Opinion ID: 783066
Heading Depth: 3
Heading Rank: 1

Heading: Jurisdiction over Diversified's Lost Profits Claim

Text: 17 In this appeal, TVA renews the primary contention that it made to the district court upon remand: that the district court lacked jurisdiction over Diversified's lost profits claim because that claim had not been presented to a Contracting Officer before Diversified filed its original complaint and because Diversified has not amended its complaint to include an appeal of the February 27, 2001, administrative decisions which rejected that claim. The critical assumption underlying TVA's position is that Diversified's May 18, 1993, certified claim — the basis of the district court's jurisdiction when Diversified initiated suit in 1997 — failed to make a claim for lost profits, but instead stated only a claim for liquidated damages. 7 18 TVA asserts that Diversified's failure to refer to lost profits expressly in its claim letter violated its duties under the CDA, specifically, 41 U.S.C. §§ 605(a) and 605(c)(1), to ensure that all of its claims were submitted in writing to a Contracting Officer and to certify that the data supporting its claims was accurate and complete. It also claims that Diversified's alleged omission amounted to noncompliance with TVA's implementing regulations which provide, among other things, that a contractor's claim submittal must [i]nclude sufficient supporting data to permit the Contracting Officer to decide the claim, provide appropriate reference to previously submitted data. 18 C.F.R. § 1308.2(c) (2003). In TVA's view, because Diversified did not comply with these requirements, it did not submit a valid claim for lost profits to the original Contracting Officer and, thus, the original Disputes Contracting Officer did not issue a final decision denying that claim. 19 TVA, as an agency of the United States, enjoys sovereign immunity unless Congress specifically waives it. See, e.g., Campanella, 137 F.3d at 890. Under the CDA, Congress has conditionally waived the sovereign immunity of executive agencies which contract with others for services or certain kinds of property. See, e.g., SMS Data Products Group, Inc. v. United States, 19 Cl.Ct. 612, 614 (Cl.Ct.1990). With regard to the TVA, this waiver applies only to contracts, like the one signed by Diversified, which contain a disputes clause requiring that a contract dispute be resolved through an agency administrative process. 41 U.S.C. § 602(b). One condition which Congress has placed upon the waiver of TVA's immunity under the CDA is the requirement that a contractor exhaust the agency's administrative procedures before filing suit in district court. The purposes of this condition are to encourage resolution of disputes by negotiation prior to litigation and to keep government contract disputes out of the district courts. Campanella, 137 F.3d at 890 (citing United States v. Kasler, 123 F.3d 341, 346 (6th Cir.1997)). An additional, related condition is the requirement that a contractor seeking more than $100,000 in damages present a valid, certified contract claim to a Contracting Officer. See 41 U.S.C. § 605(c)(1); RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1135 (6th Cir.1996). This condition serves to ensure that the Contracting Officer is given enough information to evaluate the claim fairly so that a final decision may be reached. E.g., Colon v. United States, 35 Fed. Cl. 337, 342 (1996). These conditions are jurisdictional in nature; a failure to satisfy them will preclude the district court from entertaining an appeal of the contractor's claims. See, e.g., Diversified I, 223 F.3d at 336; SMS Data Products, 19 Cl. Ct. at 615. 20 The CDA does not define what constitutes a claim. Colon, 35 Fed. Cl. at 340. Under TVA's regulations, that term is defined as a written demand by a Contractor... for a decision by a Contracting Officer under a disputes clause. 18 C.F.R. § 1308.2(c). TVA's regulations specify further that a claim must, among other things, state the amount of monetary relief, or the kind of nonmonetary relief, sought, provide sufficient supporting data to permit the Contracting Officer to decide the claim, and, if greater than $100,000, include a signed certification by the Contractor that the claim is made in good faith, that the supporting data are accurate and complete to the best of the Contractor's knowledge and belief, and that the amount requested accurately reflects the contract adjustment for which the Contractor believes TVA is liable. 18 U.S.C. § 1308.2(c)(1)-(3). The term claim is to be interpreted broadly to embrace virtually all disputes arising under or relating to a government contract. See RMI Titanium, 78 F.3d at 1135 (citing Z.A.N. Company v. United States, 6 Cl.Ct. 298, 303 (1984)). 21 Under the CDA, a district court is not deprived of jurisdiction over a contract claim merely because the contractor changes the amount of his claim or the theory of his damages, so long as the modified claim is `based on the same set of operative facts underlying the claim' submitted to the contracting officer. ThermoCor, Inc. v. United States, 35 Fed. Cl. 480, 489 (1996) (quoting Cerberonics, Inc. v. United States, 13 Cl.Ct. 415, 417 (1987)). The critical test is whether the contracting officer's right to adjudicate the claims is undermined by circumventing his statutory role `to receive and pass judgment on the contractor's entire claim.' Id. (quoting Cerberonics, 13 Cl.Ct. at 418). This rule recognizes that it would be very disruptive to a court's procedures, if theories, developed as a result of pretrial proceedings including discovery, had to be submitted to the contracting officer before the court could render a final decision on a claim. Id. (citing J.F. Shea Co. v. United States, 4 Cl.Ct. 46, 54 (1983)). Hence, as long as Diversified's claim for lost profits was based on the same operative facts as its claim for liquidated damages and did not prevent the Contracting Officer from evaluating whether Diversified was entitled to such a remedy, it was properly before the district court. See id. 22 TVA contends that Diversified submitted no information regarding its lost profits to the Contracting Officer, thus providing him with no opportunity to make a final decision on that claim. TVA specifically asserts that the claim for lost profits was based on different evidence than the liquidated damages claim. TVA's position, however, ignores the reason underpinning the rule enunciated in ThermoCor and Cerberonics: as long as the contracting agency is given an adequate opportunity to make decisions on the issues presented by a contractor's claim, the subsequent modification (or clarification) of the remedy sought by the contractor does not prejudice the contracting agency and does not, therefore, deprive the district court of jurisdiction over the modified claim. See, e.g., ThermoCor, 35 Fed. Cl. at 489-90; Cerberonics, 13 Cl.Ct. at 419. 23 Diversified's claim for lost profits arose from the same operative facts which were before the Contracting Officer in 1993 — TVA's conduct in repudiating the Contract. Additionally, since the original Disputes Contracting Officer denied Diversified's claim on the issue of liability, he necessarily refused to award Diversified damages under any available remedy theory. The Disputes Contracting Officer was given an adequate opportunity to address the lost profits claim. Therefore, the district court had jurisdiction over Diversified's lost profits claim when Diversified filed its complaint in 1997. Furthermore, since its lost profits claim was properly before the district court by virtue of its original complaint, Diversified had no obligation to amend that pleading to appeal the February 27, 2001, administrative decisions. See Sharman Company, Inc. v. United States, 2 F.3d 1564, 1570 (Fed.Cir.1993). Accordingly, the district court's assumption that it had jurisdiction to award Diversified lost profits was correct. 24