Court Opinion

ID: 8374561
Source: CourtListenerOpinion
Date Created: 2022-10-19 20:00:12.064475+00
Date Added: 2024-06-11T16:46:20.250561
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS
 Appeals of --                               )
                                             )
 Relyant Global LLC                          )    ASBCA Nos. 63024, 63257
                                             )
 Under Contract No. W912QR-18-C-0026         )

 APPEARANCES FOR THE APPELLANT:                   James H. Price, Esq.
                                                  Michael R. Franz, Esq.
                                                   Lacy, Price & Wagner, P.C.
                                                   Knoxville, TN

 APPEARANCES FOR THE GOVERNMENT:                  Michael P. Goodman, Esq.
                                                   Engineer Chief Trial Attorney
                                                  Brett R. Howard, Esq.
                                                  Thomas M. Barrett, Esq.
                                                  James M. Inman, Esq.
                                                   Engineer Trial Attorneys
                                                   U.S Army Engineer District, Louisville

             OPINION BY ADMINISTRATIVE JUDGE O’CONNELL
                  ON RESPONDENT’S MOTION TO STRIKE

        Respondent, the United States Army Corps of Engineers (USACE), has moved
to strike Count III of appellant’s complaint, which is entitled Quantum
Meruit/Quantum Valebant/Unjust Enrichment. The Board grants the motion and
dismisses Count III for failure to state a claim.

       STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

      Appellant, Relyant Global LLC (Relyant), alleges the following in its
complaint.

       The parties entered into the above-captioned firm-fixed price contract on
August 9, 2018. The contract provided for Relyant to design and build a shipping
and receiving building located at Fort McCoy, Wisconsin for $7,030,235.27.
(Compl. ¶ 6)

       A dispute developed as to whether the contract required Relyant to include in
the design a ceiling or other physical barrier in the freight area of the building to
prevent storage greater than 10 feet in height (compl. ¶¶ 8-9, 15-16). After
discussions, USACE required Relyant to either redesign the building’s fire suppression
system or install a new ceiling to create a physical barrier to prevent storage above
10 feet (id. ¶ 18). Relyant chose the latter option, designing and installing an added
ceiling, but it contends that this was a constructive change to the contract (id. ¶ 19).

       Relyant submitted a claim to the contracting officer (CO) for $242,492.41 in
added costs and a 110-day time extension for the ceiling work. The CO denied the
claim on June 11, 2021. (Compl. ¶ 22) Relyant filed an appeal on September 7, 2021.

       Relyant’s complaint contains six counts alleging a variety of theories, including
breach of contract (Count II), breach of the covenant of good faith and fair dealing
(Count IV), and constructive change/cardinal change (Count V). The count relevant to
the pending motion is Count III – Quantum Meruit/Quantum Valebant/Unjust
Enrichment.

         The crux of Count III is conveyed by the following allegation:

                [T]he Army has been unjustly enriched and equity requires
                that the Army make payment to Relyant for the full value
                of the goods and services conferred upon the Army by
                Relyant – $242,492.41 plus interest, attorneys’ fees, and
                any other recoverable costs. Relyant is entitled to relief
                under the doctrines of quantum meruit, quantum valebant,
                unjust enrichment, and any other applicable theory of
                implied-in-fact contracts.

(Compl. ¶ 40) Relyant does not contend that the contract is void or illegal. It states in
the first paragraph of the complaint that “[t]his claim is based on an express written
contract with the Army” (id. ¶ 1). It states in Count III that the goods and services
at issue were “provided by Relyant under the Contract . . . .” (id. ¶ 39).

                                       DECISION

       In its motion to strike, USACE contends that the Board lacks jurisdiction to
consider Relyant’s unjust enrichment cause of action because it is based on an
implied-in-law contract theory. It further contends that the Board lacks jurisdiction to
consider Relyant’s quantum meruit or quantum valebant theories 1 because USACE
has not refused to pay due to the contract being illegal or void. (Gov’t mot. at 3-4)

1
    Quantum meruit refers to services while quantum valebant refers to goods, but there
        is usually no significance to this difference. Barrett Refining Corp. v. United
        States, 242 F.3d 1055, 1059 n.1 (Fed. Cir. 2001) (citations omitted).
                                             2
        Relyant responds by emphasizing that it is not asserting an implied-in-law
contract theory, only an implied-in fact contract that is within the Board’s jurisdiction
(app. resp. at 1 (citing compl. ¶ 40)). Relyant further contends that at this early stage
of the appeal it is allowed to proceed on alternative theories and that it should be
allowed to take discovery that may reveal the existence of an implied-in-fact contract
(app. resp. at 2-3).

        The Board agrees with USACE. Recovery in quantum meruit or quantum
valebant is typically based on an implied-in-law contract, a type of claim that we lack
jurisdiction to consider. Lee v. United States, 895 F.3d 1363, 1373 (Fed. Cir. 2018);
Protec GmbH, ASBCA No. 61161 et al., 18-1 BCA ¶ 37,064 at 180,420. Similarly,
the Board lacks jurisdiction to consider an unjust enrichment theory because it is also
based on a contract implied-in-law. Cross Country Indus., Inc. v. United States,
231 Ct. Cl. 899, 901 (1982).

      There is one relevant exception to these rules. Quantum meruit can be used as a
measure of damages for breach of an implied-in-fact contract. Lee, 895 F.3d at 1374;
United States v. Amdahl Corp., 786 F.2d 387, 393 (Fed. Cir. 1986). The Board
possesses jurisdiction to consider appeals based on an implied-in-fact contract.
Engage Learning, Inc. v. Salazar, 660 F.3d 1346, 1354 (Fed. Cir. 2011). But this
would only help Relyant if it had a viable implied-in-fact contract theory.

       Relyant’s complaint generally contends that the work on the ceiling was not
required by the express contract and is a change or extra work for which it is entitled
to additional time and money. In Count III, it asserts an implied-in-fact contract
theory. Relyant cannot pursue both theories. As the Court of Appeals for the Federal
Circuit has explained, “[i]t is well settled that ‘the existence of an express contract
precludes the existence of an implied-in-fact contract dealing with the same subject
matter, unless the implied contract is entirely unrelated to the express contract.’”
Lee, 895 F.3d at 1370 (quoting Bank of Guam v. United States, 578 F.3d 1318 ,
1329 (Fed. Cir. 2009) (quoting Schism v. United States, 316 F.3d 1259, 1278 (Fed.
Cir. 2002) (en banc)). Because Relyant does not contend that the express contract was
void and because it does not (and cannot) contend that the addition of a ceiling in the
building it designed and constructed was entirely unrelated to the express contract,
Count III must be dismissed.

       Relyant cites the Federal Circuit’s decision in Amdahl as an example of a
contractor obtaining relief under an implied-in-fact contract theory. In Amdahl, the
contractor provided goods to the government, but the contract was void due to
statutory and regulatory violations in the procurement process. The Federal Circuit
held that if the contractor conferred a benefit on the government, it could recover for
the value of the conforming goods under an implied-in-fact contract on a quantum

                                            3
  meruit or quantum valebant basis. Amdahl, 786 F.2d at 393; see Lee, 895 F.3d
  at 1374.

          Amdahl has no relevance to these appeals. As the Federal Circuit later
  explained, “Amdahl speaks to the situation in which the government receives the
  goods or services for which it contracted, but then seeks to avoid payment by arguing
  that the underlying contract was unlawful.” United Pac. Ins. Co. v. United States,
  464 F.3d 1325, 1334 (Fed. Cir. 2006). Neither Relyant nor USACE contends that the
  contract at issue was unlawful. USACE has not withheld payment because it believes
  that the contract, or any clause in that contract, is void or illegal. The parties simply
  disagree over the correct interpretation of the express contract and, as result, disagree
  whether the design and construction of the ceiling was required by that contract.

          Finally, the Board also rejects Relyant’s request that the Board deny the motion
  to dismiss so that it can take discovery that may uncover the existence of an implied-
  in-fact contract. Because it is undisputed that there is a valid written contract, the
  mere possibility that evidence might exist supporting a completely different set of facts
  is not enough to deny the motion. See Pure Gold, Inc. v. Syntex (U.S.A.), Inc.,
  739 F.2d 624, 627 (Fed. Cir. 1984).

          While the government moves to strike Count III based on a lack of jurisdiction,
  the Board possesses jurisdiction to consider implied-in-fact contract claims, as
  described above. In Lee, the Federal Circuit affirmed dismissal for failure to state a
  claim. Lee, 895 F. 3d at 1374. Accordingly, the Board dismisses Count III for failure
  to state a claim.
                                      CONCLUSION

         Count III of the complaint is dismissed for failure to state a claim.

         Dated: September 27, 2022

                                                   MICHAEL N. O’CONNELL
                                                   Administrative Judge
                                                   Armed Services Board
                                                   of Contract Appeals

(Signatures continued)

                                              4
 I concur                                         I concur

 RICHARD SHACKLEFORD                              OWEN C. WILSON
 Administrative Judge                             Administrative Judge
 Acting Chairman                                  Vice Chairman
 Armed Services Board                             Armed Services Board
 of Contract Appeals                              of Contract Appeals

      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. 63024, 63257, Appeal of
Relyant Global LLC, rendered in conformance with the Board’s Charter.

      Dated: September 29, 2022

                                               PAULLA K. GATES-LEWIS
                                               Recorder, Armed Services
                                               Board of Contract Appeals

                                           5