Court Opinion

ID: 9947241
Source: CourtListenerOpinion
Date Created: 2024-03-04 14:01:00.714652+00
Date Added: 2024-06-11T14:26:16.884399
License: Public Domain

Case: 21-2305     Document: 54    Page: 1   Filed: 03/04/2024

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                   ______________________

     NAUSET CONSTRUCTION CORPORATION,
                  Appellant

                             v.

                SECRETARY OF THE ARMY,
                          Appellee
                   ______________________

                    2021-2305, 2022-1853
                   ______________________

     Appeals from the Armed Services Board of Contract
 Appeals in Nos. 61673, 61675, Administrative Judge Lis B.
 Young, Administrative Judge Owen C. Wilson, Adminis-
 trative Judge Richard Shackleford.
                  ______________________

                   Decided: March 4, 2024
                   ______________________

     JOHN JOSEPH MCNAMARA, Lane McNamara LLP,
 Southborough, MA, argued for appellant. Also represented
 by ELISE M. KUEHN.

     WILLIAM JAMES GRIMALDI, Commercial Litigation
 Branch, Civil Division, United States Department of Jus-
 tice, Washington, DC, argued for appellee. Also repre-
 sented by BRIAN M. BOYNTON, PATRICIA M. MCCARTHY,
 FRANKLIN E. WHITE, JR.
Case: 21-2305      Document: 54      Page: 2     Filed: 03/04/2024

 2                       NAUSET CONSTRUCTION CORPORATION v.
                                      SECRETARY OF THE ARMY

                    ______________________

     Before REYNA, TARANTO, and STOLL, Circuit Judges.
 STOLL, Circuit Judge.
      Nauset Construction Corp. appeals the final decision of
 the Armed Services Board of Contract Appeals, which dis-
 missed Nauset’s appeal of a default termination of a gov-
 ernment contract as untimely under the Contract Disputes
 Act. In particular, Nauset challenges the Board’s fact find-
 ings that (1) Nauset was not prejudiced by the appeal no-
 tice provided in the government’s termination letter; and
 (2) the government’s behavior following the termination
 letter did not vitiate the finality of the termination letter.
 Because the Board’s findings are supported by substantial
 evidence, we affirm the Board’s dismissal.
                          BACKGROUND
      On November 1, 2013, the National Guard Bureau
 awarded a contract to Nauset to build the Guard’s Unit
 Training Equipment Site Project in Camp Edwards, Mas-
 sachusetts. On November 17, 2017, the contracting officer
 terminated Nauset’s contract for default. The termination
 letter stated: “[T]he Government is completely Terminat-
 ing Nauset for Default . . . . This notice constitutes such de-
 cision, and Nauset has the right to appeal under the
 Disputes clause of the contract.” J.A. 348. The termination
 letter, however, did not include the specific notice of appeal
 rights language required by Federal Acquisition Regula-
 tion (FAR) 33.211(a)(4)(v). Specifically, under that appli-
 cable FAR provision, the termination notice was required
 to contain language notifying the contractor that they “may
 appeal [the] decision to the agency board of contract ap-
 peals . . . within 90 days” of receipt of the decision or, alter-
 natively, “bring an action directly in the United States
 Court of Federal Claims.” FAR 33.211(a)(4)(v).
Case: 21-2305     Document: 54     Page: 3    Filed: 03/04/2024

 NAUSET CONSTRUCTION CORPORATION v.                          3
 SECRETARY OF THE ARMY

      Within 90 days of receipt of the termination letter,
 Nauset submitted two letters to the contracting officer.
 First, on January 17, 2018, Nauset submitted a letter titled
 “Response to Termination of November 17, 2017 and Cer-
 tified Termination Claim and Request for Final Decision
 under the Contract Disputes Act.” J.A. 357. In this letter,
 Nauset disputed the termination and stated that it in-
 tended to submit a claim for costs. Nauset also stated that
 it “takes exception to the government’s decision to termi-
 nation for default . . . [and that it] will continue to vehe-
 mently invest every available resource to support [its]
 Claim, [its] position and reputation.” J.A. 370. The con-
 tracting officer acknowledged receipt of this letter by email
 stating “Email received.” J.A. 411. Then, on February 12,
 2018, Nauset submitted a “Claim for Extended Time and
 Unpaid Completed Contract Work – Part 2 and Wrongful
 Termination.” J.A. 372. In the “Wrongful Termination”
 section of the letter, Nauset stated that it “intends to de-
 fend its position and prove that the government’s decision
 to terminate was based on . . . circumstances . . . beyond
 [its] control” and that it “submits this wrongful termination
 claim in accordance with the Contract Disputes Act.”
 J.A. 374–75. The contracting officer again acknowledged
 receipt via email stating “Received.” J.A. 413.
      On June 27, 2018, 222 days after the termination no-
 tice, Nauset appealed the decision to the Board. J.A. 129.
 The government filed a motion to dismiss, arguing that
 Nauset’s appeal of the termination for default was un-
 timely. Nauset replied that its appeal was not time-barred
 because, among other things, the government gave inade-
 quate notice of Nauset’s appeal rights and Nauset reason-
 ably and detrimentally relied on the lack of notice and was
 thus prejudiced by the lack of notice. In addition, Nauset
 asserted that the government’s conduct following the ter-
 mination vitiated the finality of the termination for default.
 The Board rejected each of these arguments and ultimately
 dismissed Nauset’s appeal as untimely. See Nauset
Case: 21-2305     Document: 54      Page: 4    Filed: 03/04/2024

 4                      NAUSET CONSTRUCTION CORPORATION v.
                                     SECRETARY OF THE ARMY

 Construction Corp., ASBCA Nos. 61673, 61675, 21-1 BCA
 ¶ 37852, 2021 WL 2029232 (May 5, 2021) (Board Decision).
     Nauset appeals. We have jurisdiction under 28 U.S.C.
 § 1295(a)(10).
                          DISCUSSION
     On appeal, Nauset argues that the Board erred in find-
 ing that the termination notice did not prejudice Nauset.
 Alternatively, Nauset asserts that the Board erred in find-
 ing that the government’s conduct did not vitiate the final-
 ity of the termination. We address each argument in turn
 below.
     Our review of the Board’s decision is limited by statute.
 Under the Contract Disputes Act, we review the Board’s
 legal determinations de novo and we may only set aside the
 Board’s findings of fact if they are “(A) fraudulent, arbi-
 trary, or capricious; (B) so grossly erroneous as to neces-
 sarily imply bad faith; or (C) not supported by substantial
 evidence.” 41 U.S.C. § 7107(b)(2). Whether the termina-
 tion letter prejudiced Nauset presents a question of fact
 that we review for substantial evidence. See Bannum, Inc.
 v. United States, 404 F.3d 1346, 1353 (Fed. Cir. 2005)
 (“Prejudice is a question of fact.”); see also Godley v. United
 States, 5 F.3d 1473, 1476 (Fed. Cir. 1993) (stating that
 whether the appellant suffered prejudice was a factual
 question). Similarly, whether the government’s actions vi-
 tiated the finality of the termination letter, or in other
 words, whether Nauset could reasonably believe that the
 contracting officer was reconsidering her decision, is a
 question of fact reviewed for substantial evidence. See Ra-
 Nav Lab’ys, Inc. v. Widnall, 137 F.3d 1344, 1346, 1348
 (Fed. Cir. 1998) (determining that substantial evidence
 supports the ASBCA’s finding that the government’s con-
 duct following termination did not vitiate the termination
 of the contract); Am. Elec. Lab’ys, Inc. v. United States,
 774 F.2d 1110, 1116 (Fed. Cir. 1985) (determining whether
 substantial evidence supports the ASBCA’s finding that a
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 NAUSET CONSTRUCTION CORPORATION v.                         5
 SECRETARY OF THE ARMY

 party’s reliance on the government’s conduct was unrea-
 sonable).
                               I
      Substantial evidence supports the Board’s finding that
 there was no prejudice or detrimental reliance here. While
 the termination notice was technically deficient under FAR
 33.211(a)(4)(v), the notice stated that “Nauset has the right
 to appeal under the Disputes clause of the contract.”
 J.A. 348. It was reasonable for the Board to determine that
 this provided sufficient information to allow Nauset to look
 to the disputes clause of the contract, which would have
 ultimately led Nauset to 41 U.S.C. § 7104, stating Nauset’s
 appeal rights. In addition, while not necessary to our deci-
 sion, the record also shows that Nauset’s counsel reviewed
 the termination decision and conducted research on Nau-
 set’s appeal rights under FAR.
     Nauset argues that this finding is inconsistent with the
 Board’s finding that Nauset was confused and did not un-
 derstand that the termination notice starts the 90-day ap-
 peal clock. But, as Nauset’s counsel admitted at oral
 argument, any prejudice or detrimental reliance must be
 reasonable. See Oral Arg. at 3:06–3:45, https://oralargu-
 ments.cafc.uscourts.gov/default.aspx?fl=21-2305_1208202
 3.mp3; see also J-Way Southern, Inc. v. U.S. Army Corps of
 Engs., 34 F.4th 40, 48 (1st Cir. 2022) (finding that the
 party’s asserted detrimental reliance on a termination no-
 tice was unreasonable) (citing J-Way Southern, Inc.
 v. United States, 516 F. Supp. 3d 84, 91 (D. Mass. 2021)).
 Here, while Nauset may have been confused, substantial
 evidence supports the Board’s finding that such confusion
 would have been unreasonable given the clear path from
 the termination notice to the FAR provision that provides
 Nauset’s appeal rights. Specifically, the termination notice
 pointed Nauset to the disputes clause of the contract, which
 incorporated FAR 52.233-1 (2002). FAR 52.233-1 explains
 that the contract is subject to the Contract Disputes Act,
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 6                      NAUSET CONSTRUCTION CORPORATION v.
                                     SECRETARY OF THE ARMY

 formerly at 41 U.S.C. §§ 601–13. A quick search for the
 Contract Disputes Act would lead Nauset to the current
 version found at 41 U.S.C. §§ 7101–09, with § 7104 provid-
 ing information on appeal rights. Thus, while the notice of
 appeal was technically defective, Nauset’s appeal rights
 were reasonably discernible, and substantial evidence sup-
 ports the Board’s weighing of the evidence and finding that
 it is hard to imagine that Nauset would not know of its ap-
 peal rights by exercising a little diligence. See, e.g., J-Way
 Southern, 34 F.4th at 49 (“[F]rom the adequate-notice
 standpoint, [the termination notice] provided the relevant
 regulatory and statutory breadcrumbs a reader could (and
 should) follow to find the appellate logistics.”).
                               II
      For the reasons below, we also hold that substantial
 evidence supports the Board’s finding that the govern-
 ment’s conduct did not vitiate the finality of the termina-
 tion decision. Nauset argued that it reasonably believed
 that the contracting officer was reconsidering the termina-
 tion decision based on the contracting officer’s emails ac-
 knowledging receipt of Nauset’s January 17, 2018 and
 February 12, 2018 letters, as well as a letter from the con-
 tracting officer on March 26, 2018, stating that she was
 still reviewing Nauset’s February 12 claim. Nauset also
 pointed to communication between its attorney and gov-
 ernment counsel on November 28, 2017 and communica-
 tions with the government starting in April 2018 as
 support for its belief. The Board did not consider the com-
 munications after February 15, 2018—the end of the 90-
 day appeal window—stating that “[i]t is well settled that
 the government’s actions must have occurred within the
 90-day jurisdictional window in order to vitiate the finality
 of the termination.” Board Decision, 2021 WL 2029232.
 The Board ultimately found that Nauset did not provide
 sufficient evidence to demonstrate that it reasonably could
 have concluded that the contracting officer was reconsider-
 ing the termination decision.
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 NAUSET CONSTRUCTION CORPORATION v.                          7
 SECRETARY OF THE ARMY

      At the outset, we hold that the Board erred in holding
 as a matter of law that evidence of events that occurred
 after the 90-day appeal window are per se irrelevant to this
 factual inquiry. While we recognize that such evidence
 most often will have no bearing on an appellant’s under-
 standing of the finality of the contracting officer’s decision
 during the appeal window, it cannot be said that such evi-
 dence will never have any bearing on the issue. The
 Board’s per se rule is therefore incorrect, and further, not
 supported by our precedent. The Supreme Court has cau-
 tioned against such rigid per se rules in other instances.
 See Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
 572 U.S. 545, 553 (2014) (rejecting a per se framework as
 “unduly rigid”); KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398,
 415, 419–20 (2007) (rejecting a “rigid approach” and cau-
 tioning against “transform[ing] [a] general principle into a
 rigid rule”); Festo Corp. v. Shoketsu Kinzoku Kogyo Ka-
 bushiki Co., 535 U.S. 722, 738 (2002) (stating that doctrine
 is to be applied in a “flexible way, not a rigid one”). The
 Board’s error here, however, was harmless. Our review of
 the evidence, including the post-90-day appeal window ev-
 idence, confirms the Board’s view that in this case, Nauset
 could not have reasonably concluded that the contracting
 officer’s termination decision was being reconsidered prior
 to the appeal deadline.
      In other words, the Board’s finding that the contracting
 officer’s conduct did not vitiate the finality of the termina-
 tion decision is supported by substantial evidence. When
 Nauset asked the contracting officer to reconsider the ter-
 mination decision, the contracting officer’s emails stated
 “Email received” and “Received” with nothing further.
 J.A. 411, 413. Because the contracting officer merely
 acknowledged receipt, it was reasonable for the Board to
 conclude that Nauset could not have reasonably believed
 that the contracting officer was reconsidering her decision
 based on Nauset’s request for reconsideration or the of-
 ficer’s emails. Further, while the government counsel told
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 8                      NAUSET CONSTRUCTION CORPORATION v.
                                     SECRETARY OF THE ARMY

 Nauset’s attorney eleven days after the termination notice
 that it was possible that the termination for default could
 be converted to a termination for convenience, the record—
 including an affidavit by Nauset’s attorney—does not indi-
 cate that the counsel had any further communication or
 that the contracting officer was involved in any such con-
 versation. As such, the evidence supports the Board’s find-
 ing that the statement by government counsel was not
 sufficient to indicate that the contracting officer was recon-
 sidering the decision.
                         CONCLUSION
    For the foregoing reasons, we affirm the decision of the
 Board dismissing Nauset’s appeal.
                         AFFIRMED
                            COSTS
 No costs.