Public Warehousing Company K.S.C.
ASBCA No. 57510
| A.S.B.C.A. | Mar 21, 2017Background
- PWC contracted with DLA from 2003–2010 to deliver food in the Middle East under multiple Prime Vendor contracts; this appeal concerns PV-1 performance Oct 2003–Sept 2004.
- PWC later discovered it had not billed for 779 truck trips (2003–2004) and submitted a certified claim in 2009, re-submitting a corrected certification in 2010. PWC filed this ASBCA appeal in Jan 2011.
- A federal grand jury in the Northern District of Georgia indicted PWC in Nov 2009 for fraud related to the same contract; that criminal case remains pending.
- The government moved for leave to amend its answer to add affirmative defenses of first material breach (based on allegations in the indictment) and laches, and separately moved to dismiss or, alternatively, to stay the appeal because of the parallel criminal proceeding.
- The Board found the government’s delay in seeking leave to amend partially excused by uncertainty in the law (pending Federal Circuit review in Laguna) and the ongoing criminal case; it granted leave to add first material breach defenses but denied leave to add laches.
- The Board denied dismissal of the appeal but stayed proceedings for one year to allow the criminal case to proceed, citing concerns about civil discovery impacting the criminal prosecution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion for leave to amend answer to add first material breach defenses | PWC: Government delayed unduly; amendment is prejudicial due to stale evidence and advanced discovery; delay alone warrants denial | DLA: Delay excused by evolving law (Laguna appeal), related proceedings, and pending criminal case; needs amendment to defend claims | Granted — leave to amend to add first material breach defenses (government’s delay partially excused) |
| Motion for leave to amend to add laches defense | PWC: No explicit argument detailed beyond general prejudice and delay | DLA: Seeks to add laches as affirmative defense | Denied — government failed to justify delay or explain need for laches defense |
| Motion to dismiss the appeal due to parallel criminal prosecution | PWC: Opposes dismissal; wants to proceed with civil discovery and merits while limiting DLA defenses | DLA: Criminal prosecution implicates same facts; requests dismissal or stay to protect prosecution and witnesses | Denied dismissal; dismissal inappropriate |
| Motion to stay the appeal because of parallel criminal case | PWC: If stay granted, requests continuation of civil discovery and merits hearings excluding government’s affirmative defenses | DLA: Stay necessary to protect criminal prosecution and prevent use of civil discovery in criminal case | Granted — stay for one year; civil discovery and merits proceedings stayed to avoid tainting the criminal case |
Key Cases Cited
- Foman v. Davis, 371 U.S. 178 (1962) (leave to amend should be freely given absent undue delay, bad faith, prejudice, or futility)
- Laguna Construction Co. v. Carter, 828 F.3d 1364 (2016) (Federal Circuit decision affecting viability of first material breach defense)
- Peden v. United States, 512 F.2d 1099 (1975) (Court of Claims practice of staying civil proceedings when parallel criminal prosecution exists)
- Litton Sys., Inc. v. United States, 215 Ct. Cl. 1056 (1978) (staying civil cases to protect criminal prosecutions involving same facts)
- Afro-Lecon, Inc. v. United States, 820 F.2d 1198 (1987) (civil discovery can impermissibly affect parallel criminal prosecutions; courts often grant stays)
- Te-Moak Bands of W. Shoshone Indians v. United States, 948 F.2d 1258 (1991) (extreme delay by movant that was wholly its own can justify denial of leave to amend)
- Cencast Servs., L.P. v. United States, 729 F.3d 1352 (2013) (denial of leave to amend appropriate where party delayed years in asserting known legal theory)