Court Opinion

ID: 9485811
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:30:33.59364+00
Date Added: 2024-06-11T17:51:22.325591
License: Public Domain

SCHALL, Circuit Judge,
dissenting.
On jurisdictional grounds, the court reverses the money judgment in favor of the government and remands to the United States Court of Federal Claims Sharman’s challenge to the default termination.1
I respectfully dissent. Because I believe the Claims Court had jurisdiction over both the government’s money claim and Shar-man’s challenge to the default termination and because the Claims Court adjudicated both claims, I would reach the merits.
BACKGROUND
The following facts are not in dispute:
On August 7, 1989, the contracting officer issued a final decision terminating Sharman’s contract for default.
On September 12, 1989, the contracting officer sent Sharman a letter termed a “notice of demand for payment of contract debt.” In it, the contracting officer sought the return of unliquidated progress payments in the amount of $2,066,696.36. The letter did not state that it was a contracting officer’s final decision. Sharman Co., Inc. v. United States, 24 Cl.Ct. 763, 765 (1991).
On February 2, 1990, purportedly under the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-613 (1988 & Supp I 1993) (CDA), Sharman filed a complaint in the Claims Court seeking, in five counts (including one count sounding in quantum meruit): (i) invalidation of the default termination; (ii) conversion of the default termination into a termination for convenience of the government; and (iii) recovery of alleged uncompensated costs incurred in performing the contract work. Complaint, pp. 10, 12-16; Sharman, 24 Cl.Ct. at 765.
The government filed its answer to Shar-man’s complaint on May 3, 1990. Subsequently, on June 11, 1990, the government moved to dismiss the complaint for lack of subject matter jurisdiction. In its motion, the government asserted that the Claims Court did not have jurisdiction over Shar-man’s challenge to the default termination because Sharman’s complaint did not present a money claim, but rather was essentially a request for declaratory relief concerning the lawfulness of the default termination. As far as Sharman’s claim for uncompensated costs was concerned, the government argued that the contracting officer’s letter of September 12, 1989, did not constitute a final decision *1574and therefore did not serve to vest the court with jurisdiction under the CDA.
On October 18, 1990, while the government’s motion to dismiss was pending, the contracting officer sent Sharman a letter which was described as a “notice of the contracting officer’s final decision.” In the letter, the contracting officer asserted a government claim against Sharman in the amount of $1,391,240.29 for the return of unliquidated progress payments.
On December 20, 1991, the Claims Court ruled on the government’s motion to dismiss. In its decision, the court granted in part and denied in part the government’s motion. The court dismissed Sharman’s claim for alleged uncompensated costs incurred in performing the contact work, which it referred to as a “demand for convenience termination damages.” 24 Cl.Ct. at 766. It did so on the ground that the claim had not been quantified and had never been submitted to the contracting officer for a decision. Id. However, the court held that it did have jurisdiction to entertain Sharman’s challenge to the default termination decision. Id. at 767-68. The court viewed the challenge to the default termination as properly before it “as a contractor’s suit on a quantified government claim.” Id. at 768. The court determined that while the September 12,1989 letter from the contracting officer may have been legally insufficient to put before the court a money claim, the case did not involve a money claim, and the letter could serve to quantify the termination for default. The court stated:
Sharman does not attack the amount of the government’s demand but, rather, the government’s right to assert such a demand in the first instance. In other words, it is the legitimacy of the default and not the dollars associated with that action that brings Sharman into court. Sharman’s position ... is that it owes the government nothing because the default has no validity.
Id. Thus, the Claims Court held that Shar-man could challenge the default termination. The court entered an order directing Shar-man to file an amended complaint.2
On January 6, 1992, in response to the court’s partial dismissal and order, Sharman filed an amended complaint. In the amended complaint, Sharman challenged the August 7, 1989 final decision terminating the contract for default and the October 18, 1990 final decision asserting a government claim against Sharman in the amount of $1,391,-240.29 for the return of unliquidated progress payments. In its amended complaint, Sharman sought the following relief: (i) denial of the government’s claim for the return of unliquidated progress payments and (ii) a declaration that the termination for default was invalid. Amended Complaint at 21. Apparently in response to the Claims Court’s ruling of December 20, 1991, Sharman abandoned the claim for termination for convenience costs that it had asserted in its original complaint.
On February 18, 1992, the government answered the amended complaint and filed a counterclaim seeking the return of unliqui-dated progress payments in the amount of $1,391,240.29. Sharman answered the government’s counterclaim on March 10, 1992.
On June 11, 1992, following a trial, the Claims Court ruled from the bench. Rejecting Sharman’s challenge to the default termination, the court held that the termination for default was valid. The court also held that the government was entitled to recover on the full amount of its counterclaim. On June 12, 1992, in accordance with the court’s bench ruling, the Claims Court entered judgment in favor of the government in the amount of $1,391,240.29, awarded the government interest, and dismissed Sharman’s amended complaint. This appeal followed.
DISCUSSION
As the majority notes, in an appeal of a CDA case, the court reviews de novo for errors of law. See Cooper v. United States, 827 F.2d 762, 763 (Fed.Cir.1987) (citing Milmark Servs., Inc. v. United States, 731 F.2d 855, 857 (Fed.Cir.1984). Whether the Claims Court had jurisdiction in this matter is a *1575question of law. Transamerica Ins. Corp. v. United States, 973 F.2d 1572, 1576 (Fed.Cir.1992).

The Government’s Money Claim

The majority reverses the money judgment in favor of the government on the ground that the government’s claim was not the subject of a contracting officer’s final decision. In so doing, the majority rejects the contracting officer’s letters of August 7, 1989, September 12, 1989, and October 18, 1990, as bases for jurisdiction. I agree that neither the August 7, 1989 letter terminating the contract for default nor the September 12, 1989 demand letter constituted a contracting officer’s final decision on the government’s claim. In my view, however, the contracting officer’s letter of October 18, 1990, did constitute a valid contracting officer’s final decision on the claim. Accordingly, I believe that the Claims Court had jurisdiction when it adjudicated the government’s counterclaim.
The majority refers to the October 18, 1990 letter as “the first statement by the government of a ‘claim,’ ie., the assertion as a matter of right to a sum certain as presently due and owing, on which there was a final decision by the contracting officer.” Thus, the majority does not view the October 18, 1990 letter as being defective in terms of form or content, and I agree. Rather, the majority rejects the letter as a basis for the Claims Court’s jurisdiction over the government’s counterclaim for two different reasons: “[T]he October 1990 final decision letter was issued without authority and is therefore a nullity. It also came too late to affect jurisdiction which must be assessed as of February 1990.” For the following reasons, I respectfully disagree with these two points.
Turning to the first point, the majority takes the position that, by reason of the quantum meruit count in Sharman’s complaint, the “progress payment ‘claim’ was in litigation between the parties as of the date that Sharman’s original complaint was filed.” Based upon this proposition, the majority states that, because the progress payment claim was in litigation, the Department of Justice gained exclusive authority to act in the case and the contracting officer was divested of authority to issue a final decision on the government’s claim, citing 28 U.S.C. §§ 516-520 (1988); Hughes Aircraft Co. v. United States, 534 F.2d 889, 901, 209 Ct.Cl. 446 (1976); and Durable Metal Prods., Inc. v. United States, 21 Cl.Ct. 41, 46 (1990). I do not believe, however, that the money claim in Sharman’s original complaint served to divest the contracting officer of authority to issue a final decision.
It is undisputed that, as of October 18, 1990, there had been only one contracting officer’s final decision issued in this case: the August 7, 1989 final decision terminating the contract for default. There had been no final decision issued on either a money claim by Sharman or on a money claim by the government. As the majority points out, under the CDA, a final decision by the contracting officer on a claim, whether asserted by the contractor or the government, is a jurisdictional prerequisite to bringing suit in court or before a board of contract appeals.
The court in Hughes Aircraft stated that the statutory scheme granting the Department of Justice exclusive and plenary power to supervise and conduct all litigation to which the United States is a party is “broadly inclusive” and, as such, “must be narrowly construed.” 534 F.2d at 901. In my view, it is contrary to this admonition to hold, as the court does, that a contracting officer can be divested of authority to issue a contracting officer’s decision on a government claim (for the return of unliquidated progress payments) by the fact that there is pending in court a contractor claim (for convenience termination costs) over which the court lacks jurisdiction (because there has been no contracting officer’s final decision) and with respect to which a motion to dismiss has been filed. Aside from the fact that this case involved separate claims by different parties, I believe that, in order to place a claim in litigation so as to bar further action by the contracting officer, a contractor must at least plead facts sufficient to establish jurisdiction in the court. This court’s holdings — recognized by the majority — that a valid contracting officer’s final decision is a jurisdictional prerequisite to bringing suit under the CDA *1576dictate this requirement. Sound policy also dictates this requirement. Otherwise, a con-traetor/litigant could tie the hands of the contracting officer at any time by merely filing in court a jurisdietionally defective suit. In short, I do not believe that a contracting officer can be divested of authority to issue a final decision on a government claim by the filing of a jurisdietionally defective suit on a separate contractor claim.3
I also respectfully disagree with the majority’s statement that the October 18, 1990 final decision “came too late to affect jurisdiction .... ” I understand the majority to be saying that the Claims Court lacked jurisdiction over Sharman’s suit on February 2, 1990, when the original complaint was filed, and on October 18, 1990, when the contracting officer issued his final decision. Therefore, according to the majority, the issuance of the contracting officer’s final decision followed by the filing of Sharman’s amended complaint in January of 1992 and the government’s counterclaim in February of 1992 could not serve to vest the court with jurisdiction over the government’s claim for the return of the unliquidated progress payments. However, for the reasons set forth below, in my view the Claims Court had jurisdiction at all times in this matter.
In Overall Roofing and Construction, Inc. v. United States, 929 F.2d 687 (Fed.Cir.1991), this court held that the Claims Court lacked jurisdiction to entertain a challenge to a default termination that did not include a monetary claim. In October of 1992, however, the Federal Courts Administration Act of 1992, Pub.L. No. 102-572, 106 Stat. 4506 (1992) (FCA), was enacted. Section 907(b)(1) of the FCA amended 28 U.S.C. § 1491(a)(2) to give the Court of Federal Claims jurisdiction over suits brought under the CDA challenging default terminations absent a money claim. Pub.L. No. 102-572, § 907(b)(1), 106 Stat. 4519. As the majority notes, the statutory provision expanding the jurisdictional grant in 28 U.S.C. § 1491(a)(2) applies retroactively to this ease. Section 907(b)(2) of the FCA provides as follows:
(2) The amendment made by paragraph (1) shall be effective with respect to all actions filed before, on, or after the date of the enactment of this Act, except for those actions which, before such date of enactment, have been the subject of—
(A) a final judgment of the United States Claims Court, if the time for appeal of that judgment has expired without an appeal having been filed, or
(B) a final judgment of the Court of appeals for the Federal Circuit.
Pub.L. No. 102-572, § 907(b)(2), 106 Stat. 4519.
“Under familiar principles, the case must be decided on the basis of law now controlling, and the provisions of [the new statute] are applicable to this litigation.” United States v. Alabama, 362 U.S. 602, 604, 80 S.Ct. 924, 926, 4 L.Ed.2d 982 (1960). In other words, this court “is required to apply the law in effect when it renders a decision, absent a congressional directive to the contrary.” Mrs. W. v. Tirozzi, 832 F.2d 748, 755 (2d Cir.1987) (citing Bradley v. School Bd. of Richmond, 416 U.S. 696, 711-716, 94 S.Ct. 2006, 2016-19, 40 L.Ed.2d 476 (1974), and Carpenter v. Wabash Ry., 309 U.S. 23, 27, 60 S.Ct. 416, 418, 84 L.Ed. 558 (1940)). The language of the FCA is clear. The amendment giving the Court of Federal Claims jurisdiction over challenges to default terminations “shall be effective with respect to all actions filed before ... the date of the enactment of [the FCA]” where there has not been a final judgment in the case. Here, the Claims Court declined to dismiss, and exercised jurisdiction over, Sharman’s challenge to the default termination. Assuming that approach was incorrect under the law of Overall Roofing, the plain language of the retroactivity provision of the FCA operates to ratify the court’s exercise of jurisdiction. Thus, in light of the retroactivity provision of *1577the FCA, the Claims Court is deemed to have had jurisdiction in this matter as of February 2, 1990, when Sharman filed its original complaint. For this reason, the Claims Court had jurisdiction to adjudicate the government’s claim for the return of unliquidated progress payments, which was set forth in the government’s counterclaim of February 18, 1992.
“The existence of federal jurisdiction ordinarily depends upon the facts as they exist when the complaint is filed.” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830, 109 S.Ct. 2218, 2222, 104 L.Ed.2d 893 (1988). The facts that existed on February 18, 1992, when the government filed its counterclaim, were as follows: (i) the Claims Court had before it a challenge to a termination for default over which it is deemed to have had jurisdiction (through the retroactivity provision of the FCA); and (ii) there had been a contracting officer’s final decision on October 18, 1990, asserting a claim against Sharman arising out of that termination for default, which decision Sharman was challenging through its amended complaint filed on January 6, 1992. These facts constituted matters within the jurisdiction of the Claims Court under the CDA. See 41 U.S.C. § 609(a)(1) (stating that a contractor may bring an action on a contracting officer’s final decision in what was then the Claims Court).
The government’s counterclaim was brought pursuant to 28 U.S.C. §§ 1503 and 2508. On the date the government filed its counterclaim, section 1503 stated, in pertinent part, that the Claims Court had “jurisdiction to render judgment upon any ... demand by the United States against any plaintiff in such court.” 28 U.S.C. § 1503 (1988). At the same time, section 2508 stated in pertinent part as follows:
Upon the trial of any suit in the United States [Claims Court] in which any ... counterclaim, claim for damages, or other demand is set up on the part of the United States against any plaintiff making claim against the United States in said court, the court shall hear and determine such claim or demand both for and against the United States and plaintiff.
If upon the whole case it finds that the plaintiff is indebted to the United States it shall render judgment to that effect, and such judgment shall be final and reviewable.
28 U.S.C. § 2508 (1988).
Sections 1503 and 2508 gave the Claims Court jurisdiction to enter judgment on the government’s counterclaim. The counterclaim was a response to Sharman’s challenge to the default termination. The Claims Court had jurisdiction under the CDA with respect to that challenge by reason of the retroactivity provision of the FCA. Put another way, in the words of section 1503, the government’s counterclaim was a “demand by the United States against a plaintiff in [the Claims Court].” That plaintiff was Sharman, and in view of the retroactivity provision of the FCA, Sharman was properly in the Claims Court under the CDA at the time of the “demand by the United States” against it.4

The Challenge to the Default Termination

As far as the matter of the default termination is concerned, the majority states that the Court of Federal Claims “has subject matter jurisdiction over the default termination challenge in the contractor’s original complaint, and in light of our holdings it now requires decision.” I do not believe that a remand is necessary, however.
As already seen, during the litigation below, the Claims Court held that it had juris*1578diction over Sharman’s challenge to the default termination. In its decision of December 20, 1991, the court denied the government’s motion to dismiss the challenge. Subsequently, following the filing of Sharman’s amended complaint, the government’s answer to the amended complaint and counterclaim, and Sharman’s answer to the counterclaim, trial was held. After trial, the court issued a bench ruling which addressed the merits of the validity of the termination for default. Thereafter, judgment was entered in accordance with that bench ruling. In short, Sharman’s challenge to the default termination — which the Claims Court had jurisdiction to hear — has been adjudicated. For that reason, it is not a matter which, in the words of the majority, “requires decision.” 5
CONCLUSION
For the foregoing reasons, I would hold that the Claims Court had jurisdiction in this matter and would proceed to adjudicate the merits.

. Unless the context requires otherwise, I refer to the Court of Federal Claims as the "Claims Court.” During the litigation at issue, the formal name of the Court of Federal Claims was the “United States Claims Court.”

. Sharman had moved on April 2, 1991, for leave to amend its complaint in order to contest the contracting officer’s final decision of October 18, 1990. The Claims Court had deferred ruling on the motion.

. Durable Metal Prods, is distinguishable from this case. In that case, the action which was filed in the Claims Court and which the court concluded operated to give the Department of Justice sole authority and control in the matter was one over which the court had jurisdiction under the CDA, unlike Sharman's convenience termination costs claim which was pending before the Claims Court at the time the contracting officer issued his final decision on October 18, 1990.

. Assuming that, absent the retroactivity provision of the FCA, the Claims Court lacked jurisdiction over Sharman's challenge to the default termination, once the contracting officer issued his decision of October 18, 1990, Sharman could have filed a new complaint challenging both the default termination and the government's demand for the return of the unliquidated progress payments. If Sharman had done so, the court would have had jurisdiction in the matter. Instead of having Sharman file a new complaint, however, the court directed Sharman to file an amended complaint. I believe that, under these circumstances, even without the benefit of the FCA’s retroactivity provision, the court properly exercised jurisdiction over Sharman's amended complaint and the government’s counterclaim. See Christian Appalachian Project, Inc. v. United States, 10 Cl.Ct. 595, 597 (1986).

. In the BACKGROUND section of its opinion, the majority notes that on December 20, 1991, the Claims Court denied the government’s motion to dismiss Sharman's challenge to the default termination. Later, in its opinion, however, the majority states that ”[t]he Claims Court dismissed the portion of Sharman’s original complaint seeking declaratory judgment that the government’s Termination for Default was unlawful because it was unaccompanied by a monetary claim.” In addition, in footnote 14 of its opinion, the majority states that Sharman's challenge to the default termination "was not decided on the merits because of lack of jurisdiction...." I do not believe, however, that the record reflects any such dismissal. Also, I believe that review of the Claims Court's bench ruling makes it clear that the court adjudicated the validity of the default termination.