Opinion ID: 772401
Heading Depth: 3
Heading Rank: 1

Heading: Barrett's Quantum Valebant Claim

Text: 9
10 The government first raises the threshold question of whether the Court of Federal Claims had jurisdiction to consider Barrett's claim for quantum valebant relief. 1 The government suggests that Barrett's claim relies on an implied-in-law contract and correctly points out that the Court of Federal Claims has no jurisdiction over such contracts. However, the court does have jurisdiction over implied-in-fact contracts. United States v. Mitchell, 463 U.S. 206, 218, 77 L. Ed. 2d 580, 103 S. Ct. 2961 (1983) (stating that the Tucker Act does not reach claims based on contracts implied in law, as opposed to those implied in fact); City of Cincinnati v. United States, 153 F.3d 1375, 1377 (Fed. Cir. 1998). Therefore, the Court of Federal Claims had jurisdiction because the quantum valebant relief was based on an implied-in-fact contract. See Northrop Grumman Corp. v. United States, 47 Fed. Cl. 20, 40-41 (2000) (analyzing whether there was an implied-in-fact contract meriting quantum valebant relief). 11 In the present case, the Court of Federal Claims found that once the unauthorized [price escalation] clause is struck out, . . . [the] express contract simply incorporates an implied-in-fact promise by the government to pay at least fair market value for the fuel delivered by Barrett under the contract. Barrett 2, 45 Fed. Cl. at 170. We find no basis to conclude that the Court of Federal Claims clearly erred in treating Barrett's claim as being premised on an implied-in-fact contract and agree that the court properly exercised jurisdiction over Barrett's claim. 12 The government is, at least implicitly, also challenging the court's finding of an implied-in-fact contract. That question, to which we now turn, goes not to jurisdiction, but to whether Barrett has stated a claim upon which relief can be granted. City of Cincinnati, 153 F.3d at 1377. 13 The Supreme Court has defined an implied-in-fact contract as an agreement . . . founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding. Balt. & Ohio R.R. v. United States, 261 U.S. 592, 597, 67 L. Ed. 816, 43 S. Ct. 425 (1923); Cities Serv. Gas Co. v. United States, 205 Ct. Cl. 16, 500 F.2d 448, 451-52 (Ct. Cl. 1974) (quoting Baltimore & Ohio); Trauma Serv. Group v. United States, 104 F.3d 1321, 1326 (Fed. Cir. 1997); City of Cincinnati, 153 F.3d at 1377. 14 Given that the price escalation clause was unauthorized and unenforceable, 2 we agree with the Court of Federal Claims' implicit legal conclusion that there was no longer any express clause covering price escalation, and thus, nothing to preclude an implied-in-fact agreement on that term. We also agree with the Court of Federal Claims' factual finding of a promise by the government to pay at least fair market value. Barrett 2, 45 Fed. Cl. at 170. Indeed the government concedes in its opening brief that the parties would have agreed upon a clause providing for the payment of the market price. Accordingly, we find no reason to conclude that the Court of Federal Claims' factual findings regarding the parties' intent to provide for fair market-value consideration of pricing is clearly erroneous. 15 This court has previously identified four requirements of an implied-in-fact contract: (1) mutuality of intent to contract; (2) consideration; (3) lack of ambiguity in offer and acceptance; and (4) actual authority in the government representative to bind the government. City of Cincinnati, 153 F.3d at 1377. The first three requirements are clearly met in light of the court's finding, which we have upheld, that the government intended to pay at least fair market value, and in light of the undisputed performance of the contract by both parties. Regarding the fourth requirement, there can be no dispute, and the parties raise none, that the government agent had the authority to bind the government to a contract paying at least fair market value. Thus, we agree with the Court of Federal Claims' legal conclusion that there was an implied-in-fact promise to pay fair market value and, thus, an implied-in-fact contract. It follows that Barrett has stated a claim upon which relief could be granted. 16
17 We now address the merits of the Court of Federal Claims' decision to provide Barrett quantum valebant relief based on the implied-in-fact contract. The government presents three challenges. First, the government asserts that the Court of Federal Claims did not provide quantum valebant relief, but rather reformed the contract, or at least utilized a reformation approach. Second, the government objects to the failure to utilize a comparable sales approach to determine fair market value. Third, the government objects to the selection of a naphtha-based index instead of a gasoline-based index as the basis of the price escalation. We treat these in turn. 18 The government's first challenge, that the court reformed the contract or used a reformation approach, is without merit. The Court of Federal Claims clearly explained that it was providing quantum valebant relief and clearly utilized a quantum valebant approach. The government emphasizes, however, that in determining fair market value the court: (1) replaced the price index of the unauthorized price escalation clause with an alternate price index; and (2) used the word reformation on a single occasion in its opinion to refer to this replacement. Barrett 2, 45 Fed. Cl. at 171. Such a replacement, and the colloquial reference to it as a reformation, does not, however, convert the court's entire exercise of determining a proper fair market valuation into contract reformation. The court is given the task of determining a fair market valuation and its choice is accorded discretion. Seravalli, 845 F.2d at 1575. We discern no abuse of that discretion in the court's decision to fashion a valuation that resembled the parties' own agreement. Indeed, in another case involving the government's failure to provide fair compensation, one of this court's predecessor courts stated that no better answer to [the question of what is fair compensation] can be given than what the parties agreed upon. Pac. Mar. Ass'n v. United States, 123 Ct. Cl. 667, 108 F. Supp. 603, 607 (Ct. Cl. 1952); see also Urban Data, 699 F.2d at 1155-56 (citing Pacific Maritime with approval). 19 The government's second challenge, that the Court of Federal Claims erred in not using a comparable sales method, is also without merit. This court has stated that the comparable sales method is not mandated and that this court is unwilling to restrict the trial courts to any single basis for determining fair market value. Seravalli, 845 F.2d at 1575. The government urges that our general statements in Seravalli should not apply to the present case because Seravalli involved real estate and not jet fuel. However, we find the statements in Seravalli to be entirely consistent with the concept of affording a trial court discretion. The government has not shown, and we do not discern, any abuse of discretion in the court's decision not to use a comparable sales method. 20 The government's third challenge, that the selection of a naphtha-based index was error because it did not preserve the bargain of the parties as much as the selection of a gasoline-based index would have, also fails. The government's argument is based on the fact that the unauthorized escalation clause called for the use of a gasoline-based index. However, the government does not dispute the Court of Federal Claims' finding that the naphtha-based index provides data that more closely reflects the product Barrett was actually selling. Barrett 2, 45 Fed. Cl. at 170. The government also argues that a naphtha-based index is inappropriate because there is no nationwide naphtha market. Although the government may desire that a standard clause use an index that is based on a product with a national market (gasoline, and not naphtha), that consideration is irrelevant for determining whether Barrett received fair market value for the fuel it delivered. The government has not persuaded us that the Court of Federal Claims abused its discretion by basing its valuation on the products actually delivered by Barrett.