Magnus Pacific Corporation v. United States
13-859
| Fed. Cl. | Jul 13, 2016Background
- Magnus Pacific sued the United States relating to Contract Modification M004; litigation has been pending since January 2014.
- On June 10, 2016 the government moved under RCFC 15(a)(2) for leave to amend its answer to add a counterclaim with two parts: a $466,092 "retainage" claim and a $279,448 "recalculation" claim.
- The government’s retainage claim traces to a contracting officer (CO) final decision dated January 13, 2014 withholding $466,092 from CLIN 001.
- The recalculation claim arose during litigation from a government expert’s reanalysis asserting an additional $279,448 should have been withheld (for a total $745,540), but there is no CO final decision on that amount.
- The court sua sponte examined whether the Court of Federal Claims had jurisdiction over each portion under the Contract Disputes Act (CDA) presentment requirement and whether amendment would be futile, unduly delayed, or prejudicial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court has CDA jurisdiction over the $466,092 retainage counterclaim | Retainage already "fully joined" in pleadings so a counterclaim is unnecessary | Leave to amend should be allowed to assert the government’s position as a formal counterclaim | Granted: CO issued a final decision; CDA presentment satisfied; amendment allowed |
| Whether court has CDA jurisdiction over the $279,448 recalculation counterclaim | Recalculation is unnecessary and prejudicial; not presented to CO | Recalculation is a permissible adjustment/"math problem" or quantum issue discovered via expert review | Denied: no CO final decision on recalculation; not a mirror-image of a decided contractor claim; amendment would be futile |
| Whether mirror-image/set-off exception permits recalculation claim without CO decision | Plaintiff contends exception does not apply beyond amounts actually retained | Defendant argues recalculation is merely quantum/math and thus permissible | Denied: exception narrowly construed; government limited to amount of retainage decided by CO |
Key Cases Cited
- Foman v. Davis, 371 U.S. 178 (1962) (leave to amend should be freely given but may be denied for futility, undue delay, or prejudice)
- Sharman Co. v. United States, 2 F.3d 1564 (Fed. Cir. 1993) (CDA requires CO final decision as jurisdictional prerequisite for government counterclaims)
- Joseph Morton Co. v. United States, 757 F.2d 1273 (Fed. Cir. 1985) (government counterclaims under CDA must be subject to CO decision)
- Kit San Azusa, J.V. v. United States, 32 Fed. Cl. 647 (1995) (mirror-image/mirror-setoff exception allowed government to litigate only up to amount of retainage determined by CO)
- Placeway Constr. Corp. v. United States, 920 F.2d 903 (Fed. Cir. 1990) (discussed in relation to mirror-image claims and CO decision requirements)