Court Opinion

ID: 4792034
Source: CourtListenerOpinion
Date Created: 2021-08-19 20:05:03.964295+00
Date Added: 2024-06-11T08:09:49.602643
License: Public Domain

In the United States Court of Federal Claims
                                           No. 20-1784

                                      (Filed: August 19, 2021)

                                               )       Suit for breach of contract; indemnity
 CHEVRON U.S.A. INC. et al.,                   )       clause in contracts for production of high-
                                               )       octane gasoline during World War II;
                        Plaintiffs,            )       jurisdiction under the Contract Settlement
                                               )       Act of 1944, repealed but preserved in this
        v.                                     )       case under the savings clause of the
                                               )       repealer; effect of a release; factual issues
 UNITED STATES,                                )       bar summary judgment
                                               )
                        Defendant.             )
                                               )

        Michael W. Kirk, Cooper & Kirk, PLLC, Washington, D.C. for plaintiffs. With him on
briefs were Vincent J. Colatriano and Shelby L. Baird, Cooper & Kirk, PLLC, Washington,
D.C., Christopher H. Marraro, Baker & Hostetler LLP, Washington, D.C., and Bridget S.
McCabe, Baker & Hostetler LLP, Los Angeles, California.

       Stephen C. Tosini, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C. for the United States. With him on briefs
were Brian M. Boynton, Acting Assistant Attorney General, Civil Division, Robert E.
Kirschman, Jr., Director, and Franklin E. White, Jr., Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, D.C.

                                      OPINION & ORDER

       LETTOW, Senior Judge.

        This case has its roots in events that occurred during World War II, over 75 years ago.
Plaintiffs Chevron U.S.A. Inc., Texaco Downstream Properties Inc., and Union Oil Company of
California (collectively, “the oil companies”), have filed suit against the United States for breach
of contract regarding the government’s failure to indemnify the oil companies for
“environmental response costs . . . incurred due to the production of high-octane aviation
gasoline (‘avgas’) on behalf of the United States during World War II.” Compl. ¶ 2, ECF No. 1.

         Pending before the court is the government’s motion to dismiss in part and plaintiffs’
motion for partial summary judgment. For some aspects of the oil companies’ claims, the
government’s motion contends that this court lacks jurisdiction and that plaintiffs have failed to
state a claim upon which relief can be granted. Def.’s Mot. to Dismiss in Part (“Def.’s Mot.”),
ECF No. 7. Plaintiffs respond with a cross-motion for partial summary judgment on the issues of
liability under the avgas contracts and attendant claim-preparation costs and interest under the
Contract Settlement Act of 1944 (“CSA”). Pls.’ Mot for Partial Summ. J. (“Pls.’ Cross-Mot.”),
ECF No. 10; Pls.’ Mem., ECF No. 10-1. Primarily at issue is a question whether the court has
jurisdiction over claims under the CSA. That question is resolved in favor of the oil companies
based on a recent decision of the United States Court of Appeals for the Federal Circuit. See
Shell Oil Co. v. United States, __ F.4th __, 2021 WL 3377502 (Fed. Cir. Aug. 4, 2021) (“Shell
Oil IV”). 1 Based on the Circuit’s decision, the court finds that it maintains jurisdiction over
these claims under the CSA, and that plaintiffs may proceed with their suit pursuant to the CSA.
Also at issue is the effect of a release entered by one of the oil companies in 1949, but that
release does not bar future claims that were unknown and unknowable at the time of signing, as
these were. Other issues raised by the parties require additional discovery and resolution of facts
not before the court. Therefore, the government’s motion to dismiss is DENIED and plaintiffs’
motion for partial summary judgment is GRANTED IN PART.

                                         BACKGROUND 2

                                        A. The Avgas Contracts

         Upon entering World War II in 1941, the United States sought high-octane avgas as a
critical refinery product that “enabled aircraft to fly faster and higher, with improved rates of
climb and higher payload carrying capacity.” Shell Oil II, 751 F.3d at 1285. As such, high-
octane avgas “was essential to the United States’ war effort.” Id. (citation omitted). The
government contracted with various oil companies, including the predecessors-in-interest of the
plaintiff companies, “to produce maximum quantities of high-octane avgas” to meet the wartime
requirements. Pls.’ Mem. at 2. Specifically, plaintiffs cite seven contracts and amendments
signed between March 1942 and April 1944 as the bases for their claims. Compl. ¶ 16; see also
Compl. Exs. A-G, ECF Nos. 1-1 to 1-7. In exchange, the oil companies were provided a modest
profit, and, in addition, the contracts included an indemnity provision stating that, “Buyer shall
pay in addition to the prices as established . . . any new or additional taxes, fees, or charges, other
than income, excess profits, or corporate franchise taxes, which Seller may be required by any
municipal, state, or federal law . . . to collect or pay by reason of the production, manufacture,
sale or delivery of [avgas].” Compl. Ex. A at 17. By this clause, the companies contend that the
government “agreed to compensate the Oil Companies for all of their expenses and indemnify
the Oil Companies for the costs imposed on them resulting from any later-enacted laws,
including the costs of cleaning up wastes associated with the wartime production of avgas.”
Compl. ¶ 14. The oil companies aver that they “performed all relevant duties” required by the
contracts, and in doing so “produc[ed] millions of barrels of avgas under the direction of the

       1
          Shell Oil was a precedent-setting litigation involving four separate decisions by the
Federal Circuit after rulings by four separate judges of this court. See Shell Oil IV, __ F.4th __,
2021 WL 3377502; Shell Oil Co. v. United States, 896 F.3d 1299 (Fed. Cir. 2018) (“Shell Oil
III”) (damages decision); Shell Oil Co. v. United States, 751 F.3d 1282 (Fed. Cir. 2014) (“Shell
Oil II”) (liability decision); Shell Oil Co. v. United States, 672 F.3d 1283 (Fed. Cir. 2012) (“Shell
Oil I”) (recusal decision).
       2
          The recitations that follow do not constitute findings of fact, but rather are recitals
attendant to the pending motions and reflect matters drawn from the complaint, the parties’
briefs, and records and documents appended to the complaint and briefs.
                                                   2
United States.” Compl. ¶ 23. The government terminated the contracts at the conclusion of
World War II. Compl. ¶ 25.

       In 1949, following the end of the war, the government and Tide Water Associated Oil
Company, operator of the Avon refinery and a predecessor-in-interest of plaintiff Texaco,
entered into a mutual release agreement which is the focus of the government’s motion to
dismiss in part. See Def.’s Mot. at 3. The agreement stated that “Tide Water Associated Oil
Company releases [the government] of any and all liability resulting from termination of the
aforesaid contract[] dated May 19, 1943 . . . and with respect to any other provisions
thereunder.” Def.’s Mot. Ex. 1, ECF No. 7-1.

         A number of years after World War II and the termination of the avgas contracts,
Congress in 1980 enacted the Comprehensive Environmental Response, Compensation, and
Liability Act (“CERCLA”) and the Hazard and Solid Waste Amendments to the Resource
Conservation and Recovery Act (“RCRA”) in 1984. Compl. ¶ 37. CERCLA imposes liability
on facilities where hazardous substances have been disposed and remedial measures are required,
while RCRA mandates requirements for disposal of hazardous waste and the closing and
retrofitting of facilities. See Compl. ¶¶ 38, 41. The oil companies state that they incurred
expenses complying with CERCLA-related consent decrees and litigation and “were required to
expend (and did expend) substantial sums on environmental investigations . . . and remediation
for waste . . . attributable to the Avgas Contracts” under RCRA. Compl. ¶¶ 39-42. The oil
companies cite their compliance with state environmental laws, including environmental cleanup
efforts around refineries required in California and Texas. Compl. ¶ 42. Plaintiffs argue that,
under the avgas contracts, these costs are expenses attributable to avgas production and “are the
contractual responsibility of the United States.” Compl. ¶ 42.

                                     B.   Procedural History

        The oil companies submitted a written demand to the General Services Administration
(“GSA”) on June 8, 2020, but it was subsequently denied on September 8, 2020. Compl. ¶ 51.
The oil companies then filed their complaint in this court on December 7, 2020, for breach of
contract, seeking at least $65 million as well as interest, accounting and clerical costs, and
attorneys’ fees. See Compl. ¶ 73. On February 3, 2021, the government filed its motion to
dismiss the complaint in part. See Def.’s Mot. The government advances two arguments in its
motion: first, that this court lacks jurisdiction to adjudicate claims under the CSA, and second,
that the mutual release agreement established by the government and Texaco’s predecessor-in-
interest requires dismissal of the claims related to the Avon refinery contracts. Id. at 1-3. The
oil companies filed their motion for partial summary judgment and response on April 2, 2021,
seeking summary judgment on the government’s liability for breach of the avgas contracts,
whether the CSA governs the claims, and whether the oil companies are permitted to recover
costs and statutory interest under the CSA. Pls.’ Cross-Mot. at 1. Subsequently, the cross-
motions were fully briefed. See Def.’s Resp. & Reply (“Def.’s Reply”), ECF No. 17; Pls.’
Reply, ECF No. 22, with the submission of the last brief on July 15, 2021.

                                                 3
                                STANDARDS FOR DECISION

                                       A. Motion to Dismiss

                      1. Rule 12(b)(1) – Lack of Subject-Matter Jurisdiction

        The Tucker Act provides this court with jurisdiction over “any claim against the United
States founded either upon the Constitution, or any Act of Congress or any regulation of an
executive department, or upon any express or implied contract with the United States, or for
liquidated or unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1). To
establish this court’s jurisdiction under the Tucker Act, the oil companies must “identify a
substantive right for money damages against the United States separate from the Tucker Act.”
Todd v. United States, 386 F.3d 1091, 1094 (Fed. Cir. 2004) (citation omitted).

        The plaintiffs must establish jurisdiction by a preponderance of the evidence. See
Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir. 2011) (citing Reynolds
v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988)). When ruling on the
government’s motion to dismiss for lack of jurisdiction, the court must “accept as true all
undisputed facts asserted in the plaintiff’s complaint and draw all reasonable inferences in favor
of the plaintiff.” Id. (citing Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995)).

         2. Rule 12(b)(6) – Failure to State a Claim Upon Which Relief Can Be Granted

        Under Rule 12(b)(6) of the Rules of the United States Court of Federal Claims
(“RCFC”), a complaint will survive a motion to dismiss if it “contain[s] sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. The factual
matters alleged “must be enough to raise a right to relief above the speculative level on the
assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly,
550 U.S. at 555-56 (citations omitted).

        When reviewing the complaint, “the court must accept as true the complaint’s undisputed
factual allegations and should construe them in a light most favorable to the plaintiff.”
Cambridge v. United States, 558 F.3d 1331, 1335 (Fed. Cir. 2009) (citing Papasan v. Allain, 478
U.S. 265, 283 (1986)) (additional citation omitted). Conclusory statements of law and fact,
however, “are not entitled to the assumption of truth” and “must be supported by factual
allegations.” Iqbal, 556 U.S. at 679. “‘[N]aked assertion[s]’ devoid of ‘further factual
enhancement’” are insufficient to state a claim. Id. at 678 (quoting Twombly, 550 U.S. at 557);
accord Bradley v. Chiron Corp., 136 F.3d 1317, 1322 (Fed. Cir. 1998) (“Conclusory allegations
of law and unwarranted inferences of fact do not suffice to support a claim.”).

                                                  4
                                        B. Summary Judgment

        Summary judgment shall be granted “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” RCFC 56(a).
A material fact is one that “might affect the outcome of the suit.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986) (interpreting Fed. R. Civ. P. 56).3 A genuine dispute exists when
the finder of fact may reasonably resolve the dispute in favor of either party. Id. at 250.

         The movant bears the burden of demonstrating the absence of any genuine disputes of
material fact, see Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986), and must “cit[e] to
particular parts of materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations[,] . . . admissions, interrogatory answers, or
other materials,” RCFC 56(c)(1)(A). The court may consider other materials in the record even
if not cited by the parties. RCFC 56(c)(3). “[T]he inferences to be drawn . . . must be viewed in
the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654,
655 (1962)). If the record taken as a whole “could not lead a rational trier of fact to find for the
non-moving party, there is no ‘genuine issue for trial’” and summary judgment is appropriate.
Id. (quoting First Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

                                            ANALYSIS

                                      A. Contract Settlement Act

         The court’s analysis is guided by the result in Shell Oil IV, which forecloses the
government’s contention that this court does not have jurisdiction over plaintiffs’ claims under
the CSA and must “dismiss all aspects of the oil companies’ claim that rely on the CSA.”
Compare Shell Oil IV, ___ F.4th at ___-_____, 2021 WL 3377502, at **7-9, with Def.’s Mot. at
6. Congress repealed the CSA in 2011. Def.’s Mot. at 6-7. Critical to this case, however, the
repealer statute contained a savings clause that provided that the CSA was repealed “except for
the rights and duties that matured, penalties that were incurred, and proceedings that were begun
before the date of enactment of this Act.” Pub. L. No 111-350, § 7, 124 Stat. 3677, 3855. As a
result, defendant contends that “both ‘rights’ and ‘duties’ must have ‘matured’ as of January 4,
2011, for a claim to be cognizable under the CSA.” Def.’s Mot. at 7. 4

       The court previously confronted this issue in Shell Oil Co. v. United States, 148 Fed. Cl.
781, 785 (2020), aff’d, Shell Oil IV, ___ F.4th ___, 2021 WL 3377502. Addressing similar
arguments by the government in that case, this court found that it had jurisdiction over the claims
pursuant to the CSA “because the rights and duties of the parties [under the avgas contracts] had

       3
           Because RCFC 56 mirrors Fed. R. Civ. P. 56, the rules should be interpreted in pari
materia.
       4
          The government raised this argument prior to the Federal Circuit’s decision in Shell Oil
IV. Briefing on the cross-motions was completed on July 15, 2021, and the Federal Circuit
issued its decision in Shell Oil IV on August 4, 2021.
                                                 5
matured before the repealing statute’s enactment.” Id. at 793 (footnote omitted). Therefore, the
court held that “the government was liable for remediation costs incurred between November 30,
2015 through September 30, 2019.” Shell Oil IV, __ F.4th __, 2021 WL 3377502, at *1. The
Federal Circuit affirmed in Shell Oil IV, holding that the rights and duties had matured before the
repealing statute was enacted and further stating that “the government’s duty to indemnify was
triggered, at the latest, when the Oil Companies were found liable under CERCLA” which
“occurred in the 1990s, well before the CSA’s repeal.” Id. at *8 (internal quotation marks and
citations omitted). Thus, because “the government’s duty to indemnify the Oil Companies and
the Oil Companies’ right to reimbursement for remediation costs under the Avgas Contracts both
matured well before the repealer statute’s enactment,” this court “had jurisdiction over the Oil
Companies’ CSA claims.” Id. at *9.

        The Federal Circuit’s decision in Shell Oil IV definitively establishes that this court has
jurisdiction over the oil companies’ claims. Therefore, to the extent that the oil companies seek
summary judgment on the issue of whether the court has jurisdiction under the CSA and whether
plaintiffs’ can proceed with their claim pursuant to it, plaintiffs’ motion for summary judgment is
granted.

                                 B. Avon Mutual Release Agreement

        In its motion to dismiss, the United States argues that Texaco’s predecessor-in-interest
“Tide Water released the United States from any past or future liability under the ‘Taxes’ clause,
which forms the sole basis of plaintiffs’ Avon claims.” Def.’s Mot. at 13. The government avers
that the “mutual release agreement is enforceable” and that due to this release of liability,
“plaintiffs have failed to state a claim for any damages at that facility under that contract.” Id. at
13-14. The oil companies cross-move for summary judgment on this issue, arguing that the
mutual release, “when read in accordance with its plain language and governing law, clearly
establishes that Tidewater did not release the [g]overnment from the claim at issue in this
action.” Pls.’ Mem. at 36. The oil companies contend that absent language to the contrary,
general releases of liability only extend to claims that “were known or . . . ‘should have been
known at the time of [the release].’” Id. at 37 (alteration in original) (quoting Augustine Med.,
Inc. v. Progressive Dynamics, Inc., 194 F.3d 1367, 1373 (Fed. Cir. 1999)).

         The document at issue is a letter to Tide Water, dated February 25, 1949. Def.’s Mot. Ex.
  5
1. The document refers to negotiations conducted by letter and telegram between
representatives of Tide Water and the Reconstruction Finance Corporation, a representative of
the United States. See id. The letter states that during those negotiations, Tide Water indicated
that it “would be willing to release Reconstruction Finance Corporation unconditionally from
termination or other claims which were then pending or contemplated” but that such “mutual
releases on all claims should be deferred until completion of the reimbursement plan audits.” Id.
at 1. The audits were completed, and Tide Water and the Reconstruction Finance Corporation
reached a settlement. Id. at 1-2. The letter culminated with the following agreement: “It is

       5
         The release agreement letter was attached to defendant’s motion and accompanied by a
declaration from Kelly Morrow, attesting to its authenticity and completeness. See Def.’s Mot.
Ex 1 (Decl. of Kelly Morrow).
                                                  6
therefore mutually understood as between the parties hereto that Tide Water Associated Oil
Company releases [Reconstruction Finance Corporation] of any and all liability resulting from
the termination of the aforesaid contracts dated May 19, 1943 and July 1, 1945 and with respect
to any other provisions thereunder.” Id. at 2. The letter was signed by Tide Water’s
representative on March 4, 1949. Id.

        The key element of this dispute concerns whether a general release of liability can release
a future claim that is not known, contemplated, or knowable at the time of the release agreement.
A release is “a writing providing that a duty owed to the maker of the release is discharged
immediately or on the occurrence of a condition.” Restatement (Second) of Contracts § 284(1)
(1981). A general release “is designed to settle not only the specific differences between the
parties set forth within it, but all claims between the parties of every kind and character,
including . . . those unknown at that time, so long as they arose prior to the date of the release.”
29 Williston on Contracts § 73:4 (4th ed. 2021). A release, therefore, covers matters that “may
fairly be said to have been within the contemplation of the parties at the time of its execution.”
Id. § 73:10 (footnote omitted). This generally only extends to “all present, but not future
claims.” Id. (footnote omitted). However, under certain circumstances, “a valid release may
encompass unknown claims and damages that develop in the future.” Id. (citing Simpson v.
Lykes Bros. Inc., 22 F.3d 601, 602 (5th Cir. 1994) (additional citations omitted) (allowing release
of future, unknown claims when “[t]he release expressly covers unknown events and exposure as
well as future damages both known and unknown.”). 6

        This understanding is supported by Augustine Medical, in which the Federal Circuit
stated that “[t]he rule for releases is that absent special vitiating circumstances, a general release
bars claims based upon events occurring prior to the date of the release. And no exception to this
rule should be implied for a claim whose facts were well enough known for the maker of the
release to frame a general description of it and request an explicit reservation.” 194 F.3d at 1373
(internal quotations omitted) (quoting Johnson, Drake & Piper, Inc. v. United States, 531 F.2d
1037, 1047 (Ct. Cl. 1976)). Further, the Court of Claims in Johnson, Drake & Piper found that
“unknown claims” can be covered by a release provided that the plaintiff has access to the facts
underlying those claims, regardless of the whether plaintiff appreciated their significance. See
531 F.2d at 1048. “Most prominent among the circumstances” in that case, the court suggested,
was that “with knowledge of the facts constituting the present claims, plaintiff nevertheless
expressed full agreement” to the release. Id. This court in Baha v. United States synthesized this
rule to state “[i]f a party who executes such a general release has knowledge of facts sufficient to
constitute a claim at the time of executing the general release and wishes to make an exception
for such a claim, that party bears the burden of manifesting his intent to do so with an ‘explicit

       6
         Both the Supreme Court and the Federal Circuit have recognized that courts may use
the Restatement on Contracts as an authoritative source. See Mobil Oil Expl. & Producing Se,
Inc. v. United States, 530 U.S. 604, 608 (2000) (“The Restatement of Contracts reflects many of
the principles of contract law that are applicable to this action.”); Hansen Bancorp, Inc. v. United
States, 367 F.3d 1297, 1308 n.9 (Fed. Cir. 2004) (citation omitted). Additionally, both Courts
have relied upon Williston on Contracts. See M&G Polymers USA, LLC v. Tackett, 574 U.S.
427, 428 (2015); Stockton East Water Dist. v. United States, 583 F.3d 1344, 1358 (Fed. Cir.
2009).
                                                  7
reservation.’” 144 Fed. Cl. 500, 505 (2019) (quoting Augustine, 194 F.3d at 1373) (additional
citation omitted). 7
        Courts that have found that general releases apply to future claims that were unknown or
unknowable at the time of contracting have required the release to either expressly refer to future
claims or include language that indicates prospective application. For example, the settlement
and release agreement at issue in Augustine stated that plaintiff would “release and forever
discharge [defendant] from any and all manner of action or actions . . . that [plaintiff] and/or its
owners have, have had, or may have against [defendant].” 194 F.3d at 1369 (emphasis in
original). The Federal Circuit found that use of the phrase “may have” was “necessarily future-
oriented” and therefore “implie[d] a future possibility of [plaintiff] having a claim.” Id. at 1371
(emphasis in original).
         The oil companies assert that at the time of signing the release, Tide Water was not, nor
could it have been, aware of legislation enacted more than thirty years later requiring remediation
efforts and imposing retroactive liability. See Pls.’ Mem. at 44-45 (citing Penn Cent., Corp. v.
United States, 862 F. Supp. 437, 450 (Reg’l Rail Reorg. Ct. 1994) (“CERCLA is unique. It
radically changed the horizon of environmental law by giving the government enforcement tools
far beyond its previous capacity.”)) The government does not challenge plaintiffs’ posture in this
respect, but rather indicates that “Tide Water was fully aware when it released ‘any and all
liability’ under ‘any . . . provision’ of the avgas contract, that it was releasing ‘any and all’ claims
for ‘new’ ‘charges’ under the ‘taxes’ provision.” Def.’s Reply at 21. For this proposition, the
government relies on United States v. William Cramp & Sons Ship & Engine Building Co., 206
U.S. 118 (1907). See Def.’s Reply at 15. Notably, the Supreme Court in William Cramp upheld a
release encompassing “all claims of any kind or description under or by virtue of said contract.”
206 U.S. at 127. The Court additionally stated that “[i]f the parties intend to leave some things
open and unsettled, their intent so to do should be made manifest.” Id. at 128. In that respect, the
Court devoted the bulk of its analysis to the second half of the clause, determining whether the
claims arose “under or by virtue of said contract” rather than to a reading of “all claims of any
kind or description.” See id. at 127-28. Importantly, unlike the present case, the claims at issue
accrued prior to the date of the release. Id. at 112.

       7
          The oil companies counter with reliance on Duhame v. United States, 133 Ct. Cl. 360,
363 (1955). See Pls.’ Mem. at 38-39. The Court of Claims in Duhame, referring to its prior
opinion in Harrison Eng’g & Constr. Corp. v. United States, 107 Ct. Cl. 205 (1946), stated “that
a release did not, where both parties were in ignorance of an additional item of indebtedness, and
had no intention to pay or accept less than was justly due, cancel the unknown item.” Duhame,
133 Ct. Cl. at 363. As the government correctly notes, however, Duhame could be understood as
case of “mutual mistake warranting reformation.” Def.’s Reply. at 22. The Court of Claims’
reference in Duhame to Harrison, and decision not to reevaluate Harrison’s holding regarding
mutual mistake and its reformation of a contractual release, support this argument. See Duhame,
133 Ct. Cl. at 363 (“The Government asks us to overrule the Harrison decision, but, upon
reconsideration, we are content with it.”); Harrison, 107 Ct. Cl. at 208 (“We think the release as
written . . . covered and was intended to cover all claims that the plaintiffs had arising out of this
contract. The difficulty is that this intention was induced by a mistake of the parties.”). At most,
Duhame stands for the proposition that some claims can survive a general release.
                                                  8
         Tide Water did not have “knowledge of the facts constituting the present claims” at the
time it executed the release, Johnston, Drake & Piper, 531 F.2d at 1048, and the claims at issue
in this case were future claims that were not “within the contemplation of the parties at the time
of its execution,” 29 Williston on Contracts § 73:10. Additionally, the language “any and all
liability resulting from the termination of the aforesaid contracts . . . and with respect to any
other provisions thereunder,” Def.’s Mot. Ex. 1, does not constitute “future-oriented” language
necessary to “impl[y] a future possibility” of a claim, Augustine, 194 F.3d at 1371 (emphasis
omitted). In short, Tide Water did not release the claims at issue in this case and therefore, the
claims brought by Texaco, its successor-in-interest, may proceed.

                               C.   Factual Issues on Summary Judgment

        Plaintiffs additionally ask this court to hold that that the United States is liable under the
avgas contracts in this case. Pls.’ Mem. at 12-14. The oil companies correctly state that the
Federal Circuit has found the United States to be liable under the indemnification provision of
other avgas contracts for environmental response costs. Id. at 12-13 (citing Shell Oil II, 75 F.3d
at 1290). The oil companies further state that “the Federal Circuit interpreted certain avgas
contracts—identical in all material respects to the contracts here—to require the Government to
reimburse the Oil Companies for their CERCLA charges.” Pls.’ Reply at 22 (internal quotation
marks omitted) (quoting Shell Oil II, 751 F.3d at 1285). The government contends that the oil
companies have provided “no evidence linking any activity to the production of avgas during
WWII, let alone evidence establishing that any cost would not have been incurred ‘but for’ the
production of contract avgas.” Def.’s Reply at 38. Therefore, according to the government, the
oil companies have failed to prove causation. Id. Plaintiffs assert that the Federal Circuit
foreclosed this argument in its damages opinion in Shell Oil. Pls.’ Reply at 24 (citing Shell Oil
III, 896 F.3d at 1307-09). The court agrees with the government.

        To establish a case for breach of contract, plaintiffs bear the burden of demonstrating a
valid contract between the parties, a duty arising out of that contract, a breach of that duty, and
damages caused by the breach. See Shell Oil Co. v. United States, 130 Fed. Cl. 8, 34 (2017)
(citing San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir.
1989)), aff’d, Shell Oil III, 896 F.3d 1299. The court concurs that the precedents established by
the Federal Circuit in the Shell Oil litigation are applicable to this case. Even so, the court finds
that there are genuine disputes as to the existence of damages that are causally connected to the
avgas contracts and those disputes preclude summary judgment on liability. Despite the oil
companies’ contentions otherwise, see Pls.’ Reply at 24 n. 13, proof of causation is necessary to
establishing liability for breach of contract, see San Carlos Irrigation, 877 F.2d at 959; Shell Oil
III, 896 F.3d at 1307 (stating that the phrase “by reason of” “requires at least a showing of but
for causation”) (internal quotation marks and citations omitted).

        This present situation differs from the Shell Oil litigation in that plaintiffs here have not
proven the existence of damages that stem from WWII production of avgas. In a decision in
2014 in Shell Oil, a judge of this court had denied summary judgment to the plaintiffs on the
issue of damages, noting that “further proceedings would have been necessary for the Court to
reach a final determination” on that issue. Shell Oil Co. v. United States, 108 Fed. Cl. 422, 448
(2013), rev’d on other grounds, Shell Oil II, 751 F.3d 1282. The then-presiding judge stated that

                                                   9
there was a genuine dispute of fact as to what portion of the pertinent waste was created “by
reason of the avgas program,” and that factual issue was not adequately answered by evidence or
stipulations currently before the Court. Id. On appeal, the Federal Circuit reversed this court’s
then-concurrent grant of summary judgment to the government, but in doing so, it agreed with
the court on the issue of damages and remanded for trial. Shell Oil II, 751 F.3d at 1285.
Specifically, the case was remanded “to determine how much acid waste at the McColl site was
‘by reason of’ the avgas contracts.” Id. at 1303. The question on remand, therefore, was the
extent to which the claimed costs were attributable to the avgas program, akin to the question
here whether, and to what extent, there was a causal link between the avgas contracts and the
costs incurred.

        This understanding comports with the fact that there had been a finding of damages
previously in the Shell Oil litigation. See Def.’s Reply at 37-38. In that instance, a district court
in California hearing remedial issues had found that “[t]he hazardous waste located at the
McColl Site consists primarily of acid sludge byproducts resulting from alkylation and other acid
treating processes used in the manufacture of 100-octane aviation gasoline . . . and other refinery
products during World War II.” United States v. Shell Oil Co., 13 F. Supp. 2d 1018, 1020 (C.D.
Cal. 1998), aff’d in part, rev’d in part, 294 F.3d 1045 (9th Cir. 2002). That court likewise had
found a causal connection between the production of avgas, waste byproducts, and ultimate
dumping of that waste that occurred between June 1942 and September 1946. Id. at 1023.
Comparable findings have not been made in this case and would be inappropriate now to make
on summary judgment given the record provided to the court. Plaintiffs have not met their
burden on this aspect of summary judgment, see Celotex, 477 U.S. at 322, and therefore their
cross-motion in that respect on liability is denied.

                                         CONCLUSION

        For the reasons stated, defendant’s motion to dismiss in part is DENIED and plaintiffs’
motion for partial summary judgment is GRANTED IN PART insofar as it concerns this court’s
jurisdiction under the CSA, but is otherwise denied.

        The government shall file its answer to plaintiffs’ complaint on or before September 13,
2021.

        It is so ORDERED.

                                              s/ Charles F. Lettow
                                              Charles F. Lettow
                                              Senior Judge

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