Lee's Ford Dock, Inc. v. Secretary of the Army
2017 U.S. App. LEXIS 14124
| Fed. Cir. | 2017Background
- Lee’s Ford Dock, Inc. (LFD) leased marina premises from the U.S. Army Corps of Engineers (Corps) under a 2000 lease (with a 2003 supplemental option to extend). The lease covered ~166 acres and ran through 2025.
- Condition 9 of the lease reserved to the United States the right to enter, flood, and “to manipulate the level of the lake or pool in any manner whatsoever,” and disclaimed lessee claims for damages from such actions.
- In 2007 the Corps, citing serious structural risks at Wolf Creek Dam, lowered Lake Cumberland to elevation 680 and maintained a long drawdown while repairing the dam; normal levels were restored in 2014.
- LFD submitted a certified claim in 2013 seeking reformation and damages (alleging frustration of purpose/mutual mistake and later alleging superior knowledge/ nondisclosure), then appealed to the Armed Services Board of Contract Appeals (Board). The Board initially struck a superior-knowledge claim as a new, uncured claim, but later considered LFD’s amended complaint asserting reformation and breach; the Board granted summary judgment for the Corps on all counts.
- On appeal to the Federal Circuit, the court (1) held it had jurisdiction under the Contract Disputes Act (CDA) because the lease constituted a contract for “disposal of personal property,” and (2) dismissed LFD’s reformation (misrepresentation-by-silence) claim for lack of CDA jurisdiction because that theory was not presented/certified to the contracting officer, and affirmed summary judgment for the Corps on breach because the lease unambiguously authorized manipulations “in any manner whatsoever” and LFD produced no evidence the Corps acted unreasonably.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Federal Circuit has jurisdiction to hear the appeal under the CDA | LFD assumed the lease fell under CDA review; appeal should be heard | Gov't argued lease was not a CDA contract so no appellate jurisdiction | Court held CDA applied: lease was a disposal of personal property and thus within CDA jurisdiction |
| Whether LFD’s reformation (misrepresentation by silence/superior knowledge) claim was before the contracting officer as required by the CDA | LFD argued silence about the dam’s condition was a material misrepresentation supporting reformation and that its certified claim sufficed | Corps argued the misrepresentation theory was a new claim not presented/certified (original certified claim alleged mutual mistake/frustration, not nondisclosure) | Court held the misrepresentation claim was a new theory not presented to the contracting officer; Board (and court) lacked jurisdiction to decide it, so claim dismissed |
| Whether the Board erred in granting summary judgment for the Corps on breach of contract (extended drawdown) | LFD argued Condition 9 must be reasonably exercised and extended drawdown was an unreasonable breach | Corps argued Condition 9 unambiguously allowed manipulation “in any manner whatsoever,” and Corps acted reasonably given dam risk | Court affirmed: Condition 9 allowed unlimited manipulation; LFD produced no evidence Corps acted unreasonably (LFD conceded reasonableness at oral argument) |
| Whether the lease is a concession (excluded from CDA) or otherwise outside the CDA’s scope | LFD did not contest CDA coverage; focused on merits | Gov't argued CDA should be limited (e.g., to surplus sales or exclude concessions) | Court rejected limiting constructions; plain statutory text covered disposal of leasehold as personal property and CDA applied |
Key Cases Cited
- Santa Fe Engineers, Inc. v. United States, 818 F.2d 856 (Fed. Cir. 1987) (new claims not presented and certified to contracting officer cannot be raised on appeal)
- K-Con Bldg. Sys., Inc. v. United States, 778 F.3d 1000 (Fed. Cir. 2015) (a claim is new if it presents a materially different factual or legal theory requiring different operative facts)
- Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir. 2003) (claims based on the same operative facts may support different legal theories)
- Forman v. United States, 767 F.2d 875 (Fed. Cir. 1985) (leasehold interests ordinarily treated as personal property for federal contract law purposes)
- Phelps v. Harris, 101 U.S. 370 (1880) (the phrase “to dispose of” is broad and not limited to sale)
- G.E. Boggs & Associates, Inc. v. Roskens, 969 F.2d 1023 (Fed. Cir. 1992) (no jurisdiction over appeals from board decisions that do not arise from CDA contracts)