2004, the IRS 

caused notices of federal tax liens to be filed in August 

2004 and January 2005. However, the lien notices were 

filed under the taxpayer identification number as known 

to the IRS and thus directed to “Crystal Cascades, LLC” 

rather than “Crystal Cascades Civil, LLC.” In February 

2005, additional deeds of trust were recorded against the 

property as security for loans made to Crystal Cascades 

Civil by RHB. In June 2005, the trustee for the Nevada 

bank, acting as the senior secured creditor, initiated 

foreclosure proceedings because Crystal Cascades Civil 

had defaulted on its loan obligations. Crystal Cascades 

Civil then filed for Chapter 11 protection in the United 

States Bankruptcy Court for the District of Nevada 

(“bankruptcy court”), and RHB subsequently filed an 

adversary proceeding against the IRS in February 2006 

arguing seniority over the tax liens. During the contemporaneous foreclosure sale, RHB purchased the property 

for $1.43 million. 

Pursuant to § 7452(d), the IRS has the right to redeem properties against which it has a valid tax lien. 

Following the February 2006 foreclosure sale, the IRS 

communicated to RHB that it was willing to release its 

right of redemption in exchange for suitable consideration. In June 2006, the parties negotiated a settlement 

agreement whereby RHB paid the IRS $100,000 and the 

IRS executed a “release of right of redemption” in favor of 

RHB. 

In November 2007, the bankruptcy court held a twoday trial in the adversary proceeding between RHB and 
ROAD AND HIGHWAY BUILDERS v. US 4

the IRS and concluded that the IRS’s notices of federal 

tax liens did not impart constructive notice to third parties because they were improperly recorded in the name of 

“Crystal Cascades, LLC” and not “Crystal Cascades Civil, 

LLC.” In re Crystal Cascades Civil, LLC, 398 B.R. 23 

(Bnkr. D. Nev. 2008). The bankruptcy court also awarded 

surplus proceeds from the foreclosure sale to RHB, but 

“express[ed] no opinion on the initial or continuing validity of the transaction by which the IRS received 

$100,000.” Id. at 37 n. 17. The IRS appealed the bankruptcy court’s ruling, which was affirmed by the Bankruptcy Appellate Panel of the United States Court of 

Appeals for the Ninth Circuit. In re Crystal Cascades 

Civil, LLC, 415 B.R. 403 (B.A.P. 9th Cir. 2009). 

In 2009, RHB sued the United States in the United 

States Court of Federal Claims seeking return of the 

$100,000 release payment, asserting that the June 2006 

settlement agreement was void for lack of consideration. 

It argued that the IRS’s right of redemption was illusory 

because the tax liens were later held invalid by the bankruptcy court. After a one-day trial, the Court of Federal 

Claims held that RHB failed to prove that the IRS acted 

in bad faith when it entered into the release negotiation. 

Rd. & Highway Builders, 102 Fed. Cl. at 95. The court 

noted that government officials are presumed to act in 

good faith, and that presumption stands unless there is 

clear and convincing evidence to the contrary. Id. at 92–

93. In light of the evidence, the court found that (i) the 

IRS’s conduct did not give rise to an inference of bad faith 

because the IRS agents had no reason or responsibility to 

search for other names used by Crystal Cascades; (ii) 

RHB failed to demonstrate bad faith on the part of the 

IRS in negotiating the release; and (iii) RHB failed to 

demonstrate that the IRS lacked a good faith belief in the 

validity of its right of redemption. Id. at 93–94.
5 ROAD AND HIGHWAY BUILDERS v. US

RHB appeals from the judgment of the Court of Federal Claims. We have jurisdiction under 28 U.S.C. 

§ 1295(a)(3).

DISCUSSION

We review judgments of the Court of Federal Claims 

to determine if they are incorrect as a matter of law or 

premised on clearly erroneous determinations of fact. 

Dairyland Power Coop. v. United States, 645 F.3d 1363, 

1369 (Fed. Cir. 2011). 

The critical issue in this dispute is whether the IRS 

official who executed the release acted in bad faith. 

Forbearance of a right can represent consideration to 

support an agreement, provided that the forbearing party 

believes in good faith that its claim or defense may be 

fairly determined to be valid. Restatement (Second) of 

Contracts § 74(1); see Aviation Contractor Emps., Inc. v. 

United States, 945 F.2d 1568, 1574 (Fed. Cir. 1991) (forbearance of a “right in honest dispute” can represent 

consideration to support a contract). RHB contends that 

the IRS did not and could not have had a good faith belief 

that it had a right to redeem its tax liens against the 

property pursuant to § 7425(d) when the agency entered 

into the release agreement. RHB seeks to void the contract on the ground that there was a failure of consideration by the IRS because the agency’s purported right to 

redeem the lien interest was later found invalid in bankruptcy proceedings. 

I. Presumption of Good Faith 

We and our predecessor court, the Court of Claims, 

have long upheld the principle that government officials 

are presumed to discharge their duties in good faith. See 
ROAD AND HIGHWAY BUILDERS v. US 6

e.g., Am-Pro Protective Agency v. United States, 281 F.3d 

1234, 1239 (Fed. Cir. 2002); T & M Distribs., Inc. v. 

United States, 185 F.3d 1279, 1285 (Fed. Cir. 1999); 

Torncello v. United States, 681 F.2d 756, 770–71 (Ct. Cl. 

1982); Schaefer v. United States, 633 F.2d 945, 948–49 

(Ct. Cl. 1980); Kalvar Corp. v. United States, 543 F.2d 

1298 (Ct. Cl. 1976); Librach v. United States, 147 Ct. Cl. 

605, 614 (1959); Knotts v. United States, 128 Ct. Cl. 489, 

492, 121 F. Supp. 630, 631 (1954). As we clarified in AmPro, it is “well-established . . . that a high burden must be 

carried to overcome this presumption,” amounting to clear 

and convincing evidence to the contrary. 281 F.3d at 

1239–40. Specifically, we described the clear and convincing standard of proof as “impos[ing] a heavier burden 

upon a litigant than that imposed by requiring proof by 

preponderant evidence but a somewhat lighter burden 

than that imposed by requiring proof beyond a reasonable 

doubt.” Id. at 1240. We further noted that clear and 

convincing evidence has been expressed as that “which 

produces in the mind of the trier of fact an abiding conviction that the truth of a factual contention is ‘highly probable.’” Id. Moreover, a challenger seeking to prove that a 

government official acted in bad faith in the discharge of 

his or her duties must show a “specific intent to injure the 

plaintiff” by clear and convincing evidence. Id.

RHB argues that the trial court should not have applied the presumption of good faith to the IRS officials 

here because RHB did not allege that they engaged in 

fraudulent or quasi-criminal wrongdoing, but merely that 

the agency’s negligence resulted in a breach of contract. 

In support of that argument, RHB cites dictum from our 

opinion in Am-Pro and analysis from a decision by the 

Court of Federal Claims in Tecom, Inc. v. United States, 

66 Fed. Cl. 736 (2005), in an attempt to limit the good 

faith presumption to situations in which a government 
7 ROAD AND HIGHWAY BUILDERS v. US

official allegedly engaged in fraud or in some other quasicriminal wrongdoing. That is not our law. The plaintiff 

in Am-Pro claimed “duress” when a contracting officer 

threatened to cancel the plaintiff’s contract if it did not 

agree to certain contractual modifications, and we determined that the presumption of good faith applied notwithstanding that the alleged duress was not fraudulent 

and did not violate any criminal statute. Am-Pro, 281 

F.3d at 1241. Indeed, as the trial court correctly noted in 

this case, we have continued to apply the presumption of 

good faith and the clear and convincing evidentiary standard to cases not involving allegations of fraud or quasicriminal wrongdoing since our decision in Am-Pro. See 

e.g., Savantage Fin. Servs., Inc. v. United States, 595 F.3d 

1282, 1288 (Fed. Cir. 2010) (holding plaintiff failed to 

rebut presumption of good faith when government was 

accused of using contract requirements as pretext to 

circumvent injunction); Nova Express v. Potter, 277 F. 

App’x 990, 993 (Fed. Cir. 2008) (holding plaintiff failed to 

rebut presumption of good faith where government was 

accused of terminating contract based on plaintiff’s failure 

to meet contract requirements); Galen Med. Assocs., Inc. 

v. United States, 369 F.3d 1324, 1335–37 (Fed. Cir. 2004) 

(holding plaintiff failed to rebut presumption of good faith 

where government was accused of bias in awarding 

contracts). Like the contracting officer in Am-Pro, the 

IRS officials here are accused of “sharp practices” at 

worst. We decline to adopt RHB’s narrow characterization of Am-Pro and agree with the trial court that the IRS 

officials here are presumed to have discharged their 

duties in good faith—a presumption that can be overcome 

only by clear and convincing evidence to the contrary. 

II. Evidence of Bad Faith 
ROAD AND HIGHWAY BUILDERS v. US 8

RHB contends that it met a lesser burden of preponderance of the evidence that the IRS could not reasonably 

have had a good faith belief in the validity of its right of 

redemption by showing the following: (i) agency officials 

did not investigate whether Crystal Cascades, LLC was 

conducting business under other names; (ii) the IRS had 

already decided that it would not exercise its purported 

right to redeem before entering negotiations with RHB for 

a waiver of that right; (iii) the IRS later lost at trial and 

on appeal in bankruptcy adversary proceedings; and (iv) 

the IRS’s expert witness at the bankruptcy trial testified 

that an ordinary person searching for liens on the property would not have found the notices of federal tax liens. 

See Rd. & Highway Builders, 102 Fed. Cl. at 93. We 

agree with the trial court that those facts do not give rise 

to an inference of bad faith on the part of the IRS, and 

therefore that RHB failed to demonstrate by clear and 

convincing evidence that the IRS lacked a good faith belief 

in the validity of its right to redemption. 

First, evidence that the IRS officials failed to verify 

that the original landowner of the property, Crystal 

Cascades, LLC, was doing business under any other name 

before either filing a notice of federal tax lien or negotiating the release does not support a finding of a specific 

intent to injure RHB. As the trial court noted, the IRS 

“had no reason or responsibility to search for other names 

used by Crystal Cascades, LLC.” Id. Testimony by IRS 

officials regarding agency practice demonstrated that it 

was neither expected nor required that Revenue Officers 

would verify the names of delinquent taxpayers, such as 

Crystal Cascades, LLC, beyond making sure that the 

name on the liens matched the name in the agency’s 

collections system. RHB did not dispute this finding, nor 

identify any other evidence to support a conclusion that 

the trial court’s determination was clearly erroneous. 
9 ROAD AND HIGHWAY BUILDERS v. US

RHB merely recites the same evidence to argue that the 

trial court erred in its ruling. Appellant Br. 13–14. That 

is insufficient to support a ruling that the trial court’s 

findings of fact were clearly erroneous. Landmark Land 

Co., Inc. v. FDIC, 256 F.3d 1365, 1373 (Fed. Cir. 2001). 

Second, evidence that the IRS negotiated the release 

of its right of redemption after having already decided not 

to exercise that right also does not support a finding of 

bad faith on its part or clear and convincing proof of a 

specific intent to injure RHB. The court noted that RHB 

“failed to cite any evidence or case law to suggest that the 

IRS is required to release its right to redemption once it 

decides not to redeem” and that it is standard practice for 

the agency to “realize value” from the release of a right of 

redemption in cases where actual redemption may not be 

feasible. Id. at 94. We agree that that does not constitute 

an improper motive on the part of the Revenue Officer. 

RHB again does not point to any other evidence to support a determination that the trial court’s decision was 

clearly erroneous. 

Third, the fact that a bankruptcy court later held that 

the IRS’s notices of federal tax liens were not properly 

recorded because they were entered under the name 

“Crystal Cascades, LLC,” instead of “Crystal Cascades 

Civil, LLC,” does not support a finding of specific intent to 

injure RHB. As the court correctly noted, “[e]ven though 

the invalidity [of a party’s claim] later becomes clear, the 

bargain is to be judged as it appeared to the parties at the 

time.” Id. at 95 (quoting Restatement (Second) of Contracts § 74 cmt. b). At the time of the release agreement, 

there was a legal question in the Ninth Circuit as to what 

constituted a reasonable inspection of public records. See

Crystal Cascades Civil, 415 B.R. at 409. But the IRS’s 

position with respect to the validity of the notices of 
ROAD AND HIGHWAY BUILDERS v. US 10

federal tax liens that gave rise to the right of redemption 

at issue was supported by case law from other jurisdictions that enforced federal tax liens even after finding an 

error in the taxpayer’s name at the time of the release 

agreement. See Crystal Cascades Civil, 398 B.R. at 29–

30. 

Finally, RHB emphasizes that the IRS’s expert witness in bankruptcy court testified that the average reasonably diligent user looking for liens on property owned 

by Crystal Cascades Civil would not have found the 

notices of federal tax liens. While that testimony could 

indicate that the IRS acted unreasonably, it does not 

suggest that the IRS acted in bad faith. The court carefully reviewed the record, considered the testimony, and 

evaluated the credibility of witnesses at trial to support 

its conclusion that RHB did not show by clear and convincing evidence that the IRS acted in bad faith. 

CONCLUSION

For the reasons stated above, we conclude that the 

Court of Federal Claims did not err in holding that RHB 

failed to rebut the presumption by clear and convincing 

evidence that the IRS agents discharged their duties in 

good faith. The judgment of the Court of Federal Claims 

in favor of Defendant-Appellee is 

AFFIRMED