Court Opinion

ID: 4585158
Source: CourtListenerOpinion
Date Created: 2020-11-10 16:00:10.068792+00
Date Added: 2024-06-11T13:47:34.533722
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                     )
                                                 )
JAAAT Technical Services, LLC                    )     ASBCA No. 62373
                                                 )
Under Contract No. W912HN-10-D-0063              )

APPEARANCE FOR THE APPELLANT:                          Andrew T. Bodoh, Esq.
                                                        Thomas H. Roberts & Associates, P.C.
                                                        Richmond, VA

APPEARANCES FOR THE GOVERNMENT:                        Michael P. Goodman, Esq.
                                                        Engineer Chief Trial Attorney
                                                       Laura J. Arnett, Esq.
                                                        Engineer Trial Attorney
                                                        U.S. Army Engineer District, Savannah

                    OPINION BY ADMINISTRATIVE JUDGE SWEET

        On April 28, 2020, the Army Corps of Engineers (Corps) moved to dismiss, or in
the alternative, for summary judgment, on the grounds that the complaint of appellant
JAAAT Technical Services, LLC (JAAAT) purportedly asserts a claim regarding
(1) labor burden costs that is unsupported; (2) its subcontractor’s costs (pass-through
claim) that violates the Severin doctrine; (3) permanent power and FEDS-E that is barred
by the doctrine of accord and satisfaction; and (4) a permit that is barred by the doctrine
of judicial estoppel. In response, JAAAT concedes that its complaint erroneously
included labor burden and permanent power claims, and a reference to FEDS-E
(app. resp. at 5, 7, 11).1 However, JAAAT disputes the Corps’ arguments that judicial
estoppel and the Severin doctrine bar JAAAT’s permit and pass-through claims
respectively (id. at 6, 8-11).

       As discussed in greater detail below, judicial estoppel and the Severin doctrine do
not bar JAAAT’s permit and pass-through claims respectively. Therefore, the Corps’
motion is granted in part, and denied in part. We strike the labor burden and permanent

1   In its motion, the Corps indicates that, in the event that JAAAT removes its labor
           burden claim, we should grant summary judgment based upon the other asserted
           grounds (gov’t mot. at 2). JAAAT agreed to the removal of its labor burden claim,
           so we treat the remainder of the Corps’ motion as a summary judgment motion.
power claims, and the reference to FEDS-Es. 2 However, we deny the remainder of the
motion.

        STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 3

I. Background

      1. On September 30, 2010, the Corps awarded Contract W912HN-10-D-0063
(0063 Contract)—a multiple award task order contract for design/build or construction
type tasks in the South Atlantic Division Area—to JAAAT (R4, tab 3.01 at 1180-82).

       2. On June 18, 2012, the Corps awarded Task Order 0002 under the 0063 Contract
to JAAAT for $15,315,185 for the design and construction of a sensitive compartmented
information facility addition at Fort Gordon, Georgia (Whitelaw Wedge Addition Project)
(R4, tab 3.04).

II. Procedural History

       3. On January 1, 2017, JAAAT submitted a certified claim (claim) for $3,215,346
and a time extension of 342 days as an equitable adjustment under the Changes Clause
(FAR 52.243-4) due to the Corps’ alleged (1) interfering with JAAAT’s ability to obtain
a National Pollutant Discharge Elimination Systems (NPDES) permit; (2) furnishing the
furniture, fixtures, and equipment (FF&E) design late; (3) increasing JAAAT’s
permanent power process costs, and (4) accelerating the schedule. The claim does not
seek damages for breach of contract. (R4, tab 2.01 at 151, 153, 232) The claim included
a pass-through claim for JAAAT’s subcontractor, Tetra Tech, Inc. (Tetra Tech) (R4,
tab 2.01 at 168, 570, 750, 1078, 1164, 1018).

      4. On October 11, 2019, the Corps issued a contracting officer’s final decision,
which denied the claim (R4, tab 1.02).

       5. JAAAT filed an appeal, which we docketed as ASBCA No. 62373. In its
complaint, JAAAT seeks the same $3,215,346 and an additional 342 calendar day
extension sought in its claim, based upon the grounds asserted in the claim (compl. ¶¶ 1,
5-10, 12).

2 The parties agree that removal of the labor burden and permanent power claims reduces
       JAAAT’s claim to $2,533,005 (app. resp. at 5 n.1, 7; gov’t reply at 2). It does not
       appear that any costs are associated with the erroneous reference to FEDS-E.
3 We do not discuss the facts related to the labor burden, permanent power, and FEDS-E

       issues because JAAAT concedes those issues.

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II. Tetra Tech Litigation

         6. On February 10, 2017, Tetra Tech filed an action against JAAAT in a state
     court in Georgia for breach of contract and unjust enrichment regarding the Whitelaw
     Wedge Addition Project (Tetra Tech Litigation). JAAAT successfully moved to
     remove that action to the United States District Court for the Southern District of
     Georgia (District Court). (R4, tab 8.04 at 4,702)

         7. On April 7, 2017, JAAAT filed its answer, affirmative defenses, and
     counterclaim in the Tetra Tech Litigation, which alleged that Tetra Tech “[f]aile[d] to
     timely obtain and support the issuance of the NPDES Permit” (R4, tab 8.04 at 4,750).

          8. In early November 2017, JAAAT, Tetra Tech, Tetra Tech Tesoro, Inc., 4 and
     the project sureties—which had satisfied claims brought by subcontractors and
     suppliers of JAAAT and Tetra Tech Tesoro under the payment bond—subsequently
     settled several outstanding lawsuits, including the Tetra Tech Litigation and Tetra
     Tech Tesoro’s lawsuits against the sureties (gov’t reply ex. B at 2). Under the terms of
     the settlement agreement, the parties executed a release in exchange for JAAAT
     paying the sureties $2.8 million, and Tetra Tech guaranteeing that payment (id. at 4-6).
     The settlement agreement stated that “[n]othing in this Agreement shall be construed
     as an admission of liability by any of the Parties to this Agreement” (id. at 7).

         9. On January 5, 2018, the parties submitted a joint stipulation of dismissal with
     prejudice to the District Court, which indicated that “[n]either Party will be deemed a
     prevailing party” (gov’t memo. ex. 4b at 1).

         10. On January 8, 2018, the District Court dismissed the Tetra Tech Litigation
     with prejudice (gov’t memo. ex. 4a at 1).

                                          DECISION

       Contrary to the Corps’ arguments, judicial estoppel and the Severin doctrine do
not bar JAAAT’s permit and pass-through claims respectively as a matter of law.

I. Standard of Review

      Summary judgment is appropriate only if there is no genuine issue as to any
material fact, and the moving party is entitled to judgment as a matter of law. Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A material fact is one that may affect the
outcome of the decision. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).

4   Tetra Tech Tesoro was a subsidiary of Tetra Tech, and a major subcontractor
         performing and managing the subcontract (R4, tab 8.04 at 4749-50).

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There is a “genuine” dispute as to such a fact if “the evidence is such that a reasonable
[fact-finder] could return a verdict for the nonmoving party.” Id.

II. Judicial Estoppel Does Not Bar JAAAT’s Permit Claim

        Judicial estoppel does not bar JAAAT’s permit claim as a matter of law because,
since it is undisputed that the parties settled the Tetra Tech Litigation, JAAAT did not
succeed in persuading the District Court to accept its earlier position that Tetra Tech
“[f]aile[d] to timely obtain and support the issuance of the NPDES Permit” (SOF ¶ 7).
“The doctrine of judicial estoppel is that where a party successfully urges a particular
position in a legal proceeding, it is estopped from taking a contrary position in a
subsequent proceeding where its interests have changed.” Data General Corp. v.
Johnson, 78 F.3d 1556, 1565 (Fed. Cir. 1996). Three factors determine whether judicial
estoppel applies: whether a party (1) takes a later position that is clearly inconsistent
with its earlier position; (2) succeeded in persuading a tribunal to accept its earlier
position; and (3) would derive an unfair advantage or impose an unfair detriment on the
opposing party if not estopped. Trustees in Bankruptcy of N.A. Rubber Thread Co., Inc.
v. United States, 593 F.3d 1346, 1353-54 (Fed. Cir. 2010).5

       Under the second factor, “‘[a] settlement neither requires nor implies any judicial
endorsement of either party’s claim or theories, and thus a settlement does not provide the
prior success necessary for judicial estoppel.’” Water Tech. Corp. v. Calco, LTD., 850
F.2d 660, 666 (Fed. Cir. 1988) (quoting Konstantinidis v. Chen, 626 F.2d 933, 939 (D.C.
Cir. 1980)). As a result, “‘[i]f the initial proceeding results in settlement, the position
cannot be viewed as have been successfully asserted’ and estoppel is inapplicable.” Id.
(quoting Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 599 (6th Cir. 1982)).6

       Here, as in Water Technology, JAAAT did not succeed in persuading the District
Court to accept its earlier position because it is undisputed that the initial proceeding
resulted in a settlement, not a decision on the merits (SOF ¶ 8). Indeed, the conclusion

5 Judicial estoppel applies even if one of the tribunals is an administrative agency.
       Rubber Thread, 593 F.3d at 1354.
6 Kale v. Obuchowski, 985 F.2d 360, 362 (7th Cir. 1993)—which the Corps cites—is not

       binding precedent and appears to be inconsistent with Water Technology. In any
       event, even under Kale, judicial estoppel would not bar the permit claim. Kale
       adopts a distinction between settlements under which neither side prevails—which
       do not support judicial estoppel—and settlements that represent a capitulation—
       which support judicial estoppel. Id. Here, the settlement falls into the former
       category because it is undisputed that the stipulation of dismissal expressly stated
       that “[n]either Party will be deemed a prevailing party” and the settlement
       agreement expressly stated that “[n]othing in this Agreement shall be construed as
       an admission of liability by any of the Parties to this Agreement.” (SOF ¶¶ 8-9)

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that JAAAT did not succeed in persuading a tribunal to accept its earlier position is even
stronger here than it was in Water Technology because it is undisputed that the stipulation
of dismissal submitted in this case expressly stated that “[n]either Party will be deemed a
prevailing party” (SOF ¶ 9). Moreover, it is undisputed that the settlement agreement
expressly stated that “[n]othing in this Agreement shall be construed as an admission of
liability by any of the Parties to this Agreement” (SOF ¶ 8). Because JAAAT did not
succeed in persuading the District Court to accept its earlier position, judicial estoppel
does not bar JAAAT’s permit claim. Rubber Thread, 593 F.3d at 1354.7

III. The Severin Doctrine Does Not Bar JAAAT’s Pass-Through Claim

       The Severin doctrine does not bar JAAAT’s pass-through claim because it is
undisputed that JAAAT’s claim is not based solely upon a breach of contract theory.
Under the doctrine first enunciated in Severin v. United States, 99 Ct. Cl. 435 (1943)
(Severin doctrine), “a prime contractor may sue the Government for damages incurred by
one of its subcontractors through the fault of the Government . . . only when the prime
contractor has reimbursed its subcontractor for the latter’s damages or remains liable for
such reimbursement in the future.” Blount Bros. Const. v. United States, 348 F.2d 471,
471 (Ct. Cl. 1965) (quoting J.L. Simmons Co. v. United States, 304 F.2d 886, 888
(1962)). However, the “application of the Severin doctrine has been narrowly
construed.” E.R. Mitchell Constr. Co. v. Danzig, 175 F.3d 1369, 1371 (Fed. Cir. 1999)
(quoting United States v. Johnson Controls, Inc., 713 F.2d 1541, 1552 & n. 8 (Fed. Cir.
1983)). Thus, “where the claim is not based solely upon a breach of contract as was the
case in Severin, but is rather a claim for an equitable adjustment by a prime contractor
pursuing a remedy redressable under the contract, then the Severin rule is inapplicable.”
CWC, Inc., ASBCA No. 26432, 82-2 BCA ¶ 15,907; see also Owens-Corning Fiberglas
Corp. v. United States, 419 F.2d 439, 457 (Fed. Cir. 1969); Jordan-DeLaurenti, Inc.,
ASBCA Nos. 45467, 46589, 94-3 BCA ¶ 27,031 (holding that the Severin doctrine does
not apply where a contractor pursues a claim for an equitable adjustment under the
suspension of work or changes clauses).

       Here, it is undisputed that JAAAT’s claim is not based solely upon a breach of
contract theory (SOF ¶ 8). Rather, it is undisputed that JAAAT’s claim is for an equitable
adjustment pursued as a remedy redressable under the contract—specifically the Changes
Clause (SOF ¶ 3). Therefore, the Severin doctrine does not bar JAAAT’s pass-through
claim as a matter of law. Owens-Corning, 419 F.2d at 457; Jordan-DeLaurenti, 94-3
BCA ¶ 27,031; CWC, 82-2 BCA ¶ 15, 907.

7   We do not address whether JAAAT takes a position in this appeal that is clearly
        inconsistent with its earlier position, or would derive an unfair advantage or
        impose an unfair detriment on the Corps if not estopped because we conclude that
        JAAAT did not succeed in persuading the District Court to accept its earlier
        position.

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                                     CONCLUSION

      For the foregoing reasons, the Corps’ motion is granted in part, and denied in part.
We strike the labor burden and permanent power claims, and the reference to FEDS-Es;
however, we deny the remainder of the motion.

      Dated: October 26, 2020

                                                  JAMES R. SWEET
                                                  Administrative Judge
                                                  Armed Services Board
                                                  of Contract Appeals

 I concur                                         I concur

 RICHARD SHACKLEFORD                              J. REID PROUTY
 Administrative Judge                             Administrative Judge
 Acting Chairman                                  Vice Chairman
 Armed Services Board                             Armed Services Board
 of Contract Appeals                              of Contract Appeals

      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. 62373, Appeal of JAAAT
Technical Services, LLC, rendered in conformance with the Board’s Charter.

      Dated: October 26, 2020

                                                PAULLA K. GATES-LEWIS
                                                Recorder, Armed Services
                                                Board of Contract Appeals

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