Court Opinion

ID: 2832278
Source: CourtListenerOpinion
Date Created: 2015-08-31 20:00:06.87568+00
Date Added: 2024-06-11T12:24:28.652059
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                   )
                                               )
Soap Creek Marina, LLC                         )      ASBCA No. 59445
                                               )
Under Contract No. DACW21-1-07-5252            )

APPEARANCES FOR THE APPELLANT:                        Gary Gerrard, Esq.
                                                      Alfred E. Fargione, Esq.
                                                       Lexington, GA

APPEARANCES FOR THE GOVERNMENT:                       Thomas H. Gourlay, Jr., Esq.
                                                       Engineer Chief Trial Attorney
                                                      Laura J. Arnett, Esq.
                                                       Engineer Trial Attorney
                                                       U.S. Army Engineer District, Savannah

    OPINION BY ADMINISTRATIVE JUDGE DELMAN ON JURISDICTION

       The Board, sua sponte, raised the question of whether it had jurisdiction over
this appeal and requested the parties to address the issue. In response, the government
contends we are without jurisdiction over this appeal, and alternatively, that we are
without jurisdiction over that portion of the appeal seeking future damages in the
amount of $985,462. Appellant contends that we have jurisdiction over all elements of
the appeal.

      STATEMENT OF FACTS (SOF) FOR PURPOSES OF JURISDICTION

        1. On or about 6 February 2008, the U.S. Army Corps of Engineers (government),
as lessor, entered into Lease No. DACW21-1-07-5252 with Soap Creek Marina, LLC
(lessee or appellant), for commercial concession purposes on the J. Strom Thurmond Lake
project. The term of the lease was 20 years, beginning 1 January 2008 and ending
31December2027. (R4, tab 3)

       2. The lease contained a Disputes clause, paragraph 34, which stated in
pertinent part as follows:

               34. DISPUTES CLAUSE

                      a. Except as provided in the Contract Disputes Act
               of 1978 (41 U.S.C. 601-613) (the Act), all disputes arising
               under or relating to this lease shall be resolved under this
               clause and the provisions of the Act.
                      b. "Claim," as used in this clause, means a written
              demand or written assertion by the Lessee seeking, as a
              matter of right, the payment of money in a sum certain,
              the adjustment of [sic] interpretation of lease terms, or
              other relief arising under or relating to this lease. A claim
              arising under this lease, unlike a claim relating to that
              lease, is a claim that can be resolved under a lease clause
              that provides for the relief sought by the Lessee.
              However, a written demand or written assertion by the
              Lessee seeking the payment of money exceeding $100,000
              is not a claim under the Act until certified as required by
              subparagraph c.(2) below. The routine request for rental
              payment that is not in dispute is not a claim under the Act.
              The request may be converted to a claim under the Act, by
              this clause, if it is disputed either as to liability or amount
              or is not acted upon in a reasonable time.

                     c. (1) A claim by the Lessee shall be made in
              writing and submitted to the District Commander for a
              written decision. A claim by the Government against the
              Lessee shall be subject to a written decision by the District
              Commander.

                    (2) For Lessee claims exceeding $100,000, the
              Lessee shall submit with the claim a certification that:

                       (i) The claim is made in good faith;

                     (ii) Supporting data are accurate and complete to
              the best of the Lessee's knowledge and belief; and

                     (iii) The amount requested accurately reflects the
              lease adjustment for which the Lessee believes the
              Government is liable.

(R4, tab 3 at 15-16)

       3. Insofar as pertinent, paragraph 33 of the lease provided as follows:

              33. TRANSIENT USE

                     a. Camping, including transient trailers or
              recreational vehicles, at one or more campsites for a period

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               longer than thirty (30) days during any sixty (60)
               consecutive day period is prohibited. The Lessee will
               maintain a ledger and reservation system for the use of any
               such campsites, said system to be acceptable to the District
               Commander.

(R4, tab 3 at 15)

       4. During the course of lease performance, the parties came to dispute the
interpretation of the Transient Use clause. On 24 January 2013, the government issued
a Final Notice of Non-Compliance to appellant, with respect to, among other things,
appellant's failure to comply with said clause (R4, tab 25).

        5. On 19 December 2013, appellant submitted a letter to the contracting officer
(CO) alleging that the government's interpretation of the Transient Use clause caused
damage to appellant in the amount of "roughly $65,000/yr .... If you expand that over
the full course of the lease we are talking $975,000 .... Lost slip rentals, ship store
sales, and gas sales add to this figure .... " Appellant also noted that "We will have our
accountant work up a more detailed estimate of losses once a documented estimate of
actual loss from a CPA is needed." (R4, tab 12) Appellant provided no claim
certification with this letter.

         6. On 8 January 2014, the CO responded to appellant's 19 December 2013
letter, informing appellant that:

               Per condition 34(b) of your lease instrument, a
               written demand over $100,000 is not a claim under the
               [Contract Disputes] Act until certified as required by
               subparagraph c.(2). Until the demand is submitted in
               accordance with the lease instrument, I cannot make a
               determination on the specifics of that demand.

(R4, tab 10)

        7. On 24 January 2014, appellant submitted a second letter to the CO, stating
that: "[t]he damages incurred amount to roughly $81,000/yr .... If you expand that
over the full course of the lease we are talking $1,215,000 just in lost income from
campsites rentals. Lost slip rentals, ship store sales, and gas sales add to this figure .... "
Appellant provided a "certification" as follows: "The figures on rental incomes
presented above are certified to be true and accurately reflect the impact of changing to
a fully transient campground." (R4, tab 9 at 1-2)

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        8. On 25 February 2014, the CO responded to appellant's letter, stating, inter
alia, that appellant failed to state a sum certain and failed to meet other requirements
for filing a claim as set forth in paragraph 34(b) of the lease (R4, tab 7 at 1).

       9. Appellant responded by letter to the CO dated 16 March 2014. Insofar as
pertinent, appellant's letter requested as follows: "[W]e are asking for $95,000 to
replace lost incomes and a return to operating our campground in the manner it was
operated prior to us purchasing the marina and for several years following that
purchase." (R4, tab 5 at 2) Appellant's monetary claim did not exceed $100,000, and
therefore no claim certification was needed.

          10. By letter dated 14 May 2014, the CO denied appellant's $95,000 claim (R4,
tab 2).

       11. On 22 July 2014, appellant filed a timely notice of appeal with the Board,
claiming to have lost $95,000 as a result of the government's interpretation of
paragraph 33 in the lease (R4, tab 1 at 2).

       12. Appellant filed its complaint, dated 11 September 2014, requesting in
pertinent part as follows:

                A.   Its appeal be sustained and the Corps be ordered to
                     pay Soap Creek the amount of $123,127 for damages
                     to the date of the claim Pl plus accrued damages to the
                     date of the award plus interest from March 16, 2014,
                     and future damages in the amount of $985,462; or in
                     the alternative,

                B.   Its appeal be sustained and the Corps be ordered to
                     pay Soap Creek the amount of $123,127 for damages
                     to the date of the claim plus accrued damages to the
                     date of the award plus interest from March 16, 2014,
                     and that an order be entered interpreting the lease and
                     determining that the Transient Use Rule is ambiguous
                     and Soap Creek's interpretation is a reasonable
                     interpretation and compliance with which is not a
                     breach of the lease, or declaring that the course of
                     dealing of the parties has extinguished the Transient
                     Use Rule in Paragraph 33 of the lease as to Soap
                     Creek, and that Soap Creek is entitled to operate the

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    Appellant has provided an affidavit from counsel, asserting that the $123,127 damage
        figure in the complaint was the amount of damage accrued to the date of the
        complaint, not to the date of the claim (app. resp., aff. iii! 4, 5).
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                    leased premises under its interpretation of the
                    Transient Use Rule for the duration of the lease ....

                                       DECISION

        It is well settled that a claim not in excess of $100,000, which need not be
certified, may not be increased to an amount over $100,000 without being certified
where the increase was based on information that the contractor should have known at
the time it submitted its claim to the CO. Robert T. Peacock & Peter D. Ting,
Contract Disputes Act Annotated, 5-22, Federal Publications, Inc. (1988). In order to
obviate the need for claim certification: "The burden is upon a claimant to prove that
increased amounts were based upon further information not reasonably available at the
time it filed its initial claim." McNally Industries, Inc., ASBCA Nos. 43027, 44688,
93-3 BCA ii 26,130 at 129,893.

        Appellant's complaint now seeks to recover future damages attributable to the
government's lease interpretation of the Transient Use clause in the amount of
$985,462 over the remaining term of the lease, which consists of campground rental
losses in the amount of $400,946, and miscellaneous loss of rentals and sales of goods
in the amount of$584,516 (comp!. iii! 45, 47). Appellant has not shown that these
increased amounts were based upon information not reasonably available at the time it
filed its uncertified claim of $95,000 in March 2014. These increased amounts appear
to be future loss projections over the lease period, which could have been calculated
and submitted to the CO at that time, and in fact such estimated amounts were
submitted to the CO on an earlier date (SOF ii 5). Appellant was required to certify
these claim amounts to the CO.

        Citing Sullivan Marina & Campground, LLC, ASBCA No. 55355, 06-2 BCA
ii 33,389, appellant contends, alternatively, that we have jurisdiction over this appeal
because we have jurisdiction over appellant's claim to the CO for lease interpretation
that need not be certified. Appellant is correct that under Sullivan Marina we retained
jurisdiction over a lessee's claims for lease interpretation. We also did so in Donald
M Lake, ASBCA No. 54422, 05-1BCAii32,920 at 163,071: "Our jurisdiction over
 'non-monetary' claims involving such interpretations and/or those seeking so-called
 'declaratory relief is also well settled."

        However, there is a material difference between the "non-monetary" claims
filed by the lessees in the above cases and the claim filed by appellant with the CO
here. Appellant's claim, as amended, is a monetary claim, and as such, it needed to be
certified if in excess of $100,000.

       Alternatively, appellant contends that its claim for its losses over the lease
period was in fact certified, albeit defectively, in its 24 January 2014 letter to the CO.
Assuming arguendo, that this letter contained curable, defective certification language,

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41 U.S.C. § 7103(b)(3), the certified amount was not stated in a sum certain. To the
contrary, the letter provided for an indefinite, unknown claim amount - "we are talking
$1,215,000 just in lost income ... (l]ost slip rentals, ship store sales, and gas sales add to
this figure ... " (SOF ~ 7). A failure to provide a monetary claim in a sum certain to the
CO is a jurisdictional defect. Northrop Grumman Computing Systems, Inc. v. United
States, 709 F.3d 1107, 1112 (Fed. Cir. 2013).

                                      CONCLUSION

       For reasons stated, we conclude that we are without jurisdiction over the
amount of future damages, $985,462, sought in appellant's complaint, and we strike
this amount from the complaint without prejudice to its proper submission to the CO.
We retain jurisdiction over appellant's lost income claim of $95,000 (SOF ~ 9), for
which certification to the CO was not required. 2

        Dated: 18 August 2015

                                                 \
                                                 \

                                                     Administrative Judge
                                                     Armed Services Board
                                                     of Contract Appeals

I concur                                             I concur

MARK N. STEMPLER                                     RI~HARDSHACKLEFORD
Administrative Judge                                 Administrative Judge
Acting Chairman                                      Vice Chairman
Armed Services Board                                 Armed Services Board
of Contract Appeals                                  of Contract Appeals

2   In accordance with the affidavit of appellant's counsel (see note 1 above), the
         demand in appellant's complaint for $123,127 constitutes appellant's $95,000
         claim as accrued to the date of the complaint.
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      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 59445, Appeal of Soap
Creek Marina, LLC, rendered in conformance with the Board's Charter.

       Dated:

                                                 JEFFREY D. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals

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