Court Opinion

ID: 6335761
Source: CourtListenerOpinion
Date Created: 2022-04-28 14:00:19.746396+00
Date Added: 2024-06-11T09:24:01.965712
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS
    Appeal of -                                      )
                                                     )
    Herren Associates, Inc.                          ) ASBCA No. 63085
                                                     )
    Under Contract No. N00178-04-D-4062-EH02         )

    APPEARANCE FOR THE APPELLANT:                       Eden Brown Gaines, Esq.
                                                         Brown Gaines, LLC
                                                         Washington, DC

    APPEARANCES FOR THE GOVERNMENT:                     Craig D. Jensen, Esq.
                                                         Navy Chief Trial Attorney
                                                        Matthew S. Hawkins, Esq.
                                                         Trial Attorney

            OPINION BY ADMINISTRATIVE JUDGE MELNICK DENYING
           THE GOVERNMENT’S MOTIONS TO DISMISS AND TO REQUIRE
                         AN AMENDED COMPLAINT

       This is a claim for additional costs owed under a contract between appellant,
Herren and Associates, Inc. (Herren), and the Department of the Navy (government).
The government seeks dismissal of the appeal for failure to state a claim. It argues that
the complaint inadequately notifies it of Herren’s cause of action or fails to plausibly
suggest a showing of entitlement to relief. Alternatively, the government seeks an order
requiring Herren to file an amended complaint with more definitive and specific
allegations. Both requests are denied.

               STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

        Herren’s allegations are short. On June 18, 2013, the government awarded it the
contract identified above for engineering and support services (compl. ¶ 1; R4, tab 2). *
Compensation was on a cost reimbursement basis to include a fixed fee for most of the
line items (R4, tab 2 at 2-3, 35). During performance of the second option year a
government employee directed Cardinal Engineering (Cardinal), a Herren subcontractor,
to perform certain services that would increase the contract price by $136,000 (compl.
¶ 3). In response to a comment from Herren that the work was not the subject of a
contract modification with it, the government stated that it intended to issue a contract
modification, realign funding, and provide funds to pay Cardinal (id. ¶¶ 5-6). Based

*
    The award to which Herren refers was a delivery order issued under a technical services
         contract issued to Herren in 2004 (R4, tabs 1-2).
upon these representations, Herren paid Cardinal the “full value of the work performed”
(id. ¶ 6). Herren invoiced the government for “the additional costs incurred as a result of
government direction concerning” Cardinal (id. ¶ 7). The government allocated some
funding for the Cardinal work, but it did not cover all costs incurred during the second
option year. The funding was deficient in the amount of $67,730.80. (Id. ¶ 8) Herren
submitted a claim containing essentially the same allegations as the complaint which has
been denied by the contracting officer (R4, tabs 7-8). Herren seeks $67,730.80 as
payment for directed performance.

                                        DECISION

       I.     Motion to Dismiss

        Prior to filing its answer, the government has moved to dismiss the appeal for
failure to state a claim, contending that the complaint does not meet the minimum
pleading standard and therefore leaves the government without “notice of the
[a]ppellant’s theory of entitlement to defend against” (gov’t mot. to dismiss at 5). The
government also argues that the complaint fails to allege facts plausibly suggesting
entitlement to relief. The Board’s rules only require notice pleading that provides the
government with a fair notice of the claim and its grounds. Lockheed Martin Integrated
Sys., Inc., ASBCA Nos. 59508, 59509, 17-1 BCA ¶ 36,597 at 178,282; see also Erickson
v. Pardus, 551 U.S. 89, 93 (2007) (discussing Federal Rule of Civil Procedure 8(a)(2)’s
liberal fair notice pleading standard and stressing that specific facts are not necessary);
United States for the Use of Argyle Cut Stone Co. v. Paschen Contractors, Inc., 664 F.
Supp. 298, 302 (N.D. Ill. 1987) (the complaint need only give the theory behind the claim
and its basic grounds), cited in Lockheed Martin, 17-1 BCA ¶ 36,597 at 178,282. Herren
has done that. It has identified a cost reimbursement contract between it and the
government. It has alleged that the government directed its subcontractor to provide
performance which the government said it would fund under that contract. It alleges that,
given the additional work, it has not been paid all of the costs of its performance and
therefore seeks that additional amount. Contrary to the government’s position, these are
more than “[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements.” See Rack Room Shoes v. United States, 718 F.3d 1370, 1376
(Fed. Cir. 2013) (explaining that “threadbare recitals” are inadequate) (quoting Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009)). They are a short but concrete statement of events
leading to the assertion that the government has not paid Herren all the costs that the
contract promises it. The allegations adequately notify the government of Herren’s
theory and basic grounds of entitlement. In addition to providing a sufficient notice
pleading of its cause of action, Herren’s allegation that it has not been paid the full costs
of its performance plausibly suggests a basis for entitlement to relief sufficient to survive
a motion to dismiss. See Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009)
(requiring the complaint to set out “enough facts to state a claim to relief that is plausible
on its face”).

                                              2
       II.    Motion Seeking an Amended Complaint

       In the alternative to its motion to dismiss, the government requests the Board to
order Herren to file an amended complaint with more definitive and specific allegations.
The government argues that the existing complaint is too vague to enable it to prepare an
answer. It says it cannot discern what invoice Herren is identifying, the amount of the
invoice, the relevant contract line item, or whether it was rejected. We do not believe it is
necessary to delay the proceedings any longer for this purpose. The pleading options
available to the government include denying allegations when in good faith it lacks
sufficient knowledge to enable it to form a belief as to their truth. As Paschen
Contractors observes, the Federal Rules of Civil Procedure balance simple notice
pleading with liberal discovery provisions. 664 F. Supp. at 302. The Board’s rules do as
well. See Board Rule 8. The government can further inquire into the specifics of
Herren’s appeal through discovery.

                                      CONCLUSION

       Both motions are denied.

       Dated: April 12, 2022

                                                    MARK A. MELNICK
                                                    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

                                             3
      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. 63085, Appeal of Herren
Associates, Inc., rendered in conformance with the Board’s Charter.

      Dated: April 12, 2022

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

                                           4