Court Opinion

ID: 4152302
Source: CourtListenerOpinion
Date Created: 2017-03-14 17:00:09.579644+00
Date Added: 2024-06-11T14:37:45.831857
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of --                                 )
                                              )
Edward Hayes, as Liquidator of Base           )      ASBCA Nos. 59829, 59907
 Operation Services GmbH                      )
                                              )
Under Contract Nos. DABNOl-03-C-0025 )
                    W912PE-04-D-0001 )

APPEARANCES FOR THE APPELLANT:                       William F. Savarino, Esq.
                                                     Andrew K. Wible, Esq.
                                                      Cohen Mohr LLP
                                                      Washington, DC

APPEARANCES FOR THE GOVERNMENT:                      Raymond M. Saunders, Esq.
                                                      Army Chief Trial Attorney
                                                     CPT Matthew A. Freeman, JA
                                                     MAJ Michael G. Pond, JA
                                                      Trial Attorneys

              OPINION BY ADMINISTRATIVE JUDGE WOODROW
             ON APPELLANT'S MOTION FOR RECONSIDERATION

       Appellant raises two arguments in its motion for reconsideration of our earlier
decision, Edward Hayes, as Liquidator of Base Operation Services GmbH, ASBCA
Nos. 59829, 59907, 16-1BCA~36,412. First, appellant contends that the Board
applied the incorrect legal standard when it treated appellant's motion to dismiss as a
motion for summary judgment (app. mot. at 2-3). Second, appellant argues that the
Board erred when it declined to rule on whether the contractor, Base Operation
Services GmbH (BOS), lacked the capacity to sue or be sued at the time the
contracting officer issued her final decision (id. at 3-10).

        In deciding a motion for reconsideration, the standards the Board applies are
whether the motion is based upon newly discovered evidence, mistakes in our findings of
fact, or errors oflaw. Precision Standard, Inc., ASBCA No. 58135, 16-1BCA~36,504
at 177 ,859. Reconsideration is not intended to provide a party with the opportunity to
reargue an issue that already has been raised and decided. Computer Sciences
Corporation, ASBCA Nos. 56168, 56169, 09-2 BCA ~ 34,261 at 169,283. The moving
party must show a compelling reason why the Board should modify its decision. ADT
Construction Group, Inc., ASBCA No. 55358, 14-1 BCA ~ 35,508 at 174,041.

     We hold that the Board correctly treated appellant's motion as a motion for
summary judgment. Moreover, because BOS is a German corporate entity formed by a
joint venture between SKE International GmbH, a German entity (SKE), and Bums &
Roe Services Corp., an American entity, we further hold that the Board has an obligation
to determine its own jurisdiction by examining the joint venture agreement between the
joint venture parties. Specifically, we must examine whether either joint venture partner
remained liable for the debts and obligations of the joint venture following the dissolution
of the corporate joint venture entity. Therefore, even if we accepted as true appellant's
factual allegations and evidence of German legal principles, we would reach the same
conclusion: that the record before us is insufficient to determine whether the Board
possesses jurisdiction to entertain this appeal.

 I.    The Board Applied the Correct Legal Standard

        Appellant admits that it stated in its original motion that it sought a dismissal
for failure to state a claim upon which relief may be granted (app. mot. at 2).
Appellant also acknowledges that its motion relied on matters outside the pleadings,
including evidence of principles of foreign law (id.). Despite this, appellant claims
that the Board "misapprehended" (id. at 1) its argument and that the Board "elevate[d]
form over substance" when it treated its motion as a motion for summary judgment
(app. reply br. at 3).

       We disagree. Although appellant claims to be seeking a jurisdictional ruling by
styling its motion as one for dismissal, appellant really seeks a ruling on the
contractor's capacity to be sued (app. mot. at 1). If all that appellant seeks is dismissal
of the appeal, it voluntarily could dismiss its appeal and leave the government to seek
enforcement of the contracting officer's final decision through other means. Instead,
appellant asks the Board to rule on whether the government's claim is a nullity on the
grounds that the contractor lacked the capacity to be sued at the time the contracting
officer issued her final decision (id.).

        As the United States Court of Federal Claims held in Adelsberger v. United
States, a motion addressing a party's capacity to sue, which relies on matters outside
the pleadings and does not challenge subject matter jurisdiction, should be treated as a
motion for summary judgment. 58 Fed. Cl. 616, 617 (2003) (applying summary
judgment standard in holding that plaintiff who died prior to filing suit was not a
proper party with the capacity to sue, and thus his action was a nullity). As we
explained in our initial ruling, and as further set forth below, the record before us does
not provide sufficient evidence to rule on the contractor's capacity to be sued.

         The cases relied on by appellant do not support its position. In WorleyParsons
Int'!, Inc., ASBCA No. 57930, 14-1BCA,35,482 at 173,960, the Board did not
address the issue of whether the contractor possessed the capacity to be sued, but
instead ruled that the government's claim was a nullity because it was asserted against
an entity that was not the CDA contractor. Specifically, the Board examined the terms
of the agreement between two joint venture partners and concluded that the partners

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intended the joint venture to be a separate legal entity, distinct from each of its
partners.

       In this appeal, appellant's German law expert does not address the terms of the
joint venture agreement, nor does he discuss the principles of German partnership law.
Therefore, it is impossible to evaluate BOS's joint venture status under German law on
the record before us.

        Instruments & Controls Service Co., ASBCA No. 38322, 89-3 BCA ii 22,237
at 111, 794, likewise dealt with procedural defects of the government's claim, not with
the contractor's capacity to be sued. As in WorleyParsons, it was not necessary for the
Board to conduct a factual inquiry into the contractor's capacity to be sued, nor was it
necessary for the Board to determine questions of foreign law in order to address
whether the Board possessed jurisdiction to entertain the government's claim.

       In this appeal, there is no allegation that the government's claim was
procedurally defective. Instead, appellant seeks a ruling on the contractor's capacity to
be sued, a matter requiring an evidentiary and factual evaluation of the contractor's
corporate existence as well as its status under applicable law. This evaluation
necessary relies on matters outside the pleadings as well as on evidence of principles
of foreign law.

        In determining questions of foreign law, we follow Board Rule 6(c) which, in
turn, reflects Federal Rule of Civil Procedure (FED. R. CIV. P.) 44.1. Gesellschaft Fuer
Fertigungstechnik u. Maschinenbau AG, ASBCA No. 24816, 81-1 BCA ii 14,924
at 73,847. Under FED. R. C1v. P. 44.1 and Board Rule 6(c), determinations of foreign
law are treated as questions oflaw. We may consider any relevant material or source,
including testimony, whether or not submitted by a party or admissible under the
Federal Rules of Evidence. The rule provides a considerable degree of discretion in
determining the appropriate method for ascertaining what the foreign law is, whether it
be by independent research or reliance on the parties. See Twohy v. First National
Bank of Chicago, 758 F.2d 1185, 1191-95 (7th Cir. 1985). In this appeal, appellant's
expert opinion regarding German law simply does not address the issues necessary to
determine whether BOS possessed the capacity to be sued at the time the contracting
officer issued her decision. Therefore, we reach the same conclusion as we did in our
earlier opinion.

II.    The Board Properly Held that the Record is Insufficient to Resolve
       Whether BOS Possessed the Capacity to be Sued

       In its motion to dismiss, appellant focuses its entire argument on the status of
BOS GmbH's corporate existence, under German law, at the time of the contracting
officer's final decision (app. mot. at 4-6). This focus ignores the fact that BOS GmbH
is a German corporate entity formed by a joint venture between SKE International

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GmbH, a German entity, and Bums & Roe Services Corp., an American entity (app.
mot. at 2).

       The Board possesses the discretion to evaluate its own jurisdiction at any time
by examining and interpreting the joint venture agreement between joint venture
partners. In Sarang-Nat'l Joint Venture, we rejected an argument that the Board's
jurisdiction was limited to interpreting contracts with the government, holding that the
Board may evaluate its own jurisdiction at any time by interpreting a joint venture
agreement. ASBCA No. 54992, 06-1BCA~33,232 (citing Marshall N. Dana
Constr., Inc. v. United States, 229 Ct. Cl. 862, 865 (1982); Rosinka Joint Venture,
ASBCA No. 48143, 97-1BCA~28,653 (interpretingjoint venture agreement to
authorize the general director of a multinational joint venture to initiate legal
proceedings); American Export Group Int'/ Servs., lnc./Zublin Delaware, Inc., A Joint
 Venture, ASBCA No. 42616, 93-1BCA~25,373 (interpreting joint venture agreement
to permit managing partner to conduct business on behalf of the joint venture without
the authorization of the other partner)).

        As the Federal Circuit explained in Sade/mi Joint Venture v. Dalton, a joint
venture is a "partnership created for a limited purpose." 5 F.3d 510, 513 (Fed. Cir.
1993) (citing Lentz v. United States, 346 F.2d 570, 575, 171 Ct. Cl. 537 (1965)). As
such, it is governed by the law applicable to partnerships, rather than corporations.
Pine Prods. Corp. v. United States, 945 F.2d 1555, 1560 (Fed. Cir. 1991) (holding that
general principles of partnership law are applicable to joint ventures); see also
American Export Group, 93-1BCA~25,373 (holding that nature of a joint venture is
similar to a traditional partnership).

       In this appeal, the salient question is not whether BOS GmbH lacked the
capacity to be sued after 17 October 2014, but whether either joint venture partner
remained liable for the debts and obligations of the joint venture following the
dissolution of the corporate joint venture entity. See Pine Prods., 945 F.2d at 1560
(holding that under general partnership law, a partner is jointly and severally liable for
obligations and debts of the partnership).

       Indeed, BOS' s status as a joint venture raises a host of questions, none of which
can be answered on the record before us. First, is there a written joint venture
agreement setting forth the relative rights and responsibilities of the two joint venture
partners? If so, what does it provide regarding each partner's obligation to contribute
money back into the company to pay a government claim?

       Appellant asserts, without support, that BOS's members had no obligation
under BOS's governing documents to contribute money back into the company to pay
a government claim, had the claim been asserted prior to BOS's dissolution (app. mot.
at 7). Notably, appellant has not produced any of the joint venture's governing
documents, making it impossible for the Board or the government to evaluate the truth

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of this assertion. Moreover, reviewing the joint venture agreement, if one exists, could
shed light on whether the partnership between SKE and Bums & Roe survived the
dissolution of BOS, the corporate entity created by the joint venture.

       Finally, even if we were to treat appellant's motion as a motion to dismiss and
accept as true appellant's allegations and its expert's opinion on German law, we
would reach the same conclusion - that the record before us is insufficient to
determine whether BOS possessed the capacity to be sued at the time the contracting
officer issued her final decision.

       Finally, discovery also is appropriate to determine whether BOS breached the
duty of good faith and fair dealing before it dissolved, by failing to inform the
government of its intentions and by depriving the government of its audit rights under
the contract.

       For these reasons, we deny appellant's motion for reconsideration.

       Dated: 27 February 2017

                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

I concur                                         I concur

~R'11t
Administrative Judge                             Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals

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      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA Nos. 59829, 59907, Appeals of
Edward Hayes, as Liquidator of Base Operation Services GmbH, rendered in
conformance with the Board's Charter.

      Dated:

                                              JEFFREY D. GARDIN
                                              Recorder, Armed Services
                                              Board of Contract Appeals

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