In the United States Court of Federal Claims

No. 21-568

(Filed: 20 January 2022)

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SUNREZ CORPORATION, *

*

Plaintiff, * Breach of Contract; Contract Interpretation;

* Implied Duty of Good Faith and Fair

v. * Dealing; SBIR Contract; Motion to Dismiss

* for Failure to State a Claim; Declaratory

THE UNITED STATES, * Relief; Regulatory Taking.

*

Defendant. *

*

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Bryant S. Banes, with whom were Sean D. Forbes, and Sarah P. Harris, all of Neel 

Hooper & Banes, P.C., of Houston, TX, for plaintiff.

David M. Kerr, Trial Attorney, with whom were Brian M. Boynton, Acting Assistant 

Attorney General, Martin F. Hockey, Jr., Acting Director, Elizabeth M. Hosford, Assistant 

Director, U.S. Department of Justice, Commercial Litigation Branch, Civil Division, of 

Washington, DC, and Isabelle P. Cutting, Trial Attorney, with whom was Maj. David Gilkes, 

Trial Attorney, U.S. Air Force, Civil Law/Acquisition and Fiscal Law and Litigation, of Joint 

Base Andrews, MD, for defendant. 

OPINION AND ORDER

HOLTE, Judge.

Plaintiff Sunrez Corporation entered a Small Business Innovative Research contract with 

the United States Air Force to develop air-cargo pallets. Plaintiff brings this action under the 

Contract Disputes Act, 41 U.S.C. § 7104(b)(1), accusing the government of breach of contract, 

and breach of the duty of good faith and fair dealing. Plaintiff further brings a claim for 

declaratory relief under 28 U.S.C. § 1491, requesting the Court declare its pallet met the 

Contract’s deliverables and should receive Air Transportability Test Load Activity certification. 

Plaintiff also brings a takings claim under the Tucker Act, alleging the government’s actions 

constitute compensable takings under the Fifth Amendment of the United States Constitution. 

The government moved to dismiss the case pursuant to Rule 12(b)(6) of the Rules of the Court of 

Federal Claims. For the following reasons, the Court grants-in-part, denies-in-part, and stays-inpart the government’s motion to dismiss for failure to state a claim. 

I. Background
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The Court draws the following facts from plaintiff’s complaint and response to the 

government’s motion to dismiss. See United Pac. Ins. Co. v. United States, 464 F.3d 1325, 

1327–28 (Fed. Cir. 2006) (quoting Anaheim Gardens v. United States, 444 F.3d 1309, 1314–15 

(Fed. Cir. 2006)) (“In reviewing a dismissal for failure to state a claim, we must assume all wellpled factual allegations are true and indulge in all reasonable inferences in favor of the 

nonmovant.”). 

A. Factual History

Sunrez is a small business contractor which, in 2006–08, completed Small Business 

Innovative Research (“SBIR”) FA820-06-P-0957 (“0957 contract”) on Blast Resistant 

Composite Panels for Composite Tactical Shelters. Pl.’s First Am. Compl. and Req. for Relief 

(“Am. Compl.”) at 4, ECF No. 8. According to the 0957 contract, Sunrez studied a composite 

463L pallet design and “[u]sing internal research and development funds, Sunrez developed an 

all new rail system, fiber reinforced core, and manufacturing method for assembling the novel 

thermoplastic-based pallet.” Am. Compl. at 4. 463L pallets are standardized air-cargo pallets 

used by the United States Air Force (“USAF”) for loading and deploying up to 10,000 pounds of 

cargo. Am. Compl. at 3. In 2012 and 2013, Sunrez discussed a composite 463L pallet design 

with groups at Warner Robins Air Force Base (“WRAFB”), and as talks progressed, Sunrez used 

“internal research and development finances to begin developing new composite pallet 

components and an all-new load bearing rail system.” Am. Compl. at 4. On 26 September 2013,

Sunrez and the USAF executed SBIR Contract FA8501-13-C-0042 (“0042 contract”) in which 

“Sunrez was tasked with baselining the performance of the Legacy [463L] pallet via Finite 

Element Analysis (‘FEA’) and physical testing.” Am. Compl. at 5. Near the end of the 0042 

contract, “Sunrez began negotiating the terms of the Work Plan for” the Contract at issue in this 

case. Am. Compl. at 6. One contentious topic was whether Sunrez would “provide a Level III 

Technical Data Package (‘TDP’).” Am. Compl. at 6. The government ultimately accepted 

“Sunrez’s ‘Draft’ TDP language and the contract was executed.” Am. Compl. at 6–7. 

On 26 March 2014, Sunrez was awarded SBIR Contract No. FA8501-14-C-0013 (“0013 

contract” or “the Contract”), Am. Compl. at 1, through which the USAF paid Sunrez 

$1,488,250.56 to develop and deliver six prototypes of an alternative 463L pallet design using 

new composite technologies, see Ex. 1 at 2 (“Contract”), ECF No. 18. Although Sunrez 

mentions several contracts in its Amended Complaint, the parties agree the only contract at issue 

in this case is the 0013 Contract, so the Court refers to this as “the Contract.” Transcript (“Tr.”) 

at 11:16–22, ECF No. 26 (Transcript of Oral Argument on 28 September 2021) (“THE COURT: 

So when we refer to the contract, we’re on the same page with the 26 March 2014 

document . . . SBIR contract 0013, that’s the contract? [PLAINTIFF]: Yes, Your Honor. THE 

COURT: . . . . And the Government agrees with that? [GOVERNMENT]: We agree, Your 

Honor.”). The Contract specifies a twenty-four-month performance period from 26 March 2014

through 24 March 2016. Am. Compl. at 6–7. Although the parties entered the Contract 26 

March 2014, “Sunrez had already developed preliminary designs on a new 463L pallet.” Am. 

Compl. at 4; Id. (“Sunrez can prove this technology was developed before entering into any 

written contract with the USAF because 3D CAD files and 3D printed models had already been 

produced.”). 
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The first item in the Contract’s Schedule provides Sunrez was to “Develop and Deliver 

prototype composite 463L pallet system [in accordance with] work plan dated 06 March 2014.” 

See Contract. A few relevant provisions of the Work Plan are: Section 3.0, Section 5.0, and 

Section 6.3. See Am. Compl. at 8–9 n.5; see also Ex. 1 at Ex. 2 (“Work Plan”). The Scope 

provision of the Work Plan, Section 3.0, states, “Airworthiness Certification and Air 

Transportability Requirements will be met through compliance to MIL-DTL-27443F.” Am. 

Compl. at 9 n.5 (quoting Work Plan at 2). Section 5.0 of the Work Plan provides one of the 

milestones for the Contract is “Pallet build for Certification Testing.” Am. Compl. at 9 (quoting 

Work Plan at 6). Section 6.3 “Deliverables” reads, “Contractor will provide delivery of 6 full 

scale complete assemblies of the new composite 463L pallet for certification testing to Robins 

Air Force Base.” Work Plan at 9. 

Despite the Contract’s “Draft” TDP language, the government repeatedly requested Level 

III data. Am. Compl. at 7. Sunrez denied USAF requests for Level III data stating this Contract 

is a product development contract, not a production contract, and the government later concluded

“the Level III data it had been seeking from Sunrez was inappropriate for the Contract.” Am. 

Compl. at 7 (citing Ex. 1 at Ex. 3 (“Aug. 2014 Trip Report”)). Less than two months later, 

however, in a 15 October 2014 email, the government “expressed its growing displeasure with 

Sunrez’s use of the term ‘proprietary’ in the monthly reports to the Government.” Am. Compl. 

at 7 (citing Ex. 1 at Ex. 4 (“October 2014 Emails”)). Sunrez “rebuffed the pressure and 

continued performing according to the terms of the Contract.” Am. Compl. at 8. Sunrez 

performed some pallet tests at its own facility while larger tests required by the MIL-DTL24733F specification were performed at WRAFB. Am. Compl. at 8. On 4 June 2016 and 25 

July 2016, “Sunrez delivered its prototype composite pallets.” Am. Compl. at 8. Delays with 

government testing then “required several contract modifications, extending the Contract’s 

period of performance to December 31, 2017.” Am. Compl. at 9. Sunrez refused to sign the 

government’s 13 July 2017 memorandum of understanding which stated “[b]efore SBIR III 

effort can be awarded, the draft TDP needs to be delivered and accepted by the Government.” 

Am. Compl. at 9; Ex. 1 at Ex. 5 (“MOU”). The Work Plan Task 4 states, “A Draft Technical 

Data Package (TDP) sufficient to allow competitive re-procurement and spares procurement 

shall be initiated for the new design at the completion of the Phase II effort.” Am. Compl. at 11

(emphasis omitted); Work Plan at 3. 

On 18 August 2017, the Contract was modified to include an SBIR data rights clause 

which grants the government “[l]imited rights in such SBIR technical data.” Ex. 6 (“18 August 

2017 Modification”) at 1, 5, ECF No. 8-5. On 22 November 2017, CO Renfroe emailed

Sunrez’s Mark Livesay stating, “[m]y assumption is [the Contract] is a Phase II.5.” Ex. 1 at 

Ex. 6 (“Renfroe Email”). CO Renfroe further stated: “In the end we have extremely dropped the 

ball on this effort, in my opinion. The government’s intent with all SBIR efforts is to form a 

lasting partnership with the small businesses. I feel like we have been less than stellar partners in 

this case.” Renfroe Email at 1. “In the end, it took eighteen (18) months for WRAFB to 

complete the full-scale pallet tests, pushing well past the Contract’s deadline.” Am. Compl. at 

10. Sunrez notes they were unable to speak with anyone at WRAFB in the final weeks of the 

Contract’s performance period and “Sunrez never received any feedback on either their delivered 

Final Report (See Exhibit 8) or their Final Draft TDP.” Am. Compl. at 10. The parties finally 

met for an “outbriefing” in March 2018, three months after the Contract expired. Am. Compl. at 
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10–11. In this meeting, Sunrez learned WRAFB did not accept the Ring Capacity 3 Test 

internally performed by Sunrez and “that the Draft TDP delivered in December 2017 was 

unacceptable because the drawings were not in the proper format.” Am. Compl. at 11. 

The Air Force did not move forward with Sunrez’s composite prototype and instead 

chose an all-aluminum pallet by another contractor. Am. Compl. at 16. Notably, the 

government did not submit Sunrez’s prototype pallets for Air Transportability Test Load Activity 

(“ATTLA”) certification. Am. Compl. at 13. While Sunrez admits “[t]he Government is correct 

that there was no promise of a Phase III SBIR contract,” Am. Compl. at 17; Pl.’s Resp. at 13,

Sunrez showed the Court a letter from USAF Lieutenant Colonel Jack W. Flynt III to United 

States House of Representatives Honorable Duncan Hunter wherein Mr. Flynt refers to the 

Contract “as a Phase II.5 SBIR.” Ex. 7 at 1 (“Flynt Letter”), ECF No. 8-6. At oral argument, 

however, plaintiff, confirmed the Contract does not anywhere state it is a Phase II.5 contract. 

See Tr. at 13:7–9 (“THE COURT: . . . . Just to confirm, does the contract or the work plan state 

2.5 anywhere? [PLAINTIFF]: Those words do not appear in it.”). 

B. Procedural History

On 18 September 2020 plaintiff submitted a certified claim to Mr. Carlos S. Renfroe 

(“Renfroe”), the Contracting Officer (“CO”) for the Contract at that time, for $132,000,000.00

under the Contracts Disputes Act (“CDA”). Am. Compl. at 1. On 10 November 2020 the new 

CO for the Contract, Mr. Jesse Schwarztrauber (“Schwarztrauber”), issued a Contracting 

Officer’s Final Decision (“COFD”) denying plaintiff’s entire claim. Am. Compl. at 2. Sunrez 

now appeals the COFD decision for de novo review in this Court. See Am. Compl. 

On 2 April 2021, Sunrez filed an amended complaint with seven attached exhibits. See 

Am. Compl. Plaintiff alleges four causes of action: (1) the “USAF’s refusal to submit Sunrez’s 

composite 463L pallet design to the ATTLA for airworthiness certification constitutes a material 

breach of the Contract,” Am. Compl. at 18; (2) “the Government engaged in numerous breaches 

designed to hinder Sunrez’s performance of the Contract and impermissibly retaliate against 

Sunrez for refusing to give up its rights,” Am. Compl. at 19; (3) “the [g]overnment is liable to 

Sunrez for its regulatory taking of Sunrez’s property without just compensation,” Am. Compl. at 

25; and (4) Sunrez “requests a declaration that its composite pallet met all of the Contract’s 

deliverables and that the Government is required to properly submit same for ATTLA 

certification,” Am. Compl. at 26. The Court then granted plaintiff’s motion for leave to file 

Exhibits 2–5 and Exhibit 8 under seal. See Order, ECF No. 10. On 12 April 2021, the Court 

granted plaintiff’s unopposed motion for leave to file exhibit 1 under seal, see Order, ECF No. 

17, and two days later, Sunrez filed Exhibit 1 under seal, see Ex. 1. Exhibit 1 is sixty-four pages 

and includes eight sub-sections. See Ex. 1. 

On 19 April 2021, the government filed motion to dismiss plaintiff’s first amended 

complaint pursuant to Rule 12(b)(6) of the Rules of the Court of Federal Claims (“RCFC”). See 

Def.’s Mot. to Dimiss Pl.’s First Am. Compl. and Req. for Relief (“Def.’s MTD”), ECF No. 19. 

The government argues Sunrez’s complaint fails to state a claim upon which relief may be 

granted because the Contract does not require ATTLA to certify the prototype pallets for 

airworthiness. See id. On 17 May 2021, plaintiff responded by arguing the government’s 
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motion to dismiss should be denied as plaintiff plausibly states a claim upon which relief may be 

granted. See Pl.’s Opp’n to the Gov’t’s Mot. to Dismiss (“Pl.’s Resp.”), ECF No. 20. The 

government filed a reply on 1 June 2021 arguing Sunrez’s response fails to refute any of the 

government’s assertions in its motion to dismiss. See Def.’s Reply in Support of its Mot. to 

Dismiss Pl.’s First Am. Compl. and Req. for Relief (“Def.’s Reply”), ECF No. 21. On 28 

September 2021, the Court held oral argument on the government’s motion to dismiss pursuant 

to RCFC 12(b)(6). See Order, ECF No. 23. 

II. The Parties’ Arguments Regarding the Government’s Motion to Dismiss

In support of its RCFC 12(b)(6) motion to dismiss, the government contends, “because 

Sunrez’s research and development contract does not require the Government to certify Sunrez’s 

prototype pallet, Sunrez has failed to state a claim upon which relief may be granted.” Def.’s 

MTD at 4. The parties divide their briefs into four issues which the Court addresses in the 

following order: (1) breach of contract; (2) breach of the duty of good faith and fair dealing; (3) 

regulatory taking; and (4) declaratory relief. See Def.’s MTD at ii; Pl.’s Resp. at i. 

A. The Government Argues Sunrez Fails to State a Claim for Breach of Contract

The government contends, “[w]hether or not Sunrez’s research and development contract 

requires the Government to certify the prototype pallet . . . is a question of contractual 

interpretation, which is a matter of law, and thus may be addressed in resolving our motion to 

dismiss.” Def.’s Reply at 2 (first citing Bell/Heery v. United States, 739 F.3d 1324, 1330 (Fed. 

Cir. 2014); and then citing Gilbert v. Dep’t of Just., 334 F.3d 1065, 1071–72 (Fed. Cir. 2003)). 

According to the government, “[t]o interpret Sunrez’s research and development contract, the 

Court need go no further than the plain language of the contract terms[; t]here is no ambiguity.” 

Def.’s MTD at 10. The government also argues its interpretation of the Contract “is consistent 

with the uniform phased process of the SBIR program.” Def.’s MTD at 10; see 15 U.S.C. 

§ 638(e)(4). The government asserts, “Sunrez simply does not, and cannot, establish that its 

SBIR research and development contract, whether phase two or ‘phase II.5,’ requires the 

Government to certify the prototype composite pallet.” Def.’s MTD at 2. 

Plaintiff responds, “[p]ursuant to the Contract, upon delivery of six (6) prototype 

composite 463L pallets that successfully met or exceeded requirements of MIL-DTL-27443F, 

Sunrez would receive an airworthiness certification from ATTLA.” Pl.’s Resp. at 16 (citing Am. 

Compl. at 8–9). Plaintiff also argues, “[t]his issue, as framed by the Government, presents an 

issue for summary judgment, requiring Sunrez to meet a higher standard at the Motion to 

Dismiss phase than is required under Rule 12.” Pl.’s Resp. at 17 (citing Ashcroft v. Iqbal, 556 

U.S. 662, 678 (2009)). Plaintiff responds to the government’s SBIR phase argument, “[w]hile 

the Contract appears to be an SBIR Phase II contract, it was really an SBIR Phase II.5 contract,”

Pl.’s Resp. at 2, and “consistent with [the Contract’s] Phase II.5 status, [it] task[s] Sunrez with 

developing six (6) prototype composite 463L pallets for testing and ATTLA certification,” Am. 

Compl. at 6. 

B. The Government Argues Sunrez Fails to State a Claim for Breach of the Duty of 

Good Faith and Fair Dealing
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The government argues, “[n]one of the breaches alleged by Sunrez are, in fact, breaches 

of its SBIR phase two contract and, anyway, there are no allegations that the actions of the Air 

Force hindered Sunrez’s work under the contract to develop and deliver a prototype composite 

pallet with a corresponding technical data package (TDP) and final report.” Def.’s MTD at 13. 

The government contends, “[w]hen Sunrez asserts that the Air Force’s alleged actions interfered 

with the expected ‘fruits of the contract’ ([Pl.’s] Resp. at 20, 21, 23), it appears to be referring to 

the commercial application of the composite pallet in a Phase III contract.” Def.’s Reply at 12–

13. However, “because the Air Force never promised Sunrez a Phase III contract, this cannot be 

the basis for a breach of the duty of good faith and fair dealing of its Phase II (or Phase II.5) 

contract.” Def.’s Reply at 13. 

Plaintiff responds, “[t]hough the implied duty of good faith and fair dealing cannot 

expand a party’s contractual duties beyond those in the contract or create duties inconsistent with 

the contract’s provisions, a party need not breach an express contractual duty to breach the 

implied duty of good faith and fair dealing.” Pl.’s Resp. at 20 (citing CanPro Invs. Ltd. v. United 

States, 131 Fed. Cl. 528, 532 (2017)). Plaintiff further argues, “[a] party asserting a breach of 

the duty of good faith and fair dealing need only show an interference with reasonable 

expectations regarding the fruits of the contract.” Pl.’s Resp. at 20 (citing CanPro Invs. Ltd., 131 

Fed. Cl. at 532). Plaintiff contends this inquiry is a “fact inquiry,” Tr. at 120:20, and as such not 

one the Court can resolve at the motion to dismiss stage. See Tr. at 120:15–20 

([PLAINTIFF]: . . . . I don’t think you’ll find a case on breach of the duty of good faith and fair 

dealing that says that you can address reasonable intent of the parties or . . . reasonable intent of 

the parties based on some type of—anything other than a fact inquiry.”). 

C. The Government Argues Sunrez Fails to State a Claim for Regulatory Taking

To dismiss plaintiff’s alternative takings argument, the government argues, “[t]akings 

claims, however, ‘“rarely arise under government contracts because the Government acts in its 

commercial or proprietary capacity in entering contracts, rather than in its sovereign capacity”

and therefore the “remedies arise from the contracts themselves, rather than from the 

constitutional protection of private property rights.”’” Def.’s MTD at 21 (quoting Piszel v. 

United States, 833 F.3d 1366, 1376 (Fed. Cir. 2016)). The government contends Sunrez has no 

basis for the takings claim, because “[w]ith no contractual obligation to award a Phase III 

contract to Sunrez and submit the composite pallet for certification . . . the decision not to move 

forward with the composite pallet is squarely within the Government’s discretion and made in 

the Government’s proprietary capacity.” Def.’s Reply at 14 (citing St. Christopher Assocs., L.P. 

v. United States, 511 F.3d 1376, 1385 (Fed. Cir. 2008)). 

Plaintiff responds, “[t]o determine whether a regulation effects a Taking, courts look at 

(1) the character of the Government action; (2) the extent to which the regulation interferes with 

distinct, investment-backed expectations; and (3) the economic impact of the regulation.” Pl.’s 

Resp. at 30 (citing Good v. United States, 189 F.3d 1355, 1360 (Fed. Cir. 1999)). Plaintiff 

argues, “the Government was not acting in a commercial capacity when it failed to select 

Sunrez’s pallet for commercial application because the Government’s action in this case goes 
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beyond commercial activity, as the decisions were beyond the scope of what was permissible 

under the circumstances.” Pl.’s Resp. at 31–32. 

D. The Government Argues Plaintiff Fails to State a Claim for Declaratory Relief

In response to plaintiff’s request for declaratory relief, the government argues, “[u]nder 

the Tucker Act, this Court has ‘discretion to grant declaratory relief only in limited

circumstances’ during contract performance ‘involving a fundamental question of contract

interpretation or a special need for early resolution of a legal issue.’” Def.’s MTD at 22 (first 

citing Alliant Techsystems, Inc. v. United States, 178 F.3d 1260, 1271 (Fed. Cir. 1999); and then 

citing 28 U.S.C. § 1491(a)(2)). The government adds, “[t]he Court may ‘consider the 

appropriateness of declaratory relief, including whether the claim involves a live dispute between 

the parties, whether a declaration will resolve that dispute, and whether the legal remedies 

available to the parties would be adequate to protect the parties’ interests.’” Def.’s MTD at 22 

(citing Alliant, 178 F.3d at 1271). The government argues “[n]one of these factors are satisfied 

in the present case.” Def.’s MTD at 22.

Plaintiff responds, “[a] ‘live dispute’ is one in which there is a dispute regarding a party’s 

obligation to perform.” Pl.’s Resp. at 36 (citing CW Gov’t Travel Inc. v. United States, 63 Fed. 

Cl. 369, 389 (2004); Alliant, 178 F.3d at 1270). Plaintiff contends, the live dispute is “that the 

Government has the obligation to perform by submitting Sunrez’s pallets for ATTLA 

certification.” Pl.’s Resp. at 36. Plaintiff also alleges, “its other causes of action—breach of 

contract, Takings, and breach of duty of good faith and fair dealing—do not adequately protect 

its interests, because even if the foregoing were granted in Sunrez’s favor, Sunrez would still be 

without a pallet that is certified as airworthy, still destroying the economic viability of the 

pallet.” Pl.’s Resp. at 37 (citing Am. Compl. at 27). Plaintiff also alleges the government’s 

argument “that Sunrez’s request for declaratory relief does not involve a question of contract 

interpretation” fails because “one party interprets the Contract to require certain performance 

(that the Government submit the pallet for certification upon the pallet meeting certain 

specifications) and the other party opposes that interpretation.” Pl.’s Resp. at 37–38. 

III. Applicable Law

“A motion to dismiss . . . for failure to state a claim upon which relief can be granted is 

appropriate when the facts asserted by the plaintiff do not entitle him to a legal remedy.” United 

Pac. Ins. Co. v. United States, 464 F.3d 1325, 1327 (Fed. Cir. 2006) (quoting Boyle v. United 

States, 200 F.3d 1369, 1372 (Fed. Cir. 2000). “To survive a motion to dismiss, a complaint must 

contain sufficient factual matter, accepted as true ‘to state a claim to relief that is plausible on its 

face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 

U.S. 544, 570 (2007)). 

To establish a breach of contract claim, plaintiff must show a valid contract between 

parties, an obligation or duty arising from the contract, breach of that duty, and damages caused 

by that breach. San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959 

(Fed. Cir. 1989). Contract interpretation is a matter of law and may be addressed by the Court in 

resolving a motion to dismiss. Bell/Heery, 739 F.3d at 1330 (citing Cal. Edison v. United States, 
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58 Fed. Cl. 313, 321 (2003)). When interpreting a contract, unambiguous terms must be given 

their plain and ordinary meaning. Landmark Land Co., Inc. v. Fed. Deposit Ins. Corp., 256 F.3d 

1365, 1373 (Fed. Cir. 2001) (citing Alaska Lumber & Pulp Co., Inc. v. Madigan, 2 F.3d 389, 392 

(Fed. Cir. 1993)). 

The implied duty of good faith and fair dealing is inherent in every contract and may be 

called the implied duty not to hinder and the implied duty to cooperate. Precision Pine & 

Timber, Inc. v. United States, 596 F.3d 817, 827–28 (Fed. Cir. 2010) (citing Restatement 

(Second) of Contracts § 205). This duty essentially “requires a party to not interfere with 

another party’s rights under the contract.” Id. at 828 (citing Restatement (Second) of Contracts § 

205 at cmt. d). A party’s failure to fulfil the implied duty of good faith and fair dealing 

constitutes breach of contract. Metcalf Const. Co., Inc. v. United States, 742 F.3d 984, 990 (Fed. 

Cir. 2014) (citing Restatement (Second) of Contracts § 235). 

“To state a claim for a taking under the Fifth Amendment, a plaintiff must identify a 

legally cognizable property interest.” Am. Bankers Ass’n v. United States, 932 F.3d 1375, 1384–

85 (Fed. Cir. 2019) (citing Tex. State Bank v. United States, 423 F.3d 1370, 1378 (Fed. Cir. 

2005)). “[E]xisting rules and understandings and background principles derived from an 

independent source, such as state, federal, or common law, define the dimensions of the requisite 

property rights for purposes of establishing a cognizable taking.” Conti v. United States, 291 

F.3d 1334, 1340 (Fed. Cir. 2002) (citation and quotation marks omitted). 

“The discretion to grant declaratory relief only in limited circumstances allows the 

court . . . to restrict the occasions for intervention during contract performance to those involving 

a fundamental question of contract interpretation or a special need for early resolution of a legal 

issue.” Alliant, 178 F.3d at 1271.

 

IV. Analysis of the Government’s Argument Plaintiff Fails to State a Claim for Breach 

of Contract

A. Whether the Contract Obligates the Government to Submit Plaintiff’s Pallets for 

Certification

The government argues, “[w]hether or not Sunrez’s research and development contract 

requires the Government to certify the prototype pallet . . . is a question of contractual 

interpretation, which is a matter of law, and thus may be addressed in resolving our motion to 

dismiss.” Def.’s Reply at 2 (citing Bell/Heery, 739 F.3d at 1330); see also Gilbert, 334 F.3d at

1071–72 (“[T]he determination of whether non-compliance with the terms of a contract is 

material, so as to constitute a breach, is a mixed question of fact and law. What was required by 

way of contract performance turns on contract interpretation, which is an issue of law.”). The 

government asserts at the motion to dismiss stage “the tenet that a court must accept as true all of 

the allegations contained in a complaint is inapplicable to legal conclusions.” Def.’s Reply at 2 

(citing Iqbal, 556 U.S. at 678). The government contends, “[b]ecause the SBIR phase two 

contract does not require the Government to certify the pallet developed under the contract, 

Sunrez’s breach of contract claim fails as a matter of law.” Def.’s MTD at 13. 
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The government asserts the parties’ contractual bargain is “pinpointed on page 2 of the 

cont[r]act: the Government agreed to pay Sunrez $1,488,250.56 to develop and deliver a 

prototype composite pallet system in accordance with (IAW) the attached work plan.” Id. at 7 

(citing Contract at 2). According to the government, the Work Plan “contains the objective; 

background; requirements and specifications; work task plan; schedule; and deliverables for 

Sunrez’s development and delivery of the prototype composite pallet.” Id. (citing Work Plan at 

1–11). The government contends the first section of the Work Plan, which details the objective 

of the Contract, “directly contradicts Sunrez’s assertion that the contract requires the 

Government to certify the composite pallet for airworthiness: ‘This [effort] will culminate in the 

delivery of six complete 463L pallets for post Phase II environmental/airworthiness 

certification.’” Id. (quoting Work Plan at 1). The government also explains “[t]he background 

section of the work plan states that ‘[b]y the end of this effort, the contractor will achieve a 

[Technology Readiness Level (TRL) 6] by providing a fully functional composite pallet ready

for full environmental and airworthiness qualification.’” Id. The government urges, “[r]equiring 

that contractor provide prototypes ready for airworthiness qualification, should the Government 

decide to move forward with that design, is not a promise to contractor that the Government will 

certify the prototypes as such.” Id. at 7–8. 

The government states, “Sunrez asserts that one sentence in [the Requirements and 

Specification Section] creates an obligation on the Government to certify Sunrez’s prototype 

pallet: ‘Airworthiness Certification and Air Transportability Requirements will be met through 

compliance to MIL-DTL-27443F.’” Def.’s MTD at 8 (citing Am. Compl. at 8–9 n.4). The 

government argues this provision is only a specification for the pallet, “requir[ing] Sunrez to 

construct pallets to comply with the specifications set forth in MIL-DTL-27443F.” Id. To 

support this argument, the government notes it is surrounded by other specifications, for example 

the pallets shall be constructed of “fungus resistant” materials. See id. at 8–9 (citing Work Plan 

at 2). “In this context, there can be no doubt that the provision that ‘Airworthiness Certification 

and Air Transportability Requirements will be met through compliance to MIL-DTL-27443F,’ 

does not, as Sunrez asserts, create a requirement for the Government.” Id. at 9 (quoting Work 

Plan at 2). 

The government also explains, “[t]he work task plan section ‘breaks out the tasks to be 

performed during this 18-24 month effort,’ including ‘full scale testing,’ but does not break out a 

task for the Government to certify the composite pallet for airworthiness.” Id. (citing Work Plan 

at 2–6). The government similarly argues neither the Schedule nor the Deliverables Sections 

create a requirement for the government to certify the pallet. See id. at 9–10 (citing Work Plan at 

6–9). The government states “[o]ne of the milestones is ‘Pallet build for Certification Testing’” 

but notes while this section identifies a “pallet build” milestone, it does not provide a 

“certification testing for airworthiness” milestone. Def.’s MTD at 9 (citing Work Plan at 6–7). 

Regarding the Deliverables Section, the government notes the “Contractor will provide delivery 

of 6 full scale complete assemblies of the new composite 463L pallet for certification testing to 

Robins Air Force Base,” but “again while this section requires Sunrez to deliver the pallet, it 

does not identify certification of the pallet as a deliverable required from the Government.” Id.

at 9–10 (citing Work Plan at 7–9). The government also states, “the deliverables section 

provides that ‘[t]hese pallets shall be delivered to support independent Government testing to 

463L requirements at the end of Phase II prior to developing low rate production and process 
- 10 -

transportability as part of Phase III.’” Id. at 10 (quoting Work Plan at 7). The government 

contends “[t]his [section] indicates that while the contractor must deliver prototypes of a quality 

ready for airworthiness certification, should the Government choose to move forward with that 

design, the Government intends to conduct independent testing before making that choice.” Id.

at 9–10. 

Plaintiff responds, “accepting Sunrez’s alleged facts as true, Sunrez’s breach of contract 

claim is plausible on its face.” Pl.’s Resp. at 16. Plaintiff argues, “[p]ursuant to the Contract, 

upon the delivery of six (6) prototype composite 463L pallets that successfully met or exceeded 

the requirements of MIL-DTL-27443F, the Government would submit Sunrez’s pallets for an 

airworthiness certification from the ATTLA.” Id. at 5 (citing Am. Compl. at 8–9). Plaintiff 

contends the government’s duty to submit the pallets for ATTLA certification “is evidenced by 

Section 5.0 of the Work Plan, which specifically provides that one (1) of the milestones for the 

Contract was ‘Pallet build for Certification Testing.’” Id. at 5 (citing Work Plan at 6). Plaintiff 

continues, “[s]imilarly, the Deliverables section of the Work Plan evidences this fact via the 

following statement: ‘Contractor will provide delivery of 6 full scale complete assemblies of the 

new composite 463L pallet for certification testing to Robins Air Force Base.’” Id. Plaintiff 

further argues, “meeting MIL-DTL-27443F meant that Sunrez’s pallets would receive ATTLA 

certification,” id., by quoting Work Plan Section 3.0: “Airworthiness Certification and Air 

Transportability Requirements will be met through compliance to MIL-DTL-27443F,” Work 

Plan at 2. Plaintiff also states, “ATTLA specifically acknowledged and accepted its duty to 

certify the pallet at the Technical Interchange Meeting on August 27, 2014.” Pl.’s Resp. at 16 

(citing Am. Compl. at 8–9). 

Plaintiff alternatively argues, “[t]h[e] issue, as framed by the Government, presents an 

issue for summary judgment, requiring Sunrez to meet a higher standard at the Motion to 

Dismiss phase than is required under Rule 12.” Id. at 17 (citing Iqbal, 556 U.S. at 678). 

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, 

accepted as true ‘to state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 

(quoting Twombly, 550 U.S. at 570). A complaint is “plausible on its face” only if “the plaintiff 

pleads factual content that allows the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.” Id. Although the complaint need not articulate “detailed 

factual allegations,” it must provide “more than labels and conclusions, and a formulaic 

recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. In ruling 

on a 12(b)(6) motion, the Court may consider “the complaint, its proper attachments, documents 

incorporated into the complaint by reference, and matters of which a court may take judicial 

notice.” Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (internal 

citations and quotations omitted); see also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 

308, 322 (2007).

“To recover for breach of contract, a party must allege and establish: (1) a valid contract

between the parties, (2) an obligation or duty arising out of the contract, (3) a breach of that duty, 

and (4) damages caused by the breach.” San Carlos Irrigation & Drainage Dist. v. United 

States, 877 F.2d 957, 959 (Fed. Cir. 1989). Contract interpretation is an issue of law and so may 

be addressed by the Court in resolving a motion to dismiss. Bell/Henry, 739 F.3d at 1330; see 
- 11 -

also Gilbert, 334 F.3d at 1071–72 (“What was required by way of contract performance turns on 

contract interpretation, which is an issue of law.”). As the Court considers plaintiff’s claim for 

breach of contract at the RCFC 12(b)(6) motion to dismiss stage, the Court must accept as true 

Sunrez’s factual allegations and determine whether these facts support a “facially plausible” 

breach of contract claim. See Iqbal, 556 U.S. at 678. 

When interpreting a contract, a court should start with the plain language of the contract,

McAbee Constr. Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996) (citations omitted), 

and unambiguous contract terms must be given their plain and ordinary meaning, Landmark 

Land Co., Inc., 256 F.3d at 1373 (citation omitted); see also Hunt Const. Grp., Inc. v. United 

States, 281 F.3d 1369 at 1373 (citing Textron Def. Sys. v. Widnall, 143 F.3d 1465, 1469 (Fed. 

Cir. 1998)) (“When the contract language is unambiguous on its face, our inquiry ends, and the 

plain language of the contract controls.”). A contract is interpreted “as a whole and ‘in a manner 

which gives reasonable meaning to all its parts and avoids conflict or surplusage of its 

provisions.’” United Int’l Investigative Servs. v. United States, 109 F.3d 734, 737 (Fed. Cir. 

1997) (quoting Granite Constr. Co. v. United States, 962 F.2d 998, 1003 (Fed. Cir. 1992)).

Under an express contractual duty analysis, the Court must determine whether plaintiff 

adequately alleges the government has “an obligation or duty arising out of the contract,” San 

Carlos Irrigation & Drainage Dist., 877 F.2d at 959, to “submit Sunrez’s pallets for ATTLA 

certification,” Pl.’s Resp. at 17 (citing Am. Compl. at 15). 

The Contract provides the Schedule is precedential by incorporating FAR 52.215-8. 1

 See 

Contract at 9; Pl.’s Resp. at 24 (“the Work Plan takes precedence over all else”); Tr. at 31:25–

32:1 (“THE COURT: . . . . So the work plan comes first. [GOVERNMENT]: Yes.”). The first 

item in the Contract’s Schedule provides the general bargain the government urges—Sunrez 

must develop and deliver six pallets for which the government must pay nearly $1.5 million—by 

stating Sunrez is to “Develop and Deliver prototype composite 463L pallet system [in 

accordance with the] work plan dated 06 March 2014.” Contract at 2. The Schedule refers to the 

Work Plan for the parties’ specific contractual duties by providing the pallets should be 

developed and delivered “[in accordance with the] work plan.” Id. 

Section 1.0 of the Work Plan gives the objective of the Contract as follows: 

1 The Contract incorporates by reference FAR 52.215-8 “Order of Precedence –Uniform Contract Format.” See

Contract at 9. FAR 52.215-8 provides: 

Any inconsistency in this solicitation or contract shall be resolved by giving 

precedence in the following order:

(a) The Schedule (excluding the specifications)

(b) Representations and other instructions

(c) Contract clauses

(d) Other documents, exhibits, and attachments

(e) The specifications

48 C.F.R. § 52.215-8.
- 12 -

The objective of this effort is to use proven composite technologies to develop a 

new composite 463L pallet design to be used as a replacement for the current 

system. The objective will be reached by taking these new technologies through 

subscale testing followed by developing a number of complete pallets for full scale 

simulation testing. This will culminate in the delivery of six complete 463L pallets 

for post Phase II environmental/airworthiness certification.

Work Plan at 1. As this Contract “will culminate in the delivery of six complete 463L pallets,” 

the highest and final objective of the Contract is Sunrez’s delivery of six pallets to the 

government. Id. The government could only submit pallets for certification after receiving 

them, so according to the Objective Section, airworthiness certification would need to occur after 

this Contract “culminate[s].” Id. The Objective provision also states the pallets are delivered 

“for post Phase II environmental/airworthiness certification.” Id. This provision shows Sunrez 

delivers the pallets to the government for a purpose, which is “for post Phase II 

environmental/airworthiness certification,” but the plain language of this provision does not 

obligate the government to submit the pallets for ATTLA certification—especially as this phrase 

follows “[t]his will culminate in the delivery of six complete 463L pallets.” See id. 

“Environmental/airworthiness certification” also follows “post Phase II,” or in other words, after

this “Phase II” Contract. Work Plan at 1. The plain language of Section 1.0 does not support 

plaintiff’s argument the Contract obligates the government to submit the pallets for 

certification—rather the Contract’s Objective Section shows certification would occur “post 

Phase II” or after this Contract “culminate[s].” Id.; see McAbee Constr. Inc., 97 F.3d at 1435; 

San Carlos Irrigation & Drainage Dist., 877 F.2d at 959.

Section 2.0 “Background” provides “[b]y the end of this effort, the contractor will 

achieve a [Technology Readiness Level (‘TRL’)] 6 by providing a fully functional composite 

pallet ready for full environmental and airworthiness qualification.” Work Plan at 1. Plaintiff 

contends as, “[b]y the end of this effort,” the pallets must be “ready for full environmental and 

airworthiness qualification,” the government must perform such testing. Id.; see Am. Compl. at 

3. This conclusion, however, does not follow from the plain meaning of this provision. See 

McAbee Constr. Inc., 97 F.3d at 1435. Rather than providing a clear duty for the government to 

submit the pallets for certification testing, the Contract merely states “[b]y the end of this effort, 

the Contractor will . . . provid[e] a fully functional composite pallet ready for full environmental 

and airworthiness qualification.” Work Plan at 1 (emphasis added). Requiring the pallets to be

“ready for full environmental and airworthiness qualification” does not expressly obligate the

government to submit the pallets for certification. Id. Rather, the opposite is likely correct, that 

the effort according to this Contract will “end” with a pallet “ready for,” but before, certification 

testing. Id. This provision also provides “the Contractor will” so any duty flowing from this 

provision would obligate the Contractor, Sunrez. Id. The plain language of Section 2.0 does not 

support plaintiff’s argument the government must submit the pallets for certification. Id.; see 

McAbee Constr. Inc., 97 F.3d at 1435; San Carlos Irrigation & Drainage Dist., 877 F.2d at 959. 

Section “3.0 Scope – Requirements and Specifications” provides “[t]he scope of this 

Phase II effort includes the following work to be completed.” Work Plan at 2 (emphasis 

omitted). Sunrez focuses on one sentence in this section, “Airworthiness Certification and Air 

Transportability Requirements will be met through compliance to MIL-DTL-27443F.” Am. 
- 13 -

Compl. at 9 n.5; Work Plan at 2. As the government notes, however, this section provides 

“Requirements and Specifications” for the pallets, such as “the pallet shall lock into all 463L 

compatible rail systems,” and “the materials shall be fungus resistant.” Work Plan at 2. Sunrez 

designed the pallets and chose materials for the pallet construction, so these terms require

Sunrez’s compliance—not the government’s. Sentences in the surrounding paragraphs begin 

with “[t]he contractor shall,” which affirms these terms describe pallet specifications that Sunrez

must satisfy, not the government. Work Plan at 2. Given this context, the phrase “Airworthiness 

Certification and Air Transportability Requirements will be met through compliance to MILDTL-27443F” informs Sunrez of the government’s pallet standards, but the plain meaning of this 

provision does not support plaintiff’s argument the government is obligated to submit the pallets 

for certification. See McAbee Constr. Inc., 97 F.3d at 1435; San Carlos Irrigation & Drainage 

Dist., 877 F.2d at 959. 

Section 4.0 “Work Task Plan” provides “the tasks to be performed during this 18–24 

month effort.” Work Plan at 2–6. Although this section describes “[t]esting of the full scale 

463L pallet,” it lacks a task expressly obligating the government to submit the pallets for 

ATTLA certification. See Work Plan at 2–6. Sunrez also relies on this section to support its 

argument the government breached the Contract by continually and unreasonably raising the bar 

during performance. Pl.’s Resp. at 17. This argument critiques the government’s structural 

testing, not certification, so plaintiff’s argument shows this section addresses structural testing 

and not the “certification” Sunrez seeks. Section 5.0 “Schedule” provides, “[t]he following 

milestones have been identified in the development of the Phase II 463L Pallet system.” One of 

the milestones is “Pallet build for Certification Testing.” Work Plan at 6. This milestone

suggests Sunrez build the pallets to the specifications required for certification and provide 

accompanying product development documentation. See Work Plan at 6. Although the section 

provides expressly for structural testing by stating “Full Scale Pre-Qual Test,” this section lacks

a clear milestone for the government to submit the pallets for certification testing. See Work 

Plan at 6. The tasks preceding and following this milestone also require Sunrez to deliver 

documentation to the government, not vice versa. The plain meaning of Sections 4.0 and 5.0 

thus do not support plaintiff’s argument the government must submit the pallets for certification. 

See McAbee Constr. Inc., 97 F.3d at 1435; San Carlos Irrigation & Drainage Dist., 877 F.2d at 

959. 

Section 6.0 “Deliverables” provides “[t]hese pallets shall be delivered to support 

independent Government testing to 463L requirements at the end of Phase II prior to developing 

low rate production and process transportability as part of Phase III.” Work Plan at 7. 

Relevantly, this provision uses “testing” to describe the government’s action, but it lacks the 

term “certification.” See id. This section also describes “testing to 463L requirements” whereas 

sections referring to the certification standard note “compliance to MIL-DTL-27443F, see id. at 

2, so “testing to 463L” likely refers to structural testing, not certification, see id. at 7. Although 

this section uses passive voice, “[t]hese pallets shall be delivered,” it is Sunrez’s duty to deliver 

the pallets so if this provision assigns a duty it likely applies to Sunrez. Id. The section further

notes “independent Government testing” occurs “at the end of Phase II” so the government’s 

structural testing is to be the “end” of this Phase II Contract. Work Plan at 7. This provision 

also notably distinguishes between deliverables under this Phase II effort and deliverables under 

a Phase III effort. See id. Section 6.0 states “Phase II work deliverables are listed below” 
- 14 -

including Section 6.3 “Hardware,” which states the “Contractor will provide delivery of 6 full 

scale complete assemblies of the new composite 463L pallet for certification testing to Robins 

Air Force Base.” Id. at 9. Section 6.3 starts with “Contractor will provide delivery” so this 

section clarifies Sunrez’s obligation to not only deliver six pallets, but “[six] full scale complete 

assemblies of the new composite 463L pallet” including “[h]ardware.” Id. The plain meaning of 

this section provides Sunrez’s duty to deliver pallets designed to a certain specification such that 

the pallets are ready for certification testing but this section does not obligate the government to 

submit the pallets for certification testing. See McAbee Constr. Inc., 97 F.3d at 1435; San Carlos 

Irrigation & Drainage Dist., 877 F.2d at 959. 

Sunrez does not contend the Contract terms are ambiguous in its amended complaint, nor 

in its response to the government’s motion to dismiss, however, plaintiff’s counsel suggested this 

at oral argument. See Tr. at 62:15–17 (“[PLAINTIFF]: . . . I’ve read a lot of contracts, Your 

Honor. I don’t think this is unambiguous.”). Plaintiff argues some provisions are “ambiguous if 

you read the other provisions in context with it.” Tr. at 63:4–5. “When a contract is susceptible 

to more than one reasonable interpretation, it is ambiguous.” HPI/GSA 3C, LLC v. Perry, 364 

F.3d 1327, 1334 (Fed. Cir. 2004) (citing Jowette, Inc. v. United States, 234 F.3d 1365, 1368 

(Fed. Cir. 2000)). “To show an ambiguity it is not enough that the parties differ in their 

respective interpretations of a contract term. Rather, both interpretations must fall within a zone 

of reasonableness.” NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) 

(citing Metric Constructors, Inc. v. NASA, 169 F.3d 747, 751 (Fed. Cir. 1999)). Although 

plaintiff baldly asserts the Contract is ambiguous, plaintiff attempts to read language into the 

Contract, language the Contract as written lacks, and as such plaintiff does not show the Contract 

is susceptible to more than one reasonable interpretation. HPI/GSA 3C, LLC, 364 F.3d at 1334;

see also Night Vision Corp. v. United States, 469 F.3d 1369, 1374 (Fed. Cir. 2006) (finding 

“[w]hatever may be the policy favoring small businesses in the present situation, there is simply 

no valid basis for reading such a requirement into the contract.”). 

Although the Contract lacks any individual term obligating the government to submit 

Sunrez’s pallets for ATTLA certification, the Court “must interpret [the Contract] as a whole and 

in a manner which gives reasonable meaning to all its parts and avoids conflict or surplusage of 

its provisions.” United Int’l Investigative Servs., 109 F.3d at 737 (citation omitted) (internal 

quotation marks omitted). To test the government’s contractual obligations considering the 

contract “as a whole,” the Court asked the government whether it could do anything with the 

pallets after receiving them and the government responded, “that’s completely within the 

discretion of the Air Force under this contract.” Tr. at 82:11–24. When the Court asked plaintiff 

what specific contractual provision the government would violate if it simply accepted the 

pallets, paid plaintiff, and then shelved the pallets, plaintiff responded, “[w]ell, you know, I think 

that’s completely a hypothetical, but . . . I don’t really know how to address that in this context, 

Your Honor.” Tr. at 84:6–16. This discussion shows when considering the Contract as a whole, 

the government lacks any obligation regarding what it can and cannot do with the pallets it 

purchased for research and development purposes. See Night Vision, 469 F.3d at 1374

(“Whatever may be the policy favoring small businesses in the present situation, there is simply 

no valid basis for reading such a requirement into the contract.”). To interpret a provision, such 

as “Pallet build for Certification Testing,” as obligating the government to perform such testing 

would therefore impermissibly conflict with the Contract as a whole and specifically with the 
- 15 -

Contract’s Objective which states, “[t]his [Contract] will culminate in the delivery of six 

complete 463L pallets for post Phase II environmental/airworthiness certification.” Work Plan 

at 1. 

The Court thus finds Sunrez’s allegation the government breached the Contract by not

submitting the pallets for ATTLA certification testing is not “plausible on its face” as Sunrez

fails to adequately plead content allowing the Court to reasonably infer the government has an 

express contractual duty to submit the pallets for ATTLA certification. Iqbal, 556 U.S. at 678 

(quoting Twombly, 550 U.S. at 570); see also Night Vision, 469 F.3d at 1373; San Carlos 

Irrigation & Drainage Dist., 877 F.2d at 959; McAbee Constr. Inc., 97 F.3d at 1435. 

1. Whether the Contract Provides Other Express Duties for the 

Government

Although Sunrez only pleads the government had an express duty to submit Sunrez’s 

pallets for certification,2 Sunrez implies three other express duties when it describes the 

government’s “breaches”:

(Breaches). The Government breached its contracts with Sunrez by (a) attempting 

to coerce Sunrez into giving up its SBIR data rights by conditioning it upon a Phase

III award, (b) continually and unreasonably raising the bar during performance, (c) 

refusing to meaningfully communicate with Sunrez through the course of 

performance of the Contract on issues material to the contract. [Am. Compl. at 15]. 

Pl.’s Resp. at 17. If plaintiff alleges the first three breaches were breaches of contract, plaintiff 

must show “an obligation or duty arising out of the contract.” San Carlos Irrigation & Drainage 

Dist., 877 F.2d at 959. 

Regarding the first alleged breach, (a), at oral argument plaintiff alleged the 

government’s duty regarding data rights is found in “DFARS 252.227-7018.”3 Tr. at 38:24–

39:1. This provision provides the government’s “[r]ights in noncommercial technical data and 

computer software” under the Small Business Innovation Research Program. See 48 C.F.R. § 

252.227-7018 (2014). The provision grants certain rights to the government regarding the use 

2 Under the heading “Breach of Contract” Sunrez in its amended complaint only states “the government was 

obligated to submit Sunrez’s composite 463L pallet design to ATTLA for airworthiness certification” and “[t]he 

USAF’s refusal to submit Sunrez’s composite 463L pallet design to the ATTLA for airworthiness certification 

constitutes a material breach of the Contract.” Am. Compl. at 18–19; accord Def.’s MTD at 7 (arguing it is not 

contractually bound to “certify the prototype 463L pallet”); accord Pl.’s Resp. at 16–17 (discussing “duties” plaintiff 

alleges only the government’s duty to submit pallets for certification); accord Pl.’s Resp. at 17 (discussing 

“damages” from the government’s breach of contract, plaintiff only argues “the Government’s refusal to submit the 

composite pallet design for ATTLA certification as required . . . . resulted in losses and damages to Sunrez.”).

3 This provision was “added by full text” in Amendment No. P00006 on 18 August 2017. See 18 August 2017 

Modification. Prior to this modification, the Work Plan read, “[a]ll engineering and product definition data created 

using Government funding as a result of this contract shall be considered a part of the TDP and shall be delivered to 

the Government with unlimited rights.” Work Plan at 4. As the government notes, “[t]he Air Force’s alleged 

requests for a TDP with unlimited rights prior to this modification would have been consistent with the terms of the 

contract at that time.” Def.’s Reply at 8; see Work Plan at 4; 18 August 2017 Modification. 
- 16 -

and distribution of data and reserves other rights for the Contractor. See id. Although the 

provision prohibits the government from “us[ing] or distribut[ing] technical data in a manner 

inconsistent with the ownership rights listed therein,” it does not expressly prohibit the 

government from requesting rights “upon a Phase III award.” Flynt Letter at 1; see 48 C.F.R. § 

252.227-7018 (2014). 

Regarding the second alleged breach, (b), plaintiff states the government’s duty to not

raise the bar during performance is found in “[t]he testing requirements . . . at Task 6.” Tr. at 

39:22–40:8; Tr. at 40:13–15 (“THE COURT: So what specific provision under the contract was 

not adhered to? [PLAINTIFF]: Task 6.”). Task 6 of the Work Plan provides “[t]he tasks to be 

executed” include “full scale testing.” Work Plan at 6. These tasks, however, are generic and 

lack specific duties for the government. See Work Plan at 6 (“Develop[] full scale test 

plan . . . . Perform Full Scale Testing . . . . Document results of Full scale testing.”). Task 6 

further implies the directives are Sunrez’s duties to the government, not the government’s duties 

to Sunrez. See id. (“Test validation results shall be communicated to the Government Contract 

Technical Representative.”) (emphasis added). Also, as the government notes, Section 6.0 

“Deliverables” provides “[t]hese pallets shall be delivered to support independent Government 

testing to 463L requirements at the end of Phase II prior to developing low rate production and 

process transportability as part of Phase III.” Id. at 7. Section 6.0 describes the government’s 

part of the testing as “independent,” suggesting the government has discretion to test the pallets 

according to its own procedures. See id. When discussing plaintiff’s allegation regarding “extra 

contractual testing,” plaintiff admits the Contract does not preclude the government from 

performing “extra” testing. See Tr. at 58:2–10 (“THE COURT: Well, so, is there something in 

the contract that says that the Government cannot do [extra] testing after receiving the prototype 

pallets? . . . . [PLAINTIFF]: I think the answer to that is, no, there’s nothing prohibiting them 

from doing that, Your Honor.”); Tr. at 58:18–19 (“[PLAINTIFF]: [T]he Government is certainly 

not prohibited from doing its own testing.”). 

Regarding the third alleged breach, (c), at oral argument plaintiff referred generally to 

pages 4 and 5 of the Work Plan for the government’s duty to meaningfully communicate with 

Sunrez. When the Court asked plaintiff’s counsel to read a duty the government owed, plaintiff 

responded “I don’t think Sunrez was supposed to have these meetings [Section 6.2 

Briefings/Reviews & Test Support, Work Plan at 8] by itself.” Tr. at 43:16–20. When the Court 

asked “if the Plaintiff wanted to have a meeting, [did] the Government owe[] Plaintiff a 

meeting,” plaintiff’s counsel responded “[w]ell if the Government requested a meeting, the 

Government certainly had an obligation to participate at it.” Tr. at 44:4–10. Plaintiff’s counsel 

agreed the Contract does not obligate the government to attend any meeting Sunrez requests. Tr. 

at 44:23–45:5 (“THE COURT: . . . but [Section 6.2] in the contract doesn’t say Plaintiff can 

demand a meeting with the Government and the Government needs to show up and be there. 

[PLAINTIFF]: No, Your Honor.”). Plaintiff would not concede this is just an issue of good 

faith and fair dealing, yet plaintiff could not identify a specific provision obligating the 

government in the manner plaintiff suggests. See Tr. at 45:8–17 (“THE COURT: . . . . Is it just 

generally that reading all . . . 12 pages of the work plan . . . just generally requires the 

Government to always be responsive? [PLAINTIFF]: No, Your Honor, but they can’t act in bad 

faith . . . . THE COURT: . . . . Is this just an issue of good faith and fair dealing? 

[PLAINTIFF]: I don’t think I would concede that.”). 
- 17 -

Regarding all three of these alleged breaches, plaintiff bears the burden of showing “an 

obligation or duty arising out of the contract,” San Carlos Irrigation & Drainage Dist., 877 F.2d 

at 959; however, neither plaintiff’s paragraph outlining the government’s “duties,” nor its 

paragraph outlining its “damages” mentions the government’s express duties regarding these 

three breaches, see Pl.’s Resp. at 16–17. Further, during oral argument plaintiff was unable to 

identify specific provisions obligating the government to perform these three “duties.” See Tr. at 

37:20–38:7 (“[PLAINTIFF]: the other breaches are . . . the Government just simply not being a 

good partner in the program. THE COURT: So that sounds like good faith and fair dealing. 

[PLAINTIFF]: Well, it sounds like it, but it’s also a contractual requirement.”); Tr. at 58:8–12 

(discussing the contractual provision relating to “extra contractual testing,” Sunrez admits “that 

almost dovetails very nicely into the idea of the good faith and fair dealing”). The Court 

therefore does not find the Contract expressly obligates the government for these three “duties,”

San Carlos Irrigation & Drainage Dist., 877 F.2d at 959, rather these claims sound in the 

government’s possible breaches of its implied duty of good faith and fair dealing as analyzed

infra Section V. 

B. Whether the SBIR Program Statute Obligates the Government to Submit 

Plaintiff’s Pallet for Certification

The government argues Sunrez cannot establish its SBIR contract, “whether phase two or 

‘phase II.5,’ requires the Government to certify the prototype composite pallet.” Def.’s MTD at 

2. The government argues, “that Sunrez’s SBIR phase two contract culminates in the 

development of the prototype pallet, but defers the time and effort of certification, is consistent 

with the uniform phased process of the SBIR program. Id. at 10 (citing 15 U.S.C. § 638(e)(4)). 

The government contends “[c]ertification is necessary to proceed to commercial application of 

the prototype pallet (the purpose of phase three), not for its research and development (the 

purpose of phase two).” Id. at 11. “It is thus logical that certification of the prototype would be 

paid for with non-SBIR funds after, and thus not part of, the research and development effort 

under Sunrez’s phase two contract.” Id. The government notes, “[c]ertification would have been 

in Phase III, if there had been one” and cites Night Vision for the proposition that there is “no 

duty on the government to award a Phase III contract to a concern that successfully completes a 

Phase II contract.” Def.’s Reply at 4 (citing Night Vision, 469 F.3d at 1374). The government 

states Sunrez realizes this, which is why “Sunrez asserts for the first time in its amended 

complaint that ‘[w]hile the Contract appears to be an SBIR Phase II contract, it was really an 

SBIR Phase II.5 contract.’” Def.’s MTD at 11 (citing Am. Compl. at 3, 9). 

The government contends Sunrez’s argument “fails for at least three reasons.” Def.’s 

MTD at 11. First, the government argues, “Sunrez provides no support in fact or law for its 

suggestion that a ‘phase II.5’ contract would extend beyond phase two research and development

into phase three commercial application efforts.” Id. at 12. Second, “by the plain language of its 

terms, Sunrez’s contract describes itself throughout as a phase two contract.” Id. Third, “the 

plain language of Sunrez’s contract” indicates “to the extent Sunrez’s cont[r]act is a ‘phase II.5’ 

contract, such a contract is a continuation of phase two research and development rather than a 

partial jump to phase three commercial application, as Sunrez asserts.” Id. In other words, the 
- 18 -

government argues even if the Contract is a “phase II.5” contract, “it is still a type of an SBIR 

phase two contract.” Id. 

Plaintiff urges, “submitting Sunrez’s pallets for [ATTLA] certification is consistent with 

the Contract’s Phase II.5 status.” Pl.’s Resp. at 6 (citing Am. Compl. at 8–9). “[T]hough the 

Contract has been referred to as a Phase II Contract, the Government admitted that the Contract 

was, in reality, a Phase II.5 Contract.” Id. at 19 (citation omitted). Plaintiff supports this 

assertion by arguing, “by the end of the Contract: (1) Sunrez was to, and did, submit drawings 

that allowed for commercial production of its pallets without modification; and (2) the prototype 

pallets developed by Sunrez were to be submitted for Air Transportability Test Load Activity 

(‘ATTLA’) certification.” Am. Compl. at 3 (citations omitted). 

Congress created the SBIR program to ensure “that assistance be given to small-business 

concerns to enable them to undertake and to obtain the benefits of research and development in 

order to maintain and strengthen the competitive free enterprise system and the national 

economy.” 15 U.S.C.A. § 638(a) (2021). “[T]he term ‘Small Business Innovation Research 

Program’ or ‘SBIR’ means a program under which a portion of a Federal agency’s research and 

development effort is reserved for award to small business concerns through a uniform process 

having [three phases].” Id. § 638(e)(4). The “first phase [is] for determining . . . the scientific 

and technical merit and feasibility of ideas that appear to have commercial potential.” Id. § 

638(e)(4)(A). The “second phase . . . will further develop proposals which meet particular 

program needs, in which award shall be made based on the scientific and technical merit and 

feasibility of the proposals, as evidenced by the first phase, considering, among other things, the 

proposal’s commercial potential.” Id. § 638(e)(4)(B). “[W]here appropriate, a third phase” 

involves “commercial applications of SBIR-funded . . . research and development . . . or, for 

products or services intended for use by the Federal Government,” or “the continuation of 

research or development that has been competitively selected using peer review or scientific 

review criteria.” Id. § 638(e)(4)(C). Phase III funding is provided by either “non-SBIR Federal 

funding” or “non-Federal sources of capital.” Id.

In Night Vision, the Federal Circuit affirmed a Court of Federal Claims RCFC 12(b)(6) 

dismissal of a small business contractor’s breach of contract claim because the USAF was not 

contractually obligated to award a Phase III contract. Night Vision, 469 F.3d at 1374. The 

Federal Circuit found “neither [the Phase I nor the Phase II agreement] contained any explicit 

commitment that if Night Vision successfully completed the first two phases, it would receive a 

Phase III contract.” Id. at 1373. Night Vision, however, contended “such a commitment was 

provided in [15 U.S.C. § 638] which . . . the Phase I and Phase II contracts should be deemed to 

incorporate.” Id. The Federal Circuit found, “the statute that Night Vision invokes does not 

provide such a commitment,” id., and stated “[w]hatever may be the policy favoring small 

businesses in the present situation, there is simply no valid basis for reading such a requirement 

into the contract,” Id. at 1374. The Federal Circuit concluded “if Night Vision believed it had a 

contractual commitment from the Air Force to give it a Phase III contract, one would expect it to 

submit a proposal for such contract—which it did not do.” Id. at 1375. 

Not only is the government not obligated to award a Phase III contract following a 

successful Phase II contract, but at oral argument, the Court asked the government whether “it 
- 19 -

[would] be a violation of the SBIR provisions if there were two SBIR Phase II contracts 

essentially in competition with each other” to which the government responded, “No, Your 

Honor.” Tr. at 86:11–14. The government continued “there’s a phased process to the SBIR, and 

there’s nothing that prohibits the Government from looking at different alternatives at the Phase 

II stage or at the Phase I stage or to move to Phase III with just two different designs if it 

chooses.” Tr. at 86:21–87:1. In response at oral argument, plaintiff was unable to show how 

two simultaneous Phase II SBIR contracts would violate the Contract or the SBIR phased 

approach. See Tr. at 89:1–9 (“THE COURT: . . . you agree that there is no provision of the 

contract that would prohibit the Government from having the exact same contract for another 

pallet supplier. [PLAINTIFF]: The exact same? . . . I don’t think the con—Your Honor, I think 

we’ve talked about this before. This contract would not be worded this way if it was a 

competition.”). 

Sunrez admits the Contract does not anywhere state it is a Phase II.5 contract. See Tr. at 

13:7–9 (“[THE COURT]: Just to confirm, does the contract or the work plan state 2.5 

anywhere? [PLAINTIFF]: Those words do not appear in it.”). Sunrez also admits “[t]he 

Government is correct that there was no promise of a Phase III SBIR contract.” Am. Compl. at 

17; Pl.’s Resp. at 13. Although plaintiff argues Mr. Flynt’s letter supports its argument the 

Contract is an SBIR Phase II.5 contract, Mr. Flynt in his letter states, the Contract “would 

culminate in the delivery of six complete 463L pallets for post-Phase II.5 

environmental/airworthiness certification.” Flynt Letter at 1. Mr. Flynt adds “[t]he Air Force 

did not have a contractual obligation to submit the pallets for Air Transportability Test Loading 

Activity (ATTLA) certification under the effort,” and “certification by ATTLA would not occur 

until Phase III of a SBIR contract.” Flynt Letter at 1. This letter is consistent with the 

government’s argument, “to the extent Sunrez’s cont[r]act is a ‘phase II.5” contract, such a 

contract is a continuation of phase two research and development rather than a partial jump to 

phase three commercial application, as Sunrez asserts.” Def.’s MTD at 12. 

Section 638(e)(4) only provides three SBIR contract phases which are Phase I, II, and III. 

Notably, the statute does not provide for “Phase II.5.” See 15 U.S.C.A. § 638(e)(4). Plaintiff

fails to offer legal support for its argument the government is obligated to certify its pallets 

because the Contract is a “Phase II.5” contract and the Court was unable to find any precedential 

caselaw holding the government is obligated to certify a product under a “Phase II.5” contract. 

The government describes Phase II.5 as “almost like a layperson’s description of a sequential 

Phase II contract.” Tr. at 103:9–10. The Contract might thus be described as a Phase II.5 

contract because as the government noted at oral argument, “we’ve shown from the record, that 

this is Sunrez’s second Phase II contract.” Tr. at 103:10–12. Although the Contract is a “carryon from a prior Phase II contract,” the government argues, “it’s still a Phase II contract.” Tr. at 

103:18–19. Plaintiff’s logic about the SBIR phases is circular as plaintiff uses its Phase II.5 

claim to support its argument the government has a duty to certify the pallets and plaintiff uses 

the government’s duty to certify the pallets as support for the Contract’s “Phase II.5 status.” 

Compare Am. Compl. at 3 (“While the Contract appears to be an SBIR Phase II contract, it was 

really an SBIR Phase II.5 contract. . . . This is because by the end of the Contract . . . the 

prototype pallets developed by Sunrez were to be submitted for Air Transportability Test Load 

Activity (‘ATTLA’) certification.”); with Am. Compl. at 9 (“submitting Sunrez’s pallets for 

[ATTLA] certification is consistent with the Contract’s Phase II.5 status.”). This circular 
- 20 -

reasoning reveals Sunrez’s argument the USAF must certify Sunrez’s pallets because the

Contract is a Phase II.5 SBIR contract depends on Sunrez’s argument the USAF is contractually 

bound to certify Sunrez’s pallets—an argument the Court does not find persuasive. See supra 

Section IV.A. 

Plaintiff’s arguments regarding the SBIR phases do not overcome the plain language of 

the Contract, especially given the relevant contract provisions are unambiguous. Hunt Const. 

Grp., Inc., 281 F.3d at 1373 (finding trade practice “irrelevant” as plaintiff did not claim the 

relevant provision contained a term of art, and thus the court held the “contract’s unambiguous 

terms govern”); see also Night Vision, 469 F.3d 1369 (affirming RCFC 12(b)(6) dismissal of 

breach of contract claim because the contract did not provide for a follow-on phase III award and 

neither does the SBIR statutory regime). Given the lack of support, the argument’s circularity, 

and the Contract’s unambiguous language, the Court finds the government does not have a duty 

to certify plaintiff’s pallets, either under the Contract’s plain language or the SBIR statute. Hunt 

Const. Grp., Inc., 281 F.3d at 1373; Night Vision, 469 F.3d at 1374; San Carlos Irrigation & 

Drainage Dist., 877 F.2d at 959; McAbee Constr. Inc., 97 F.3d at 1435. 

V. Analysis of the Government’s Argument Plaintiff Fails to State a Claim for Breach 

of the Duty of Good Faith and Fair Dealing

The government contends, the implied duty of good faith and fair dealing “cannot expand 

a party’s contractual duties beyond those in the express contract or create duties inconsistent with 

the contract’s provisions,” therefore, “any breach of that duty has to be connected, though it is 

not limited, to the bargain struck in the contract.” Def.’s MTD at 13 (first quoting Precision 

Pine, 596 F.3d at 831; and then quoting Metcalf Constr. Co., 742 F.3d at 994). The government 

argues, “[n]one of the breaches alleged by Sunrez are, in fact, breaches of its SBIR phase two 

contract and, anyway, there are no allegations that the actions of the Air Force hindered Sunrez’s 

work under the contract to develop and deliver a prototype composite pallet with a corresponding 

technical data package (TDP) and final report.” Def.’s MTD at 13. At oral argument, the 

government cited E&I Global, as a case where the Court of Federal Claims dismissed a good 

faith and fair dealing claim pursuant to RCFC 12(b)(6). Tr. at 161:18–162:2 (citing E&I Global 

Energy Servs., Inc. v. United States, 144 Fed. Cl. 508 (2019)). 

Regarding Sunrez’s allegation the government breached the contract by changing the test 

parameters, the government states it “did not raise the bar on Sunrez’s development and delivery 

of the prototype pallets under the Phase II contract.” Def.’s Reply at 5–6. According to the 

government, “Sunrez does not identify any provisions in its Phase II contract that would require 

the Air Force to accept Su[nr]ez’s testing, not do its own testing, and not have an internal 

analysis for deciding whether to move forward with the composite pallet into Phase III.” Id. at 6. 

The government also argues, “Sunrez’s specific allegations of the Government’s lack of 

communication occur after Sunrez delivered the prototype pallets in June and July 2016.” Id. 

The government concludes, “Sunrez, therefore, has not (and cannot) identify what contractual 

requirement the Air Force would have breached by its alleged lack of communication towards 

the end of the Phase II research and development contract.” Id. at 8. Regarding Level III data, 

the government argues the contract provided “[a]ll engineering product definition data created 

using Government funding as a result of this contract shall be considered a part of the [Technical 
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Data Package (TDP)] and shall be delivered to the Government with unlimited rights.” Id. (citing 

Def.’s MTD at 18). 

In paragraph 55 of its complaint, Sunrez alleges “the Government engaged in numerous 

breaches designed to hinder Sunrez’s performance of the Contract and impermissibly retaliate 

against Sunrez for refusing to give up its rights.” Am. Compl. at 19. Sunrez explains:

These breaches included: (a) repeatedly, improperly attempting to coerce and 

mislead Sunrez into giving up its SBIR data rights; (b) continually and 

unreasonably raising the bar during performance (e.g., utilizing and conducting 

improper testing procedures); (c) refusing to meaningfully communicate with 

Sunrez throughout the course of performance of the Contract on issues material to 

the Contract; and (d) refusing to submit Sunrez’s pallets for ATTLA certification. 

Am. Compl. at 19. Sunrez alleges “[t]hese breaches hindered Sunrez’s ability to perform under 

the Contract and the foregoing breaches were done in an attempt to frustrate the purpose of the 

contract by (1) delaying performance of the pallet-testing requirements under the Contract; and 

(2) skewing and shelving the Phase II deliverables, despite their design and performance going 

beyond the minimum requirements.” Am. Compl. at 19–20. Sunrez alleges “the Government’s 

impermissible actions . . . borne out of retaliation and an attempt to improperly obtain intellectual 

property rights in Sunrez’s pallets breached the duties of cooperation and not to hinder 

performance.” Am. Compl. at 20. At oral argument plaintiff also stated “[w]e have alleged the 

facts to the extent that we can, but the Government has a whole bunch more facts that will 

illuminate the context.” Tr. at 145:3–5. In response to the government’s simplification of the 

contractual bargain as money for pallets, plaintiff responds, “it wasn’t just the pallets; it was the 

TDP, too. . . . [and] that the TDP would be improved and it would be . . . revised to meet 

whatever efficiencies the Government thought that there were in the tested pallets.” Tr. at 

157:20–25. Plaintiff contends an implied duty of good faith and fair dealing inquiry is a “fact 

inquiry,” Tr. at 120:20, so the Court cannot resolve this claim at the motion to dismiss stage 

before discovery, see Tr. at 120:15–20 ([PLAINTIFF]: . . . . I don’t think you’ll find a case on 

breach of the duty of good faith and fair dealing that says that you can address reasonable intent 

of the parties or . . . reasonable intent of the parties based on some type of—anything other than a 

fact inquiry.”). At oral argument, plaintiff cited ASI Constructors, Inc. as a Court of Federal 

Claims case denying the government’s motion to dismiss because “the claim relied on additional 

facts.” Tr. at 132:5–25 (citing ASI Constructors, Inc. v. United States, 129 Fed. Cl. 707 (2016)). 

The implied duty of good faith and fair dealing is inherent in every contract, Precision 

Pine, 596 F.3d at 828 (citation omitted), and the government’s failure to fulfil this duty would 

constitute breach of contract, Metcalf Const. Co., Inc., 742 F.3d at 990 (citing Restatement 

(Second) of Contracts § 235). This duty essentially “requires a party to not interfere with 

another party’s rights under the contract.” Precision Pine, 596 F.3d at 828 (citing Restatement 

(Second) of Contracts § 205 at cmt. d). The implied duty of good faith and fair dealing may also 

be called the implied duty not to hinder and the implied duty to cooperate. Precision Pine, 596 

F.3d at 827. “The covenant imposes obligations on both contracting parties that include the duty 

not to interfere with the other party’s performance and not to act so as to destroy the reasonable 

expectations of the other party regarding the fruits of the contract.” Centex Corp. v. United 
- 22 -

States, 395 F.3d 1283, 1304 (Fed. Cir. 2005) (citations omitted); see also Restatement (Second) 

of Contracts § 205 cmt. d (stating potential breaches of the implied duty of good faith and fair 

dealing include “evasion of the spirit of the bargain, lack of diligence and slacking off, willful 

rendering of imperfect performance, abuse of a power to specify terms, and interference with or 

failure to cooperate in the other party’s performance”). 

In Metcalf, the government argued breach of the implied duty of good faith and fair 

dealing requires an express provision in the contract and the Federal Circuit explained “[t]hat 

goes too far: a breach of the implied duty of good faith and fair dealing does not require a 

violation of an express provision in the contract.” Metcalf Const. Co., Inc., 742 F.3d at 994. As 

Judge Sweeney states in CanPro Investments, Ltd., any “argument that a party must base an 

allegation concerning breach of the implied covenant of good faith and fair dealing upon a 

specific ‘substantive obligation within the [Contract]’ . . . lacks merit.” CanPro Invs., Ltd. v. 

United States, 131 Fed. Cl. 528, 532 (2017) (citation omitted). “[W]hile the implied duty exists 

because it is rarely possible to anticipate in contract language every possible action or omission 

by a party that undermines the bargain, the nature of that bargain is central to keeping the duty 

focused on ‘honoring the reasonable expectations created by the autonomous expressions of the 

contracting parties.’” Metcalf Const. Co. 742 F.3d at 991 (quoting Tymshare, Inc. v. Covell, 727 

F.2d 1145, 1152 (D.C. Cir. 1984) (Scalia, J.)). 

The “[c]ases in which the government has been found to violate the implied duty of good 

faith and fair dealing typically involve some variation on the old bait-and-switch.” Precision 

Pine, 596 F.3d at 829. In Precision Pine, the Federal Circuit concluded “there was no breach of 

the government’s implied duty of good faith and fair dealing because the Forest Service’s actions 

during these formal consultations were (1) not ‘specifically targeted,’ and (2) did not 

reappropriate any ‘benefit’ guaranteed by the contracts, since the contracts contained no 

guarantee that the Precision Pine’s performance would proceed uninterrupted.” Precision Pine, 

596 F.3d at 827. Notably, the Federal Circuit was reviewing Judge Damich’s ruling on a motion 

for summary judgment, not a motion to dismiss. Precision Pine, 596 F.3d at 820. The Federal 

Circuit explains “the Government’s duty [to cooperate] must be considered in light of the 

circumstances.” Milmark Servs., Inc. v. United States, 731 F.2d 855, 859 (Fed. Cir. 1984) 

(affirming a Claims Court decision because the judge “carefully examined all the evidence 

presented and was unpersuaded, in view of the circumstances of the case, that [the government] 

had breached such duty”). A court’s determination of whether a party’s acts “destroy the 

reasonable expectations of the other party regarding the fruits of the contract,” is necessarily 

intertwined with the contract and facts of a case. See Centex Corp., 395 F.3d at 1304 (citations 

omitted). 

Unlike the summary judgment motion in Precision Pine, this Court is ruling on a motion 

to dismiss and plaintiff here does allege the government failed to cooperate. Compare Tr. at 

165:25–166:6 (“[PLAINTIFF]: . . . what we’re saying is that [the government] didn’t cooperate 

at any point. . . . the ultimate certification question or whether it should be certified has behind it 

the type of testing that was done and the failure of the Government to cooperate up and through 

that testing as well.”); with Precision Pine, 596 F.3d at 830 (“Nor is there any evidence of bad 

faith or failure to cooperate with Precision Pine.”). Also, as the Federal Circuit described in 

Precision Pine, Sunrez alleges a “bait-and-switch.” Tr. at 131:18–22. The Federal Circuit 
- 23 -

describes a “bait-and-switch” as having two steps: (1) “the government enters into a contract 

that awards a significant benefit in exchange for consideration”; and (2) “the government 

eliminates or rescinds that contractual provision or benefit through a subsequent action directed 

at the existing contract.” Precision Pine, 596 F.3d at 829. As the second part requires 

considering the government’s actions after the contract is awarded, whether plaintiff was subject 

to a “bait-and-switch” is a fact-intensive inquiry. As fact-dependent good faith and fair dealing 

cases are typically resolved at the summary judgment stage, E&I Global is an exception because, 

in that case, the contract specifically “foreclose[d] such an argument.” E&I Global, 14 Fed. Cl. 

at 514. While the Contract forecloses Sunrez’s argument the government must certify its pallets, 

the Contract does not foreclose the government’s duty to cooperate. See supra Section IV; 

Precision Pine, 596 F.3d at 820 n.1. 

On a motion to dismiss for failure to state a claim, the Court “must assume all well-pled 

factual allegations are true and indulge in all reasonable inferences in favor of the nonmovant.” 

United Pac. Ins. Co., 464 F.3d at 1327–28 (citation omitted). The government admits “part of 

research and development is . . . communication,” Tr. at 191:2–4, and Sunrez alleges facts 

indicating the government was uncommunicative, uncooperative, and “just simply not . . . a good 

partner in the program,” Tr. at 37:20–38:3; see also Am. Compl. at 10 (“[T]he Government 

repeatedly rescheduled and cancelled meetings required under the Work Plan and, when it did 

not cancel the meetings, the Government was repeatedly unprepared for and/or otherwise refused 

to discuss items on the meeting agendas.”); Am. Compl. at 10 (“[C]ommunication from WRAFB 

was problematic throughout the Contract.”); Pl.’s Resp. at 29 (“If not dispositive on the issue of 

whether the Government acted improperly, at the very least, th[e] email from [CO] Renfroe 

confirms that the Government failed to communicate and failed to perform on the Contract as it 

should have.”). Plaintiff also alleges “Government delay[s] in testing required several contract 

modifications,” Am. Compl. at 9, and if changes to the testing schedule required contract 

modifications, plaintiff’s allegations regarding testing delays are likely “connected . . . to the 

bargain struck in the contract,” Metcalf Constr. Co., 742 F.3d at 994. 

Sunrez takes the “bait-and-switch” argument one step further by alleging a government 

cabal effort to improperly obtain its data and give it to its competitors:

All of the Government’s actions and impermissible retaliation were borne out of 

the USAF’s desire to improperly obtain the intellectual property rights to Sunrez’s 

composite 463L pallet system and Sunrez’s steadfast refusal to allow it to do so. 

Starting even prior to inception of the Contract, WRAFB personnel were insistent 

that Sunrez was to hand over all composite 463L pallet data for the Government to 

use with unlimited rights. Despite the Government’s acknowledgement at the 

Technical Interchange Meeting that the type of Level III data it was seeking was 

neither appropriate nor necessary for the Contract, it nevertheless continued to 

pressure Sunrez into relinquishing its data rights. The Government even went so 

far as to have its Chief Engineer attempt to compel Sunrez into giving up its data 

rights in exchange for a hollow promise of a $4.5 million Phase III contract, a mere 

fraction of what was intended at the outset. 

Am. Compl. at 20–21. Plaintiff adds:
- 24 -

The Government’s continued failed attempts to impermissibly obtain Sunrez’s 

intellectual property rights caused the Government to become increasingly hostile 

with each new, failed attempt. This hostility ultimately culminated in the 

Government’s completely ignoring Sunrez’s dozens of attempts to reach it during 

the Contract’s final weeks so as to hide from Sunrez the fact of its final retaliatory 

act and buy it enough time to manufacture its alleged reasons therefore.

Am. Compl. at 21. Although proving a cabal may be difficult, these alleged acts could violate the 

duty of good faith and fair dealing. See Centex Corp., 395 F.3d at 1304 (citations omitted); 

Restatement (Second) of Contracts § 205 cmt. d; see also Essex Electro Eng’rs, Inc. v. Danzig, 

224 F.3d 1283, 1291 (Fed. Cir. 2000) (citations omitted) (internal quotation marks omitted) 

(“Every contract, as an aspect of the duty of good faith and fair dealing, imposes an implied 

obligation that neither party will do anything that will hinder or delay the other party in 

performance of the contract.”); CanPro Invs., Ltd. v. United States, 130 Fed. Cl. 320, 349 (2017) 

(quoting Tecom, Inc. v. United States, 66 Fed. Cl. 736, 770 (2005)) (“‘Government actions that 

are unreasonable under the circumstances’ are sufficient to constitute a breach of the implied 

duty not to hinder performance.”). The Court agrees with plaintiff’s argument “[t]here are a 

plethora of disputed facts that make dismissal at this phase inappropriate.” Pl.’s Resp. at 15; see 

also Tr. at 154:19–23 (“[PLAINTIFF]: . . . we’ve alleged a whole plethora of facts about things 

that happened during the contract in Paragraphs 25 through 28 and then 36.”); ASI Constructors, 

Inc., 129 Fed. Cl. at 721 (denying the government’s motion to dismiss because “[plaintiff] argues 

that its good faith and fair dealing claim relies upon additional facts”).4

 

VI. Analysis of the Government’s Argument Plaintiff Fails to State a Regulatory Taking 

Claim

To dismiss plaintiff’s alternative takings argument, the government argues, “without the 

contract, [plaintiff] cannot identify a property interest that’s at issue in a regulatory taking.” Tr. 

at 202:14–17. “Plaintiff[] ha[sn’t] pointed, other than the contract, to any property interest that’s 

at stake in the regulatory takings and they haven’t pointed to any regulation.” Tr. at 203:5–8. 

The government also urges, “[t]akings claims . . . ‘rarely arise under government contracts 

because the Government acts in its commercial or proprietary capacity in entering contracts, 

rather than in its sovereign capacity’ and therefore the ‘remedies arise from the contracts 

themselves, rather than from the constitutional protection of private property rights.’” Def.’s 

MTD at 20–21 (citing Piszel, 833 F.3d at 1376). The government further argues, “[w]hen the 

4 Even if Sunrez proves a breach of the implied duty of good faith and fair dealing, proving damages may be 

difficult as Sunrez notes, “all of Sunrez’s damages stem from the Government’s breaches of the Contract . . . . In 

particular, the Government’s refusal to submit Sunrez’s pallet for the ATTLA certification despite its contractual 

obligation to do so.” Pl.’s Resp. at 13 (citing Am. Compl. at 17). In a breach of contract case, damages are typically 

awarded “sufficient to place the injured party in as good a position as it would have been had the breaching party 

fully performed.” Ind. Mich. Power Co. v. United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005). As the Court finds 

the government lacks an express duty to submit Sunrez’s pallets for certification, Sunrez must show a benefit it 

“reasonably” expects according to the Contract. See Ind. Mich. Power Co., 422 F.3d at 1373; Bell/Heery, 739 F.3d 

at 1334–35 (citing Centex Corp., 395 F.3d at 1304) (“Implied in every contract is a duty of good faith and fair 

dealing that requires a party to refrain from interfering with another party’s performances or from acting to destroy 

another party’s reasonable expectations regarding the fruits of the contract.”). 
- 25 -

government itself breaches a contract, a party must seek compensation from the government in 

contract rather than under a takings claim.” Def.’s MTD at 21 (first citing Piszel, 833 F.3d 

at 1376; then citing A & D Auto Sales, Inc. v. United States, 748 F.3d 1142, 1156 (Fed. Cir. 

2014); and then citing St. Christopher Assocs., L.P., 511 F.3d at 1385). 

The government responds to plaintiff’s Florida Rock argument, by stating, “Florida Rock

is a regulatory takings case arising out of the denial of a permit under section 404 of the Clean 

Water Act.” Def.’s Reply at 13 (citing Fla. Rock Indus., Inc. v. United States, 18 F.3d 1560, 

1562 (Fed. Cir. 1994)). “It is thus inapposite to Sunrez’s claim that the ‘Government’s 

unreasonable shelving’ of an allegedly ‘safer, stronger, and cheaper’ pallet is a regulatory 

taking.” Def.’s Reply at 13 (citing Am. Compl. at 25–26). The government concludes, Sunrez 

has no basis for the takings claim, because “[w]ith no contractual obligation to award a Phase III 

contract to Sunrez and submit the composite pallet for certification . . . the decision not to move 

forward with the composite pallet is squarely within the Government’s discretion and made in 

the Government’s proprietary capacity.” Def.’s Reply at 14 (citing St. Christopher Assocs., L.P., 

511 F.3d at 1385). 

Plaintiff responds, “[t]o determine whether a regulation effects a Taking, courts look at 

(1) the character of the Government action; (2) the extent to which the regulation interferes with 

distinct, investment-backed expectations; and (3) the economic impact of the regulation.” Pl.’s 

Resp. at 30 (citing Good v. United States, 189 F.3d 1355, 1360 (Fed. Cir. 1999)). Sunrez alleges, 

“the Government’s elevated testing requirements, and its extreme lack of alacrity and good faith, 

went far beyond normal regulation and destroyed all economic viability in the Sunrez pallets.” 

Am. Compl. at 25. Plaintiff also argues, “the Government was not acting in a commercial 

capacity when it failed to select Sunrez’s pallet for commercial application because the 

Government’s action in this case goes beyond commercial activity, as the decisions were beyond 

the scope of what was permissible under the circumstances.” Pl.’s Resp. at 31–32. Plaintiff cites 

Florida Rock arguing, “the Government must ‘act fairly and reasonably, so that private parties 

can pursue their interests.’” Pl.’s Resp. at 32 (quoting Fla. Rock Indus., Inc., 18 F.3d at 1571). 

Sunrez alleges several “facts, which support that the Government’s actions went beyond what is 

reasonable, appropriate, or expected from a commercial actor.” Pl.’s Resp. at 32–34. 

“To state a claim for a taking under the Fifth Amendment, a plaintiff must identify a 

legally cognizable property interest.” Am. Bankers Ass’n v. United States, 932 F.3d 1375, 1384–

85 (Fed. Cir. 2019). “The Constitution neither creates nor defines the scope of property interests 

compensable under the Fifth Amendment.” Conti, 291 F.3d at 1340 (citation omitted). “Instead, 

existing rules and understandings and background principles derived from an independent 

source, such as state, federal, or common law, define the dimensions of the requisite property 

rights for purposes of establishing a cognizable taking.” Id. at 1340 (citation and quotation 

marks omitted). “To support a takings claim, a property interest must be more than a ‘mere 

unilateral expectation or an abstract need.’” Am. Bankers Ass’n, 932 F.3d at 1385 (citation 

omitted). Contract rights are property rights which may be compensable under the Fifth 

Amendment. Cienega Gardens v. United States, 331 F.3d 1319, 1329 (Fed. Cir. 2003); see also 

Lynch v. United States, 292 U.S. 571, 579 (1934) (“The Fifth Amendment commands that 

property be not taken without making just compensation. Valid contracts are property, whether 

the obligor be a private individual, a municipality, a State or the United States.”). 
- 26 -

“[W]hen the government itself breaches a contract, a party must seek compensation from 

the government in contract rather than under a takings claim.” Piszel, 833 F.3d at 1376. 

“Taking claims rarely arise under government contracts because the Government acts in its 

commercial or proprietary capacity in entering contracts, rather than in its sovereign capacity. 

Accordingly, remedies arise from the contracts themselves, rather than from the constitutional 

protection of private property rights.” Hughes Commc’n Galaxy, Inc. v. United States, 271 F.3d

1060, 1070 (Fed. Cir. 2001) (citations omitted); see also A & D Auto Sales, Inc., 748 F.3d at

1156 (explaining remedies available under a breach of contract theory make takings liability 

redundant); St. Christopher Assocs., L.P., 511 F.3d at 1385 (“In general, takings claims do not 

arise under a government contract because, as stated by the Court of Federal Claims, the 

government is acting in its proprietary rather than its sovereign capacity, and because remedies 

are provided by the contract.”). 

Furthermore, when a party alleges a breach of contract claim and a takings claim, the 

court first will consider whether a viable contract claim exists because “[i]t has long been the 

policy of the courts to decide cases on non-constitutional grounds when that is available, rather 

than reach out for the constitutional issue.” Stockton E. Water Dist. v. United States, 583 F.3d 

1344, 1368 (Fed. Cir. 2009); see also City Line Joint Venture v. United States, 503 F.3d 1319, 

1323 (Fed. Cir. 2007) (“When a viable contract claim exists, we should not reach out to decide 

the takings issue. Clearly, there should not be double recovery, we should not commingle takings

compensation and contract damages.”). If, however, “the right at issue is not governed by the 

terms of the parties’ contract, plaintiffs may pursue a takings action.” Allegre Villa v. United 

States, 60 Fed. Cl. 11, 18 (2004) (citation omitted); see also Prudential Ins. Co. v. United States, 

801 F.2d 1295, 1300 n.13 (Fed. Cir. 1986) (noting a takings claim may provide plaintiff relief 

where contract claim is ineffective). 

Plaintiff must allege a cognizable property interest to maintain a takings claim. Am. 

Bankers Ass’n, 932 F.3d at 1384–85. When the Court asked what property interest plaintiff is 

alleging, plaintiff responded, “[w]ell the property interest—you know, I don’t agree with my 

colleague here that there’s no property interest in not being allowed to compete fairly.” Tr. at 

199:17–22. Plaintiff states it has a property right in the ability “to compete at all in this sphere or 

this space or to even have a fair opportunity [to compete].” Tr. at 200:13–17. Plaintiff does not 

provide any support for its argument it has a property right in “being allowed to compete fairly,” 

Tr. at 200:13–17, and this argument hinges on the government’s alleged duty to submit the 

pallets for certification. The government states, “without the contract, [plaintiff] cannot identify 

a property interest that’s at issue in a regulatory taking.” Tr. at 202:14–17. The Court agrees 

with the government’s statement, “Plaintiff[] ha[sn’t] pointed, other than the contract, to any 

property interest that’s at stake in the regulatory takings and they haven’t pointed to any 

regulation.” Tr. at 203:5–8. Plaintiff responded, “I don’t agree with that,” Tr. at 203:17–18, but 

then only stated “in the permitting process, there is always a property interest” and in the 

“anticipated sales of [pallets],” Tr. at 204:8–12. Yet again, however, plaintiff does not provide 

any support for these assertions. 

What plaintiff asserts as a property right is like a “mere unilateral expectation or an 

abstract need,” which is insufficient to support a takings claim. Am. Bankers Ass’n, 932 F.3d at 
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1385 (citation omitted). In short, plaintiff does not allege a property interest other than its 

allegation the government must certify the pallets, which the Court does not find persuasive. See 

supra Section IV. Plaintiff’s failure to allege a cognizable property interest is grounds to dismiss 

this claim for failure to state a claim upon which relief may be granted. See Conti, 291 F.3d at 

1339 (citations omitted) (“[I]f a claimant fails to demonstrate that the interest allegedly taken 

constituted a property interest under the Fifth Amendment, a court need not even consider 

whether the government regulation was a taking under the analysis set forth in Penn Central.”); 

United Communities, LLC v. United States, 154 Fed. Cl. 676, 684–85 (2021) (granting the 

government’s motion to dismiss and stating “[w]hile plaintiff may have intended to plead a 

takings claim based on a property interest other than its alleged expectations under the contract, 

that is not the claim that appears in the complaint.”); Stromness MPO, LLC v. United States, 134 

Fed. Cl. 219, 256 (2017) (citing Barlow & Haun, Inc. v. United States, 87 Fed. Cl. 428, 438 

(2009) (“If, however, the court determines that the property rights alleged to have been taken 

were solely created by the terms of the voluntary lease agreements between plaintiff and 

defendant, then the proper remedy, if any, lies in the contract.”). As plaintiff is not entitled 

according to the Contract to have the pallets submitted for certification, and plaintiff does not 

allege a property interest outside the Contract, the Court grants the government’s motion to 

dismiss against plaintiff’s claim for a regulatory taking.5

 See Conti, 291 F.3d at 1339 (citations 

omitted); United Communities, 154 Fed. Cl. at 684–85 (granting the government’s motion to 

dismiss and stating “[w]hile plaintiff may have intended to plead a takings claim based on a 

property interest other than its alleged expectations under the contract, that is not the claim that 

appears in the complaint.”); see also Night Vision, 469 F.3d 1369 (affirming a Court of Federal 

Claims RCFC 12(b)(6) dismissal of a small business contractor’s breach of contract claim 

because the USAF was not contractually obligated to award a Phase III contract).

VII. Analysis of the Government’s Argument Plaintiff Fails to State a Claim for

Declaratory Relief

The government states, “[u]nder the Tucker Act, this Court has ‘discretion to grant 

declaratory relief only in limited circumstances’ during contract performance ‘involving a 

fundamental question of contract interpretation or a special need for early resolution of a legal 

issue.’” Def.’s MTD at 22 (first citing Alliant, 178 F.3d at 1271; and then citing 28 U.S.C. § 

1491(a)(2)). The government continues, “[t]he Court may ‘consider the appropriateness of 

declaratory relief, including whether the claim involves a live dispute between the parties, 

whether a declaration will resolve that dispute, and whether the legal remedies available to the 

parties would be adequate to protect the parties’ interests.’” Id. (citing Alliant, 178 F.3d at 

1271). The government argues “[n]one of these factors are satisfied in the present case.” Id. 

Against plaintiff’s first claim of declaratory relief, the government argues, “[e]ven if Sunrez had 

stated a claim for declaratory relief . . . there is no such certification requirement in Sunrez’s 

SBIR phase two contract,” so Sunrez’s claim fails as a matter of law. Id. Against plaintiff’s 

second claim for declaratory relief, the government states, “[w]hile the Government agrees that 

5 In reaching this decision, the court does not hold a party cannot assert in the same complaint a breach of contract 

claim and a takings claim. See Stockton E. Water Dist., 583 F.3d at 1369 (stating “the fact that a cause of action was 

pled under a contract theory did not preclude a separate count for a cause of action based on a taking”). The Court’s 

ruling is limited to finding plaintiff has failed to sufficiently plead a cognizable property interest.
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the issue of what is required under the contract . . . is an issue of contract interpretation and thus 

question of law . . . the issue of whether Sunrez’s composite pallet meets the contract 

requirements is . . . a question of fact.” Def.’s Reply at 15 (citing Gilbert, 334 F.3d at 1072). 

The government also argues, “there is no ‘live dispute’ because Sunrez is no longer performing 

its research and development contract.” Def.’s MTD at 22. The government further states, 

“Sunrez cannot show that its legal claim for breach of contract is inadequate to protect its 

interests.” Id. 

Plaintiff contends, “[a] ‘live dispute’ is one in which there is a dispute regarding a party’s 

obligation to perform.” Pl.’s Resp. at 36 (first citing CW Gov’t Travel, 63 Fed. Cl. at 389; and 

then citing Alliant, 178 F.3d at 1270). Plaintiff contends, the live dispute is “that the 

Government has the obligation to perform by submitting Sunrez’s pallets for ATTLA 

certification.” Id. Plaintiff also alleges, “its other causes of action—breach of contract, Takings, 

and breach of duty of good faith and fair dealing—do not adequately protect its interests, because 

even if the foregoing were granted in Sunrez’s favor, Sunrez would still be without a pallet that 

is certified as airworthy, still destroying the economic viability of the pallet.” Id. at 37 (citing 

Am. Compl. at 27). Plaintiff also alleges the government’s argument “that Sunrez’s request for 

declaratory relief does not involve a question of contract interpretation” fails because “one party 

interprets the Contract to require certain performance (that the Government submit the pallet for 

certification upon the pallet meeting certain specifications) and the other party opposes that 

interpretation.” Id. at 37–38. Plaintiff states, “[i]f this Court were to grant Sunrez’s request for 

declaratory relief, this declaration would resolve the dispute—namely, that the Government’s 

obligation to perform will be resolved.” Id. at 37. Plaintiff notes this question “is not a question 

of fact, but rather, a question of contract interpretation.” Id. at 38. 

Congress amended the Tucker Act in 1992 to provide the Court of Federal Claims 

jurisdiction over some “nonmonetary disputes.” 28 U.S.C.A. § 1491(a)(2) (2021). In Alliant, 

the Federal Circuit explained, “[t]he discretion to grant declaratory relief only in limited 

circumstances allows the court . . . to restrict the occasions for intervention during contract 

performance to those involving a fundamental question of contract interpretation or a special 

need for early resolution of a legal issue.” Alliant, 178 F.3d at 1271. The Court “is free to 

consider the appropriateness of declaratory relief” and may consider whether “the claim involves 

a live dispute between the parties, whether a declaration would resolve that dispute, and whether 

the legal remedies available to the parties would be adequate to protect the parties’ interests.” Id. 

Notably, the Federal Circuit states this Court has “discretion” when weighing a request for 

declaratory relief and the Court may exercise this discretion “in limited circumstances.” Id.; see 

Md. Enterprise, L.L.C. v. United States, 91 Fed. Cl. 511, 530 (2010) (citing Wilton v. Seven Falls 

Co., 515 U.S. 277, 287 (1995)) (“In Wilton the Court held that, ‘consistent with the 

nonobligatory nature of the remedy, a district court is authorized, in the sound exercise of its 

discretion, to stay or dismiss an action seeking a declaratory judgment before trial or after all 

arguments have drawn to a close.’”). 

Plaintiff states “[a] ‘live dispute’ is one in which there is a dispute regarding a party’s 

obligation to perform.” Pl.’s Resp. at 36 (first citing CW Gov’t Travel, 63 Fed. Cl. at 389; and 

then citing Alliant, 178 F.3d at 1270). When Sunrez “requests a declaration that its composite 

pallet met all of the Contract’s deliverables and that the Government is required to properly 
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submit same for ATTLA certification,” Am. Compl. at 26, the only obligation plaintiff asserts is 

the government’s obligation to submit Sunrez’s pallets for certification, see Pl.’s Resp. at 36 

(citation omitted) (“[T]he Government has the obligation to perform by submitting Sunrez’s 

pallets for ATTLA certification.”); see also Am. Compl. at 26 (“pursuant to the plain language of 

the Contract, the Government was required to submit Sunrez’s pallet for ATTLA certification.”). 

Later in its response, Sunrez says the same thing another way: “[W]hether the Court should 

declare the . . . pallet meets all specifications is . . . a question of contract interpretation because 

one party interprets the Contract to require certain performance (that the Government submit the 

pallet for certification upon the pallet meeting certain specifications) and the other party opposes 

that interpretation.” Pl.’s Resp. at 38. The Court finds the government does not have a duty to 

submit the pallets for certification and plaintiff does not plead the government has another 

“obligation to perform,” so there is no live dispute between the parties. See supra Section IV;

see also CW Gov’t Travel, 63 Fed. Cl. at 389 (“The only possible ‘live dispute’ in this case 

concerns [plaintiff’s] future obligation to perform.”). Without a “live dispute between the 

parties” plaintiff’s claim for declaratory relief fails. See Alliant, 178 F.3d at 1271. 

Furthermore, similar to Todd Construction, L.P. v. United States, 88 Fed. Cl. 235 (2009), 

even if there is a “live dispute” between the parties, “[i]t is not clear . . . that a declaration of 

rights will resolve that dispute.” Todd Constr., 88 Fed. Cl. at 244. In Todd Construction, the 

court found “although [it] possesses jurisdiction to declare the rights of the parties, declaratory 

relief alone would be insufficient to provide the plaintiff with any of the relief it seeks.” Id. The 

court continued “[d]efendant is correct that a mere declaration ‘will not necessarily resolve the 

dispute’ because it would neither cause the performance evaluation rating to be changed nor 

cause the evaluation to be removed from [the Construction Contractor Appraisal Support 

System].” Id. Sunrez requests this Court “declar[e] that its composite pallet met all of the 

Contract’s deliverables and that the Government is required to properly submit same for ATTLA 

certification.” Am. Compl. at 26. Even if the Court were to declare the pallet met the Contract’s 

deliverables, the Contract does not obligate the government to submit the same for certification, 

see supra Section IV, and so “[i]t is not clear . . . that a declaration of rights will resolve [the 

parties] dispute,” Todd Constr., 88 Fed. Cl. at 244.

Regarding plaintiff’s request the Court declare “the government is required to properly 

submit [its composite pallet] for ATTLA certification,” the Court finds the government is not 

required to submit the pallet for certification, see supra Section IV, so the Court agrees with the 

government, “th[is] part [sh]ould go away,” Tr. at 207:11–12. Sunrez does not assert another 

obligation, so Sunrez does not show “[its] claim involves a live dispute between the parties.” 

Alliant, 178 F.3d at 1271. This Court therefore finds plaintiff has not shown this case is within 

the “limited circumstances” justifying declaratory relief. See id.; Todd Constr., 88 Fed. Cl. at 

244; Md. Enterprise, L.L.C., 91 Fed. Cl. 511.6

 Given that a breach of contract claim remains, see 

6 Regarding the other factors for the Court to consider in assessing requests for declaratory relief, in Alliant, the 

Federal Circuit described “a special need to resolve the issue in a timely manner,” and “whether the legal remedies 

available to the parties would be adequate to protect the parties’ interests.” Alliant, 178 F.3d at 1271. On 

timeliness, without a government obligation to submit the pallets for airworthiness certification, and without 

pleading any other obligation under the Contract, plaintiff does not show this issue is one with “a special need to 

resolve the issue in a timely manner.” Id.; see supra Section IV; see also Hamilton Securities Advisory Servs., Inc. 

v. United States, 60 Fed. Cl. 144, 156 (2004) (citing Alliant, 178 F.3d at 1271) (finding no “special need for early 

resolution of a legal issue” because “performance under the [contract] ha[d] been completed and a trial [wa]s
- 30 -

supra Section V, the Court stays full consideration of the declaratory relief claim, however, it is 

likely any “declaratory relief would be meaningless.” Todd Constr., 88 Fed. Cl. at 244; see 

Alliant, 178 F.3d at 1271. 

VIII. Conclusion

For the foregoing reasons the Court GRANTS-IN-PART, DENIES-IN-PART, and 

STAYS-IN-PART the government’s motion to dismiss pursuant to RCFC 12(b)(6).

7

 The Court 

grants the government’s RCFC 12(b)(6) motion to dismiss as to plaintiff’s claim for breach of 

contract, and regulatory taking. The Court denies the government’s RCFC 12(b)(6) motion to 

dismiss as to plaintiff’s claim for breach of the implied duty of good faith and fair dealing. 

IT IS SO ORDERED.

s/ Ryan T. Holte

RYAN T. HOLTE 

Judge 

scheduled.”). On the legal remedies available, Sunrez’s damages claim would likely be sufficient to protect its 

interests as Sunrez claims: “losses and damages . . . [including the] anticipated market value of Sunrez’s pallet prior 

to the Government’s breaches.” Am. Compl. at 24. 

7 The Court also accepts the government’s MTD Reply filing despite its untimeliness, see ECF No. 21.