Diversified Energy v. TVA ( 2003 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Diversified Energy v. Nos. 01-6043/6100
ELECTRONIC CITATION: 2003 FED App. 0266P (6th Cir.) Tenn. Valley Authority
File Name: 03a0266p.06
_________________
UNITED STATES COURT OF APPEALS COUNSEL
FOR THE SIXTH CIRCUIT ARGUED: Peter K. Shea, TENNESSEE VALLEY
_________________ AUTHORITY, Knoxville, Tennessee, for Appellant. Herbert
S. Sanger, Jr., WAGNER, MYERS & SANGER, Knoxville,
DIVERSIFIED ENERGY, INC., X Tennessee, for Appellee. ON BRIEF: Peter K. Shea, Edwin
Plaintiff-Appellee/ - W. Small, TENNESSEE VALLEY AUTHORITY,
Cross-Appellant, - Knoxville, Tennessee, for Appellant. Herbert S. Sanger, Jr.,
- Nos. 01-6043/6100 WAGNER, MYERS & SANGER, Knoxville, Tennessee,
- Martin B. Bailey, HUNTON & WILLIAMS, Knoxville,
v. > Tennessee, for Appellee.
,
-
TENNESSEE VALLEY _________________
-
AUTHORITY , - OPINION
Defendant-Appellant/ - _________________
Cross-Appellee. -
- COFFMAN, District Judge. This appeal, involving a
N dispute between the Tennessee Valley Authority (“TVA”) and
Appeal from the United States District Court one of its former coal suppliers, raises three questions:
for the Eastern District of Tennessee at Knoxville. (1) whether the district court erred in determining that it had
No. 97-00223—Thomas G. Hull, District Judge. subject matter jurisdiction, pursuant to the Contract Disputes
Act of 1978 (“CDA”), 41 U.S.C. § 601 et seq., over the
Argued: March 13, 2003 plaintiff’s claim for lost profits; (2) whether the district court
properly concluded, under standard principles of contract law,
Decided and Filed: August 1, 2003 that the plaintiff is not entitled to recover damages based on
a contract price/market price differential; and (3) whether the
Before: CLAY and ROGERS, Circuit Judges; COFFMAN, unappealed February 27, 2001, administrative decisions
District Judge.* which denied the plaintiff’s claims for actual damages are
entitled to res judicata effect. For the reasons that follow, we
AFFIRM the district court’s judgment.
*
The Honorable Jennifer B. Coffman, United States District Judge for
the Eastern and Western Districts of Kentucky, sitting by designation.
1
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I. Factual Background “Officials not to Benefit” provision3 of the Contract by giving
a $10,000 loan, a telephone calling card, and college football
For a second time, these parties bring their dispute to this tickets to a TVA employee in exchange for confidential
Court.1 On August 18, 1990, the plaintiff, Diversified information. Furthermore, by letter dated March 19, 1993,
Energy, Inc. (“Diversified”), and the defendant, TVA, entered TVA’s Vice-President of Fossil Fuels, Gregory Vincent,
into a long-term coal supply contract (the “Contract”) under explained that TVA considered the Contract terminated and
which Diversified was to provide TVA with 10,000 tons of that it would not extend the Contract or accept any further
coal per week through March 27, 1996. Diversified was deliveries of coal from Diversified. In response, Diversified
authorized to obtain and deliver coal from only one source -- exercised its rights to initiate a dispute under the Contract’s
the Sigmon Coal Company (“Sigmon”). In accordance with “Disputes” clause, which made the Contract subject to the
its agreement with Sigmon, Diversified was to pay Sigmon CDA and to TVA’s implementing regulations.4 On May 18,
the full purchase price, less a commission of $.98 per ton. 1993, Diversified submitted a certified breach of contract
The Contract contained a “reopener” provision which entitled claim to a Contracting Officer requesting “a determination
either party to reopen the Contract at its midpoint to negotiate that [it] is entitled to recover from TVA the amount which [it]
price and other terms.2 By letter dated December 14, 1992, would have made from delivery of the remaining portion of
TVA invoked that provision but refused to negotiate with the maximum commitment under the Contract.” Diversified
Diversified because Diversified had allegedly violated the specifically claimed in its letter that this amount was
$21,980,000, representing the 1,570,000 tons of coal which
3
1
This “Officials not to Benefit” provision read:
This is the second ap peal of this case; the factual background is
more fully summarized in the Court’s prior opinion, Diversified Energy, [N]or shall the C ontractor o ffer or give, direc tly or indirectly, to
Inc. v. TVA, 223 F.3d 32 8 (6th Cir. 2000) (hereinafter, “Diversified I”). any officer, em ployee, special Government employee, or agent
of TV A any gift, gratuity, favor, entertainment, loan, or any
2 other thing of monetary value, except as provided in 18 C.F.R.
The reopener provision provided:
§ 1300.735-12 or -34. Breach of this provision shall constitute
[T]his contra ct shall continue through M arch 27 , 1996 , unless a material breach of this contract and TV A shall have the right
terminated by agreement or as otherwise nego tiated herein. to exercise all remed ies pro vided in this contract or at law.
Provided, however, this contract may be reopened by either 4
party three (3) months prior to March 19, 19 93 . . . for the Pursuant to the CDA , a contractor and the contracting government
purpose of negotiating price and other terms and conditions of agency must submit disputes to a Contracting Officer. If the parties are
the remaining portion of the maximum commitment . . . . If unab le to resolve their claims by agreement, the Contracting Officer may
either party ex ercises this reop ener it sha ll give the o ther pa rty issue a decision on the dispute. The terms of the instant Contract, as well
written notice by December 19, 1992 . If the reopener provision as TV A’s implementing regulations, have altered this administrative
has been exercised, this contract will terminate on March 19, scheme slightly by requiring that any dispute which cannot be settled by
1993, unless TVA and the Contractor [i.e., Diversified] have the parties shall be decided by a Disputes Contracting Officer, rather than
mutually agreed in writing by M arch 1 9, 19 93, to continue this a Contracting Officer. Under this scheme, a Contracting Officer’s role is
contract. Neither party shall be under any obligation or liab ility to receive claims from a contractor and to raise claim o n TVA ’s behalf.
to extend this contract if either p arty desires to termina te A Disputes Contracting Officer’s sole function is to dec ide claims. See
deliveries. Diversified I, 223 F.3d at 332.
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remained undelivered under the Contract multiplied by $14 Benefit” provision, thereby disqualifying it from any
per ton -- the amount which Diversified would have been damages.
entitled to in liquidated damages if TVA’s conduct amounted
to a unilateral termination of the Contract.5 In a July 11, Diversified appealed the district court’s decisions to this
1995, letter addressed to TVA’s Vice-President of Court, arguing that the district court was precluded from
Purchasing, Victor King, the Disputes Contracting Officer considering TVA’s defense under the Officials not to Benefit
who would be deciding its contract claim, Diversified made provision because TVA’s Contracting Officer had never
an alternative claim for damages based on the difference raised that claim. Diversified also argued that the district
between the contract price and the market price for court erred in refusing to construe TVA’s conduct as a
comparable long-term coal contracts at the time of TVA’s unilateral termination of the Contract. This Court affirmed
March 19, 1993, repudiation letter. In its letter, Diversified the district court on the unilateral termination issue but
alleged that the contract price exceeded the market price by reversed with respect to TVA’s claim under the “Officials not
$5.13 per ton of coal and that, therefore, it was due to Benefit” provision, concluding that the district court lacked
approximately $8,054,100 in damages. The Disputes jurisdiction over that claim because TVA’s Contracting
Contracting Officer rejected Diversified’s contract claim, as Officer had never raised it. We held that the district court
well as its two specific proposed measures of damages, could assert jurisdiction over TVA’s defensive claim only if
concluding that Diversified had violated the Officials not to it had been the subject of a valid, final decision by the
Benefit provision and that the TVA had a consequent right to contracting agency. We further held that a valid, final
terminate the Contract. decision on TVA’s claim could be made only if it had first
been raised by a Contracting Officer. However, because the
On March 31, 1997, Diversified filed suit in district court, March 19, 1993, letter which first raised TVA’s “Officials not
appealing the Disputes Contracting Officer’s decisions. Upon to Benefit” claim was not written by a Contracting Officer,6
Diversified’s motion for summary judgment, the trial judge and because the Disputes Contracting Officer who later raised
determined that TVA had, through “inept and heavy-handed” that claim was not simultaneously acting as the Contracting
behavior, breached the Contract in multiple ways. The trial Officer, we determined that TVA’s claim was not properly
court also ruled, however, that TVA’s breaches were not before the Disputes Contracting Officer. Accordingly, this
tantamount to a unilateral termination of the Contract. Court concluded that the district court had no power to
Moreover, the trial court determined that Diversified consider TVA’s defensive claim and remanded the case to the
committed prior material breaches of the “Officials not to district court with instructions to award damages to
Diversified on its contract claims “in accordance with
standard contract law principles.” See Diversified I, 223 F.3d
at 336-38, 340.
5
The Contract contained a “Unilateral Termination Right” provision
which entitled TVA to terminate the Contract unilaterally upon 60 d ays’
prior written no tice. The penalty for invoking this clause was $14 per ton 6
of coal multiplied by the remaining number of tons scheduled for delivery Vincent -- the author o f th e M arch 19, 1993, letter -- was not
from the effective termination date through the earliest applicable date for authorized to act as a Contracting Officer when he alleged that Diversified
termination. breached the “Officials not to Benefit” clau se.
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Upon remand, Diversified first sought an award of actual would place Diversified in a better position than it would
damages under the contract price-market price differential. have enjoyed had the Contract been performed fully. The
TVA, attempting to rely on the Court’s reasoning in district court granted TVA’s motion, holding that
Diversified I, moved to dismiss that claim, arguing that Diversified’s damages would be calculated on the basis of the
Diversified’s initial 1993 claim letter to the Contracting profits it would have made had the Contract been performed.
Officer submitted only a claim for liquidated damages. On On May 23, 2001, TVA filed objections to the district court’s
November 6, 2000, the district court, uncertain whether jurisdiction, claiming, among other things, that Diversified
Diversified’s 1993 claim letter was sufficient to state a valid needed to amend its complaint to appeal the adverse
claim for actual, non-liquidated damages, stayed the action February 27, 2001, decisions in order for the district court to
for 120 days “to allow for administrative consideration of have jurisdiction over any of its damage claims.
Diversified’s claim for actual damages.”
On June 7, 2001, Diversified moved for summary judgment
In an August 29, 2000, letter sent to Diversified, TVA’s on its lost profits claim. TVA opposed the motion, alleging
Vice-President of Procurement, Paul R. LaPointe, had advised (1) that the district court lacked jurisdiction over that claim
that Larry A. Mize had been assigned as the new Contracting because it had not been submitted to a Contracting Officer
Officer who would be administering Diversified’s contract before Diversified filed its original complaint and because
claims. On November 14, 2000, Mize informed Diversified Diversified had not been granted leave to amend its complaint
that TVA would also be asserting a claim that Diversified had to appeal the February 27, 2001, administrative decisions
breached the “Officials not to Benefit” Clause -- the same which denied that claim, (2) that expenses should be deducted
claim which we ruled the district court lacked jurisdiction to from Diversified’s claim for lost profits, and (3) that the
consider. Mize also asked Diversified to submit any February 27, 2001, administrative decisions of the Disputes
additional materials relevant to its contract claims, indicating Contracting Officer were entitled to res judicata effect and
that his role was to resolve the matter by agreement. On precluded Diversified’s claim for any actual damages. On
January 22, 2001, Diversified sent a letter to Mize specifying July 12, 2001, the district court overruled TVA’s objections
that it sought actual damages as measured by the difference and granted, in part, Diversified’s motion for summary
between the contract price and the market price or, judgment. With regard to the jurisdictional issue raised by
alternatively, the profits it lost due to TVA’s repudiation. In TVA, the district judge assumed that it had power to comply
two letters dated February 27, 2001, Mize -- now also acting with this Court’s previous mandate that it award Diversified
as the Disputes Contracting Officer -- refused to award damages in accordance with standard contract law principles,
Diversified either measure of damages, concluding that its characterizing the procedural posture of the case as “simply
prior breach of the “Officials not to Benefit” clause precluded the end-stage of Diversified’s original breach of contract
it from recovering any damages. action not a new lawsuit based upon some separate set of
facts.” With respect to the lost profits claim, the district court
On March 7, 2001, the district court lifted its stay. On the awarded Diversified $1,139,185 (plus interest) in actual
same day, TVA moved for partial summary judgment on damages, reflecting the $.98 per ton in commissions which it
Diversified’s claim based on the contract/market price would have received from Sigmon if TVA had accepted the
differential, claiming that such an award would not be remaining tons of coal, less a reduction of $.22 per ton which
consistent with standard contract law principles because it Diversified had agreed to pay a third party, Billy Evans d/b/a/
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B & A Coals, for all coal delivered under the Contract. lost profits, but instead stated only a claim for liquidated
Finally, the trial court refused to give res judicata effect to the damages.7
unappealed February 27, 2001, administrative decisions
because it believed that this Court’s prior decision precluded TVA asserts that Diversified’s failure to refer to lost profits
it from finding -- or accepting the Disputes Contracting expressly in its claim letter violated its duties under the CDA,
Officer’s findings -- that Diversified’s breaches of the specifically, 41 U.S.C. §§ 605(a) and 605(c)(1), to ensure that
“Officials not to Benefit” provision barred it from recovering all of its claims were submitted in writing to a Contracting
any damages. Officer and to certify that the data supporting its claims was
accurate and complete. It also claims that Diversified’s
II. Standard of Review alleged omission amounted to noncompliance with TVA’s
implementing regulations which provide, among other things,
This Court reviews de novo a district court's grant of that a contractor’s claim submittal must “[i]nclude sufficient
summary judgment. Edwards v. TVA, 25 F.3d 318, 322 (6th supporting data to permit the Contracting Officer to decide
Cir. 2001). The existence of subject matter jurisdiction under the claim, provide appropriate reference to previously
the CDA is also reviewed de novo. See Campanella v. submitted data.” 18 C.F.R. § 1308.2(c) (2003). In TVA’s
Commerce Exch. Bank, 137 F.3d 885, 891 (6th Cir. 1998). view, because Diversified did not comply with these
requirements, it did not submit a valid claim for lost profits to
III. Discussion the original Contracting Officer and, thus, the original
Disputes Contracting Officer did not issue a final decision
A. Jurisdiction over Diversified’s Lost Profits Claim denying that claim.
In this appeal, TVA renews the primary contention that it
made to the district court upon remand: that the district court
lacked jurisdiction over Diversified’s lost profits claim
because that claim had not been presented to a Contracting 7
TV A’s assumption is not well-founded, as Diversified’s 199 3 claim
Officer before Diversified filed its original complaint and letter clearly stated that it believed itself “entitled to recover from TVA
because Diversified has not amended its complaint to include the amo unt which [it] would have ma de from de livery of the rem aining
an appeal of the February 27, 2001, administrative decisions portion of the maximum commitment under the Contract.” This language
plainly enco mpa sses a claim for lost profits. See, e.g., Allen, H eaton &
which rejected that claim. The critical assumption underlying Mc Do nald v. Castle Farm Amusement Co., 86 N .E.2d 78 2, 78 4 (O hio
TVA’s position is that Diversified’s May 18, 1993, certified 1949) (“When a p laintiff sues on a contract to recover the amount he
claim -- the basis of the district court’s jurisdiction when would have received for the full performance prevented by a defend ant's
Diversified initiated suit in 1997 -- failed to make a claim for breach, he seeks in effect to recover as damages the profit from
performance of the contract which profit defendant's breach prevented
him from earning.”). It is true tha t the May 18, 1993, letter states that
Diversified identified its lost profits as the amount due under the
Unilateral Termination Right clause, but Diversified did not in any way
indicate that this was the exclusive measure of damages sough t. Instead,
it appears that Diversified stated a contract claim for what Diversified
“would have made,” and then understandably contended that the amount
be m easured in terms of the con tract’s liquid ated d amages rem edy.
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TVA, as an agency of the United States, enjoys sovereign a claim must, among other things, “state the amount of
immunity unless Congress specifically waives it. See, e.g., monetary relief, or the kind of nonmonetary relief, sought,”
Campanella, 137 F.3d at 890. Under the CDA, Congress has provide “sufficient supporting data to permit the Contracting
conditionally waived the sovereign immunity of executive Officer to decide the claim,” and, if greater than $100,000,
agencies which contract with others for services or certain “include a signed certification by the Contractor that the claim
kinds of property. See, e.g., SMS Data Products Group, Inc. is made in good faith, that the supporting data are accurate
v. United States, 19 Cl. Ct. 612, 614 (Cl. Ct. 1990). With and complete to the best of the Contractor's knowledge and
regard to the TVA, this waiver applies only to contracts, like belief, and that the amount requested accurately reflects the
the one signed by Diversified, which “contain a disputes contract adjustment for which the Contractor believes TVA
clause requiring that a contract dispute be resolved through an is liable.” 18 U.S.C. § 1308.2(c)(1)-(3). The term “claim” is
agency administrative process.” 41 U.S.C. § 602(b). One to be interpreted broadly to embrace virtually all disputes
condition which Congress has placed upon the waiver of arising under or relating to a government contract. See RMI
TVA’s immunity under the CDA is the requirement that a Titanium, 78 F.3d at 1135 (citing Z.A.N. Company v. United
contractor exhaust the agency’s administrative procedures States, 6 Cl. Ct. 298, 303 (1984)).
before filing suit in district court. The purposes of this
condition are to encourage resolution of disputes by Under the CDA, a district court is not deprived of
negotiation prior to litigation and to “keep government jurisdiction over a contract claim merely because the
contract disputes out of the district courts.” Campanella, 137 contractor changes the amount of his claim or the theory of
F.3d at 890 (citing United States v. Kasler, 123 F.3d 341, 346 his damages, so long as the modified claim is “‘based on the
(6th Cir. 1997)). An additional, related condition is the same set of operative facts underlying the claim’ submitted to
requirement that a contractor seeking more than $100,000 in the contracting officer.” ThermoCor, Inc. v. United States, 35
damages present a valid, certified contract “claim” to a Fed. Cl. 480, 489 (1996) (quoting Cerberonics, Inc. v. United
Contracting Officer. See 41 U.S.C. § 605(c)(1); RMI States, 13 Cl. Ct. 415, 417 (1987)). “The critical test is
Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, whether the contracting officer’s right to adjudicate the claims
1135 (6th Cir. 1996). This condition serves to ensure that the is undermined by circumventing his statutory role ‘to receive
Contracting Officer is given enough information to evaluate and pass judgment on the contractor's entire claim.’” Id.the claim fairly so that a final decision may be reached. E.g., (quoting Cerberonics, 35 Cl. Ct. at 418). This rule recognizes
Colon v. United States, 35 Fed. Cl. 337, 342 (1996). These that “it would be very disruptive to a court’s procedures, if
conditions are jurisdictional in nature; a failure to satisfy them theories, developed as a result of pretrial proceedings
will preclude the district court from entertaining an appeal of including discovery, had to be submitted to the contracting
the contractor’s claims. See, e.g., Diversified I, 223 F.3d at officer before the court could render a final decision on a
336; SMS Data Products, 19 Cl. Ct. at 615. claim.” Id. (citing J.F. Shea Co. v. United States, 4 Cl. Ct.
46, 54 (1983)). Hence, as long as Diversified’s claim for lost
The CDA does not define what constitutes a “claim.” profits was based on the same operative facts as its claim for
Colon, 35 Fed. Cl. at 340. Under TVA’s regulations, that liquidated damages and did not prevent the Contracting
term is defined as a “written demand by a Contractor . . . for Officer from evaluating whether Diversified was entitled to
a decision by a Contracting Officer under a disputes clause.” such a remedy, it was properly before the district court. See
18 C.F.R. § 1308.2(c). TVA’s regulations specify further that id.Nos. 01-6043/6100 Diversified Energy v. 13 14 Diversified Energy v. Nos. 01-6043/6100
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TVA contends that Diversified submitted no information B. Diversified’s Claim Under the Contract/Market Price
regarding its lost profits to the Contracting Officer, thus Differential
providing him with no opportunity to make a final decision
on that claim. TVA specifically asserts that the claim for lost The district court did not err in rejecting Diversified’s claim
profits was based on different evidence than the liquidated for damages based on the $5.13 per ton difference between
damages claim. TVA’s position, however, ignores the reason the Contract price and the market price. Upon remand, this
underpinning the rule enunciated in ThermoCor and Court instructed the district court to determine Diversified’s
Cerberonics: as long as the contracting agency is given an damages in accordance with standard principles of contract
adequate opportunity to make decisions on the issues law. Diversified mistakenly argues here that those principles
presented by a contractor’s claim, the subsequent entitled it to a measure of damages reflective of the
modification (or clarification) of the remedy sought by the contract/market price differential under the Uniform
contractor does not prejudice the contracting agency and does Commercial Code (“UCC”), specifically § 2-708(1).8 Even
not, therefore, deprive the district court of jurisdiction over
the modified claim. See, e.g., ThermoCor, 35 Fed. Cl. at 489-
90; Cerberonics, 13 Cl. Ct. at 419.
Diversified’s claim for lost profits arose from the same
operative facts which were before the Contracting Officer in
1993 -- TVA’s conduct in repudiating the Contract.
Additionally, since the original Disputes Contracting Officer
denied Diversified’s claim on the issue of liability, he
necessarily refused to award Diversified damages under any
available remedy theory. The Disputes Contracting Officer 8
was given an adequate opportunity to address the lost profits This section p rovides:
claim. Therefore, the district court had jurisdiction over
(1) Subject to subsection (2) and to the pro visions o f this Article
Diversified’s lost profits claim when Diversified filed its with respe ct to proof o f mark et price (Section 2-723), the
complaint in 1997. Furthermore, since its lost profits claim measure of damages for no n-acce ptanc e or repud iation by the
was properly before the district court by virtue of its original buyer is the difference between the market price at the time and
complaint, Diversified had no obligation to amend that place for tender and the unpaid contract price together with any
pleading to appeal the February 27, 2001, administrative incidental damages provided in this Article (Section 2-710), but
decisions. See Sharman Company, Inc. v. United States, 2 less exp enses sa ved in consequence of the buyer's breach.
F.3d 1564, 1570 (Fed. Cir. 1993). Accordingly, the district (2) If the measure of damages pro vided in subsection (1 ) is
court’s assumption that it had jurisdiction to award inade quate to put the seller in as good a position as performance
Diversified lost profits was correct. would have done then the me asure of damages is the profit
(including reasonable overhead) which the seller would have
made from full performance by the buyer, together with any
incidental damages provided in this Article (Section 2-710), due
allowance for costs reasonably incurred and due credit for
payments or proceeds of resale.
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assuming that the UCC applies,9 however, Diversified was Diversified relies principally upon Trans World Metals,
not entitled to damages under § 2-708(1). Inc. v. Southwire Co., 769 F.2d 902, 908 (2d Cir. 1985) to
support its argument that it is entitled to damages under § 2-
Sigmon -- the entity which actually owned the coal -- paid 708(1). That case is not applicable, however. Unlike the
Diversified a fixed commission of $.98 for each ton of coal plaintiff in Trans World Metals, Diversified did not assume
delivered to TVA. Diversified was obligated to pay a portion any risk that the market price of coal would increase. Rather,
of those commissions, $.22 for each ton delivered, to a third any such risk was assumed, if at all,10 by Sigmon -- the only
party, Billy Evans, as compensation for his assignment of the authorized producer of the coal under the Contract.
Contract to Diversified on June 19, 1980. Hence, as indicated Therefore, Diversified was not entitled to damages based on
in Diversified I, if TVA had performed the Contract fully, the contract/market price differential under § 2-708(1). See
Diversified’s maximum expectancy would have been $.76 per Nobs Chem., 616 F.2d at 215; see also Union Carbide Corp.
ton of undelivered coal. See Diversified I, 223 F.3d at 338. v. Consumers Power Co., 636 F. Supp. 1498, 1501-02 (E.D.
Mich. 1986). Because Diversified would have received only
A non-breaching party is entitled to be placed in the same $.76 per ton of coal had the Contract been performed, the
position it would have enjoyed had the defendant abided by district court properly limited its damages to an amount based
the contract, but is not entitled to more than the benefit of his on that figure.
bargain. See, e.g., San Carlos Irrigation & Drainage Dist. v.
United States, 111 F.3d 1557, 1562-63 (Fed. Cir. 1997); C. The Res Judicata Effect of the February 27, 2001,
Rodgers v. Fisher Body Div., Gen. Motors Corp., 739 F.2d Administrative Decisions
1102, 1107 (6th Cir. 1984). A damage award which fails to
adhere to this principle is unreasonable as a matter of law. The February 27, 2001, administrative decisions which
See Cincinnati Fluid Power, Inc. v. Rexnord, Inc., 797 F.2d purported to resurrect TVA’s “Official not to Benefit” defense
1386, 1393 (6th Cir. 1986). The UCC, including § 2-708, has and to deny Diversified’s claims were invalid from the outset
adopted this philosophy. See, e.g., Nobs Chem., U.S.A., Inc. and are therefore not entitled to any preclusive effect. Where,
v. Koppers Co., 616 F.2d 212, 215 (5th Cir. 1980). as here, a claim for damages under the CDA is in litigation,
a Disputes Contracting Officer has absolutely no authority to
issue a final decision on that claim. See Sharman Co. v.
United States, 2 F.3d 1564, 1571-72 (Fed. Cir. 1993), rev’d
9
on other grounds, Reflectone, Inc. v. Dalton, 60 F.3d 1572,
It is unclear the extent to which the UCC ap plies to government 1580 (Fed. Cir. 1995) (citing Durable Metal Prods., Inc. v.
contracts. See, e.g., Technical Assistance Int’l, Inc. v. United States, 150 United States, 21 Cl. Ct. 41, 46 (1990)). In Sharman, there
F.3d 1369, 1372 (Fed. Cir. 1998) (looking to the UCC for guidance, but
concluding that “the U niform Commercial C ode is not binding with
had been no stay of judicial proceedings, and we do not hold
respect to gov ernment contracts . . . .”) (citation omitted ); Northern Helix
Co. v. United States, 455 F.2d 546, 553 (Ct. Cl. 1972) (“This court has
explicitly recognized the authority and relevance of the Uniform 10
Commercial Code in the field of public contracts . . . .”) (citations As obse rved by the district court, the reopener provision allowed
omitted). We need not settle this question here, however, since, even either party to reopen the Contract (with certain restrictions) for the
assuming that the U CC applies, Diversified is not entitled to the relief it purpo se of negotiating new terms in the event that the market price of coal
claims. changed.
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that court stays are never appropriate to permit additional
administrative proceedings under the CDA. In this case,
however, in light of our holding that the district court had
jurisdiction over Diversified’s lost profits claim when
Diversified filed its complaint in 1997, there was no need for
the district court to stay the judicial proceedings, and at least
in that context the Disputes Contracting Officer’s
February 27, 2001, decisions must be treated as entitled to no
preclusive effect.
IV. Conclusion
For the foregoing reasons, the district court’s decision is
AFFIRMED.