Court Opinion

ID: 2721841
Source: CourtListenerOpinion
Date Created: 2014-08-28 20:01:40.529951+00
Date Added: 2024-06-11T13:26:46.793551
License: Public Domain

In the United States Court of Federal Claims
                                 No. 09-131C
                           (Filed: August 28, 2014)

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AMERICAN        GOVERNMENT
PROPERTIES and NEW IBERIA SSA, LLC

                      Plaintiffs,

v.

THE UNITED STATES OF AMERICA,

                      Defendant.

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                                    ORDER

       Pending in this Contract Disputes Act suit is defendant’s motion to
dismiss OR, in the alternative, for summary judgment. The main thrust of
defendant’s motion to dismiss is that American Government Properties
(“AGP”) violated the Contracts Act’s prohibition against assignment of
contracts with the federal government by transferring its interest in the subject
lease to New Iberia SSA, LLC. See 41 U.S.C. § 6305 (2012) (prohibiting
transfers of contract interests).

       The General Services Administration (“GSA”) originally issued Lease
No. GS-07B-15516 to AGP on April 11, 2005. That contract called for AGP
to design, build, and then lease to the government a 6,575 rentable square feet
building in New Iberia, Louisiana for use by the Social Security
Administration. On August 11, 2005, AGP and a newly formed entity, New
Iberia SSA, LLC executed an assignment of interests in the GSA lease from
AGP to New Iberia. Although the parties discussed entering a novation
agreement in November 2007 to change ownership of the contract with the
government’s approval, and GSA sent AGP a supplemental lease agreement
to effectuate the change, neither party produced a signed agreement.1 We are
left to conclude that none was executed by both parties.

        The contract between GSA and AGP was eventually terminated for
default by GSA on March 4, 2008, for, among other things, lack of progress
towards completion by the mutually agreed upon delivery date. On June 29,
2010, GSA issued a replacement lease to another contractor for a slightly
larger facility.

        New Iberia submitted a certified claim to the contracting officer on
November 10, 2010, claiming that the termination was wrongful because the
delays were caused by GSA’s failure to timely provide design drawings,
government changes to its requirements, GSA’s failure to issue a notice to
proceed, and delays caused by permitting and weather, all allegedly not the
fault of plaintiffs. The contracting officer denied the claim in late April 2011
and assessed reprocurement costs against plaintiffs of $931,020.00 and
$129,600.00 in liquidated damages ($100 dollars per day) for the delay
between the original completion date and the completion date under the
replacement contract.

        AGP and New Iberia jointly appealed that decision of the contracting
officer by filing a complaint in this court on March 3, 2009, along with three
other complaints regarding similar construction projects in Louisiana.
Defendant moved to dismiss this case and case number 09-153C, American
Government Properties & Houma SSA, LLC v. United States, on the basis that
plaintiffs in both cases violated the prohibition against assignment of
government contracts. We are issuing an opinion in the 09-153C docket
contemporaneous with this order and adopt its reasoning in full. As explained
in that opinion, plaintiff’s assignment to a third party, in this case, New Iberia,
violated 41 U.S.C. § 6305 because plaintiffs do not meet the act’s requirements
for a valid assignment nor did the government accede to the transfer by
novation or course of conduct. Although the record reflects that the
government was willing to agree to the transfer from AGP to New Iberia, it
never formally did so. It continued to communicate with and pay AGP. Its

1
  Plaintiff contends that it did execute the supplemental agreement and sent
both a hard copy and electronic copy to GSA on January 19, 2008. There is
no evidence that GSA received the agreement or that it executed it, nor is there
secondary evidence of GSA approval, for example in the form of a change in
the party with whom GSA directed correspondence.

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conduct thus cannot be construed to be a knowing waiver of its rights in this
regard. Per the terms of the statute, the contract between AGP and GSA was
annulled. The legal consequence of which is that neither AGP nor New Iberia
have standing to sue the government on that contract, and defendant’s motion
to dismiss for lack of jurisdiction must be granted. Accordingly, the clerk of
court is directed to dismiss the complaint for lack of jurisdiction and enter
judgment accordingly. Defendant’s and plaintiff’s cross-motions for summary
judgment are denied as moot.

                                                 s/ Eric G. Bruggink
                                                 ERIC G. BRUGGINK
                                                 Judge

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