Court Opinion

ID: 4296416
Source: CourtListenerOpinion
Date Created: 2018-07-20 20:01:37.825882+00
Date Added: 2024-06-11T14:39:48.316608
License: Public Domain

In the United States Court of Federal Claims
                                       No. 18-178C

                                  (E-Filed: July 20, 2018)

                                                      )
BGT HOLDINGS, LLC,                                    )
                                                      )
                     Plaintiff,                       ) Motion to Amend Pleadings;
                                                      ) RCFC 15.
v.                                                    )
                                                      )
THE UNITED STATES,                                    )
                                                      )
                     Defendant.                       )
                                                      )

Milton C. Johns, Tysons, VA, for plaintiff.

Borislav Kushnir, Trial Attorney, with whom were Chad A. Readler, Acting Assistant
Attorney General, Robert E. Kirschman, Jr., Director, Elizabeth M. Hosford, Assistant
Director, Commercial Litigation Branch, Civil Division, United States Department of
Justice, Washington, DC, for defendant.

                                  OPINION AND ORDER

CAMPBELL-SMITH, J.

        On February 2, 2018, plaintiff filed the instant complaint in which it alleges that
defendant breached a contract under which plaintiff was to provide a gas turbine
generator set to the United States Navy (the Navy). See ECF No. 1 at 2. Defendant has
moved to partially dismiss the complaint, pursuant to Rule 12(b)(6) of the Rules of the
United States Court of Federal Claims (RCFC). See ECF No. 6. In its response brief,
plaintiff opposes the motion to dismiss, and in the alternative, seeks leave of court to
amend the complaint, pursuant to RCFC 15(a)(2). See ECF No. 7. Defendant opposes
plaintiff’s request to amend the complaint in its reply brief. See ECF No. 8. For the
following reasons, defendant’s motion for partial dismissal is DENIED, and plaintiff’s
motion for leave to amend the complaint is GRANTED.
I.     Background

        On October 27, 2014, the Navy awarded a contract to plaintiff under which
plaintiff was to provide a “stand-alone, complete outdoor-rated air cooled dual fuel
LM2500 Gas Turbine Generator Set (GTGS) using [Government Furnished Equipment]”
to the Navy “at their site in Philadelphia, Pennsylvania.” ECF No. 1 at 2. Plaintiff
alleges that in January 2015, Ms. Suzanne Onesti, who worked for the Navy, informed
plaintiff that defendant would not provide certain equipment, including an exhaust
collector and engine mounts. See id. at 4. Plaintiff asserts that defendant’s refusal to do
so was contrary to its obligations under the contract. See id. In its complaint, plaintiff
seeks reimbursement for the cost of that equipment under three theories: (1) equitable
adjustment, see id. at 2-5 (Count I); (2) breach of contract, see id. at 5 (Count II); and (3)
breach of duty of good faith and fair dealing, see id. at 6 (Count III).

        Defendant moves to dismiss the first three counts of the complaint for four
reasons. First, defendant claims that Ms. Onesti lacked the authority to change the
contract requirements, and therefore, defendant is not liable for any costs incurred by
plaintiff as a result of her communications. See ECF No. 6 at 9-11. On this basis,
defendant asks the court to dismiss Counts I, II, and III of the complaint. See id. at 11.
Second, defendant alleges that plaintiff failed to assert its right to equitable adjustment
within thirty days of the relevant decision, as it was required to do, and as such, Count I
of the complaint is untimely. See id. at 11-12. Third, defendant contends that the
contract language precludes defendant’s liability for breach of contract, thus requiring the
dismissal of Count II of the complaint. See id. at 13-14. And finally, fourth, defendant
argues that plaintiff’s claim in Count III of the complaint, for a breach of the duty of good
faith and fair dealing, must be dismissed because allowing recovery on this theory would
violate the rule that a party “cannot rely on the implied covenant of good faith and fair
dealing to change the text of their contractual obligations.” Id. (quoting Century
Exploration New Orleans LLC v. United States, 745 F.3d 1168, 1179 (Fed. Cir. 2014)).

        In its response to defendant’s motion, plaintiff argues that the contracting officer
did have the authority to modify the contract and was the relevant decision maker with
regard to the provision of equipment. See ECF No. 7 at 3. In the alternative, plaintiff
claims that Ms. Onesti’s decision was properly ratified. See id. at 4. Plaintiff further
argues that: (1) Count I of the complaint should survive a motion to dismiss because
defendant has waived the thirty-day requirement for filing claims for equitable
adjustment, see id. at 5-7; (2) Count II of the complaint should survive the motion to
dismiss because the failure to provide the equipment was a “drastic modification,” or a
“cardinal change,” and is therefore a material breach, id. at 7-8; and (3) Count III of the
complaint should survive the motion to dismiss because plaintiff’s allegation that
defendant breached the duty of good faith and fair dealing is not an attempt to change the
text of the contract, see id. at 8.
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       In the alternative, plaintiff asks that the court permit it to amend the complaint.
See id. Defendant opposes plaintiff’s request on the basis that amending the complaint
would be futile. See ECF No. 8 at 6.

II.    Legal Standards

        Pursuant to Rule 15(a)(2), “a party may amend its pleading only with the opposing
party’s written consent or the court’s leave. The court should freely give leave when
justice so requires.” The United States Court of Appeals for the Federal Circuit has noted
that amendment should be “liberally allowed,” absent any “apparent or declared reason—
such as undue delay, bad faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment, [or] futility of amendment.”
A & D Auto Sales, Inc. v. United States, 748 F.3d 1142, 1158 (Fed. Cir. 2014) (quoting
Foman v. Davis, 371 U.S. 178, 182 (1962)).

III.   Analysis

       After reviewing the parties’ submissions in this case, the court concludes that
allowing plaintiff an opportunity to amend the complaint is appropriate. Plaintiff has not
previously sought to amend the complaint, and there is no suggestion—either from
defendant, or on the basis of the facts as alleged—that plaintiff has any dilatory or
otherwise improper motive in seeking to amend the complaint. Defendant’s only basis
for opposing amendment is its view that amendment would be futile. See ECF No. 8 at 6.

       Defendant’s position may ultimately prove to be correct, but the court is not
prepared to make that determination at this time. Plaintiff has raised the possibility that it
may be able to make more precise or additional allegations, particularly with regard to
the contracting officer’s role as the relevant decision maker, which the court would like
to consider. As such, the court will follow the Federal Circuit’s directive that amendment
shall be liberally allowed.

IV.    Conclusion

       Accordingly, defendant’s motion for partial dismissal of the complaint, ECF No.
6, is DENIED. Plaintiff’s motion for leave to amend the complaint, ECF No. 7, is
GRANTED. Plaintiff shall FILE its amended complaint on or before August 17,
2018.

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IT IS SO ORDERED.

                        s/Patricia E. Campbell-Smith
                        PATRICIA E. CAMPBELL-SMITH
                        Judge

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