Future Forest, LLC v. Secretary of Agriculture ( 2021 )

Case: 20-2039 Document: 35 Page: 1 Filed: 04/15/2021
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
FUTURE FOREST, LLC,
Appellant
v.
SECRETARY OF AGRICULTURE,
Appellee
______________________
2020-2039
______________________
Appeal from the Civilian Board of Contract Appeals in
No. 5863, Administrative Judge Jonathan D. Zischkau, Ad-
ministrative Judge Joseph A. Vergilio, Administrative
Judge Patricia J. Sheridan.
______________________
Decided: April 15, 2021
______________________
JACOB WILLIAM SCOTT, Smith, Currie & Hancock LLP,
Washington, DC, for appellant. Also represented by
ALEXANDER GORELIK; ALAN IRVING SALTMAN, Chevy Chase,
MD.
WILLIAM JAMES GRIMALDI, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC for appellee. Also represented
by JEFFREY B. CLARK, MARTIN F. HOCKEY, JR., ROBERT
EDWARD KIRSCHMAN, JR.;
Case: 20-2039 Document: 35 Page: 2 Filed: 04/15/2021
2 FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE
ANDREW E. MOORE, Office of the General Counsel, United
States Department of Agriculture, Lakewood, CO; LORI
POLIN JONES, Washington, DC.
______________________
Before MOORE, O’MALLEY, and REYNA, Circuit Judges.
REYNA, Circuit Judge.
Future Forest, LLC appeals the decision of the Civilian
Board of Contract Appeals granting summary judgment in
favor of the U.S. Department of Agriculture. Future Forest
and the Forest Service entered an indefinite-delivery, in-
definite-quantity contract for thinning of the Apache-Sit-
greaves National Forests in Arizona. The Board held that
Future Forest’s claim for acreage amounts beyond the con-
tractual minimum provided for in the contract based on the
implied duty of good faith and fair dealing fails as a matter
of law. For the reasons explained below, we affirm.
BACKGROUND
In 2002, forest fires burned approximately 469,000
acres of Arizona’s Apache-Sitgreaves National Forests and
White Mountain Apache Indian Reservation. J.A. 425. In
the wake of those fires, the Forest Service sought to treat
the forest and reduce the risk of further fires by removing
fuels, including small-diameter trees and biomass, from
the forest. Id.
On March 4, 2004, the Forest Service issued a Request
for Proposals (“RFP”) for the White Mountain Stewardship
Project. Id. According to the RFP, the stewardship would
be a long-term (ten-year) contract for the treatment of the
forest and would allow the cost of treatments to be offset by
the value of the forest products—for example, timber—au-
thorized for removal. Id. The RFP explained that
“[r]elease of the acres to be treated will be done annually
over the life of the contract ([ten]-years).” J.A. 339. It fur-
ther explained that the Forest Service “anticipates
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FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE 3
releasing approximately 15,000 acres at regular annual in-
tervals through use of task orders,” but that it “may release
up to 25,000 acres maximum at the regular annual inter-
val” in order “[t]o reach the end result of 150,000 acres by
the end of the contract.” Id. The RFP disclosed that the
Forest Service “will guarantee a minimum, for each pro-
gram year of work, of 5,000 (five thousand) acres for a total
of 50,000 acres over the [ten-]year term of the contract.”
J.A. 359.
On August 10, 2004, the Forest Service awarded the
White Mountain Stewardship Project Contract (“WMSC”)
to Future Forest. J.A. 416. The contract repeated the
RFP’s language stating that the Forest Service “antici-
pates” releasing approximately 15,000 acres per year “[t]o
reach the end result of 150,000 acres by the end of the con-
tract.” J.A. 426. The contract further specified that it “is
an indefinite-quantity contract for the supplies or services
specified,” and that the Forest Service “shall order at least
the quantity of supplies or services designated in the
Schedule as the ‘minimum.’” J.A. 480. The Schedule, in
turn—like the RFP—stated that the Forest Service “will
guarantee a minimum, for each program year of work, of
5,000 (five thousand) acres for a total of 50,000 acres over
the [ten-]year term of the contract.” J.A. 3. Between Sep-
tember 2004 and May 2014, the Forest Service issued task
orders releasing 71,737.90 acres for landscape biomass
management. J.A. 4. The contract expired in August 2014.
Id.
On June 13, 2017, Future Forest submitted a certified
claim to the contracting officer for $14,743,430.72 in “lost
gross profit,” alleging that the Forest Service breached its
duty of good faith and fair dealing by failing to issue task
orders for treatment of 150,000 acres over the ten-year pe-
riod of the WMSC. J.A. 710. On September 22, 2017, the
contracting officer issued a final decision denying Future
Forest’s claim in its entirety. See J.A. 717–18. The con-
tracting officer explained that the government satisfied its
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4 FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE
obligations under the WMSC by ordering Future Forest’s
services with respect to 71,737.90 acres, an amount that
exceeded the guaranteed contractual minimum of 50,000
acres. See J.A. 713. By exceeding the guaranteed mini-
mum, the contracting officer determined, the government
met and surpassed any reasonable expectations that could
have been derived from the contract. Id. The contracting
officer rejected Future Forest’s argument that government
officials led it to reasonably expect treatment of 150,000
acres, and that the Forest Service was therefore contractu-
ally bound to meet Future Forest’s expectations. J.A. 714–
16. The contracting officer observed that the government
officials’ cited statements did not guarantee 150,000 acres,
and some were made years after the contract was awarded,
negating any reliance by Future Forest on them when en-
tering the contract. J.A. 715–16.
On October 26, 2017, Future Forest filed a complaint
with the Civilian Board of Contract Appeals (“Board”),
again seeking $14,743,430.72 based on the Forest Service’s
alleged breach of its implied duty of good faith and fair
dealing. See J.A. 749–61. Future Forest first alleged that
the Forest Service created a reasonable expectation that it
would order treatment of 150,000 acres of forest, not the
contractual minimum of 50,000 acres. See, e.g., J.A. 751–
53. Future Forest alleged that Forest Service personnel
had represented that the Forest Service intended to order
treatment of 150,000 acres even though the contract only
required treatment of 50,000. See, e.g., J.A. 751. Future
Forest also pointed to high-ranking Forest Service officials’
testimony before Congress in 2008 and 2009, in which the
officials described the WMSC as a ten-year contract for the
treatment of 15,000 acres per year for a total of about
150,000 acres. See J.A. 751–52.
Future Forest also alleged that the Forest Service im-
properly interfered with the issuance of task orders, result-
ing in the Forest Service placing orders for treatment of
only 71,737.90 acres rather than the 150,000 acres that
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FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE 5
Future Forest expected. See J.A. 753–61, 3044–45. Future
Forest alleged that the Forest Service minimized orders
placed under the WMSC so that it could thin forest further
west under a different long-term stewardship project called
Four Forest Restoration Initiative (“4FRI”). J.A. 756–61.
Future Forest further alleged that the Forest Service’s or-
dering decisions were motivated by “animus” toward Fu-
ture Forest. J.A. 760.
On April 22, 2019, the Forest Service moved for sum-
mary judgment that it had not breached its implied duty of
good faith and fair dealing. See J.A. 1182–1203. The For-
est Service argued that it had discharged its obligations
under the WMSC by ordering treatment of more acreage
than the 50,000-acre contractual minimum, see J.A. 1196–
1201, and that its decision to fund 4FRI did not violate its
duty of good faith and fair dealing under the WMSC, see
J.A. 1201–03.
In response, on April 27, 2019, Future Forest filed a
motion for leave to take additional discovery. See
J.A. 1234–57. It submitted declarations by individuals
with alleged personal knowledge of the WMSC, including
Forest Service retirees. See J.A. 1279–1316. These indi-
viduals declared, among other things, that the Forest Ser-
vice held a belief as of May 2010 that it would order
treatment of 150,000 acres and indeed that it was required
to do so, see J.A. 1280; that the Assistant Director of For-
estry in the region had a “personal animus against the
WMSC” and sought to order the minimum amount of treat-
ment required under the contract, J.A. 1288, 1302; and
that the Forest Service turned down funding requests for
the WMSC with “hostil[e]” statements such as, “Future
Forest is already making millions,” and “Future Forest is
screwing us,” J.A. 1301. Future Forest sought to depose
certain individuals to obtain more evidence regarding the
Forest Service’s belief that it would order treatment of
150,000 acres and regarding the Forest Service’s reasons
for failing to do so. See J.A. 1234–57. According to Future
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6 FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE
Forest, this evidence would be vital to Future Forest’s case.
J.A. 1256.
On May 21, 2019, the Board issued an order explaining
that, before it would permit the additional discovery, the
parties must first brief the “threshold legal question of
whether the implied duty of good faith and fair dealing can
expand the requirements on an indefinite delivery/indefi-
nite quantity contract beyond the contract minimums.”
J.A. 3030.
On March 9, 2020, after the parties submitted their
briefing, the Board concluded that Future Forest’s theory
fails as a matter of law “such that summary judgment is
appropriate and the appeal is denied.” J.A. 2. The Board
reasoned that certain Forest Service employees’ state-
ments that they hoped and intended to treat 150,000 acres
under the WMSC did not, as a matter of law, transform the
nature of the WMSC into a definite quantity or require-
ments contract. Id. According to the Board, “The written
language of the contract with the guaranteed minimum
dictates the parameters of reasonable expectations.” Id.
Future Forest appealed. We have jurisdiction under
28 U.S.C. § 1295(a)(10).
STANDARD OF REVIEW
We review the Board’s decisions on questions of law de
novo and set aside factual determinations that are arbi-
trary, capricious, or unsupported by substantial evidence.
41 U.S.C. § 7107(b)(2); Rockies Express Pipeline LLC v.
Salazar, 730 F.3d 1330, 1335–36 (Fed. Cir. 2013); Engage
Learning, Inc. v. Salazar, 660 F.3d 1346, 1352 (Fed. Cir.
2011).
DISCUSSION
“The duty of good faith and fair dealing is inherent in
every contract.” Precision Pine & Timber, Inc. v. United
States, 596 F.3d 817, 828 (Fed. Cir. 2010). The duty
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FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE 7
prohibits a party to a contract from interfering with an-
other party’s rights under the contract. Id. But not all
misbehavior breaches the implied duty of good faith and
fair dealing. Id. at 829. The archetypal breach involves
“the old bait-and-switch,” or in other words, eliminating or
rescinding a contractual provision or benefit through a sub-
sequent action directed at the contract. Id. (citing First
Nationwide Bank v. United States, 431 F.3d 1342, 1350–51
(Fed. Cir. 2005); and then citing Centex Corp. v. United
States, 395 F.3d 1283, 1304–07 (Fed. Cir. 2005)). For ex-
ample, in Centex and First Nationwide, the government
breached its duty of good faith and fair dealing when it sold
failing savings and loan institutions to private companies
in exchange for significant tax deductions and then, a few
years later, enacted targeted legislation that retroactively
disallowed those tax deductions. First Nationwide, 431
F.3d at 1344–45, 1349–51; Centex, 395 F.3d at 1304–06.
We have explained that the implied duty of good faith
and fair dealing cannot expand a party’s contractual duties
beyond those that are expressly set forth in the contract,
nor can it be used to create new duties inconsistent with
the contract’s provisions. Precision Pine, 596 F.3d at 831;
Century Expl. New Orleans, LLC v. United States, 745
F.3d 1168, 1179 (Fed. Cir. 2014). To the contrary, “the na-
ture of that bargain is central to keeping the duty focused
on ‘honoring the reasonable expectations created by the au-
tonomous expressions of the contracting parties.’” Metcalf
Constr. Co. v. United States, 742 F.3d 984, 991 (Fed.
Cir. 2014) (quoting Tymshare, Inc. v. Covell, 727 F.2d 1145,
1152 (D.C. Cir. 1984)). Put differently, the implied duty of
good faith and fair dealing is “limited by the original bar-
gain: it prevents a party’s acts or omissions that, though
not proscribed by the contract expressly, are inconsistent
with the contract’s purpose and deprive the other party of
the contemplated value.” Metcalf, 742 F.3d at 991. Accord-
ingly, a party’s conduct will not be found to violate the duty
“if such a finding would be at odds with the terms of the
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8 FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE
original bargain, whether by altering the contract’s dis-
cernible allocation of risks and benefits or by conflicting
with a contract provision.” Id.
Future Forest argues that, even though the Forest Ser-
vice met and exceeded its obligations expressly imposed by
the WMSC when it ordered treatment of 71,737.90 acres
rather than the 50,000-acre contractual minimum, the For-
est Service nonetheless breached its implied duty of good
faith and fair dealing by deciding—undisputedly in its own
discretion—not to order treatment of a total of 150,000
acres. Appellant’s Br. 18, 24, 28–29. According to Future
Forest, the Forest Service breached that duty when it led
Future Forest to believe that it would order treatment of
150,000 acres but did not follow through, allegedly because
the Forest Service fostered an unwarranted animus toward
Future Forest, and because Forest Service officials had an
improper personal desire to fund 4FRI instead of WMSC.
See, e.g., id. at 29.
Future Forest misapprehends the implied duty of good
faith and fair dealing. Specifically, the duty cannot be used
to alter the WMSC by increasing the contractual minimum
guarantee of acreage. See Precision Pine, 596 F.3d at 831;
Century, 745 F.3d at 1179. Notably, Future Forest does not
allege that the Forest Service interfered with a bargained-
for benefit to which Future Forest was expressly entitled
under the contract, such that the implied duty of good faith
and fair dealing could properly be invoked. Instead, Future
Forest argues that representations made by Forest Service
personnel created a “reasonable expectation” of 150,000
acres, and that those representations legally bind the For-
est Service. The implied duty of good faith and fair dealing
cannot bind the Forest Service in this regard because the
duty is “limited by the original bargain.” See Metcalf, 742
F.3d at 991.
Travel Centre v. Barram, 236 F.3d 1316 (Fed.
Cir. 2001), is instructive. In Travel Centre, we addressed
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FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE 9
the implied duty of good faith and fair dealing in the con-
text of an indefinite-delivery, indefinite-quantity (“IDIQ”)
contract relating to travel management services. The so-
licitation provided revenue estimates under the contract of
approximately $2,500,000 total per year in Maine, New
Hampshire, and Vermont. Travel Centre, 236 F.3d at 1317.
The Government Services Administration (“GSA”)
awarded the contract to Travel Centre with respect to
Maine and New Hampshire, and the contract expressly re-
ferred to Travel Centre as a “preferred source” for travel
management services in those states. Id. at 1318–19.
However, the contract also set a guaranteed revenue mini-
mum of $100 and specified its nature as an IDIQ contract.
Id. at 1317. We explained that neither the solicitation’s
revenue estimates nor the description of Travel Centre as
a “preferred source” gave rise to any reasonable expecta-
tion that GSA would order more services than the contrac-
tual minimum. Id. at 1319. We held that “when an IDIQ
contract between a contracting party and the government
clearly indicates that the contracting party is guaranteed
no more than a non-nominal minimum amount of sales,
purchases exceeding that minimum amount satisfy the
government’s legal obligation under the contract.” Id.Consistent with Travel Centre, we conclude in this case
that the WMSC required the Forest Service to order a min-
imum of 50,000 acres, and that the Forest Service satisfied
that obligation by ordering 71,737.90 acres. To hold other-
wise would be to rewrite the contract to impose an obliga-
tion on the Forest Service that is not supported in the
WMSC. Because the implied duty of good faith and fair
dealing cannot be used in that manner, see Precision Pine,
596 F.3d at 831; Century, 745 F.3d at 1179, we affirm the
Board’s decision.
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10 FUTURE FOREST, LLC v. SECRETARY OF AGRICULTURE
CONCLUSION
We have considered the parties’ remaining arguments
and do not find them persuasive. For the reasons explained
above, the Board’s decision is
AFFIRMED