Kansas City Power & Light Co. v. United States

In the United States Court of Federal Claims
No. 15-348C
(Filed: March 27, 2017)
*************************************
KANSAS CITY POWER & LIGHT CO., *
* Contract Disputes Act of 1978; Motion
Plaintiff, * to Strike; RCFC 12(f); Collateral Source
* Rule; Remote Transactions Rule
v. *
*
THE UNITED STATES, *
*
Defendant. *
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Daniel J. Donohue, Washington, DC, for plaintiff.
Amanda L. Tantum, United States Department of Justice, Washington, DC, for defendant.
OPINION AND ORDER
SWEENEY, Judge
Plaintiff, Kansas City Power & Light Co. (“KCP&L”), seeks indemnification by the
United States (“defendant” or “the government”) under the Contract Disputes Act of 1978
(“CDA”), 41 U.S.C. §§ 7101-7109 (2012), for the cost of settling a wrongful death suit
stemming from an electrical accident that occurred on property owned by defendant. Before the
court are four motions: (1) plaintiff’s motion to strike defendant’s seventh affirmative defense;
(2) defendant’s motion to compel the production of documents and answers to requests for
admissions; (3) plaintiff’s motion to quash defendant’s subpoena to AEGIS Insurance Services,
Inc. (“AEGIS”), and for a protective order; and (4) plaintiff’s motion for leave to use depositions
taken in the underlying wrongful death suit. The court deems oral argument unnecessary and
resolves the first motion in this opinion and order. The remaining three motions will be resolved
in subsequent opinions and orders.
I. BACKGROUND
A. Factual History
Plaintiff is an electrical utility company headquartered in Kansas City, Missouri. Compl.
¶ 1. It provides electrical services to both residential and commercial customers in Missouri and
Kansas. Id. On or about August 19, 2005, the United States, acting through the General
Services Administration (“GSA”), entered into a contract with plaintiff for the delivery of
electrical utility services to the Hardesty Federal Complex (“HFC”), a GSA property located in
Kansas City, Missouri. Id. ¶ 6. Attached to and incorporated into the contract was a tariff
schedule that was publicly filed with the Missouri Public Service Commission (“Tariff”). Id. ¶
39. The schedule provided plaintiff’s rates, terms, and conditions of service, and included an
indemnity provision. Id. ¶¶ 40-41. Pursuant to the contract, plaintiff agreed to provide
defendant with electrical services for a five-year term beginning on September 15, 2004, and
concluding on September 13, 2009. Id. ¶ 14.
On or about August 10, 2006, GSA employee David Eubank received fatal burns from an
arc blast that occurred while he was working in Building 13, an electrical substation vault located
at the HFC. Id. ¶ 15. Mr. Eubank died eight days later, on August 18, 2006. Id.
B. Procedural History
On March 27, 2007, Kembra Eubank, David Eubank’s wife, sued plaintiff for negligence
and loss of consortium in Missouri state court. Id. ¶ 21. In the fall of that year, the United States
was named as a third-party defendant and the case was removed to federal court. Id. ¶ 23. On
April 17, 2009, defendant was dismissed from the action and on May 18, 2010, plaintiff entered
into a settlement agreement with Mrs. Eubank. Id. ¶ 27. Pursuant to the terms of the agreement,
plaintiff paid Mrs. Eubank $2,250,000. Id. ¶ 29.
On or about June 25, 2014, plaintiff submitted a certified claim to GSA’s Contracting
Officer (“CO”) and requested a final decision. Id. ¶ 31. In its certified claim, plaintiff requested
reimbursement for not only the amount it paid Mrs. Eubank, but also for the costs it incurred
defending the action in the underlying case, which totaled $1,756,138.14. Id. ¶¶ 28, 31. Thus,
plaintiff sought a total of $4,006,138.14 ($2,250,000 + $1,756,138.14). Id. ¶ 31. On January 27,
2015, the CO issued his final decision denying plaintiff’s claim. Id. ¶ 33.
On April 6, 2015, plaintiff filed a two-count complaint in this court. Id. Plaintiff’s first
count is labeled “Contractual Indemnity”; plaintiff’s second is labeled “Breach of Contract.” Id.
¶¶ 57-75.
On July 20, 2015 defendant filed a motion to dismiss plaintiff’s complaint for lack of
subject matter jurisdiction pursuant to Rule 12(b)(1) of the Rules of the United States Court of
Federal Claims (“RCFC”). On January 31, 2016, the court denied the motion as to both counts
of the complaint. In its amended answer, defendant denies liability and asserts seven affirmative
defenses: (1) statute of limitations, (2) laches, (3) waiver, (4) equitable estoppel, (5) contributory
negligence, (6) failure to mitigate, and (7) offset. Am. Answer 11-12.
C. The Contract Disputes Act of 1978
Under the Tucker Act, the United States Court of Federal Claims (“Court of Federal
Claims”) possesses jurisdiction “to render judgment upon any claim against the United States
founded either upon the Constitution, or any Act of Congress or any regulation of an executive
department, or upon any express or implied contract with the United States, or for liquidated or
unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1) (2012). The Tucker
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Act also confers upon the Court of Federal Claims specific “jurisdiction to render judgment upon
any claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41,
including a dispute concerning termination of a contract, rights in tangible or intangible property,
compliance with cost accounting standards, and other nonmonetary disputes on which a decision
of the contracting officer has been issued under section 6 of [the CDA].” Id. § 1491(a)(2).
In order for such jurisdiction to exist, a contractor must first submit a timely written
claim, generally within six years of its accrual date, to the CO. See 41 U.S.C. § 7103(a)(1)-(2),
(4)(A). Next, the CO must issue a timely written decision. 1 Id. § 7103(a)(3). Lastly, the
contractor must file an appeal with this court “within 12 months from the date of receipt of a
contracting officer’s decision.” Id. § 7104(b)(3).
With respect to what constitutes a claim, the CDA is silent. However, according to the
Federal Acquisition Regulation (“FAR”), a claim is “a written demand or written assertion by
one of the contracting parties seeking, as a matter of right, the payment of money in a sum
certain, the adjustment or interpretation of contract terms, or other relief arising under or relating
to this contract.” FAR § 52.233-1(c). For claims greater than $100,000, the CDA further
requires the contractor to certify that (1) “the claim is made in good faith”; (2) that “the
supporting data are accurate and complete to the best of the contractor’s knowledge and belief”;
(3) “the amount requested accurately reflects the contract adjustment for which the contractor
believes the Federal Government is liable”; and (4) “the certifier is authorized to certify the
claim on behalf of the contractor.” 41 U.S.C. § 7103(b)(1).
Significantly, the claim need not be “submitted in any particular form or use any
particular wording.” Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586, 592 (Fed.
Cir. 1987). Rather, “[a]ll that is required is that the contractor submit in writing to the
contracting officer a clear and unequivocal statement that gives the contracting officer adequate
notice of the basis and amount of the claim.” Id. “The purpose of this requirement is resolution
at the contracting officer level, an objective that would be hindered if the claim heard in court is
substantially different from the one presented to the contracting officer.” Affiliated Constr. Grp.,
Inc. v. United States, 115 Fed. Cl. 607, 611-12 (2014) (citing M. Maropakis Carpentry, Inc. v.
United States, 609 F.3d 1323, 1331 (Fed. Cir. 2010)). Thus, if an appeal of the CO’s decision is
later filed in this court, in order for this court to have jurisdiction, the complaint must be “based
on the same claim previously presented to and denied by the contracting officer.” Cerberonics,
Inc. v. United States, 13 Cl. Ct. 415, 417 (1987); see also 41 U.S.C. § 7104(b). To determine
whether the claims are the same, the court must examine whether the claims 1) are based on the
1
For claims of $100,000 or less, the CO must issue his decision within sixty days of his
“receipt of a written request from the contractor that a decision be rendered within that period.”
41 U.S.C. § 7103(f)(1). For claims of more than $100,000, the CO must either issue his decision
within the sixty-day period or let the contractor know when the decision will be issued. Id. §
7103(f)(2). If the CO fails to issue a written decision within the requisite time period, such
failure is deemed a denial of the contractor’s claim and authorization of an appeal. Id. §
7103(f)(5).
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same underlying theory; 2) seek the same relief; and 3) arise from the same operative facts. 2
Scott Timber v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003).
II. MOTION TO STRIKE
In its motion, plaintiff moves this court, pursuant to RCFC 12(f) to strike defendant’s
seventh affirmative defense—offset.
A. Legal Standard
Pursuant to RCFC 12(f), “[t]he court may strike from a pleading an insufficient defense
or any redundant, immaterial, impertinent, or scandalous matter.” The court may do so sua
sponte or on motion. RCFC 12(f). “Notably, federal courts generally are reluctant to respond
favorably to motions to strike.” Reunion, Inc. v. United States, 90 Fed. Cl. 576, 580-81 (2009).
“When considering a motion to strike a defense, the court must ‘construe the pleadings liberally
to give the defendant a full opportunity to support its claims at trial.’” Entergy Nuclear
Fitzpatrick, LLC v. United States, 93 Fed. Cl. 739, 742 (2010) (internal quotation marks
omitted). Thus, if the resolution of such a motion “depends on disputed issues of fact or
questions of law,” the motion should not be granted. Reunion, 90 Fed. Cl. at 581 (internal
quotation marks omitted).
B. Discussion
1. The Parties’ Competing Positions
In its motion, plaintiff seeks to strike defendant’s seventh affirmative defense on the
grounds that (1) the court lacks subject matter jurisdiction over defendant’s offset claim; and (2)
defendant, as the breaching party, cannot benefit from a separate contract made by plaintiff and
its insurer. Pl.’s Mot. to Strike 1-2. In support of its first argument, plaintiff contends that the
court lacks jurisdiction because defendant failed to first raise the defense, which plaintiff
characterizes as a claim, with the CO under the CDA. Id. at 2-3. In support of its second
argument, plaintiff contends that the collateral source rule bars defendant’s assertion of the
defense as a matter of law: “The collateral source rule applies in breach of contract actions in
this Court to prevent the breaching party from obtaining an inequitable windfall on the basis of
collateral benefits received by the non-breaching party.” Id. at 3. In other words, plaintiff claims
that because defendant intentionally breached the indemnity provisions of the Tariff, defendant
2
Operative facts are those “essential facts that give rise to a cause of action.” Kiewit
Constr. Co. v. United States, 56 Fed. Cl. 414, 420 (2003). “In making such a determination, if
the court will have to review the same or related evidence to make its decision, then only one
claim exists, but if the claim presented to the contracting officer requires examination of a
different or unrelated set of operative facts, then the claims are separate.” Affiliated Constr.
Grp., Inc., 115 Fed. Cl. at 612 (internal citations and quotation marks omitted). Stated
differently, if the court must review “different kinds of proof, they are different claims for
purposes of the CDA.” Id. (citing Placeway Constr. Corp. v. United States, 920 F.2d 903, 909
(Fed. Cir. 1990); AAB Joint Venture v. United States, 75 Fed. Cl. 414, 422-23 (2007)).
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should not be permitted to offset the damages it owes plaintiff because plaintiff received money,
in the form of insurance payments, from a third source. Id. at 6. Plaintiff also contends, in
support of its second argument, that defendant is precluded from asserting the affirmative
defense of offset because of the remote transactions rule, which provides that remote, third-party
transactions should not be considered when determining a breaching party’s damages in a
separate contract action. Id. at 8. According to plaintiff, the insurance agreement between
plaintiff and AEGIS predates the Eubank case as well as defendant’s breach of its contractual
duty to indemnify plaintiff and therefore is irrelevant to the court’s calculation of damages owed
by defendant. Id. at 9. In the alternative, plaintiff argues that even if the court permits defendant
to offset amounts paid by AEGIS in the Eubank case, plaintiff is entitled to those offset amounts
because they were assigned to plaintiff. Id. at 9-10.
Defendant asserts three arguments in opposition to plaintiff’s motion to strike. Initially,
defendant claims that plaintiff cannot satisfy the high standards necessary to warrant granting a
motion to strike an affirmative defense. Def.’s Resp. Mot. to Strike 2-7. First, defendant
observes that the question of whether plaintiff’s claimed damages can be offset by
reimbursement it received from its insurer is a legal dispute and that courts generally do not
favor granting such motions unless it appears likely that plaintiff will succeed. Id. at 4. Second,
defendant argues that plaintiff has failed to demonstrate why defendant should be denied the
chance to develop its theory in discovery, especially in light of the fact that plaintiff has not
alleged that it would be in any way prejudiced by such development. Id. at 5-7. Alternatively,
defendant contends that if the court grants plaintiff’s motion, defendant should be allowed to file
an amended pleading. Id. at 7.
Next, defendant argues that the affirmative defense of offset is available to it in this case.
Id. at 7-24. First, defendant claims that the court does possess jurisdiction to consider its offset
theory: “Our assertion, in our seventh affirmative defense, that KCP&L’s claims in this Court
‘should be offset or reduced by amounts claimed as damages . . . for which plaintiff was
reimbursed in whole or in part by an insurer,” Am. Answer 12, is not an independent claim that
the Government could assert against KCP&L for payment of the reimbursed amounts, separate
from KCP&L’s claims for damages in this case. Thus, the seventh affirmative defense is
unrelated to a ‘claim’ required to be raised before the contracting officer.” Id. at 8. According to
defendant, plaintiff confuses defendant’s affirmative defense with “setoffs,” which “relate to
debts owed to the Government by contractors.” Id. at 9-10. Second, defendant argues that,
contrary to plaintiff’s contention, defendant’s seventh affirmative defense is not barred as a
matter of law. Id. at 11-24. With respect to the collateral source rule, defendant contends that
precedent of the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) bars
its application in this case and that the cases plaintiff cites are inapposite. Id. at 12-21.
Specifically, defendant argues that the collateral source rule generally applies to cases involving
tort damages and only applies to contract actions where there is a tortious or negligent
component to the breach. Id. at 12. In addition, defendant disputes plaintiff’s characterization of
the government as a “wrongdoer” for purposes of applying the collateral source rule simply
because the government was found to be the tortfeaser in a particular case. Id. at 14-16. With
respect to plaintiff’s characterization of AEGIS’s payment of its settlement and litigation
expenses as a remote transaction, defendant argues that plaintiff is simply wrong and that
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plaintiff’s recovery from AEGIS in this case is “a direct result of the alleged breach” and thus
clearly not a remote transaction. Id. at 22.
Finally, defendant contends that even if the court were to strike its seventh affirmative
defense, AEGIS’s reimbursement of plaintiff’s costs remains relevant to the calculation of
plaintiff’s damages. Id. at 24-25.
In its reply, plaintiff concedes that motions to strike are generally disfavored but argues
that in this case, the motion should be granted because the government intentionally breached the
contract, thus qualifying as a wrongdoer for purposes of applying the collateral source rule. Pl.’s
Reply 3. In support of its argument, plaintiff notes that the GSA did not contest the
Occupational Safety and Health Administration’s (“OSHA”) citation for two violations
following the accident that caused Mr. Eubank’s death. 3 Id. at 4-5. In addition, with respect to
defendant’s remoteness argument, plaintiff claims that “[t]he contract under which AEGIS
reimbursed KCP&L had to do with KCP&L’s liability under the settlement in the wrongful death
case, not the Government’s failure to indemnify KCP&L.” Id. at 6. Characterizing the issue as a
“public policy concern,” plaintiff argues that the government should not be permitted to reduce
its contractual liability by factoring in separate payments received by the nonbreaching party. Id.
Lastly, plaintiff identifies two rationales for applying the collateral source rule to cases involving
underlying insurance policies—first, as the wrongdoer, defendant does not deserve to benefit
from plaintiff’s fortuity in having obtained an insurance policy and second, any reimbursement
or compensation plaintiff recovers from such a policy is “deserved” because it was provided in
the contract. Id. at 7.
2. Analysis
a. The Court Possesses Subject Matter Jurisdiction Over Defendant’s Offset Defense
According to plaintiff, “[t]he Government failed to assert its contractual defense of offset
through the contracting officer . . . , thus, the Court has no subject matter jurisdiction over the
Government’s affirmative defense of offset.” Pl.’s Mot. 3. The court disagrees.
As stated by the Federal Circuit in Raytheon Co. v. United States, 747 F.3d 1341, 1354
(Fed. Cir. 2014), the CO need only address the “claims” presented to him, irrespective of
whether they are asserted affirmatively or defensively:
It is a bedrock principle of government contract law that contract
claims, whether asserted by the contractor or the Government,
must be the subject of a contracting officer’s final decision. See 41
U.S.C. § 7103(a)(3) (2011). . . . Under the Contract Disputes Act,
obtaining a final decision is a jurisdictional prerequisite to any
3
The two violations identified in the OSHA citation were: “1. Allowing an unqualified
person to have access to unguarded live electrical parts exceeding 600 volts; and 2. Not
performing a hazard assessment of the building within Building 13 before assigning employees
to work in that building.” Pl.’s Reply 4.
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subsequent action before a Board of Contract Appeals or the trial
court. See, e.g., Sharman Co. v. United States, 2 F.3d 1564, 1568
(Fed. Cir. 1993) (“Under the CDA, a final decision by the
contracting officer on a claim, whether asserted by the contractor
or the government, is a ‘jurisdictional prerequisite’ to further legal
action thereon.”), overruled on other grounds by Reflectone, Inc. v.
Dalton, 60 F.3d 1572 (Fed. Cir. 1995) (en banc). The purpose of
this requirement is “to create opportunities for informal dispute
resolution at the contracting officer level and to provide
contractors with clear notice as to the government’s position
regarding contract claims.” Applied Cos. v. United States, 144
F.3d 1470, 1478 (Fed. Cir. 1998). This jurisdictional prerequisite
applies even when a claim is asserted as a defense. See M.
Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1331
(Fed. Cir. 2010) (holding that a party “seeking an adjustment of
contract terms must meet the jurisdictional requirements and
procedural prerequisites of the [Contract Disputes Act], whether
asserting the claim against the government as an affirmative claim
or as a defense to a government action”).
Thus, if the relief sought can properly be characterized as a claim, it must be reviewed and
resolved by the CO prior to being brought before this court. In this case, the question is whether
the offset defense is a claim under the CDA that should have been asserted by defendant in the
proceedings before the CO. The answer is no.
As noted above, a CDA claim is “a written demand or written assertion by one of the
contracting parties seeking, as a matter of right, the payment of money in a sum certain, the
adjustment or interpretation of contract terms, or other relief arising under or relating to this
contract.” FAR § 52.233-1. Defendant’s seventh affirmative defense is not an independent
request for money “in a sum certain,” the adjustment or interpretation of one of the electrical
utility services’ contract’s terms, or other relief arising under the contract. It is instead a defense
that seeks to apply a monetary offset to a claim for reimbursement of monies previously paid.
Thus, defendant’s failure to assert the affirmative offset defense in response to plaintiff’s claims
before the CO is not fatal to its ability to assert it now before this court. See Laguna Constr. Co.,
Inc. v. Carter, 828 F.3d 1364, 1368 (Fed. Cir. 2016) (holding that the government’s assertion of
fraud as an affirmative defense before the Armed Service Board of Contract Appeals
(“ASBCA”) in its appeal of the CO’s decision, even though the government had not previously
asserted the defense before the CO, did not deny the Board jurisdiction over the appeal because
the fraud defense is not a claim in that it “plainly does not seek the payment of money or the
adjustment or interpretation of contract terms”); M. Maropakis Carpentry, Inc., 609 F.3d at 1331
(upholding the trial court’s finding that it lacked jurisdiction over the contractor’s appeal of the
CO’s decision because, despite the contractor’s “styling of its claim as a defense to a government
counterclaim for liquidated damages,” the contractor’s allegation that it was entitled to a time
extension due to the government’s delay was a claim for contract modification that had to be
considered by the CO under the CDA); Total Eng’g, Inc. v. United States, 120 Fed. Cl. 10, 14-16
(2015) (holding that the court had jurisdiction over the contractor’s appeal of the CO’s decision
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because when the contractor claimed before the CO that the government’s specifications were
defective—in response to the government’s claim for a deductive credit—it was “not seeking an
adjustment of contract terms,” or “asserting its own claim for relief,” but was instead “appealing
and defending a Government claim”).
b. It Is Premature to Determine Whether the Collateral Source or Remote Transactions
Rules Apply
Plaintiff next argues that the collateral source rule or remote transactions rule bars
defendant’s affirmative defense that plaintiff’s damages should be offset by monies plaintiff
received from another source. “The principle of contract damages is that the non-breaching
party is entitled to the benefits it reasonably would have received had the contract been
performed, that is, the profits that would have been earned but for the breach.” LaSalle Talman
Bank, F.S.B. v. United States, 317 F.3d 1363, 1371 (Fed. Cir. 2003). However, “the non-
breaching party is not entitled, through the award of damages, to achieve a position superior to
the one it would reasonably have occupied had the breach not occurred.” Id. at 1372. In other
words, the nonbreaching party cannot be put in a better position than it would have been but for
the breach. Id. See generally 3 E. Allen Farnsworth, Farnsworth on Contracts 193 (2d ed. 1998)
(“No matter how reprehensible the breach, damages are generally limited to those required to
compensate the injured party for lost expectation, for it is a fundamental tenet of the law of
contract remedies that an injured party should not be put in a better position than had the contract
been performed.”).
To that end, the collateral source rule provides that “collateral benefits received by the
injured party do not reduce the damages owed by the wrongdoer.” Id. Although the rule is most
often applied in tort actions, it is sometimes considered in relation to contract cases:
The collateral source rule arises primarily in connection with tort
damages, and presupposes some wrongful act by the breaching
party. This rule has been applied in connection with breach of
contract, where there is a tortious or negligence component to the
breach, or when the equitable balance is such that any windfall
should not benefit the wrongdoer.
Id.; accord Davis v. Odeco, Inc., 18 F.3d 1237, 1243 (5th Cir. 1994) (“The collateral source rule
is a substantive rule of law that bars a tortfeasor from reducing the quantum of damages owed to
a plaintiff by the amount of recovery the plaintiff receives from other sources of compensation
that are independent of (or collateral to) the tortfeasor.”).
In addition to the collateral source rule, the remote transactions rule informs the way in
which damages are calculated. Under the rule, as articulated by the United States Supreme Court
in Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531, 534 (1918), a defendant
may be able to offset its total damages based on plaintiff’s third-party transactions as long as
those transactions are not too remote. Unlike the collateral source rule, the remote transactions
rule has been applied to breach-of-contract actions. For example, in LaSalle Talman Bank,
F.S.B., a bank sued the United States for breach of contract following the enactment of a federal
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regulation, which precluded the bank from benefitting from certain accounting practices. 317
F.3d at 1363-69. Finding that the collateral source rule did not apply because the breach was due
to an act of Congress rather than any “bad faith . . . misconduct . . . [or] negligence,” the Federal
Circuit utilized the remote transactions rule as a means of limiting plaintiff’s damage award:
“Implementation of this principle requires evaluation of the remoteness, as contrasted with the
proximity of ensuing events . . . , for precedent distinguishes between remote consequences of
contract breach, whether favorable or unfavorable to the non-breaching party and those that are
directly related to or direct consequences of the breach.” Id. at 1373; see also Hughes Commc’ns
Galaxy v. United States, 38 Fed. Cl. 578, 582 (1997) (“[C]onsequential damages are not
recoverable by a plaintiff suing the government for breach of contract. I.e., there are certain
damages that, as a matter of law, the courts will find too remote—for example, profits lost on
collateral business arrangements, or lost opportunity damages.”).
In this case, by moving to strike defendant’s seventh affirmative defense, plaintiff places
the cart before the horse. Although plaintiff concedes that the collateral source rule (which, if
applied in the instant case, would have the effect of reducing plaintiff’s recovery) is traditionally
applied to cases involving the commission of a tort, it nonetheless argues that the court should
apply the rule to the instant contract action because defendant was clearly a wrongdoer in the
underlying case. In its motion, plaintiff states:
The Court of Federal Claims has consistently held that when the
Government has breached a contract, the terms “breaching party”
and “wrongdoer” are synonymous and both aptly describe the
Government in such cases. . . . Given that the Government is the
wrongdoer who intentionally breached the indemnity provision of
the Tariff, the collateral source rule should bar the insurance offset
defense to ensure that ‘any windfall should not benefit the
wrongdoer’ as prescribed under LaSalle, for a number of reasons.
Pl.’s Mot. to Strike 6. In its reply brief, plaintiff further argues: “[T]he Government did
intentionally breach a contract, in conscious and voluntary disregard of its contractual terms,
leaving KCP&L to defend a wrongful death case on its own, and leaving it to pay the resulting
costs and expenses.” Pl.’s Reply 3. In support of its argument, plaintiff claims that defendant
already conceded its liability with respect to Mr. Eubank’s death:
After an internal investigation, the Government itself concluded
that the accident that caused Mr. Eubank’s death in the underlying
action was contributed to by a lack of security at the Hardesty
Complex and also the GSA assigning Mr. Eubank a task that
placed him in a potentially dangerous environment. . . . Kevin
Santee, corporate representative of GSA, acknowledged receipt of
the OSHA citations and acknowledged that it was necessary for
GSA to modify its training protocol and admitted that the GSA
accepted, and did not contest the OSHA citation. Mr. Santee also
testified that he looked for and could not find any historical hazard
assessments for Building 13 or the Hardesty Complex.
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Id. at 4. Defendant, however, does not concede liability and urges the court to reject plaintiff’s
characterization of the government as a wrongdoer with respect to the instant breach-of-contract
action. At present, discovery remains ongoing. Consequently, the court declines to render
findings of fact that go to the very heart of liability.
As previously noted, plaintiff asserts two causes of action in this case—contractual
indemnity and breach of contract. In Count I, plaintiff avers that (1) pursuant to the terms of the
contract, the government was required to indemnify plaintiff “against all claims, losses, expenses
and the like connected with the distribution or use of electrical service by the Government at or
on the Government’s side of the point of delivery,” Compl. ¶ 60; (2) Mr. Eubank’s injuries
occurred on the government’s side of the point of delivery; (3) plaintiff incurred a total of
$4,006,138.14 to settle the underlying action brought by Mrs. Eubank; and (4) the government
owes plaintiff $4,006,138.14. Id. ¶¶ 61-65. In Count II, plaintiff avers that (1) the parties
entered into a valid contract, which contained an indemnification clause; (2) the government
breached the contract by failing to defend plaintiff in the underlying action; and (3) the
government owes plaintiff $4,006,138.14. Id. ¶¶ 67-75. In its amended answer, with respect to
the factual allegations contained in these two counts, defendant either denies the averments “to
the extent they are deemed allegations of fact,” or denies them “for lack of knowledge or
information sufficient to form a belief as to the truth of the matters asserted.” See Am. Answer
¶¶ 57-75. Thus, contrary to plaintiff’s assertions, defendant does not concede that it breached the
contract or that it is a wrongdoer for purposes of analyzing plaintiff’s breach of contract claim.
By asking the court to strike this affirmative defense, plaintiff is, in essence, seeking resolution
of the case on its merits—resolution of questions of law and perhaps disputed issues of fact, see
Reunion, 90 Fed. Cl. at 581, which the court is unwilling to do at this juncture based on the
record and motion before it. Thus, plaintiff’s invocation of the collateral source rule is
premature and does not warrant striking plaintiff’s offset defense. The same is true of plaintiff’s
reliance on the remote transactions rule—it, too, fails to provide a basis upon which to strike
defendant’s affirmative defense.
III. CONCLUSION
In sum, the court DENIES plaintiff’s motion to strike defendant’s seventh affirmative
defense.
IT IS SO ORDERED.
s/ Margaret M. Sweeney
MARGARET M. SWEENEY
Judge
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