ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of

-- ) ) ASFA Uluslararasi Insaat Sanayi Ve )

Ticaret AS ) ) Under Contract No. W912PB-13-P-0157 ) APPEARANCE FOR THE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 61471

D. Lee Toedter, Esq.

Coeur d'Alene, ID Raymond M. Saunders, Esq.

Army ChiefTrial Attorney MAJ Jason W. Allen, JA

Trial Attorney OPINION BYADMINISTRATIVE JUDGE WILSON ON THE GOVERNMENT'S MOTION FOR SUMMARYJUDGMENT The government moves for summaryjudgment, arguing that appellant cannot, as a matter oflaw, prove that the government is liable for the claimed costs because the costs were not expressly allowable in the contract. Appellant opposes the motion, alleging that the government is responsible for payment ofthe traffic fines, penalties, and violations incurred bythe government's personnel while using appellant's vehicles during performance ofthe contract. The Board denies the motion. STATEMENT OF FACTS (SOF) FORPURPOSES OF THE MOTION 1. OnMarch 12, 2013, the Army (hereinafter Army or government) entered into a fmn-fixed-price contract with ASFA Uluslararasi Insaat Sanayi Ve Ticaret AS (ASFA or appellant) for a six-month lease offive vans in Turkey. The original contract term was from March 15, 2013 to September 14, 2013. The contract included two six-month options for continued lease, to run from September 15, 2013 to March 14, 2014 and March 15, 2014 to September 14, 2014, respectively. (R4, tab 1 at 1-5) 2. The contract contained various standard clauses, including Federal Acquisition Regulation (FAR) 52.212-4, CONTRACT TERMS AND CONDITIONS

- COMMERCIAL ITEMS (FEB 2012), paragraph (c), Changes (R4, tab 1at 11-15). 3. The contract was silent as to which party would be responsible for traffic tickets, fines, and penalties incurred by governmentpersonnel while using the vehicles during the performance period (R4, tab 1).4. OnApril 11, 2013, bilateral Modification No. POOOOl was implemented, changing the initial period ofperformance to run from March 22, 2013 to September21, 2013. As part ofthis modification, the periods ofperformance for the first and second options were changed to September 22, 2013 to March 21, 2014, and March 22, 2014 to September 21, 2014, respectively. (R4, tab 2 at 1-4) 5. The government exercisedthe first option period on August 27, 2013, through Modification No. P00002 (R4, tab 3).
6. ByModification No. P00003, dated March 21, 2014, the government exercised the second option period (R4, tab 4).
7. OnJune l, 2017, ASFA submitted its claim to the government for $11,953.54, alleging it was entitled to reimbursement for fines, tolls, andtoll-fee penalties incurred by government employees who drove the rented vans during the contractperformance period (R4, tab 9). 8. In its claim, ASFA allegedthatthe traffic fines, tolls, andtoll-fee penalties were registered against the rental vehicles by local and state Turkish authorities, rather than against individual vehicle operators (R4, tab 10; compl. 

## ,r,r 7, 10-11). 9. Forthe purposes ofthis motion only, the government does not dispute that the charges were incurredbyits employees (gov't mot. at 3-4). 10. The contracting officer (CO) issued a final decision on October 12, 2017, denying some ofthe requestedreimbursement. The CO determined a portion ofthe claim related to "HSGtolls" was allowable, and ordered reimbursement inthe amount of$940.44. However, the CO found that $11,013.10 was unallowable because paying this portion, which consisted ofthe penalties and fees, would be "inviolation ofUS fiscal policyto pay for violations ofthe law which a traffic or HSGtoll penalties constitutes." (R4, tab 11 at 6) 11. Appellantfiled a timely appeal to the Board onJanuary 4, 2018, which was docketed as ASBCANo. 61471. DECISION The government contends that appellant cannot satisfy its burden ofproofand showthatthe claimed costs are allowable underthe contract orthe FAR. The government ai;gues two mainpoints

- that this firm-fixed-price contract does not allow for additional costs and allowing any additional costs may be in violation ofthe Anti-Deficiency Act (ADA). (Gov'tmot. at 6-12) Appellant opposes the motion,

2primarily arguing that that would not be in violation ofthe ADA, butpayment by appellant may actually constitute an improper gift from appellant to the government (app. opp'n at 2-5). We agree with the government that appellant's "apparenttheory ofrecovery is that the government's failure to pay these costs constitutes a breach of the implied duty ofgood faith and fair dealings." Thus we first focus on whetherthe firm-fixed-price contractprecludes an implied duty ofgood faith and fair dealing when it is not explicitly stated in the contract, making summaryjudgment appropriate. Summaryjudgmentis appropriate when there is no genuine issue ofmaterial fact and the movant is entitled tojudgment as a matter oflaw. Proveris Scientific Corp. v. Innovasystems, Inc., 739 F.3d 1367, 1371 (Fed. Cir. 2014);Mingus Constructors, Inc. v. UnitedStates, 812 F.2d 1387, 1390-91 (Fed. Cir. 1987). A material fact is one that may affect the outcome ofthe decision. Anderson v. LibertyLobby, Inc., 477 U.S. 242, 248-49 (1986). The moving party bears the burden ofestablishing the absence ofany genuine issue ofmaterial fact, and all significant doubt over factual issues must be resolved in favor ofthe party opposing summaryjudgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). We draw alljustifiable inferences in favor ofthe nonmoving party. CI2, Inc., ASBCANos. 56257, 56337, 11-2 BCA

## ,r 34,823 at 171,353. The government argues it is not liable for any costs over and above the contract value unless a formal change is made to the contract. The government relies onthe fact that this is a firm-fixed-price contract, and appellant should have, essentially, known better. (Gov'tmot. at 6-8) Forthe purposes ofthis motion, the government admits that its employees were in sole possession and control ofthe vehicles at the time the fines and fees were incurred (SOF

## ,r 9). The government contends thatbecause the express language ofthe contract does not establish a duty ofcare, none exists. The government cites to Metcalf Constr. Co. v. UnitedStates, 742 F.3d 984, 990 (Fed. Cir. 2014), as its authority (gov'tmot. at 13). However, the Boardhas analyzed, and denied, this same argument in CiyaSoft Corporation, ASBCANos. 59519, 59913, 18-1 BCA

## ,r 37,084. There, the government argued thatbecause the express language ofthe contract did not establish a duty ofcare, none existed, again citingMetcalfConstruction. CiyaSoft, 18-1 BCA

## ,r 37,084 at 180,521-22. The Boardrejected the government's argument, specificallyholding: [C]ontracts can include implied duties, such as the duty of good faith and fair dealing. SIA Construction, Inc., ASBCA No. 57693, 14-1 BCA

## ,r 35,762 at 174,986 (citing MetcalfConstruction Co. v. UnitedStates, 742 F.3d 984, 990 (Fed. Cir. 2014)). The implied duty ofgood faith and fair dealing is limited by the circumstances involved in the

3contract. The implied duty prohibits acts or omissions that, though not proscribedby the contract expressly, are inconsistent with the contract's purpose and deprive the otherparty ofthe contemplated value. See First Nationwide Bankv. UnitedStates, 431 F.3d 1342, 1350 (Fed. Cir. 2005) (duty was breachedby legislation that "changedthe balance ofcontract consideration"). The Supreme Courthas addressed implied duties in contracts stating:[A] contract includes not only the promises set forth in express words, but, in addition, all such implied provisions as are indispensable to effectuate the intention ofthe parties and as arise from the language ofthe contract and the circumstances under which it was made, 3 Williston on Contracts, 

### § 1293; Brodie v. Cardiff Corporation, [1919] A. C. 337, 358[)].

... Sacramento Navigation Co. v. Salz, 273 U.S. 326, 329 (1927). The Board also has indicated that when considering implied duties that the circumstances involved in the contract must be considered. Free &Ben, Inc., ASBCA No. 56129, 09-1 BCA

## ,r 34,127 at 168,742 (citing Coastal GovernmentServices, Inc., ASBCA No. 50283, 99-1 BCA

## ,r 30,348 at 150,088). Id. at 180,521. The Board went further, noting that in situations where the contract involved leased items, the Supreme Courthas held: [I]n every lease there is, unless excludedbythe operation ofsome express covenant or agreement, an implied obligation onthe part ofthe lessee to so use the property as not to unnecessarily injure it.... This implied obligation is part ofthe contract itself, as much so as ifincorporated into itby express language. 

### It results from the relation of landlord and tenant between the parties whichthe contract creates. Id. (quoting UnitedStates v. Bostwick, 94 U.S. 53, 65-66 (1876); see alsoA&BLtd. Partnership v. GSA, GSBCA No. 15208, 04-1 BCA

## ,r 32,439 at 160,504-05). The Board found that the government could not show that the "implied duty would conflict with, exceed, or otherwise alter the express provisions ofthe contract, particularly in

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# Ilight ofthe government's argument the contract imposed no duties on the government." Id. at 180,522. Here, contrary to the government's assertions, a duty ofcare may exist even when it is not expressly written into a contract. The Board has carefully considered the Army's arguments and the underlying contract in question, but concludes that there are genuine issues ofmaterial fact that preclude summaryjudgment. Thus, the Board must considerthe contract as a whole, including formation and intent. There are genuine issues as to circumstances surrounding how the fines and penalties in question occurred, the capacity in which those who incurred the fines were acting, and ifthe circumstances surrounding the contract's creation establish or preclude an obligation by the government to be liable for fines and penalties registered against the vehicles while in the government's control. As such, these above-noted issues are fact intensive and, based on the current record, are not ripe to be resolved by summary judgment. Cooley Constructors, Inc., ASBCA No. 57404, 11-2 BCA

## ,r 34,855 at 171,457. Because the issues offact identified above require us to deny summary judgment, the Board need not address the parties' arguments related to the ADA. CONCLUSION The government's motion is denied. Dated: February 5, 2019

I concur

RICHARD SHACKLEFORD Administrative Judge Acting Chairman Armed Services Board ofContract Appeals



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___ _ Administrative Judge Vice Chairman Armed Services Board ofContract Appeals I concur

Administra · Judge Armed Services Board ofContract Appeals

# I 

# I I I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCA No. 61471, Appeal ofASFA Uluslararasi Insaat Sanayi Ve Ticaret AS, rendered in conformance with the Board's Charter. Dated:

6 JEFFREY D. GARDIN Recorder, Armed Services Board ofContract Appeals