Court Opinion

ID: 4513078
Source: CourtListenerOpinion
Date Created: 2020-03-05 17:00:57.838346+00
Date Added: 2024-06-11T09:40:43.628779
License: Public Domain

Case: 20-1130   Document: 22     Page: 1   Filed: 03/05/2020

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

 ROBERT E. MILTON, JR., MANUELLA F. MILTON,
              Plaintiffs-Appellants

                            v.

                   UNITED STATES,
                   Defendant-Appellee
                 ______________________

                       2020-1130
                 ______________________

     Appeal from the United States Court of Federal Claims
 in Nos. 1:18-cv-00021-MCW, 1:18-cv-00796-MCW, Senior
 Judge Mary Ellen Coster Williams.
                  ______________________

                 Decided: March 5, 2020
                 ______________________

     ROBERT E. MILTON, JR., MANUELLA F. MILTON,
 Altadena, CA, pro se.

     JAMES WILLIAM POIRIER, Commercial Litigation
 Branch, Civil Division, United States Department of Jus-
 tice, Washington, DC, for defendant-appellee. Also repre-
 sented by JOSEPH H. HUNT, ROBERT EDWARD KIRSCHMAN,
 JR., DOUGLAS K. MICKLE.
                 ______________________
Case: 20-1130    Document: 22     Page: 2    Filed: 03/05/2020

 2                                   MILTON v. UNITED STATES

     Before O’MALLEY, REYNA, and CHEN, Circuit Judges.
 PER CURIAM.
     Robert and Manuella Milton appeal an order of the
 United State Court of Federal Claims (“Claims Court”) dis-
 missing their complaint for failure to state a claim and for
 lack of jurisdiction and, in the alterative, as barred by
 claim preclusion. See Milton v. United States, No. 18-21C,
 2019 WL 4137495 (Fed. Cl. Aug. 30, 2019). For the reasons
 discussed below, we affirm the Claims Court’s dismissal.
                              I
     The Miltons are the founders and sole owners of REM
 Engineering Company (“REM”), a professional engineering
 and construction services business. Mr. Milton is a com-
 bat-injured Vietnam veteran. REM thus qualifies as a Ser-
 vice-Disabled     Veteran-Owned       Small     Business
 (“SDVOSB”).
     In October 2011, the Department of Veterans Affairs
 (“VA”) awarded REM a $23,347,412 SDVOSB set-aside
 project, Contract Number 101CFM-C-0167 (“Contract”).
 Under the Contract, REM was to build a 10-acre solar farm
 for the VA Southern Nevada Healthcare System in North
 Las Vegas, Nevada. As a condition of the Contract, REM
 was required to acquire performance and payment bonds,
 each equal to the Contract’s value. REM acquired the nec-
 essary bonds within days of the VA awarding the Contract.
 The Miltons personally indemnified the Bonds.
     A number of bid protests were filed, delaying the VA
 issuing a Notice to Proceed on the Contract. In August
 2012, the Government Accountability Office (“GAO”) sus-
 tained a protest that argued unreasonable valuation. The
 GAO recommended that the VA reevaluate REM’s offer to
 determine whether it was the best value to the govern-
 ment. Eleven months later, in July 2013, the VA termi-
 nated its contract with REM for convenience. REM, having
Case: 20-1130     Document: 22     Page: 3    Filed: 03/05/2020

 MILTON v. UNITED STATES                                     3

 never received a Notice to Proceed, completed no work un-
 der the Contract.
     After receiving the VA’s Notice of Termination, REM
 submitted a settlement proposal to the VA, seeking
 $3,534,983. In January 2014, the VA denied REM’s settle-
 ment proposal and modified the Contract to reflect a final
 settlement amount of $39,303.28. REM appealed the final
 settlement to the Civilian Board of Contract Appeals
 (“Board”).
     REM filed another claim with the VA in May 2014, ar-
 guing that it had incurred damages due to the VA’s eleven-
 month delay in releasing it from the Contract. REM ar-
 gued that it had been unable to complete other work be-
 cause its entire bonding capacity was consumed by the
 Contract. The VA denied this claim in July 2014, and REM
 appealed to the Board.
     In September 2015, REM accepted a settlement offer of
 $3,050,000 in full settlement of both Board appeals.
     The Miltons filed this suit in the Claims Court in Jan-
 uary 2018, alleging four counts related to the Contract:
 breach of written contract; breach of implied contract;
 breach of oral contract; and breach of implied duty of good
 faith and fair dealing. The government moved to dismiss
 the case.
      The Claims Court granted the government’s motion.
 It found that the Miltons: (1) had failed to establish that
 they were third-party beneficiaries to the Contract, (2)
 failed to establish they were sureties for the purposes of the
 equitable subrogation doctrine, and (3) failed to allege con-
 duct giving rise to a plausible implied-in-fact contract. In
 the alternative, the court found the Miltons’ claims barred
 by claim preclusion.
    The Miltons timely appeal. We have jurisdiction pur-
 suant to 28 U.S.C. § 1295(a)(3).
Case: 20-1130    Document: 22      Page: 4     Filed: 03/05/2020

 4                                   MILTON v. UNITED STATES

                              II
     We review legal questions, such as whether the Claims
 Court has jurisdiction over a claim, whether claim preclu-
 sion applies, or whether a party has failed to state a claim,
 de novo. Frankel v. United States, 842 F.3d 1246, 1249
 (Fed. Cir. 2016); Biafora v. United States, 773 F.3d 1326,
 1334 (Fed. Cir. 2014); Bowers Inv. Co. v. United States, 695
 F.3d 1380, 1384 (Fed. Cir. 2012). We review the Claims
 Court’s jurisdictional findings of fact for clear error. Bia-
 fora, 773 F.3d at 1334.
                 A. Failure to State a Claim
     The Claims Court found that the Miltons failed to plau-
 sibly allege an implied-in-fact contract with the VA. Mil-
 ton, 2019 WL 4137495, at *4. To plead an implied-in-fact
 contract, a claimant must allege, “mutual intent to contract
 including an offer and acceptance, consideration, and a
 Government representative who had actual authority to
 bind the Government.” Trauma Serv. Grp. v. United
 States, 104 F.3d 1321, 1326 (Fed. Cir. 1997).
     The Miltons’ complaint alleges that Mr. Milton commu-
 nicated with the VA about the negative effect that remain-
 ing on standby, with REM’s bonding capacity tied to the
 project, had on REM and the Miltons. Suppl. App. 18, ¶ 9.
 Despite this, the VA consistently stated that, if REM were
 to pull the bonds, REM would default on the Contract. Id.
 Such a default would have resulted in the Miltons becom-
 ing personally liable under the Contract. Id. The Miltons
 argued to the Claims Court that the VA’s threat of default
 constituted a meeting of the minds between Mr. Milton and
 the VA contracting officer. Milton, 2019 WL 4137495, at
 *4.
     The Claims Court correctly held that the Miltons failed
 to plausibly allege an implied-in-fact contract between Mr.
 Milton and the VA. Specifically, the Miltons do not allege
 a plausible offer or intent to contract by the VA.
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 MILTON v. UNITED STATES                                    5

 Accordingly, we affirm the Claims Court’s dismissal of the
 Miltons’ allegations stemming from of an implied-in-fact
 contract.
        B. The Miltons’ Relationship to the Contract
     The Claims Court found that it lacked jurisdiction over
 the Miltons’ remaining claims because the Miltons failed to
 establish that they were parties to the Contract. Milton,
 2019 WL 4137495, at *3. Under the Tucker Act, to estab-
 lished that the Claims Court has jurisdiction over a con-
 tract-based claim, a plaintiff must prove privity of contract
 between itself and the government. Cienega Gardens v.
 United States, 194 F.3d 1231, 1239 (Fed. Cir. 1998). The
 Claims Court found that REM, not the Miltons, was party
 to the Contract. Milton, 2019 WL 4137495, at *3. The Con-
 tract, which clearly establishes that the bound parties are
 REM and the government, confirms that the Claims
 Court’s finding was not erroneous. Supp. App. 47.
      On appeal, the Miltons argue that Mr. Milton was nec-
 essarily a party to the contract based on VA regulations re-
 lated to REM’s SDVOSB status. This argument is
 unavailing. VA regulations set out a scheme to provide
 preferential treatment to SDVODBs but do not establish a
 contractual relationship between the veteran business
 owner and the VA. See 48 C.F.R. §§ 819.7001–819.7009.
 The fact that REM received an SDVOSB certification sim-
 ilarly does not create a contract. The certification merely
 establishes that the business meets the regulatory require-
 ments for preferential treatment. See 13 C.F.R. §§ 125.12–
 125.16. Thus, the Claims Court correctly found that Mr.
 Milton, as an individual, does not have privity of contract
 with the government based on REM’s SDVOSB status.
     A plaintiff may also seek relief before the Claims Court
 as a third-party beneficiary to a government contract. See
 G4S Tech. LLC v. United States, 779 F.3d 1337, 1340 (Fed.
 Cir. 2015). To establish third-party beneficiary status, the
 contracting parties must intend to directly benefit the
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 6                                   MILTON v. UNITED STATES

 third-party. Id. The intent may be express or implied, but
 must be fairly attributable to the contracting officer. Id.
 The Miltons do not allege in their complaint that they are
 third-party beneficiaries of the Contract. They argued to
 the Claims Court, in response to the government’s motion
 to dismiss, that the VA is a third-party beneficiary to the
 contract. Pls.’ Resp. Def.’s Mot. Dismiss at 5, Milton, 2019
 WL 4137495 (Fed. Cl. Aug. 20, 2018) (No. 18-21), ECF No.
 18. The Claims Court held that, because the Miltons did
 not articulate how the VA’s status as a third-party benefi-
 ciary gave them any rights in the Contract and because the
 Miltons did not allege that they themselves are third-party
 beneficiaries, the Miltons failed to establish this alterna-
 tive basis for the Claims Court’s jurisdiction over the
 claims. Milton, 2019 WL 4137495 at *3.
     We agree. The Miltons have not alleged that they,
 themselves, were third-party beneficiaries to the Contract
 nor have they articulated why the VA’s status as such a
 beneficiary would give them any right to bring this suit.
 Accordingly, we affirm the Claims Court’s holding that it
 does not have jurisdiction over the Miltons’ contract claims.
      C. Implied Duty of Good Faith and Fair Dealing
     Government contracts impose on the government an
 implied duty of good faith and fair dealing. See Metcalf
 Const. Co., v. United States, 742 F.3d 984, 990 (Fed. Cir.
 2014) (“Every contract imposes upon each party a duty of
 good faith and fair dealing in its performance and enforce-
 ment.”). No such duty arises, however, in the absence of a
 contract. As we explain above, the Miltons do not plausibly
 allege an implied-in-fact contract with the VA and they are
 not parties to the Contract. Absent a contract, the Miltons’
 claim of breach of an implied duty of good faith and fair
 dealing is unsustainable.
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 MILTON v. UNITED STATES                                   7

                            III
     We have considered the remainder of the Miltons’ ar-
 guments but find them unpersuasive. For the reasons dis-
 cussed above, the Claims Court properly dismissed this
 case. Accordingly, we affirm the decision of the Claims
 Court.
                       AFFIRMED
                           COSTS
    No costs.