U.S. Coating Specialties & Supplies, LLC ( 2017 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of-- )
)
U.S. Coating Specialties & Supplies, LLC ) ASBCA No. 58245
)
Under Contract No. W912EE-10-C-0019 )
APPEARANCES FOR THE APPELLANT: Louis H. Watson, Jr., Esq.
Watson & Norris, PLLC
Jackson, MS
Mr. Earl Washington
Chief Operation Officer & CEO
APPEARANCES FOR THE GOVERNMENT: Thomas H. Gourlay, Jr., Esq.
Engineer Chief Trial Attorney
John M. Breland, Esq.
Walker D. Moller, Esq.
Adam Caudle, Esq.
Engineer Trial Attorneys
U.S. Army Engineer District, Vicksburg
OPINION BY ADMINISTRATIVE JUDGE WOODROW ON THE
GOVERNMENT'S RENEWED MOTION FOR SUMMARY JUDGMENT
INTRODUCTION
This appeal arises from the government's termination of the captioned contract
for default. On 9 April 2015, the Board issued a decision denying the government's
amended motion to dismiss or, in the alternative, for summary judgment. U.S. Coating
Specialties & Supplies, LLC, ASBCA No. 58245, 15-1BCA~35,957 (U.S. Coating!).
The government now files a renewed motion for summary judgment, contending that
an alleged prior oral agreement between appellant and the Assistant U.S. Attorney
(AUSA) during appellant's Chapter 11 bankruptcy proceedings is barred by the parol
evidence rule, and alternatively, the AUSA lacked actual authority to enter into the
alleged agreement. For the reasons set forth below, we deny the motion.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. On 21June2010, the U.S. Army Corps of Engineers (Corps) awarded
Contract No. W912EE-10-C-0019 (contract) to appellant, U.S. Coating Specialties &
Supplies, LLC (U.S. Coating) in the amount of$11,383,000 for the construction of a
U.S. Army Engineer Research and Development Center Information Technology
Laboratory office building and computer facility in Vicksburg, Mississippi (R4, tab 3
at 5-6 1).
2. The contract included the standard Federal Acquisition Regulation (FAR)
default clause, 52.249-10, DEFAULT (FIXED-PRICE CONSTRUCTION) (APR 1984),
which provided, in pertinent part:
(a) If the Contractor refuses or fails to prosecute the work
or any separable part, with the diligence that will insure its
completion within the time specified in this contract
including any extension, or fails to complete the work
within this time, the Government may, by written notice to
the Contractor, terminate the right to proceed with the
work (or the separable part of the work) that has been
delayed ....
(c) If, after termination of the Contractor's right to
proceed, it is determined that the Contractor was not in
default, or that the delay was excusable, the rights and
obligations of the parties will be the same as if the
termination had been issued for the convenience of the
Government.
(Id. at 133-34)
3. On 13 January 2012, during performance of the contract, U.S. Coating
sought bankruptcy protection, filing a Chapter 11 voluntary petition in the United
States Bankruptcy Court for the Southern District of Mississippi (Bankruptcy Court)
(R4, tab 4).
4. On 24 February 2012, Travelers Casualty and Surety Company of America
(Travelers), U.S. Coating's surety for the contract, filed a motion ("Dkt. #38") in the
Bankruptcy Court, seeking relief from the automatic stay imposed by U.S. Coating's
bankruptcy filing to enforce its rights under a General Agreement of Indemnity
between Travelers and U.S. Coating (R4, tab 5). Travelers also filed another motion
("Dkt. #39") on the same date to compel rejection of the contract, or alternatively, to
1
Citations to the Rule 4 file are to the consecutively-numbered pages unless otherwise
indicated.
2
compel U.S. Coating to assume or reject the contract pursuant to 11 U.S.C. § 365
(supp. R4, tab 1).
5. On 13 March 2012, Mid State Construction Company, Inc. (Mid State), U.S.
Coating's subcontractor, filed a response and limited objection to Travelers' motion
for relief from the automatic stay ("Dkt. #52") (R4, tab 7). Mid State also filed a
response and limited objection to Travelers' motion to compel on the same date
("Dkt. #53") (supp. R4, tab 3).
6. On 13 March 2012, the AUSA for the Southern District of Mississippi,
David N. Usry (AUSA Usry), on behalf of the U.S. Attorney, filed responses to
Travelers' 24 February motions for the United States and the agency. In its response
and limited joinder in Travelers' motion for relief from the automatic stay ("Dkt.
#51 "), the United States moved to lift the automatic stay to pursue termination
proceedings pursuant to FAR Part 49 and allow the Corps to complete the
construction. (R4, tab 6 at 7) The United States pied that the CO "was proscribed
from ... determin[ing] whether [U.S. Coating] was defaulted or is likely to default on the
Contract for failure to make progress" (R4, tab 6 at 7, ~ 26). The United States also
supported Travelers' motion to compel rejection of the contract, or alternatively, to
compel U.S. Coating to assume or reject the contract (supp. R4, tab 2).
7. The Bankruptcy Court of Mississippi issued an order on 30 March 2012,
directing U.S. Coating, the debtor, to file a motion to assume or reject the contract by
13 April 2012 and setting a trial on any such motion for 26 April 2012 (supp. R4,
tab 4).
8. After obtaining leave from the Bankruptcy Court to file its motion, U.S.
Coating moved to assume the contract on 17 April 2012 (R4, tab 9). The United States·
filed a response to the motion on 20 April 2012, demanding proof of U.S. Coating's
ability to assume the contract at the 26 April 2012 trial. The response was filed by
AUSA Usry. (R4, tab 12)
9. Prior to the scheduled 26 April 2012 hearing, U.S. Coating, Travelers, the
United States, and Mid State advised the Bankruptcy Court that they reached a
settlement on pending issues set for trial and submitted a proposed order for the
Bankruptcy Court's approval (R4, tab 20 at 45 2).
10. Based on the parties' communicated settlement and proposed order, the
Bankruptcy Court judge issued an order on 25 April 2012, stating in pertinent part:
2
Citation is to the original pagination.
3
There came on for the Court's consideration for the
following pleadings:
A. Motion for Relief from the Automatic Stay
[Dkt. #38] ("Automatic Stay Motion") filed by Travelers
Casualty and Surety Company of America ("Travers"
[sic]);
B. Mid State Construction Company, Inc. 's
Response and Limited Objection to Travelers Casualty and
Surety Company of America's Motion for Relief From the
Automatic Stay [Dkt. #52] filed by Mid State Construction
Company, Inc. ("Mid State");
C. United States of America's Response and
Limited Joinder in Travelers Casualty and Surety
Company of America's Motion for Relief from the
Automatic Stay [Dkt. #51] filed by the United States of
America on behalf of the Corps of Engineers ("Corps");
D. Debtor's Response to Travelers' Motion for
Relief From the Automatic Stay [Dkt. #59) filed by U.S.
Coating Specialities [sic] & Supplies, LLC ("Debtor");
E. Motion to Assume Executory ("Bonded")
Contract Held by U.S. Army Corps of Engineers [Dkt.
#87) ("Motion to Assume") filed by the Debtor;
F. Travelers Casualty and Surety Company of
American's [sic] Objection to Motion to Assume [Dkt.
#83);
G. Mid State Construction Company, Inc. 's
Objection to Motion to Assume Executory Contract [Dkt.
#84]; and
H. United States of America's Response to
Debtor's Motion to Assume Executory ("Bonded")
Contract [Dkt. #99).
The Court, being fully advised in the premises and
having considered the settlement of the foregoing
pleadings as reflected below, finds that cause exists
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pursuant to 11 U.S.C. § 362(d)(l) to grant Travelers and
the Corps relief from the automatic stay and finds that the
Motion to Assume should be denied and that the contract
("Contract") between the Debtor and the Corps ... should be
deemed rejected.
IT IS, THEREFORE, ORDERED that the Contract
is hereby rejected as a matter of law.
IT IS FURTHER ORDERED that the automatic
stay is hereby terminated in favor of the Corps and
Travelers with respect to the Contract and General
Agreement of Indemnity ('"GAI").
IT IS FURTHER ORDERED that this Order does
not adjudicate or waive any respective rights and/or
defenses of Travelers, the Corps, or Mid State with respect
to the Contract, the Bonded Project, the GAI, or the
performance and payment bonds issued by Travelers on
the project.
IT IS FURTHER ORDERED that, because the
Automatic Stay Motion was sufficient to afford reasonable
notice of the material provisions of the agreement between
the parties and opportunity for hearing, the provisions of
Fed. R. Bankr. P. 400l(d)(l)-(3) do not apply and the
agreement is approved without further notice.
ORDERED that the Stay of execution of Fed. R.
Bankr. P. 400l(a)(3) is hereby waived. SO ORDERED.
(R4, tab 13) The order was "AGREED TO and APPROVED AS TO FORM" by
AUSA Usry, U.S. Coating's bankruptcy counsel, and representatives for Travelers,
and Mid State (id. at 3).
11. Following the issuance of the Bankruptcy Court's 25 April 2012 order, the
contracting officer (CO), Jeri H. McGuffie (CO McGuffie), terminated the contract for
default on the same date, asserting that U.S. Coating's consent to rejection of the
contract constituted an anticipatory repudiation of the contract (R4, tab 2).
12. On 30 April 2012, U.S. Coating formally filed a motion in the Bankruptcy
Court to vacate the 25 April 2012 order. In its motion, U.S. Coating asserted that its
consent to the settlement was based on representations made by AUSA Usry that the
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Corps would terminate the contract for "reasons other than default" (R4, tab 15). The
United States, Travelers, and Mid State filed responses to U.S. Coating's motion to
vacate the 25 April 2012 order (R4, tabs 16-18).
13. The Bankruptcy Court held a hearing on U.S. Coating's motion to vacate
on 17 May 2012. Ruling from the bench, the Bankruptcy Court denied U.S. Coating's
motion, holding that U.S. Coating's contentions were insufficient to set aside the
25 April 2012 order. The Bankruptcy Court did not address the propriety of the
Corps' termination of the contract for default. (R4, tab 20) The Bankruptcy Court
subsequently issued a written Final Judgment based on the reasons articulated at the
hearing (R4, tab 19).
14. On 20 July 2012, U.S. Coating timely appealed from the CO's 25 April
2012 final decision, terminating the contract for default.
15. The Corps filed a motion to dismiss or, in the alternative, for summary
judgment in this appeal, which was later amended, that was the subject of our
9 April 2015 decision in US. Coating I, 15-1BCAiJ35,597 at 175,705. In our
decision, the Board struck U.S. Coating's affirmative claims in its amended complaint
and denied the remainder of the Corps' motion. Id. at 175,707-08.
16. On 21January2016, the Corps filed a renewed motion for summary
judgment in this appeal. In support of its renewed motion, the Corps submitted the
affidavits of CO McGuffie and AUSA Usry. CO McGuffie's affidavit stated in
pertinent part:
2. I was the Government Procuring Contracting Officer
who awarded and administered the contract (number
W9 l 2EE- l O-C-0019) that is the subject of this appeal.
3. My authority as the duly authorized Contracting Officer
under the subject Contract was never delegated to or
usurped by the Assistant United States Attorney who
represented the Corps in the bankruptcy proceeding that
involved U.S. Coating and implicated contract number
W9 l 2EE- l O-C-0019.
4. Because of the Contractor's actions endangering
performance on the contract, I had clear justification for
termination for default. Due to the significant financial
and contractual ramifications a termination for
convenience would have presented to the Corps and our
customer, I never would have agreed to terminate the
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contract for convenience. The Assistant United State[s]
Attorney had no authority granted to him on the subject
contract. Had the Assistant United State[ s] Attorney
advised or recommended a termination for
convenience, which he did not, I would not have
entertained such a recommendation.
(Gov't reply, ex. L) AUSA Usry's affidavit stated in pertinent part:
2. I represented the United States Army Corps of
Engineers ("the Corps") in the Chapter 11 bankruptcy
proceedings that involved the Corps' contract, number
W912EE-10-B-001 l,l31with U.S. Coating Specialties &
Supplies, LLC ("U.S. Coating"), the debtor ....
3. I had conversations with U.S. Coatings' counsel in the
bankruptcy proceedings, Herb Irvin, and
representatives of the debtor on multiple occasions
during the course of the bankruptcy proceedings.
4. During my discussions and negotiations in the
bankruptcy proceedings with debtor's counsel and
debtor's representatives, I never promised anyone that
the Corps would terminate the contract for convenience
if U.S. Coating rejected the contract in bankruptcy.
5. During my discussions and negotiations in the
bankruptcy proceedings with debtor's counsel and
debtor's representatives, I never did state or otherwise
imply that I had any authority whatsoever to bind the
Corps to terminate the contract for convenience.
(Gov't reply, ex. M)
17. In its opposition to the Corps' renewed motion for summary judgment,
U.S. Coating relies on three affidavits of its employees - President and CEO,
Mr. Earl J. Washington; Ms. Velma Day; and Mr. Alden Brooks - originally submitted
3
The referenced contract number appears to be a typographical error. The correct
reference is Contract No. W912EE-10-C-0019. The referenced number,
W912EE-10-B-001 l, pertains to Invitation for Bid No. W912EE-10-B-001 l
(see gov't reply, ex. K).
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in the earlier US. Coating I proceedings. Mr. Washington's affidavit stated in
pertinent part:
3. I never consented to a termination by default. I agreed
to lift the automatic stay on the condition that U.S.
Coating would be terminated only by convenience. I
held this discussion with Travelers' legal counsel, the
Respondent's legal counsel, and U.S. Coating's legal
counsel, Herb Irvin, on April 24, 2012.
(Gov't reply, ex. I) Ms. Day's affidavit stated that telephone discussions between U.S.
Coating's counsel, Herb Irvin, and AUSA Usry took place on 24 April 2012, and there
were discussions about the automatic stay being lifted to allow discussions about a
termination for convenience (id., ex. G). Mr. Brooks'· affidavit stated that he received
a telephone call on 24 April 2012 to attend a meeting to discuss a resolution that would
allow for a termination of the contract for convenience. Mr. Brooks stated that U.S.
Coating's counsel and AUSA Usry exchanged messages and it was his understanding
that all parties agreed to terminate the contract for convenience. (Id., ex. H)
DECISION
Summary Judgment Standards
The guidelines for summary judgment are well established; the granting of
summary judgment is appropriate where there are no genuine issues of material fact
and the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986); DIRECTV Grp., Inc. v. United States, 670 F.3d 1370, 1374
(Fed. Cir. 2012). The movant has the burden to establish that there are no material
facts in dispute. A material fact is one which may affect the outcome of the case.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). At the summary judgment
stage, we do not resolve controversies, weigh evidence, or make determinations of
credibility. Id. at 253. All reasonable inferences are drawn in favor of the
non-movant. Id. at 25 5. A movant is entitled to judgment as a matter of law if the
non-movant "fails to make a showing sufficient to establish the existence of an
element essential to [the non-movant's] case, and on which [the non-movant] will bear
the burden of proof at trial." Celotex Corp., 477 U.S. at 322.
Discussion
In US. Coating I, we concluded that summary judgment for the Corps was
premature, stating that appellant should be given an opportunity to demonstrate that
"its consent to the rejection of the contract was based upon an agreement with the
government to terminate the contract, not for default, but for convenience." US.
8
Coating I, 15-1 BCA ~ 35,957 at 175,708. In its renewed motion for summary
judgment, the Corps advances two new theories to bar U.S. Coating's introduction of
an alleged prior oral agreement to terminate the contract for convenience for the
purposes of contesting the propriety of the default termination. First, it contends that
U.S. Coating's allegation of a prior agreement is barred by the parol evidence rule.
Second, it contends that, even if the allegation is assumed true, the AUSA, whose
representations U.S. Coating relies upon, lacked the requisite actual authority to bind
the government to such an agreement.
For the reasons set forth below, we reject both of the government's theories and
deny the government's renewed motion for summary judgment.
Parol Evidence Rule
The Corps contends that there is no genuine issue of material fact that the
Bankruptcy Court's 25 April 2012 order is a fully or partially integrated agreement,
and therefore, the parol evidence rule prohibits U.S. Coating from introducing
extrinsic evidence of an alleged prior oral agreement to contradict the terms of the
parties' agreement. It asserts that the order was drafted, reviewed, and consented to by
representatives of the parties involved prior to the Bankruptcy Court's issuance, and
U.S. Coating does not contest that the order is an integrated agreement. (Gov't br.
at 4; gov't reply at 16-17) The Corps also argues that the 25 April order expressly
rejected the contract under bankruptcy law and that while the order does not contain
terms pertaining to termination of the contract, the order stated that the Corps did not
waive any rights with respect to the contract (gov't br. at 5; gov't reply at 15).
In opposition, U.S. Coating contends that there are material factual disputes
surrounding the 25 April order and the Corps' arguments "lack any evidentiary
foundation" (app. opp'n at 7 of 8). It argues that it consented to the order in exchange
for a termination of the contract for convenience and detrimentally relied on the
AUSA's representations, citing to the affidavits of its employees previously submitted
in US. Coating I (id. at 1-2, 7 of 8). U.S. Coating also contends that summary
judgment is still premature because, while it has conducted written discovery, it has
not orally deposed any witnesses (id. at 7 of 8).
The parol evidence rule is a rule of substantive law that prohibits consideration
of extrinsic evidence to alter the terms of a written agreement that "has been adopted
by the parties as an expression of their final understanding." Barron Bancshares, Inc.
v. United States, 366 F.3d 1360, 1375 (Fed. Cir. 2004) (citing David Nassif Assocs. v.
United States, 557 F.2d 249, 256 (Ct. Cl. 1977)). Therefore, a writing that is final and
complete is an integrated agreement, and the effect of integration is the inadmissibility
of prior or contemporaneous agreements to modify or contradict the terms of the
agreement. See David Nassif Assocs., 557 F.2d at 256; RESTATEMENT (SECOND) OF
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CONTRACTS§§ 213, 215 (Am. Law Inst. 1981). Where a fully or completely
integrated agreement exists, the writing cannot be supplemented with evidence of
consistent or inconsistent additional terms or prior agreements that cover the same
subject matter. Rumsfeldv. Freedom NY, Inc., 329 F.3d 1320, 1328 (Fed. Cir. 2003);
RESTATEMENT (SECOND) OF CONTRACTS§§ 214, 216~
In this appeal, the parties largely dispute whether the Bankruptcy Court's
25 April 2012 order was intended to be a completely integrated agreement. A writing
that is signed by both parties "and apparently complete on its face, may be decisive of
the issue in the absence of credible contrary evidence." RESTATEMENT (SECOND) OF
CONTRACTS § 210. An integration clause creates a strong presumption that the writing
is purported to be a completely integrated agreement. Freedom NY, 329 F.3d at 1328.
On its face, the 25 April order contains no integration clause, nor does it contain
express language indicating finality and completeness (SOF ,-i 10). The Corps
concedes that the order does not contain express terms addressing termination of the
contract (gov't br. at 5; gov't reply at 15).
In the absence of unequivocal language indicating finality and completeness,
we may examine the writing itself as well as the circumstances surrounding its
execution, including the negotiations that produced it. David Nassif Assocs., 557 F .2d
at 256; see also RESTATEMENT (SECOND) OF CONTRACTS§ 210 ("But a writing cannot
of itself prove its own completeness, and wide latitude must be allowed for inquiry
into circumstances bearing on the intention of the parties."). To ascertain whether the
25 April 2012 order is a complete or partially integrated agreement, we must examine
the parties' negotiations prior to and contemporaneous with the issuance of the order.
See RESTATEMENT§ 209(2) ("Whether there is an integrated agreement is to be
determined by the court as a question preliminary ... to application of the parol evidence
rule.").
The current record is incomplete to reach these determinations. As we
concluded in our previous opinion, there are genuine issues of material fact regarding
whether there was a separate oral agreement with the government to terminate the
contract for convenience. US. Coating I, 15-1 BCA ,-i 35,957 at 175,708. Such an
agreement, if it existed, would contradict directly the government's contention that the
bankruptcy order is an integrated agreement. It also would call into question whether
the contracting officer properly exercised her discretion in terminating the contract for
default. Id. Therefore, appellant should be given an opportunity to demonstrate that
"its consent to the rejection of the contract was based upon an agreement with the
government to terminate the contract, not for default, but for convenience." Id.
Finally, the Corps' emphasis on the parol evidence rule glosses over the
implausibility of its position. It is hard to imagine why U.S. Coating would agree to
settle the bankruptcy litigation in exchange for a termination for default. Indeed, U.S.
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Coating's president, Mr. Earl Washington, stated in his affidavit that his agreement to
the bankruptcy order was based on his understanding that such an order was necessary
to proceed with negotiations with the Corps to allow the addition of a subcontractor to
assist U.S. Coating in completing the contract. US. Coating I, 15-1 BCA, 35,957
at 175,705 (citing R4, tab 20 at 23-30). Indeed, the Corps gives us no reason to doubt
Mr. Washington's testimony that "I have not consented to any termination, and I will
not consent to any termination" (R4, tab 20 at 33).
Actual Authority
Alternatively, the Corps argues that even if U.S. Coating's allegation of a prior
oral agreement with the AUSA to terminate the contract for convenience were true,
there is no genuine issue of material fact that the AUSA lacked actual authority to bind
the government, and therefore, the agreement is unenforceable (gov't br. at 6-7). It
contends that the requisite authority to make changes and determinations affecting the
contract resides with the CO, and authority to terminate the contract for reasons other
than default was not delegated to the AUSA, citing to J.H. Strain & Sons, Inc.,
ASBCA No. 34432, 88-3 BCA, 20,909 for support (id. at 6-7; gov't reply at 9-10
n.4). The Corps asserts that the AUSA never communicated or implied that he had
authority to promise a termination of the contract for convenience and U.S. Coating
has failed to present sufficient facts proving the AUSA either made the alleged
agreement or had actual authority (gov't reply at 9-13). It also argues that prior to the
25 April 2012 order, U.S. Coating was well aware that the CO was unwilling to
terminate the contract for convenience or entertain U.S. Coating's attempts to propose
a substitution of contractors. It maintains that the AUSA possesses no express
authority under the regulations to terminate a contract for convenience, and that his
authority during the bankruptcy proceedings was limited to settling claims arising
under U.S. Coating's bankruptcy filing. (Gov't br. at 6-7; gov't reply at 9)
Like its arguments regarding the parole evidence rule, U.S. Coating primarily
argues that the Corps' actual authority theory lacks evidentiary foundation. It
contends that it detrimentally relied on the AUSA's representations, and the record
reflects that the "sole purpose" of its consent of the 25 April 2012 order was in
exchange for a termination of the contract for convenience. U.S. Coating also alleges
that while it has conducted written discovery it should be entitled to further discovery
because it has not deposed any witnesses. (App. opp'n at 7 of 8)
The Corps' argument regarding the authority possessed by AUSA Usry misses
the point, because it fails to acknowledge the statutory delegation of settlement
authority to the U.S. Department of Justice pursuant to 28 U.S.C. § 516. As a result of
the bankruptcy filing, litigation at the Bankruptcy Court was within the control and
purview of the Department of Justice, whose officers, under the supervision of the
Attorney General, are tasked to conduct and supervise all litigation on behalf of the
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United States and its agencies. See 28 U.S.C. §§ 516-520; Hughes Aircraft Co. v.
United States, 534 F.2d 889, 901 (Ct. Cl. 1976) ("[U]nless otherwise provided by law,
the Attorney General is charged by statute with exclusive and plenary power to
supervise and conduct all litigation to which the U.S. is a party.").
U.S. Coating's bankruptcy filing imposed an automatic stay pursuant to
11 U.S.C. § 362(a), prohibiting the CO from commencing administrative actions or
proceedings against U.S. Coating. Martel Truck & Tractor Serv., Inc., ENG BCA
No. 6191, 96-2 BCA ~ 28,368 at 141,649. Therefore, the Corps could not terminate
the contract for default absent permission from the Bankruptcy Court. Id. at 141,650.
The government acknowledged this constraint in its filings before the Bankruptcy
Court, when it stated that the bankruptcy stay prevented it from "determin[ing]
whether [U.S. Coating] was defaulted or is likely to default on the Contract for failure
to make progress so as to endanger performance" (SOF ~ 6). While the Corps suggests
that the CO could have pursued a termination of the contract for the government's
convenience without violating the stay, it does not cite to any case law to support this
assertion.
The Corps cites to a Board decision, J.H. Strain & Sons, 88-3 BCA ~ 20,909, to
support its contention that the alleged agreement was not binding because
CO McGuffie, as the person authorized to make decisions related to the contract, did
not delegate her authority to the AUSA. The Corps reliance on this decision is
misplaced. In J.H. Strain, the Board concluded that a settlement agreement,
negotiated by an engineer trial attorney but not approved by the CO, was
unenforceable against the government. The engineer trial attorney, as a limited agent
of the CO under the applicable procurement regulations, lacked authority to settle
without delegation from the CO. Id. at 105, 702. In this appeal, the AUSA, as the
authorized representative of the Attorney General, possesses the exclusive authority to
settle matters in litigation before the United States bankruptcy courts. Because the
AUSA's authority is exclusive, the question of whether the CO has delegated her
authority is irrelevant.
The Corps also contends that the applicable regulations contained within
28 C.F .R. Part 0, Subpart Y, do not delegate authority to an AUSA to terminate a
contract for convenience. Again, this argument misses the point that the AUSA, as the
authorized representative of the Attorney General, possesses the exclusive authority to
settle litigation before the United States bankruptcy courts. Subject to limitations, the
regulations, in effect at the time of the Bankruptcy Court's 25 April 2012 order,
redelegated authority to U.S. Attorneys to initiate suits, accept or reject compromises,
and take any other action necessary to protect the interests of the United States. This
specific suit and compromise authority may be further redelegated in writing to
AUSAs. See 28 C.F.R. §§ 0.160, 0.168; 28 C.F.R. Pt. 0, Subpt. Y, App., sections I
and 4 of Directive No. 1-10. There is no dispute that AUSA Usry, acting on behalf of
12
the U.S. Attorney, negotiated and settled matters arising from the Bankruptcy Court's
25 April 2012 order which, according to the Corps, is the parties' settlement
agreement. "A settlement agreement.. .arises when a claimant relinquishes its right to
litigate its claim." Massie v. United States, 166 F .3d 1184, 1188 (Fed. Cir. 1999).
U.S. Coating relies on the existence of an alleged prior agreement to terminate
the contract for convenience to challenge the propriety of the default termination, and
matters arising under the 25 April 2012 order served as the underlying basis for the
termination. Although U.S. Coating has not adequately informed the Board reasons
why additional discovery consisting of oral depositions of witnesses was necessary to
its opposition (see FED. R. C1v. P. 56(d)), we conclude that the Corps is not entitled to
judgment as a matter of law on the factual record and further development is needed.
See NL.R.B. v. Smith Indus., Inc., 403 F.2d 889, 893 (5th Cir. 1983) (court should
deny summary judgment if facts and circumstances have not been sufficiently
developed to make a correct determination of the question oflaw). In particular, U.S.
Coating should have an opportunity to fully develop the facts surrounding the parties'
negotiations at the Bankruptcy Court. See Monarch Assurance P.L.C. v. United States,
244 F.3d 1356, 1365 (Fed. Cir. 2001) (while commenting that likelihood of proving
actual authority was remote, the Court granted additional discovery because, on
balance, possible harm and appearance of unfairness outweighed inconvenience to the
government).
CONCLUSION
The government's renewed motion for summary judgment is denied.
Dated: 6 April 2017
Administrative Judge
Armed Services Board
of Contract Appeals
(Signatures continued)
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I concur
``
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 No. 58245, Appeal of U.S.
Coating Specialties & Supplies, LLC, rendered in conformance with the Board's
Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
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