White Buffalo Construction, Inc. v. United States , 546 F. App'x 952 ( 2013 )


Menu:
  •        NOTE: This disposition is nonprecedential.
    United States Court of Appeals
    for the Federal Circuit
    ______________________
    WHITE BUFFALO CONSTRUCTION, INC.,
    Plaintiff-Appellant,
    v.
    UNITED STATES,
    Defendant-Appellee.
    ______________________
    2012-5045
    ______________________
    Appeal from the United States Court of Federal
    Claims in Nos. 99-CV-961, 00-CV-415, and 07-CV-738,
    Senior Judge Loren A. Smith.
    ______________________
    Decided: November 1, 2013
    ______________________
    SCOTT J. KAPLAN, Stoel Rives, LLP, of Portland, Ore-
    gon, argued for plaintiff-appellant. With him on the brief
    was RICHARD E. ALEXANDER.
    TIMOTHY P. MCILMAIL, Senior Trial Counsel, Commer-
    cial Litigation Branch, Civil Division, United States
    Department of Justice, of Washington, DC, argued for
    defendant-appellee. With him on the brief were STUART
    F. DELERY, Acting Assistant Attorney General, JEANNE E.
    DAVIDSON, Director. Of counsel on the brief was RAYANN
    2                        WHITE BUFFALO CONSTRUCTION     v. US
    SPEAKMAN, Attorney, United States Department of
    Transportation, Federal Highway Administration, of
    Vancouver, Washington.
    ______________________
    Before PROST, BRYSON, and REYNA, Circuit Judges.
    PROST, Circuit Judge.
    White Buffalo Construction, Inc. (“White Buffalo”) ap-
    peals from final judgment of the United States Court of
    Federal Claims disposing of all claims in consolidated
    case nos. 99-CV-961 (the “1999 Case”), 00-CV-415 (the
    “2000 Case”), and 07-CV-738 (the “2007 Case”). White
    Buffalo Const., Inc. v. United States, 
    101 Fed. Cl. 1
    (2011).
    We affirm in part and vacate in part and remand as
    detailed below.
    BACKGROUND
    The Federal Highway Administration (“FHA”) con-
    tracted with White Buffalo to repair damaged roads in the
    Sikiyou National Forest in the fall of 1998. On December
    1, 1998, the FHA decided to terminate the contract for
    default, and White Buffalo was instructed to stop all work
    immediately.
    White Buffalo subsequently filed the 1999 Case, chal-
    lenging the FHA’s default termination. One year later
    White Buffalo filed the 2000 Case, seeking to recover
    liquidated damages paid by White Buffalo’s surety.
    Prior to the scheduled trial of the 1999 and 2000 Cas-
    es, the FHA’s legal counsel requested authority from the
    Department of Justice (“DOJ”) to convert the termination
    for default into a termination for convenience of the
    government. The legal counsel noted that trial prepara-
    tion had uncovered a substantial question as to whether
    the project could have been completed on time by White
    Buffalo due to some unexpected site conditions. Pursuant
    WHITE BUFFALO CONSTRUCTION     v. US                        3
    to DOJ authorization, the FHA converted the termination
    and released the liquidated damages.
    Following the conversion, White Buffalo sought to
    continue litigating the 1999 and 2000 Cases, arguing that
    the conversion took away its right to relief under the
    Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412,
    through which White Buffalo alleges it could have ob-
    tained attorney fees. White Buffalo also filed the 2007
    Case to obtain lost profits on uncompleted work due to the
    FHA’s alleged bad faith conduct and to challenge the
    amount of the termination for convenience settlement
    awarded by the FHA.
    After a trial, the Court of Federal Claims found that
    the 1999 and 2000 Cases were moot due to the FHA’s
    conversion of the default termination to one of conven-
    ience. However, it failed to dismiss those two cases in its
    judgment. The Court of Federal Claims also found that
    the FHA did not act in bad faith toward White Buffalo
    and awarded no lost profits for uncompleted work. It did
    award White Buffalo a total of $353,237.36, plus interest,
    on White Buffalo’s termination for convenience claim.
    DISCUSSION
    On appeal, White Buffalo challenges the Court of
    Federal Claims’ judgment on seven grounds. We address
    each of these challenges in turn.
    A. The Validity of the Termination for Convenience
    Conversion
    First, White Buffalo questions whether the DOJ could
    moot the 1999 and 2000 Cases by converting a default
    termination to a termination for convenience, arguing
    that the conversion unlawfully took away White Buffalo’s
    EAJA claims. However, we have stated that “[a]lthough
    securing attorney fees may understandably affect a par-
    ty’s litigation strategy, the availability of EAJA fees is not
    an appropriate consideration for a court when determin-
    4                         WHITE BUFFALO CONSTRUCTION     v. US
    ing how to dispose of a case.” Chapman Law Firm Co. v.
    Greenleaf Const. Co., 
    490 F.3d 934
    , 939 (Fed. Cir. 2007).
    Therefore, without regard to EAJA, the Court of Federal
    Claims properly found that the conversion mooted the
    claims presented and relief sought in the 1999 and 2000
    Cases. Since the Court of Federal Claims did not reflect
    this in its judgment, we remand the 1999 and 2000 Cases
    to the Court of Federal Claims with directions to dismiss.
    B. De Novo Review of White Buffalo’s Claims in the 1999
    and 2000 Cases
    White Buffalo argues that the Court of Federal
    Claims failed to conduct a de novo review of the FHA’s
    initial default termination decision. However, once the
    conversion occurred, White Buffalo was no longer identi-
    fied as a defaulting party, so we need not consider wheth-
    er the Court of Federal Claims properly reviewed the
    motive behind the FHA’s initial determination.
    C. White Buffalo’s Subcontractor Claims
    The Court of Federal Claims found that White Buffalo
    was entitled to $29,528 in claimed “settlement expenses”
    related to White Buffalo’s subcontractor claims, but it
    appears this award was not included in the judgment.
    Since it is unclear whether this was an error or whether
    this omission was intentional, we vacate in part the
    judgment for the 2007 Case and remand to the Court of
    Federal Claims so that it may consider whether to in-
    crease the judgment by $29,528.
    D. White Buffalo’s Testimony on Profit Margins
    White Buffalo argues that it offered factual and opin-
    ion testimony supporting a 44% profit margin on pre-
    termination work and that the Court of Federal Claims
    erred in rejecting that testimony. We note that an abuse
    of discretion review applies to the methodology for calcu-
    lating the rate of profit, while clear error review applies to
    the calculation of the amount itself. See Home Savs. of
    WHITE BUFFALO CONSTRUCTION    v. US                       5
    Am. v. United States, 
    399 F.3d 1341
    , 1347 (Fed. Cir.
    2005). And under the correct standard, we hold that the
    trial judge’s choice of methodology to calculate profits
    based on a comparison of actual expenditures to the
    contract value of the work performed was not an abuse of
    discretion.
    E. Evidentiary Presumptions on Missing Witness
    Testimony
    White Buffalo argues that the trial court made an er-
    ror of law in failing to grant White Buffalo an evidentiary
    presumption that some of the Government’s witnesses
    would have testified against the Government. Although
    White Buffalo was able to depose the Project Engineer
    and the FHA Division Engineer, neither testified at trial. 1
    However, the drawing of an adverse inference based on
    failure to call a witness is discretionary with the trial
    court. See Ring Plus, Inc. v. Cingular Wireless Corp., 
    614 F.3d 1354
    , 1362-63 (Fed. Cir. 2010) (“[I]f [a] party chooses
    to not call [witnesses within his control to produce], the
    fact finder may draw the inference that the testimony
    would be unfavorable.” (emphasis added)); see also Bo-
    gosian v. Woloohojian Realty Corp., 
    323 F.3d 55
    , 67 (1st
    Cir. 2003) (“The ‘missing witness’ rule permits, rather
    than compels, the factfinder to draw an adverse inference
    from the absence of a witness.”). Therefore, the Court of
    Federal Claims’ failure to state that it applied a negative
    inference was not an error of law.
    F. Lack of Bad Faith Findings
    As a preliminary matter, the Government challenges
    whether the Court of Federal Claims even had jurisdic-
    1    The FHA Division Engineer was deceased prior to
    the trial, and upon learning this fact at oral argument,
    White Buffalo focused its evidentiary presumption argu-
    ment on the Project Engineer.
    6                        WHITE BUFFALO CONSTRUCTION     v. US
    tion over White Buffalo’s bad faith termination claim, as
    it was filed more than six years from the termination by
    default decision. See 41 U.S.C. § 7103(a)(4)(A). However,
    a claim accrues when all events necessary to fix the
    liability of the defendant have occurred. See Catawba
    Indian Tribe of S.C. v. United States, 
    982 F.2d 1564
    , 1570
    (Fed. Cir. 1993). And there is evidence in the record to
    support a finding that all events relevant to White Buffa-
    lo’s bad faith claim did not occur until 2000 or later, after
    White Buffalo discovered the alleged disparate treatment
    of contractors and learned of the Government’s alleged
    “other motives.” This would make the claim timely.
    Therefore, we hold that the Court of Federal Claims did
    not commit clear error in finding jurisdiction.
    “For a plaintiff to successfully assert a claim for
    breach of the implied covenant of good faith and fair
    dealing respecting a contract with the government, he or
    she ‘must allege and prove facts constituting a specific
    intent to injure [the] plaintiff on the part of the govern-
    ment[al] official.” Bannum, Inc. v. United States, 80 Fed.
    Cl. 239, 246 (2008) (citing Pratt v. United States, 50 Fed.
    Cl. 469, 479 (2001)). Further, there is a presumption that
    government officials act in good faith, but this presump-
    tion can be overcome by evidence of such specific intent to
    injure. 
    Id. We have
    observed that “[t]he contractor’s
    burden to prove the Government acted in bad faith,
    however, is very weighty. Due to this heavy burden of
    proof, contractors have rarely succeeded in demonstrating
    the Government’s bad faith.” Krygoski Const. Co. v.
    United States, 
    94 F.3d 1537
    , 1541 (Fed. Cir. 1996) (cita-
    tions omitted).
    The evidence in the record supports a finding that the
    termination was motivated by a reasonable basis, as
    White Buffalo does not dispute that it failed to complete
    the repairs in a timely manner. White Buffalo argues
    that the FHA employee’s specific intent to injure can be
    shown by its unequal treatment of the contractors, but as
    WHITE BUFFALO CONSTRUCTION   v. US                       7
    the Government correctly points out, the assertion of a
    legitimate contract is not bad faith. See Rumsfeld v.
    Freedom NY, Inc., 
    329 F.3d 1320
    , 1331 (Fed. Cir. 2003).
    Therefore, the evidence in the record does not show that
    the Court of Federal Claims erred in finding a lack of bad
    faith on the Government’s part.
    White Buffalo further argues that the conversion de-
    cision was itself in bad faith, since the FHA only made the
    conversion on the eve of trial to avoid liability for lost
    profits. But White Buffalo fails to explain how a desire to
    minimize the Government’s litigation exposure consti-
    tutes bad faith.
    The Court of Federal Claims found that “the conver-
    sion may have reasonably been made because there were
    questions as to whether the differing site conditions
    prevented White Buffalo from completing the project on
    time” and that “[t]he most logical inference from the facts
    is that government officials were divided on the complex
    fact issue on this project and opted to give White Buffalo
    the benefit of the doubt.” White Buffalo Const., 101 Fed.
    Cl. at 19. This finding was not clearly erroneous. There-
    fore, we affirm the Court of Federal Claims’ finding that
    the Government did not act in bad faith.
    G. The Testimony of the Government’s Lawyer
    Finally, White Buffalo argues that the Court of Fed-
    eral Claims abused its discretion in allowing a Govern-
    ment lawyer to testify at trial on rebuttal about why the
    FHA decided to convert the termination by default to a
    termination by convenience. However, the record shows
    that White Buffalo agreed to such limited testimony.
    Since we review a decision of the Court of Federal Claims
    in an evidentiary matter under an abuse of discretion
    standard and will only disturb that court’s ruling if it
    prejudiced substantial rights, Air Land Forwarders, Inc.
    v. United States, 
    172 F.3d 1338
    , 1341 (Fed. Cir. 1999), we
    8                       WHITE BUFFALO CONSTRUCTION   v. US
    hold that the Court of Federal Claims did not abuse its
    discretion here.
    CONCLUSION
    In accordance with our analysis above, we affirm in
    part, vacate in part, and remand to the Court of Federal
    Claims with directions to dismiss the 1999 and 2000
    Cases as well as to evaluate whether the judgment in the
    2007 Case should include $29,528 in awarded subcontrac-
    tor damages.
    AFFIRM-IN-PART, VACATE-IN-PART, AND
    REMAND
    COSTS
    Each party shall bear their own costs.