Meltech Corporation, Inc. v. United States ( 2023 )

In the United States Court of Federal Claims
NOT FOR PUBLICATION
No. 21-1532C
(Filed: February 13, 2023)
)
MELTECH CORPORATION, INC., )
)
Plaintiff, )
)
v. )
)
UNITED STATES, )
Defendant. )
)
Leonard A. Sacks, Leonard A. Sacks & Associates, P.C., Rockville, MD, for plaintiff.
Fred A. Mendicino, Faughnan Mendicino PLLC, Dulles, VA, Of Counsel.
Matthew J. Carhart, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, Washington DC, for defendant, with whom on the
briefs were Brian M. Boynton, Principal Deputy Assistant Attorney General,
Patricia M. McCarthy, Director, Deborah A. Bynum, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, Washington DC.
Adam J. Kwiatkowski, Assistant District Counsel, U.S. Army Corps of Engineers,
Baltimore, MD, Of Counsel.
TRANSFER ORDER
On or about September 29, 2014, the United States Army Corps of Engineers
(USACE) awarded plaintiff Meltech Corporation, Inc. a $10.5 million design-build
contract to renovate military barracks located in Fort Meade, Maryland. In the
course of contract performance, Meltech submitted three certified claims dated
August 31, 2017, April 9, 2020, and June 9, 2021. The contracting officer denied
the certified claims on July 6, 2018, July 2, 2020, and July 12, 2021, respectively.
Meltech appealed the denials of the first and third certified claims to the Armed
Services Board of Contract Appeals (ASBCA or Board). Meltech appealed the
denial of the second certified claim to this Court. On January 27, 2023, the Court
directed the parties to show cause why this case should not be transferred to the
ASBCA pursuant to 41 U.S.C. § 7107(d). 1 See ECF No. 17. Both parties timely
responded on February 9, 2023. See ECF Nos. 17–18. For the reasons set forth
below, transfer of this action is in the interest of justice.
Relevant here, the first certified claim seeks reimbursement of $350,978
and a 150-day contract extension for an alleged differing site condition involving
the structural integrity of the military barracks’ existing concrete. Through
discovery in the ASBCA proceedings, Meltech claims to have uncovered evidence
demonstrating the USACE possessed–but failed to disclose–superior knowledge
regarding the structural condition of the subject site. Accordingly, on January 10,
2020, Meltech sought to amend its ASBCA complaint to add claims of superior
knowledge and breach of good faith and fair dealing. On June 11, 2020, the Board
denied Meltech’s motion to pursue the additional causes of action citing Meltech’s
failure to present them in the August 31, 2017 certified claim to the contracting
officer.
In the interim, on April 9, 2020, Meltech filed the second certified claim
with the contracting officer based on the USACE’s alleged withholding of superior
knowledge. Although the phrase “good faith and fair dealing” does not appear in
Meltech’s second certified claim, in describing its “simple claim” (notably singular),
Meltech explains the contractor “suffered damages based on the USACE[’s] failure
to disclose its superior knowledge or to allow Meltech to perform destructive testing
for many months without good cause.” See ECF No. 1-2 at 1 (emphasis added). In
the April 9, 2020 certified claim, Meltech claimed entitlement to the same amount
of increased costs included in the first certified claim (i.e., $350,978), but extended
the claimed government-caused delay from 150 days to 283 days. See id. As noted
above, the contracting officer denied the second certified claim on July 2, 2020.
Rather than appeal the contracting officer’s July 2, 2020 decision to the
ASBCA within the agency board’s 90-day statutory deadline, see 41 U.S.C.
§ 7104(a), Meltech filed the instant suit on July 1, 2021, i.e., one day shy of the
Court’s one-year statutory deadline. See id. § 7104(b)(3). In the complaint filed
in this Court, Meltech asserts alternative theories of recovery based on USACE’s
alleged withholding superior knowledge and the agency’s alleged breach of
good faith and fair dealing. Meltech seeks $2.4 million in damages–an amount
not included in either of Meltech’s certified claims.
Shortly after the complaint was filed in this Court, the parties jointly
requested a nearly year-long stay to allow the ASBCA to resolve Meltech’s appeals,
representing: “In light of the factual overlap between the case before the [ASBCA]
and the case before this Court, the parties expect that the board’s decision will
likely narrow the factual issues that this Court must decide, if the board’s decision
does not dispose of the case entirely.” See ECF No. 5 at 3; accord ECF No. 7 at 1
(“As the parties previously explained, Meltech is currently pursuing claims before
1This case was transferred to the undersigned for adjudication on January 4, 2023, pursuant to
Rule 40.1(b) of the Rules of the United States Court of Federal Claims. See ECF Nos. 14–15.
2
the Armed Services Board of Contract Appeals that overlap with the claims it
brought before this Court.”). The stay remained in effect until June 14, 2022; the
following day, the Court granted the parties’ joint request for a briefing schedule
on defendant’s motion to dismiss. See ECF Nos. 9–10.
On September 15, 2022, defendant moved to dismiss Meltech’s complaint or,
in the alternative, to stay this case pending final disposition of the ASBCA appeals.
See ECF No. 11. Defendant argues Meltech’s allegations constitute impermissible
claim splitting. At a minimum, defendant seeks to dismiss Meltech’s claims insofar
as they allege a breach of good faith and fair dealing and request damages in excess
of $350,978 due to Meltech’s failure to present the issues to the contracting officer.
Defendant alternatively requests that the Court stay this matter until the Board
proceedings conclude and then dismiss the complaint based on issue preclusion.
See id. at 46 (“It is unnecessary to expend resources litigating this case when the
case may be substantially narrowed, if not entirely dispose of, by the board’s final
judgment.”). Although disagreeing with defendant’s position regarding issue
preclusion, Meltech does not oppose a stay and “agrees that a final decision by the
Board would limit the scope of disputed facts and shorten the overall duration of
any future proceedings before this Court.” See ECF No. 12 at 36.
Title 41, United States Code, Section 7107(d) provides:
If 2 or more actions arising from one contract are filed in the
United States Court of Federal Claims and one or more agency boards,
for the convenience of parties or witnesses or in the interest of justice,
the United States Court of Federal Claims may order the consolidation
of the actions in that court or transfer any actions to or among the
agency boards involved.
41 U.S.C. § 7107(d). Although not conclusively decided, the weight of authority
strongly suggests Meltech’s timely appeal to this Court vests derivative jurisdiction
in the ASBCA to adjudicate the merits of Meltech’s April 9, 2020 certified claim
following a § 7107(d) transfer. See Glenn v. United States, 858 F.2d 1577, 1580–81
(Fed. Cir. 1988); Southwest Marine, Inc. v. United States, 680 F. Supp. 327, 329–30
(N.D. Ca. 1988); see, e.g., also Suffolk Constr. Co., Inc. v. Gen. Servs. Admin.,
CBCA 4377, 16-1 BCA ¶ 36,476; but see Nova Grp./Tutor-Saliba v. United States,
127 Fed. Cl. 591, 595–96 (2016). Nothing in § 7107(d) limits this Court’s transfer
authority to complaints filed within 90 days of the contracting officer’s decision.
See Glenn, 858 F.3d at 1581 (predecessor statute did not limit Court of Federal
Claims’ transfers to complaints filed within 90 days of contracting officer’s decision).
In assessing whether the transfer of this action to the ASBCA under
§ 7107(d) would facilitate the just and efficient resolution of the underlying
disputes, the Court traditionally considers the following factors:
3
(1) Whether the dispute before the board and the court concern the
same contract; (2) whether the claims before the court and the board
duplicate claims or have overlapping and related issues; (3) whether
plaintiff initially chose to appeal its claims before a court or a board;
(4) whether one forum or the other has already made significant
progress on the claims; (5) whether concurrent resolution would result
in an inefficient allocation of the court’s, board’s, or party’s resources;
(6) whether separate forums would reach inconsistent results.
Avant Assessment, LLC v. United States, 134 Fed. Cl. 323, 332–33 (2017)
(quoting Morse Diesel Int’l, Inc. v. United States, 66 Fed. Cl. 801, 804 (2005)
(citing Giuliani Contracting Co. v. United States, 21 Cl. Ct. 81, 83 (1990))).
There is no serious debate that these factors support transferring this action
to the ASBCA.
Meltech’s appeals to the ASBCA and the complaint filed in this Court
concern the same contract. As outlined above, the claims before the Court
overlap with and relate to the issues pending before the Board (i.e., USACE’s
representations regarding the structural integrity of the military barracks’
existing concrete). Regarding the initial choice of forum, prior to commencing
this action, Meltech sought to litigate its superior knowledge and breach of
good faith and fair dealing claims in the ASBCA by amending its complaint.
It was during the pendency of that motion, opposed by the government, that
Meltech filed the April 9, 2020 certified claim at issue in this case.
Turning to comparative progress, the Board has devoted substantial
resources and made significant progress in the related appeals, including
overseeing extensive discovery and conducting hearings, with post-hearing
briefing presently underway. A search of the ASBCA website reveals fifteen
(15) consolidated appeals filed by Meltech under the same USACE contract
at issue here. See Meltech Corp., ASBCA Nos. 61706 & 61768, at *1 & n.1
(Dec. 17, 2021). In contrast, at the parties’ joint request, the proceeding
before this Court has been effectively stayed since its filing to allow the
related Board proceedings to conclude. Indeed, defendant’s pending motion
to dismiss or continue to stay these proceedings is also predicated on the
parallel ASBCA proceedings. To allow concurrent or consecutive adjudication
of intricately related claims before the Board and the Court would constitute
an inefficient use of judicial resources and risk inconsistent results. Transfer
of this case to the ASBCA alleviates these concerns.
In arguing against transfer, defendant cites Meltech’s failure to
include its good faith and fair dealing contention and request for damages
in excess of $350,978 in its April 9, 2020 certified claim. Upon this premise,
defendant maintains that the Court and the Board similarly lack jurisdiction
over these claims and, as such, a transfer would be futile. Without endorsing
the argument or deciding the issue, it remains to be determined whether
4
Meltech’s April 9, 2020 certified claim sufficiently noticed a good faith and
fair dealing assertion. As for the potential limitation on damages, the issue is
secondary to a liability finding. On both counts, the ASBCA stands in a
better position to assess Meltech’s claims given the extensive proceedings
already conducted before the Board.
In turn, Meltech argues that the proceedings before the ASBCA have
progressed too far for the issues raised in this action to effectively catch up.
Meltech’s contention highlights the institutional knowledge advantage the
Board possesses over the Court regarding the USACE contract at issue
and the arguments presented by the parties. Finally, citing Nova Grp./
Tutor-Saliba, Meltech avers that a § 7107(d) transfer risks forfeiting the
claims included in the contractor’s April 9, 2020 certified claim. The Court
finds the argument unpersuasive. As noted above, in Glenn, the Federal
Circuit sanctioned the transfer of actions filed in this Court between 91 days
and one year of the contracting officer’s decision under the predecessor
statute to § 7107(d), vesting the Board with derivative jurisdiction. See 858
F.2d at 1580–81. Moreover, as in Glenn, the issues pending before the Court
and the Board are interrelated, meriting transfer and consolidation.
For the foregoing reasons,
(1) Defendant’s Motion to Dismiss (ECF No. 11) is DENIED as Moot;
(2) This matter is TRANSFERRED to the Armed Services Board of Contract
Appeals pursuant to 41 U.S.C. § 7107(d); and
(3) The Clerk of Court is directed to TRANSFER this case to the Armed Services
Board of Contract Appeals by mailing a certified copy of this order and a copy of
the docket sheet in this matter to:
Armed Services Board of Contract Appeals
Skyline 6 – Room 703
5109 Leesburg Pike
Falls Church, VA 22041-3208
It is so ORDERED.
s/ Armando O. Bonilla
Armando O. Bonilla
Judge
5