Kansas City Power & Light Co. v. United States
131 Fed. Cl. 161
| Fed. Cl. | 2017Background
- KCP&L (electrical utility) contracted with GSA to provide power at the Hardesty Federal Complex; the contract incorporated a publicly filed tariff containing an indemnity provision.
- A GSA employee, David Eubank, suffered a fatal electrical arc blast on government property in 2006; Kembra Eubank sued KCP&L, the United States was later involved, and KCP&L ultimately settled with Mrs. Eubank for $2,250,000 and incurred ~$1.76M in defense costs.
- KCP&L submitted a certified CDA claim to the contracting officer in 2014 seeking reimbursement of the settlement and defense costs (total ~$4,006,138); the CO denied the claim and KCP&L appealed to the Court of Federal Claims.
- The government answered and asserted seven affirmative defenses, including offset (seventh defense) based on reimbursements KCP&L received from its insurer (AEGIS).
- KCP&L moved, under RCFC 12(f), to strike the government’s offset defense arguing (1) the court lacks jurisdiction over it because it was not presented to the CO and (2) the collateral source and remote transactions rules bar offset; the court resolves only the motion to strike in this opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Court lacks CDA jurisdiction over gov’t offset defense because it wasn’t presented to the CO | Offset is a claim that had to be raised to the CO; failure to do so deprives the court of jurisdiction | Offset is an affirmative defense, not an independent CDA claim requiring a CO decision | Court: Government may assert offset as a defense; CDA jurisdictional requirement does not bar it |
| Whether the collateral source rule bars government from offsetting insurer payments against KCP&L’s recovery | Collateral-source and public-policy reasons bar offset because the gov’t is the wrongdoer and should not benefit from plaintiff’s insurance | Collateral source mainly applies in tort; even in contract cases it’s limited; government may offset non-remote reimbursements | Court: Premature to apply collateral source rule; dispute involves liability and factual development in discovery |
| Whether the remote transactions rule prevents consideration of insurer payments as too remote to affect damages | AEGIS payments predated government breach and are remote; thus not offsettable | AEGIS reimbursements are directly related to the underlying settlement and relevant to damages | Court: Premature to resolve remoteness; factual inquiry required; cannot strike defense now |
| Whether striking the affirmative defense is appropriate under RCFC 12(f) | Strike is warranted because defense is legally insufficient as a matter of law | Motion to strike is disfavored; factual disputes and discovery remain; defense should stand or be pleaded anew | Court: Denies motion to strike; defenses are not facially insufficient and resolution depends on factual/legal development |
Key Cases Cited
- Raytheon Co. v. United States, 747 F.3d 1341 (Fed. Cir.) (CO final decision requirement applies to claims but defenses that do not seek affirmative relief may not be CDA claims)
- M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323 (Fed. Cir.) (distinguishing claims that must be presented to the CO from defensive positions)
- Laguna Constr. Co. v. Carter, 828 F.3d 1364 (Fed. Cir.) (an affirmative defense that does not seek money or contract adjustment is not a CDA claim)
- LaSalle Talman Bank, F.S.B. v. United States, 317 F.3d 1363 (Fed. Cir.) (discussing collateral source and remote-transactions rules in contract damages)
- Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586 (Fed. Cir.) (CDA claim need only give CO clear notice of basis and amount; form not required)
- Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531 (U.S.) (articulating remote transactions concept for offsets in damages)