Court Opinion

ID: 1036342
Source: CourtListenerOpinion
Date Created: 2013-08-02 19:14:04.833515+00
Date Added: 2024-06-11T11:13:33.734263
License: Public Domain

FILED
                                                             AUG 02 2013
                                                         SUSAN M SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
 1                                                         OF THE NINTH CIRCUIT

 2
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                           )    BAP No. NV-12-1572-DKiCo
                                      )
 6   WASHINGTON GROUP INTERNATIONAL, )     Bk. No.    01-31627-GWZ
     INC., ET AL.,                    )
 7                                    )    Adv. Proc. No. 05-05022-GWZ
                         Debtor.      )
 8   ________________________________ )
                                      )
 9   WASHINGTON GROUP INTERNATIONAL, )
     INC.,                            )
10                                    )
                         Appellant,   )
11                                    )
     v.                               )    M E M O R A N D U M1
12                                    )
     THE UNITED STATES OF AMERICA,    )
13                                    )
                         Appellee.    )
14   ________________________________ )
15                   Argued and Submitted on July 19, 2013
                              at Las Vegas, Nevada
16
                             Filed - August 2, 2013
17
                 Appeal from the United States Bankruptcy Court
18                         for the District of Nevada
19            Honorable Gregg W. Zive, Bankruptcy Judge, Presiding
20
     Appearances:   Beth Heifetz of Jones Day argued for appellant
21                  Washington Group International, Inc.; Glenn Douglas
                    Gillett of the U.S. Department of Justice argued for
22                  appellee The United States of America.
23
24        1
               This disposition is not appropriate for publication.
25   Although it may be cited for whatever persuasive value it may have
     (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
26   Cir. BAP Rule 8013-1.

                                       1
 1   Before:   DUNN, KIRSCHER and COLLINS2, Bankruptcy Judges.
 2
 3         This appeal involves the impact of confirmation of a
 4   chapter 113 bankruptcy plan on claims that were not asserted in the
 5   bankruptcy case but are alleged by the debtor to have been within
 6   the “fair contemplation” of the claimant such that the claimant is
 7   enjoined from asserting the claims in subsequent litigation filed in
 8   federal district court.   The bankruptcy court applied Ninth Circuit
 9   precedent, particularly as set forth in Cal. Dep’t of Health Svcs.
10   v. Jensen (In re Jensen), 995 F.2d 925 (9th Cir. 1993), and denied
11   the debtor’s motion to enjoin the subsequent litigation.     We AFFIRM.
12                                 I.   FACTS
13   A.   Context of the Current Dispute
14         On May 14, 2001 (“Petition Date”), Washington Group
15   International, Inc. ("WGI") and most of its subsidiaries filed
16   voluntary chapter 11 petitions.    On December 21, 2001, the
17   bankruptcy court confirmed WGI's Second Amended Plan, which provided
18   that "[n]otwithstanding anything in the Plan or the Order of
19   Confirmation to the contrary, the Plan does not discharge any cause
20   of action that is not within the fair contemplation of the entity
21   asserting the cause of action, in accordance with In re Jensen,
22
23         2
               Hon. Daniel P. Collins, Bankruptcy Judge for the District
24   of Arizona, sitting by designation.
           3
25             Unless specified otherwise, all chapter, code and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
26   the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

                                        2
 1   995 F.2d 925 (9th Cir. 1993).”   The effective date of the confirmed
 2   plan was January 25, 2002 (“Effective Date”).
 3        On November 5, 2004, the United States of America, on behalf of
 4   the United States Agency for International Development ("USAID"),
 5   filed a complaint ("Complaint") in the United States District Court
 6   for the District of Idaho ("USAID Litigation"), asserting claims
 7   against WGI f/k/a Morrison Knudsen Corporation ("MK"), Contract
 8   International Inc. ("CII"), and Misr Sons Development S.A.E., a/k/a
 9   Hassom Allam Sons ("HAS") under the False Claims Act ("FCA")4, the
10   Foreign Assistance Act of 1961 ("FAA")5, and several common law
11   theories, including payment by mistake, unjust enrichment, and
12   fraud.   The Complaint alleged generally that the claims being
13   asserted arose out of the
14        fraud and misrepresentation of the defendants to secure
          five separate [USAID] funded host country construction
15        contracts ["Egypt Contracts"] with the Arab Republic of
          Egypt ("Egypt") and the defendants' subsequent submission
16        of false claims to USAID through false payment demands and
          other false records and statements intended to induce
17        payment from USAID.
18   Complaint at 2:1-15.
19        On March 23, 2005, WGI commenced an adversary proceeding in the
20   bankruptcy court seeking to enjoin continued prosecution of the
21   USAID Litigation.   The bankruptcy court determined through its order
22   entered November 9, 2005, that USAID's common law claims were barred
23   as a consequence of confirmation of the plan in WGI's bankruptcy
24
          4
25              31 U.S.C. §§ 3729-33, as amended.
          5
26              22 U.S.C. § 2399b, as amended.

                                       3
 1   case.    On October 6, 2011, the bankruptcy court held a trial on the
 2   remaining issues of whether USAID's claims under the FCA and the FAA
 3   similarly were barred.     The bankruptcy court's Memorandum Decision
 4   (“Memorandum”) on those issues was entered April 24, 2012, and is
 5   the subject of this appeal.
 6   B.   Underlying Facts
 7           1.   The Contracts Generally
 8           The Egypt Contacts were a result of the 1978 Camp David
 9   Accords, through which USAID committed more than $2 billion toward
10   the development and rehabilitation of Egypt's infrastructure.       To
11   implement various infrastructure projects, the United States and
12   various Egypt government agencies sought bids from qualified United
13   States contractors.     Although each contract was between a
14   U.S. contractor and the Egyptian governmental agency responsible for
15   the project, because some of the funding was from USAID, both the
16   FAA and the FCA applied.     The purpose of USAID's involvement was to
17   ensure that USAID and "host country" (in this case Egypt) rules,
18   requirements and procedures were followed and to ensure performance
19   under the contract.
20           To bid on the prime contract for an individual project, a
21   prospective bidder was required first to pre-qualify through USAID.
22   USAID rules and regulations required that for any joint venture
23   bidder, each joint venture member had to be pre-qualified.     The
24   primary purpose of pre-qualification was to ensure bidders could
25   satisfy USAID's "nationality and source" rules.
26           USAID and the government of Egypt financed the infrastructure

                                            4
 1   projects and paid the prime contractors.   USAID was charged with
 2   approving a contractor's request for payment ("Payment Request").
 3   Each Payment Request was submitted to USAID's Contract Management
 4   Coordinator ("CMC"), and contained invoices which certified that the
 5   amounts requested were due and payable.    The invoices also certified
 6   that "to the best of [the contractor's] information and belief any
 7   commodity or service supplied under said contract meets the source,
 8   origin, componentry and nationality requirements specified in the
 9   contract and/or letter of commitment" ("the Compliance
10   Certification").
11        At issue in the USAID Litigation are five separate
12   USAID-financed Egypt Contracts:    the Ismailia Contract, the Port
13   Said Contract, the Aswan Contract, the Luxor Contract, and the
14   Telecom Contract.    MK applied as the entity pre-qualifying for the
15   Ismailia Contract, the Port Said Contract, and the Telecom Contract.
16   A joint venture of MK and CII applied as the entity pre-qualifying
17   for the Aswan Contract and the Luxor Contract.
18        2.     The Canal Cities Contracts
19        MK submitted its pre-approval application for the design and
20   construction of certain wastewater treatment facilities known as the
21   Canal Cities Projects on March 17, 1989, and supplemented its
22   application in June 1991 and again in September 1991.    The Canal
23   Cities Projects included the Ismailia Contract and the Port Said
24   Contract.    In September 1991, USAID's CMC for the Canal Cities
25   Projects recommended MK as an approved bidder to the National
26   Organization for Potable Water and Sanitary Drainage ("NOPWASD"),

                                         5
 1   the Egyptian government agency associated with the Canal Cities
 2   Projects.
 3        On August 27, 1992, MK submitted a fixed price bid on the
 4   Ismailia Contract; the CMC recommended MK to NOPWASD, and NOPWASD
 5   awarded the Ismailia Contract to MK on October 26, 1992.    Sometime
 6   thereafter, MK sought and received approval from USAID and NOPWASD
 7   for CII and HAS to perform work as subcontractors on the Ismailia
 8   Contract.    Between 1993 and April 1995, MK submitted approximately
 9   80 invoices for payment for work performed under the Ismailia
10   Contract, each of which included the Compliance Certification.      The
11   Ismailia Contract was not executory at the time WGI filed its
12   bankruptcy petition.
13        On September 30, 1993, MK submitted a fixed price bid on the
14   Port Said Contract; the CMC recommended MK to NOPWASD, and NOPWASD
15   awarded the Port Said Contract to MK on December 1, 1993.   Sometime
16   thereafter, MK sought and received approval from USAID and NOPWASD
17   for CII and HAS to perform work as subcontractors on the Port Said
18   Contract. Between 1993 and August 2000, MK submitted approximately
19   69 invoices for payment for work performed under the Port Said
20   Contract, each of which included the Compliance Certification.      The
21   Port Said Contract was not executory at the time WGI filed its
22   bankruptcy petition.
23        3.     The Secondary Cities Contracts
24        MK formed a joint venture with CII ("MK/CII Joint Venture") on
25   February 16, 1997.    The MK/CII Joint Venture submitted its pre-
26   approval application for what is referred to as the Secondary Cities

                                         6
 1   Projects, which called for the rehabilitation, augmentation, and
 2   extension of wastewater facilities in several Egyptian cities.    The
 3   Secondary Cities Projects included the Aswan Contract and the Luxor
 4   Contract.   USAID's CMC for the Secondary Cities Projects recommended
 5   MK and CII as approved joint venture bidders to the NOPWASD.
 6        On May 6, 1998, the MK/CII Joint Venture ("Aswan Joint
 7   Venture") submitted a fixed price bid on the Aswan Contract; the CMC
 8   recommended the Aswan Joint Venture to NOPWASD, and NOPWASD awarded
 9   the Aswan Contract to the Aswan Joint Venture on October 1, 1998.
10   Sometime thereafter, the Aswan Joint Venture sought and received
11   approval for HAS to perform work as a subcontractor on the Aswan
12   Contract.
13        Between 1998 and October 2003, the Aswan Joint Venture
14   submitted approximately 55 invoices for payment for work performed
15   under the Aswan Contract, each of which included the Compliance
16   Certification.   Nineteen of the invoices were submitted after
17   confirmation of the WGI plan; eighteen of those were submitted after
18   the Effective Date of the WGI plan.
19        On June 25, 2000, the MK/CII Joint Venture ("Luxor Joint
20   Venture") submitted a fixed price bid on the Luxor Contract.     The
21   bid included a copy of a Luxor Joint Venture agreement dated
22   June 13, 2000, which identified MK and CII as the parties to the
23   Luxor Joint Venture.   The CMC recommended the Luxor Joint Venture to
24   NOPWASD, and NOPWASD awarded the Luxor Contract to the Luxor Joint
25   Venture on April 24, 2001.   In June 2001, the Luxor Joint Venture
26   sought approval to use as a subcontractor on the Luxor Contract a

                                       7
 1   joint venture between CII and HAS.     After USAID rejected the
 2   request, the Luxor Joint Venture sought approval to use as a
 3   subcontractor on the Luxor Contract a joint venture between OCI (the
 4   parent of CII) and HAS, which USAID and NOPWASD approved.
 5        Between 2001 and July 2004, the Luxor Joint Venture submitted
 6   approximately 38 invoices for payment for work performed under the
 7   Luxor Contract, each of which included the Compliance Certification.
 8   Thirty-three of the invoices were submitted after confirmation of
 9   the WGI plan; thirty-one of those invoices were submitted after the
10   Effective Date of the WGI plan.
11        4.   The Telecom Contract
12        MK submitted its pre-approval application for the project to
13   expand the telecommunications infrastructure in Egypt ("the Telecom
14   Contract") on March 25, 1997.    USAID's CMC for the Telecom Project
15   recommended MK as an approved bidder to Telecom Egypt, the Egyptian
16   government agency responsible for projects to expand Egypt's
17   telecommunications which were partially funded by USAID.
18        On February 14, 1999, MK submitted a fixed price bid, which
19   listed HAS as a proposed subcontractor, on the Telecom Contract.
20   The CMC recommend MK to Telecom Egypt, and Telecom Egypt awarded the
21   Telecom Contract to MK on August 30, 1999.
22        Between 1999 and April 2003, MK submitted more than 300
23   invoices for payment for work performed under the Telecom Contract,
24   each of which included the Compliance Certification.    One hundred
25   thirty of the invoices were submitted after confirmation of the WGI
26   plan; 121 of those were submitted after the Effective Date of the

                                        8
 1   WGI plan.
 2        5.     The Investigations
 3              a.   The Aswan Contract Investigation
 4        Beginning in September 1999, MK notified the CMC, NOPWASD and
 5   USAID of problems in the Aswan Contract which resulted in cost
 6   overruns and time delays.     Over the course of three years, several
 7   modifications to the Aswan Contract were negotiated between and
 8   among the CMC, NOPWASD, USAID and the Aswan Joint Venture, the
 9   result of which was additional compensation to the contractor and
10   additional time to perform for the Aswan Joint Venture.    In April
11   2001, WGI submitted Variation Order Request No. 50 ("VOR 50") for
12   the Aswan Contract.     VOR 50 was the precursor to WGI's formal
13   "Request for Equitable Adjustment" claim ("REA Claim") submitted to
14   an arbitration panel.
15        On March 13, 2002, a WGI employee produced in support of its
16   REA Claim a document reflecting that the Aswan Joint Venture had
17   requested and received cash calls from HAS in connection with the
18   Aswan Contract, and that a three-party joint venture existed as to
19   the Aswan Contract which included HAS.     This document was turned
20   over to USAID which then opened an investigation ("Aswan
21   Investigation") into the existence of a three-party joint venture
22   agreement related to the Aswan Contract.     During the Aswan
23   Investigation, WGI produced two signed joint venture agreements
24   relating to the Aswan Contract, one which included HAS and one which
25   did not.
26        Additional documents produced during the Aswan Investigation

                                         9
 1   revealed that undisclosed joint venture agreements existed with
 2   respect to other Egypt Contracts.    WGI produced a three-party joint
 3   venture agreement relating to the performance of the Ismailia
 4   Contract; the parties to the agreement were MK, CII, and HAS.     WGI
 5   produced a three-party joint venture agreement relating to the
 6   performance of the Port Said Contract; the parties to the agreement
 7   were MK, CII, and HAS.   WGI produced an unsigned three-party joint
 8   venture agreement relating to the performance of the Luxor Contract;
 9   the parties to the unsigned agreement were WGI, CII, and HAS.
10   Finally, WGI produced a two-party joint venture agreement relating
11   to the performance of the Telecom Contract; the parties to the
12   agreement were MK and HAS.
13           b.   The Telecom Contract Investigation
14        Approximately sixteen months after MK was awarded the Telecom
15   Contract, one of its suppliers, 3M, requested clarification from the
16   CMC whether certain components to be supplied would comply with
17   USAID regulations for the Telecom Contract.   Shortly thereafter, in
18   April 2001, a CMC agent visited WGI's warehouse to verify the source
19   and origin of components awaiting use in the Telecom Contract at
20   which time he observed packing cartons marked "Made in Spain" and
21   "Made in Mexico."   A USAID agent then interviewed the CMC agent
22   regarding these observations.   On June 27, 2001, a WGI employee
23   called a CMC agent to inform him that WGI was ordering additional
24   components from 3M that were not from the United States, and
25   inquired whether those components would be compliant with USAID
26   source and origin requirements.   On July 14, 2001, another WGI

                                         10
 1   employee submitted a Telecom Contract invoice which included the
 2   Compliance Certification.   On September 5, 2001, representatives of
 3   the CMC and of USAID inspected WGI's Telecom Contract warehouse in
 4   Heliopolis, Egypt, where they observed shipping boxes containing
 5   modular connectors and terminal blocks bearing Spain and Mexico
 6   manufacturing markings.    The following week, a USAID agent visited
 7   WGI's offices to advise WGI of its civil investigation into WGI's
 8   use of components made in Mexico and Spain on the Telecom Contract.
 9   On November 18, 2001, WGI complied with USAID's request for source
10   and origin information with respect to components supplied by 3M.
11         On October 9, 2001, Telecom Egypt recommended that the CMC
12   withhold payment to WGI for non-USA product in light of questions
13   regarding WGI's compliance with the source and origin requirements
14   of the Telecom Contract.    On October 10, 2001, the CMC notified WGI
15   that it was withholding payment pending documentation of compliance
16   with the source and origin requirements.   The CMC sent WGI a letter
17   report on October 31, 2001, outlining the apparent failure to comply
18   with the source and origin requirements and advising that payments
19   were being withheld for non-compliant components.
20         On November 7, 2001, a USAID agent subpoenaed WGI's records
21   relating to the Telecom Conract.   WGI complied with the subpoena on
22   November 16, 2001.   USAID's investigation of the source and origin
23   issues with the Telecom Contract continued through 2002.
24   C.   The USAID Litigation and WGI's Bankruptcy Case
25         1.   Facts Relating to USAID’s Notice of WGI’s Bankruptcy
26         Three days after the Petition Date, WGI’s Executive Vice

                                        11
 1   President sent a letter to USAID at its Washington, D.C. offices, to
 2   advise it of the bankruptcy filing, but emphasized that USAID’s
 3   “contracts are with a non-filing subsidiary and therefore will not
 4   be affected by the filing.”    (Emphasis in original.)   Six days after
 5   the Petition Date, a WGI vice president sent a letter to a USAID
 6   employee in Egypt to notify USAID of the bankruptcy filing, but
 7   emphasized that the “contract for the Luxor Project is with a non-
 8   filing joint venture and therefore will not be affected by the
 9   filing.”6    (Emphasis in original.)
10        On August 8, 2001, WGI filed amended schedules and an amended
11   statement of financial affairs, modified in numerous places to
12   include WGI’s interests in joint ventures.   The amended “Schedule G
13   - Executory Contracts and Unexpired Leases” alone consisted of
14   531 pages.    Additionally, some, but not all, of the monthly
15   operating reports between the months ending June 2001 through
16   November 2001 included a “Schedule of Investment and Receivables in
17
18        6
               There is an inconsistency in the record with respect to
19   the date the Luxor Contract was awarded. “NOPWASD, with USAID’s
     approval, on or about April 24, 2001, awarded and entered into the
20   Luxor Contract with the Luxor MK/CII JV.” Memorandum at 11:3-4.
21   However, the USAID employee in Egypt testified that at the time he
     received word of WGI’s bankruptcy, WGI and CII were the low bidder
22   on the Luxor Contract, that the letter he received prompted USAID to
     check out the financial soundness of the joint venture, that WGI
23   provided additional information to assure USAID and NOPWASD that WGI
     had the financial soundness and capacity to perform the Luxor
24
     Contract, and that WGI “thereafter” was awarded the Luxor Contract.
25   Memorandum at 16:1-7; see generally Memorandum at 16:8-25
     (identifying May 20, 2011, as the proposed signing date for the
26   Luxor Contract).

                                        12
 1   Joint Ventures.”
 2        2.    USAID’s Common Law Claims
 3        On November 9, 2005, the bankruptcy court granted summary
 4   judgment in the adversary proceeding in favor of WGI barring USAID
 5   from asserting all claims in the USAID Litigation.   In doing so, the
 6   bankruptcy court relied upon the following facts.
 7        During the course of WGI's bankruptcy case, WGI filed motions
 8   to assume all of the Egypt Contracts.   After hearing, the motions
 9   were granted.   The United States never raised an issue of default
10   with respect to the Egypt Contracts, and did not request any cure
11   prior to assumption.   Orders were entered approving the assumptions
12   of the Egypt Contracts on July 6, 2001 and August 1, 2001.     In
13   addition, the bankruptcy court established September 17, 2001, as
14   the deadline for the United States to file proofs of claim asserting
15   the need to cure the Egypt Contracts.   The United States filed no
16   cure claims by the deadline or at any time thereafter.   The
17   bankruptcy court noted that USAID waited more than three years after
18   the cure claims deadline to raise its claims in the USAID
19   Litigation, which it did without first obtaining the permission of
20   or even notifying the bankruptcy court.   The bankruptcy court also
21   noted that it had approved a settlement between WGI and the United
22   States of America with respect to all "indirect rate adjustment
23   claims."   WGI's motion to approve the settlement stated that the
24   agreement between the parties "resolv[ed] all claims, including
25   future claims, with the United States of America due to the formal
26   closing of certain contracts that existed between WGI and the

                                        13
 1   federal government" and that "[t]he debtors believe that the
 2   Agreement resolves all claims between WGI and the federal government
 3   with respect to the Contracts and is fair and equitable and in the
 4   best interests of the estates."   Based on the foregoing chronology,
 5   and upon USAID's failure to object to WGI's characterization that
 6   all claims were resolved by the settlement agreement, the bankruptcy
 7   court determined that USAID was barred from pursuing all of its
 8   alleged claims in the USAID Litigation.
 9         USAID appealed to the District Court for the District of
10   Nevada, which reversed to the extent the bar applied to USAID’s
11   claims under the FCA and the FAA, on the basis that the bankruptcy
12   court had erred in deeming those claims to be cure claims under the
13   Egypt Contracts rather than statutory claims.   The District Court
14   did not disturb the bankruptcy court’s determination that USAID’s
15   alleged common law claims were barred.
16        3.   USAID’s Alleged Statutory Claims
17        On remand, and following further pretrial proceedings, the
18   bankruptcy court held that as the party seeking relief, WGI bore the
19   burden of proving that prosecution of the USAID Litigation was
20   barred by the confirmation order as claims that were within the fair
21   contemplation of USAID at the time of confirmation.   The bankruptcy
22   court then applied the “fair contemplation” test set forth in Jensen
23   to USAID’s statutory claims as to each of the Egypt Contracts.
24        With respect to the statutory claims relating to the Ismailia
25   Contract and the Port Said Contract, the bankruptcy court held that
26   because USAID did not learn of the alleged illegal joint venture

                                       14
 1   agreements among WGI, CII and HAS until after the Effective Date,
 2   USAID could not have fairly contemplated its alleged statutory
 3   claims against WGI.   In addition, to the extent WGI made disclosures
 4   in its bankruptcy filings which identified its joint venture
 5   partners with respect to the Ismailia Contract and the Port Said
 6   Contract, the bankruptcy court determined that those disclosures
 7   were too vague to have alerted USAID to the illegal joint venture
 8   agreements.   Finally, the letter assurances WGI sent USAID to the
 9   effect that the Egypt Contracts were with a non-filing subsidiary
10   and therefore not affected by the bankruptcy filing negated any fair
11   contemplation by USAID.
12        With respect to the statutory claims relating to the Aswan
13   Contract, the bankruptcy court held that the analysis was similar as
14   to that for the Canal Cities Contracts, except with respect to WGI’s
15   REA Claim.    However, no evidence was provided to indicate that any
16   information USAID obtained from the dispute regarding the REA Claim
17   would raise USAID’s suspicions as to alleged statutory claims.     To
18   the contrary, USAID and WGI had a 20-year history, including the
19   Egypt Contracts and others, which the bankruptcy court characterized
20   as “long and mutually beneficial.”      Further, WGI’s cooperation in
21   prior investigations would not have given USAID any specific reason
22   to suspect WGI might have violated the FCA or the FAA.     Thus, any
23   pre-Effective Date statutory claims could not have been fairly
24   contemplated by USAID.    Additionally, the bankruptcy court reasoned
25   that under O’Loghlin v. County of Orange, 229 F.3d 871 (9th Cir.
26   2000), any post-Effective Date statutory claims USAID had based on

                                        15
 1   continuing violations of the FCA or the FAA were not barred, because
 2   to hold otherwise would effectively provide WGI with a continuing
 3   license to violate the law.
 4        With respect to the statutory claims relating to the Luxor
 5   Contract, the bankruptcy court held that any pre-Effective Date
 6   claims were not fairly contemplated because the alleged illegal
 7   joint venture agreement was not produced by WGI until after the
 8   Effective Date.   Any statutory claims USAID may have had based on
 9   post-Effective Date violations of the FCA or the FAA were not
10   barred, because to hold otherwise would effectively provide WGI with
11   a continuing license to violate the law.
12        With respect to USAID’s statutory claims relating to the
13   Telecom Contract, the bankruptcy court held that pre-Effective Date
14   claims related to use of alleged foreign-made components could have
15   been fairly contemplated by USAID, and therefore discharged through
16   WGI’s plan, because USAID had begun to investigate WGI’s compliance
17   with component source and origin requirements on September 5, 2001,
18   and withheld payment pending its investigation by November 2001.
19   However, under the O’Loghlin analysis, the bankruptcy court ruled
20   that any post-Effective Date claims related to use of alleged
21   foreign-made components were not fairly contemplated by USAID,
22   because to hold otherwise would effectively provide WGI with a
23   continuing license to violate the law.   Finally, any statutory
24   claims based upon alleged false certifications and/or the existence
25   of an illegal joint venture agreement, were not barred.   As with the
26   other Egypt Contracts, any pre-Effective Date claims were not fairly

                                       16
 1   contemplated because the alleged illegal joint venture agreement was
 2   not produced by WGI until after the Effective Date, and statutory
 3   claims USAID may have had based on post-Effective Date violations of
 4   the FCA or the FAA were not barred, because to hold otherwise would
 5   effectively provide WGI with a continuing license to violate the
 6   law.
 7          The bankruptcy court entered its order denying WGI’s motion to
 8   enjoin the USAID Litigation on May 29, 2012.     The bankruptcy court
 9   entered its order denying WGI’s motion to alter or amend the
10   Memorandum Decision on October 30, 2012.      WGI filed a timely notice
11   of appeal.
12                              II.   JURISDICTION
13          The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
14   and 157(b)(2)(B), (I), and (O).     We have jurisdiction under
15   28 U.S.C. § 158(a).
16                                III.   ISSUES7
17          Whether the bankruptcy court erred when it placed the burden of
18   proof on WGI to establish that the USAID Litigation was barred by
19   the confirmed chapter 11 plan.
20          Whether the bankruptcy court erred in its application of the
21   “fair contemplation” test to determine whether the Statutory Claims
22   were barred.
23
            7
                As stated in footnote 1 of Appellee’s Opening Brief, WGI
24
     failed to comply with Rule 8010(a)(1)(B) &(C) by failing to include
25   in its opening brief (1) a statement of appellate jurisdiction,
     (2) the standard of appellate review, (3) and the issues presented
26   on appeal.

                                         17
 1        Whether the bankruptcy court erred when it determined that all
 2   post-Effective Date Statutory Claims were not barred.
 3                          IV.   STANDARDS OF REVIEW
 4        We review the bankruptcy court’s allocation of the burden of
 5   proof, which is a conclusion of law, de novo.      See Ferrari, Alvarez,
 6   Olsen & Ottoboni v. Home Ins. Co., 940 F.2d 550, 555 (9th Cir.
 7   1991).   De novo review requires that we consider a matter afresh, as
 8   if no decision had been rendered previously.    United States v.
 9   Silverman, 861 F.2d 571, 576 (9th Cir. 1988); B-Real, LLC v.
10   Chaussee (In re Chaussee), 399 B.R. 225, 229 (9th Cir. BAP 2008).
11        Where “the historical facts are established; the rule of law is
12   undisputed, ...; and the issue is whether the facts satisfy the
13   legal rule [,]” a mixed question of fact and law is presented which
14   we review de novo.   Murray v. Bammer (In re Bammer), 131 F.3d 788,
15   792 (9th Cir. 1997).   Whether the bankruptcy court correctly applied
16   Jensen’s “fair contemplation” test is a mixed question of fact and
17   law, as is the bankruptcy court’s determination that USAID’s post-
18   Effective Date statutory claims are not barred.
19                                V.   DISCUSSION
20   A.   WGI Bore the Burden of Proof to Establish the Scope of the
          Bar to USAID’s Claims.
21
22        Generally speaking, the party seeking relief bears the burden
23   of proof.
24        In order to invoke the jurisdiction of the federal courts,
          a plaintiff must establish “the irreducible constitutional
25        minimum of standing,” consisting of three elements: injury
          in fact, causation, and a likelihood that a favorable
26        decision will redress the plaintiff's alleged injury.

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 1        [Lujan v. Defenders of Wildlife, 504 U.S. 55, 560–61
          (1992)]; see Cal. Pro–Life Council, Inc. v. Getman,
 2        328 F.3d 1088, 1093 (9th Cir.2003). The injury in fact
          must constitute “an invasion of a legally protected
 3        interest which is (a) concrete and particularized, and
          (b) actual or imminent, not conjectural or hypothetical.”
 4        [Lujan, 504 U.S. at 560](internal citations and quotations
          omitted).
 5
 6   Lopez v. Candaele, 630 F.3d 775, 785 (9th Cir. 2010).
 7        In its adversary complaint, WGI invoked the jurisdiction of the
 8   bankruptcy court to determine whether the USAID Litigation violated
 9   the discharge provided by the confirmed plan.   Paragraph J.1.(d) of
10   the order confirming the chapter 11 plan provides an exception to
11   discharge of certain claims:
12        Notwithstanding anything in the Plan or the Order of
          Confirmation to the contrary, the Plan does not discharge
13        any cause of action that is not within the fair
          contemplation of the entity asserting the cause of action,
14        in accordance with In re Jensen, 995 F.2d 925 (9th Cir.
          1993).
15
16   Whether the USAID Litigation constituted “an invasion of a legally
17   protected interest,” i.e., WGI’s discharge of claims through the
18   confirmed plan, required a determination that the FCA and FAA claims
19   were within the fair contemplation of USAID.    The bankruptcy court
20   properly placed the burden of proof on WGI.
21   B.   The Bankruptcy Court Correctly Analyzed the Status of USAID’s
          Statutory Claims.
22
23        “We look to federal law to determine when a claim arises under
24   the bankruptcy code.”   Zilog, Inc. v. Corning (In re Zilog, Inc.),
25   450 F.3d 996, 1000 (9th Cir. 2006).    The Bankruptcy Code defines the
26   term “claim” broadly:

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 1       The term “claim” means -
         (a) right to payment, whether or not such right is reduced
 2       to judgment, liquidated, unliquidated, fixed, contingent,
         matured, unmatured, disputed, undisputed, legal,
 3       equitable, secured, or unsecured; or
         (B) right to an equitable remedy for breach of performance
 4       if such breach gives rise to a right to payment, whether
         or not such right to an equitable remedy is reduced to
 5       judgment, fixed, contingent, matured, unmatured, disputed,
         secured, or unsecured.
 6
 7   Section 101(5).
 8        However, the broad definition of claim is not without limit.
 9   In this appeal we are asked to determine whether two specific limits
10   on the definition of claim apply to the USAID Litigation.   The first
11   is known as the “fair contemplation” test, as set forth in Jensen,
12   and specifically incorporated into WGI’s confirmation order.   The
13   second limit, identified in O’Loghlin, can render postpetition acts
14   in violation of a statute into a postpetition claim, notwithstanding
15   that the debtor had been violating the statute prepetition.
16        As noted by the bankruptcy court:
17       Jensen’s “fair contemplation” test is a totality of the
         circumstances test, whereby the court should consider:
18       (1) when the conduct underlying the creditor’s claim
         occurred; (2) the creditor’s knowledge of that conduct;
19       (3) whether the creditor had an opportunity to learn of
         the conduct underlying the claim and whether it undertook
20       an investigation to determine whether it had a claim; and
         (4) whether there was any prepetition relationship between
21       the parties.
22   Memorandum Decision at 46:3-10.
23        The bankruptcy court determined that with respect to USAID’s
24   alleged claims premised upon the FCA and FAA based on WGI’s alleged
25   illegal joint ventures, those claims could not have been in USAID’s
26   fair contemplation prior to the Effective Date because USAID first

                                       20
 1   learned of the illegal joint ventures during the Aswan
 2   Investigation, which commenced after the Effective Date.    The record
 3   supports this determination.    Although WGI amended its schedules and
 4   statement of financial affairs prior to the Effective Date to make
 5   reference to some or all of the illegal joint ventures, there is
 6   nothing in the record to demonstrate that these disclosures were
 7   brought to USAID’s attention.   Had USAID been looking for them, it
 8   would have been like looking for the proverbial needle in a hay
 9   stack in light of the magnitude of the changes to the schedules.   In
10   any event, USAID would not have been on notice to look for them
11   where WGI had affirmatively assured USAID that their contracts were
12   not implicated in the filing.   While the bankruptcy court’s decision
13   in November 2005 barring the common law claims referenced the
14   assumption of the Egypt Contracts and a settlement with USAID of
15   rate adjustment claims which took place prior to the Effective Date,
16   WGI did not provide anything in the record with respect to these
17   proceedings from which we might conclude USAID had some knowledge of
18   the alleged illegal joint ventures.     We therefore agree that
19   (1) USAID’s claims on the Ismailia Contract and the Port Said
20   Contract, (2) USAID’s pre-Effective Date claims on the Aswan
21   Contract and the Luxor Contract, and (3) USAID’s pre-Effective Date
22   claims on the Telecom Contract, which are based on alleged illegal
23   joint ventures, are not subject to WGI’s discharge based on the
24   application of the Jensen “fair contemplation” test.
25        Even after the Effective Date, WGI continued to submit invoices
26   which bore allegedly false certifications.    As a matter of policy,

                                        21
 1   it was appropriate to apply O’Loghlin to exclude these claims from
 2   WGI’s discharge.   To do otherwise, as repeatedly stated by the
 3   bankruptcy court, would be to provide WGI with a continuing license
 4   to violate the law.    Accordingly, the bankruptcy court did not err
 5   when it determined that (1) USAID’s post-Effective Date claims on
 6   the Aswan Contract and the Luxor Contract, and (2) USAID’s post-
 7   Effective Date claims on the Telecom Contract, based upon alleged
 8   false certifications, were not subject to WGI’s discharge.
 9        Finally, the bankruptcy court determined that because USAID had
10   commenced an investigation into its source and origin claims under
11   the Telecom Contract prior to the Effective Date, those statutory
12   claims were within USAID’s “fair contemplation” such that USAID
13   should have asserted them on or before the claims bar date in WGI’s
14   bankruptcy case.   Because these claims were not timely asserted,
15   they are discharged.   USAID did not appeal this determination; nor,
16   of course, did WGI.    WGI does assert on appeal, however, that the
17   bankruptcy court erred when it did not extend the discharge to post-
18   Effective Date claims for the same alleged violations, rather than
19   applying O’Loghlin.    We cannot agree.   Like the bankruptcy court, we
20   believe that doing so would be tantamount to giving WGI a license to
21   violate the FCA and FAA post-Effective Date.
22                               VI.   CONCLUSION
23        As the party seeking relief through the adversary proceeding
24   complaint, WGI bore the burden of proof to establish that the scope
25   of the discharge encompassed the claims in the USAID Litigation.
26   The bankruptcy court did not err when it determined that the only

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 1   alleged statutory claims of USAID which were discharged were the
 2   pre-Effective Date claims for violations of the source and origin
 3   requirements under the Telecom Contract.   We AFFIRM.
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