Court Opinion

ID: 4371002
Source: CourtListenerOpinion
Date Created: 2019-02-25 21:00:05.562031+00
Date Added: 2024-06-11T14:22:19.701907
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                  )
                                              )
Arab Shah Construction Company                )      ASBCA No. 61565
                                              )
Under Contract No. W912ER-l 7-A-0005          )

APPEARANCE FOR THE APPELLANT:                        Mr. Mohammad Idrees
                                                      Director

APPEARANCES FOR THE GOVERNMENT:                      Michael P. Goodman, Esq.
                                                      Engineer Chief Trial Attorney
                                                     Michael E. Taccino, Esq.
                                                     Aimee L. Rider, Esq.
                                                      Engineer Trial Attorneys
                                                      U.S. Army Engineer District, Middle East
                                                      Winchester, VA

      OPINION BY ADMINISTRATIVE JUDGE YOUNGER ON THE
 GOVERNMENT'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM
             UPON WHICH RELIEF CAN BE GRANTED

       Appellant Arab Shah Construction Company (appellant) has appealed from the
Army Corps of Engineers' (Corps') decision to terminate its contract for cause. The
Corps has moved to dismiss the appeal for failure to state a claim upon which relief
can be granted, arguing that appellant's complaint did not explicitly dispute the
termination or make a specific request for relief. We deny the motion.

           STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

       1. By date of December 7, 2016, the Corps awarded Contract No. W912ER-17-A-0005
(contract) to appellant for diesel generator repair services at power plants located throughout
Afghanistan (R4, tab 3 at 1, 4} Under the contract, identified as a blanket purchase
agreement, the Corps would issue orders for appellant to perform the contracted services
(gov't mot. at 1). The contract referred to those orders as "calls" (R4, tab 3 at 1, tab 4 at 1).

       2. The contract included FAR 52.212-4, CONTRACT TERMS AND CONDITIONS
COMMERCIAL ITEMS (MAY 2015). Subparagraph (m) of that clause provides the
government with authority to terminate a contract for cause "in the event of any default
by the Contractor, or if the Contractor fails to comply with any contract terms and
conditions, or fails to provide the Government, upon request, with adequate assurances
of future performance." That subparagraph further provides that "[i]f it is determined

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that the Government improperly terminated this contract for default, such termination
shall be deemed a termination for convenience." In a separate subparagraph, the
clause provides that "the Contractor shall be liable for default unless nonperformance
is caused by an occurrence beyond the reasonable control of the Contractor and
without its fault or negligence." FAR 52.212-4(f). (R4, tab 3 at 49)

       3. By date of December 15, 2017, the Corps issued a cure notice advising
appellant that its performance under Call 0003 (Call 3) was deficient and "endangering
performance under the subject contract" (R4, tab 48 at 1). The cure notice included a
detailed timeline describing the problems encountered with appellant's performance
on three generators located at two different power plants (id. at 2-5). The cure notice
further directed appellant to respond in writing to the contracting officer within
10 days with a schedule of actions it would take to remedy its deficient performance,
and to provide a list consisting of manufacturer verification of part and/or serial
numbers for the replaced parts (id. at 5).

        4. By email dated December 20, 2017, appellant submitted a 48-page response to
the cure notice that consisted primarily of photographs of various items appearing to be
parts that were to be installed during contract performance (gov't mot. at 2; R4, tab 49).
The response briefly described certain actions appellant had either already taken or
intended to take, and asserted that with respect to one of the generators, the contractor
responsible for maintenance was not changing the generator's oil in a timely fashion or
using good quality oil, which impacted its performance (R4, tab 49 at 8-10). Appellant's
response also included a chart that listed parts and part numbers (id. at 47-48).

       5. In a memorandum for record dated December 29, 2017, the contracting
officer documented her decision to terminate the contract for cause under
FAR 52.212-4 for failure to adequately respond to the cure notice (R4, tab 127 at 1-3).
By letter of the same date, the contracting officer issued the termination notice, finding
appellant in default "for failure to include a feasible recovery schedule of actions
[appellant] will take to remedy its deficient performance" with respect to two of the
three generators identified in the cure notice, and for failure to provide the parts list
verifying part and/or serial numbers for parts replaced in the generators (R4, tab 2 at 1).

       6. The termination notice described the problems with the two generators
in substantial detail. With respect to the first generator, the notice described a
turbocharger "glowing red hot" and continuing to overheat even after appellant
replaced three fuel injectors. The notice also stated that the Corps had photographic
evidence showing that replacement parts installed on that generator were not
"authentic OEM" (original equipment manufacturer), and that appellant was using
parts with no identifiable serial or part numbers. With respect to the second generator,
the notice indicated that appellant failed to present a realistic timeline to turn the
generator over to the end user and failed to identify and validate the replacement parts.

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The notice further stated that photographic evidence indicated that appellant was
re-using parts instead of replacing them with new parts, which could impact the
generator's ability to provide sustained use, and that there "is no evidence this
generator was turned on or could take any sort of load." (Id at 1-2)

        7. By email dated March 24, 2018, appellant filed its notice of appeal with the
Board, and attached a copy of the termination notice. The notice of appeal described
in detail certain problems appellant encountered with performance, and quoted and
specifically responded to the performance deficiencies identified in the termination
notice. The notice of appeal also repeated appellant's contention that the maintenance
contractor's failure to properly maintain one of the generators was responsible for the
performance deficiencies, and included a copy of the parts list provided in its response
to the cure notice.

        8. By email dated April 18, 2018, appellant filed its complaint with the Board.
The complaint included some unrelated discussion of Calls 1 and 2; with respect to
Call 3, it stated that another contractor "was creating problems" for appellant by not
allowing it to start work. The complaint further stated that this other contractor
claimed that one of the generators was covered by its contract with the Corps, not
appellant's, and that the other contractor had stolen some of that generator's parts.
(Compl. at 1-2)

        9. The complaint also referenced a number of attachments consisting of emails
and email chains between appellant and various Corps representatives, in which it
raised concerns with respect to the other contractor (whom appellant identified as the
maintenance contractor). In a February 20, 2017 email, appellant informed the Corps
that the maintenance contractor would "not [allow] us to start the work they claimed
they will fix it and it's on their contract." The February 20, 2017 email also noted that
when appellant raised this issue with Corps representatives its complaints were
ignored. Appellant repeated its contention regarding the maintenance contractor
"creating these problems" in an email dated March 9, 2017. In two additional emails,
dated October 7 and October 11, 2017, appellant informed the Corps that the
maintenance contractor was not properly changing the oil and filter on one of the
generators.

                                      DECISION

       The Corps has moved to dismiss this appeal for failure to state a claim upon
which relief can be granted, arguing that appellant has "neither set forth a recognizable
claim nor claimed entitlement to any relief' (gov't mot. at 3). Appellant opposes the
motion, repeating its contention that the maintenance contractor denied it access to the
site and failed to properly perform its maintenance obligations (app. opp'n at 1-3).

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              The standards for deciding a motion to dismiss for failure to state a claim upon
      which relief can be granted are well established. A motion to dismiss for failure to
      state a claim can be granted where the facts asserted in the complaint do not entitle
      the claimant to a legal remedy. See Lindsay v. United States, 295 F.3d 1252, 1257
      (Fed. Cir. 2002). The complaint must allege facts "'plausibly suggesting (not merely
      consistent with)' a showing of entitlement to relief." Cary v. United States, 552 F.3d
1373, 1376 (Fed. Cir. 2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
      557 (2007)); American General Trading & Contracting, WLL, ASBCA No. 56758,
      12-1 BCA ,r 34,905 at 171,640. In ruling on such a motion, we "must accept
      well-pleaded factual allegations as true and must draw all reasonable inferences in
      favor of the claimant," Kellogg Brown & Root Sen1ices, Inc. v. United States, 728 F.3d
1348, 1365 (Fed. Cir. 2013), and decide "only whether the claimant is entitled to offer
      evidence in support of its claims, not whether the claimant will ultimately prevail."
      Matcon Diamond, Inc., ASBCA No. 59637, 15-1 BCA ,r 36,144 at 176,407. The
      scope of our review is limited to considering the sufficiency of the allegations set forth
      in the complaint, "matters incorporated by reference or integral to the claim, items
      subject to judicial notice, [and] matters of public record." A&D Auto Sales, Inc. v.
      United States, 748 F.3d 1142, 1147 (Fed. Cir. 2014) (alteration in original) (internal
      quotation marks and citation omitted); see Zak v. Chelsea Therapeutics Int 'l, Ltd,
      780 F.3d 597,606 (4th Cir. 2015) (On a motion to dismiss for failure to state a claim,
      courts may consider documents attached or incorporated into the complaint.).

              Although the Corps describes appellant's complaint as failing to explain its
      allegations or request any actual relief (gov't mot. at 2), "the primary document setting
      forth the claim is not the complaint, per se, but is either the contractor's claim or the
      government's claim, the latter asserted in a contracting officer's final decision as
      required by the Contract Disputes Act." Lockheed Martin Integrated Systems, Inc.,
      ASBCA Nos. 59508, 59509, 17-1 BCA ,r 36,597 at 178,281. Thus, in addition to
      appellant's complaint, we look to the Corps' December 29, 2017 termination notice.
      See Jurass Company, ASBCA No. 51527, 06-1 BCA ,r 33,186 at 164,503 (termination
      for cause is a government claim).

              Read in conjunction with the termination notice, appellant's complaint alleges
      sufficient facts '"plausibly suggesting (not merely consistent with)' a showing of
      entitlement to relief." See Cary, 552 F.3d at 1376; American General Trading &
      Contracting, 12-1 BCA ,r 34,905 at 171,640. The Corps' termination notice describes
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      in detail the problems encountered with the generators covered by Call 3 (statement 6).
      Appellant's complaint incorporated the emails submitted as attachments, in which it
      specifically communicated to the Corps that the maintenance contractor was
      interfering with its access to the site and was not properly changing the generator's oil
      and filter (statements 8-9). A contractor's default may be excused "if it is caused by
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      an occurrence that is beyond its reasonable control and without its fault or

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negligence." Earthstar Constn1ction and Logistics Company, ASBCA No. 58086,
13 BCA 135,461 at 173,901; see statement 2. Appellant's allegations regarding the
problems it encountered with the maintenance contractor, and the impact of those
problems on its performance, go to the question of whether its alleged performance
deficiencies can be excused.

        With respect to the Corps' claim that appellant's complaint failed to request any
form of relief, the Corps has not cited, and we are unaware of, any precedent requiring
an appellant's complaint to recite a specific request for relief. The Board's rules, like
the Federal Rules of Civil Procedure, only require notice pleading. UniTech Services
Group, Inc., ASBCA No. 56482, 10-1 BCA 134,362 at 169,695. By virtue of
filing its notice of appeal, it is clear that appellant did not agree with, and was
challenging, the Corps' decision to terminate its contract for cause. Under the
contract's terms, "[i]f it is determined that the Government improperly terminated this
contract for default, such termination shall be deemed a termination for convenience."
FAR 52.212-4(£); see statement 2. Although appellant did not explicitly request the
termination for cause be converted to a one for convenience, that form of relief is a
logical inference from appellant's decision to file this appeal.

                                    CONCLUSION

      The government's motion is denied.

      Dated: February 12, 2019

                                                  Administrative Judg ___
                                                  Armed Services Board
                                                  of Contract Appeals

                                                  I concur

RICHARD SHACKLEFORD                               OWENC~SON
Administrative Judge                              Administrative Judge
Acting Chairman                                   Vice Chairman
Armed Services Board                              Armed Services Board
of Contract Appeals                               of Contract Appeals

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      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 61565, Appeal of Arab
Shah Construction Company, rendered in conformance with the Board's Charter.

      Dated:

                                                  JEFFREY D. GARDIN
                                                  Recorder, Armed Services
                                                  Board of Contract Appeals

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