Fortis Networks, Inc. v. United States

In the United States Court of Federal Claims
No. 19-531C
(Filed: May 9, 2019)
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*
FORTIS NETWORKS, INC. *
* Motion to Dismiss; Subject Matter
* Jurisdiction; RCFC 12(b)(1);
* Contract Disputes Act; Election
* Doctrine
Plaintiff, *
*
v. *
*
THE UNITED STATES, *
*
Defendant. *
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David A. Rose, Rose Consulting Law Firm, Valdosta, Georgia, for Plaintiff.
Joseph A. Pixley, Trial Attorney, with whom were Joseph P. Hunt, Assistant Attorney
General, Robert A. Kirschman, Jr., Director, Deborah A. Bynum, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington,
D.C., and Lauren M. Williams, Assistant District Counsel, U.S. Army Corps of Engineers,
Tulsa District, Tulsa, Oklahoma, for Defendant.
OPINION AND ORDER
WHEELER, Judge.
On April 10, 2019, Plaintiff Fortis Networks, Inc. filed an emergency motion for a
temporary restraining order and a preliminary injunction, asking this Court to stop the U.S.
Army Corps of Engineers (USACE) from using offsets to collect a debt. The Government
responded with a Motion to Dismiss the complaint under RCFC 12(b)(1), arguing that
Plaintiff is currently challenging the disputed debt before the Armed Services Board of
Contract Appeals (ASBCA) and therefore this Court is without subject matter jurisdiction
to rule on this matter. The case is now fully briefed and ready for decision.
As explained below, the Court agrees with Defendant and GRANTS Defendant’s
Motion to Dismiss this case. The Court also DENIES Plaintiff’s motion for a temporary
restraining order and preliminary injunction.
Background
Fortis entered into Contract No. W912BV-14-D-0005, Task Order 2, FY14 Multiple
Mechanical Repairs, with the USACE, to perform repair work at Fort Sill, Oklahoma.
Compl. 4. On November 7, 2018, the Contracting Officer issued a final decision giving
notice to Fortis of the assessment of liquidated damages for late performance, in the amount
of $578,445.00. This debt was partly satisfied by retaining the $82,000 balance remaining
to be paid to Plaintiff, which left a balance of about $496,000 still due to the Government.
Dkt. No. 6-1. On December 18, 2018, the USACE Finance Center sent to Fortis a demand
letter to repay the debt and included a blank “voluntary installment repayment agreement”
(VIRA) to repay over time. Dkt. No. 6-2. Plaintiff apparently had free choice in filling
out the repayment terms and returned the signed VIRA, promising to pay $1,000 per month
towards the debt. Dkt. No. 6-3. Fortis has made at least three monthly payments to
USACE. Compl. 14. Plaintiff subsequently filed a notice of appeal of the Contracting
Officer’s liquidated damages assessment with the ASBCA on January 16, 2019. A
complaint and answer have now been filed in that case, ASBCA No. 61941. Dkt. Nos. 11-
1, 11-2, 11-3.
While the appeal is pending, Government collection efforts have not stopped. The
USACE-Tulsa District Counsel found the VIRA executed by Fortis to be unacceptable in
that it lacked a repayment schedule and did not address maturity, interest, or other terms
relating to the debt. For those reasons, Tulsa District Counsel requested that the ACE
Finance Center continue offset collection against other payments due to Fortis under other
government contracts it is performing. Dkt. 7-3 at 2. Fortis has now filed this action in
this Court in an effort to stop the offset collection, arguing that without such relief, Fortis
faces financial ruin.
Discussion
A. Jurisdiction
Whether the Court has jurisdiction to decide the merits of a case is a threshold
matter. See PODS, Inc. v. Porta Stor, Inc., 484 F.3d 1359, 1365 (Fed. Cir. 2007). When
deciding a Rule 12(b)(1) motion to dismiss, a court must assume all the undisputed facts
in the complaint are true and draw reasonable inferences in the non-movant’s favor.
Acevedo v. United States, 824 F.3d 1365, 1368 (Fed. Cir. 2016). Further, the plaintiff
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bears the burden of establishing facts sufficient to invoke this Court’s jurisdiction by a
preponderance of the evidence. Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746,
748 (Fed. Cir. 1988). In determining whether a plaintiff has met this burden, courts may
look “beyond the pleadings and ‘inquire into jurisdictional facts’ in order to determine
whether jurisdiction exists.” Lechliter v. United States, 70 Fed. Cl. 536, 543 (2006)
(quoting Rocovich v. United States, 933 F.2d 991, 993 (Fed. Cir. 1991)).
In support of its Motion to Dismiss, the Government argues that jurisdiction in this
case is barred by the “Election Doctrine.” This is a “body of jurisprudence” developed by
this Court under the Contract Disputes Act, 41 U.S.C. § 601 et. seq., which provides a
choice of forums in which to contest a contracting officer’s decision. National Neighbors,
Inc. v. U.S., 839 F.2d 1539, 1541-42 (Fed. Cir. 1988). The Election Doctrine holds that,
once a contractor makes a binding election to appeal an adverse decision to a board of
contract appeals, he cannot pursue his claim in this Court. “The Election Doctrine controls,
as a matter of law.” Id. at 1541.
Plaintiff counters that the Election Doctrine does not apply here because Fortis is
challenging the Government’s breach of the VIRA, not the merits of the Contracting
Officer’s final decision, which is the subject of the ASBCA appeal. Plaintiff maintains
that, since the USACE Finance Center provided the installment agreement form and
accepted several monthly payments, a binding contract was created, and a challenge to that
contract confers jurisdiction in this Court over a matter separate from the underlying
contract under challenge at the ASBCA.
As discussed, the Plaintiff has the burden of proof to show facts sufficient to invoke
this Court’s jurisdiction. If the Government’s collection actions were to be seen as
sufficiently separate from the underlying contract so as to avoid the Election Doctrine,
Fortis would still have to establish jurisdiction in this Court. Pursuant to the Tucker Act,
28 U.S.C. § 1491(a)(1), this Court has subject matter jurisdiction to hear claims against the
Government “founded . . . upon any express or implied contract with the United States.”
Where a plaintiff alleges that he entered into a contract with the Government, the plaintiff
need only make a “non-frivolous allegation of a contract with the government.” Mendez
v. United States, 121 Fed. Cl. 370, 378 (2015) (quoting Engage Learning, Inc. v. Salazar,
660 F.3d 1346, 1353 (Fed. Cir. 2011) (emphasis in original)). Accordingly, to show
jurisdiction, a plaintiff must plead the elements of a government contract: “(1) mutuality
of intent to contract; (2) consideration; (3) an unambiguous offer and acceptance; and (4)
actual authority on the part of the government’s representative to bind the government.”
Biltmore Forest Broad. FM, Inc. v. United States, 555 F.3d 1375, 1380 (Fed. Cir. 2009)
(citations omitted).
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It is a far reach to characterize the VIRA in this case as a contract of any sort, and
Plaintiff did not plead facts sufficient to show the required elements. For example, Plaintiff
did not meet its burden of showing consideration, intent, or authority on the part of the
Government. Therefore, the Court holds that Plaintiff’s claim of breach of the VIRA is
insufficient to establish jurisdiction in this Court separate from the challenge to the
Contracting Officer’s final decision currently pending before the ASBCA. The Court
further holds that the Election Doctrine bars this Court from jurisdiction over the debt
collection practices related to that decision, which should be challenged as part of that
appeal.
For these reasons, the Court GRANTS the Defendant’s Motion to Dismiss and
DENIES Plaintiff Fortis’ Motion for a Temporary Restraining Order and Motion for
Preliminary Injunction. The Clerk of Court shall enter judgment accordingly.
IT IS SO ORDERED.
s/ Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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