Scott Timber Co. v. United States
2012 U.S. App. LEXIS 18659
| Fed. Cir. | 2012Background
- Timber-harvesting contracts Pigout, Jigsaw, and Whitebird were awarded to Scott in 1999 for 2000–2003 performance.
- Forests Service suspended contracts to comply with environmental litigation and Northwest Forest Plan requirements.
- Oregon Natural litigation claimed Forest Service violated plan by not conducting wildlife surveys; settlement required continued suspensions pending surveys.
- Surveys eventually completed (Pigout 2001; Jigsaw/Whitebird 2000) but suspensions lingered due to related litigation (Umpqua Watersheds) and other environmental challenges.
- Claims Court found government liable for breach of implied duty of good faith and fair dealing and awarded damages including Roseburg through pass-through and Scott’s own damages.
- We reverse, finding no liability on the asserted duties and not awarding damages for several components.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to inform Scott of Oregon Natural risks breached the implied duty | Scott Timber argues pre-award notice breached duty. | United States contends no pre-contract duty existed. | No pre-contract duty; no breach established. |
| Whether continued suspensions under settlement/order breached implied duty | Scott contends continued suspensions violated duty to act reasonably. | Government asserts suspension authorized to complete surveys under settlement/order. | Suspensions valid; no breach found. |
| Whether government delays in completing surveys violated implied duty | Delays unduly lengthened suspensions and harmed Scott. | Actions during surveys not specifically targeted and did not reappropriate contract benefits. | No breach of implied duty; not reasonably actionable. |
| Whether Roseburg’s damages could be recovered as pass-through | Roseburg’s losses recoverable via pass-through claim. | Contract did not require processing by Scott; Roseburg not subcontractor; no pass-through. | Pass-through claim rejected; Roseburg damages not recoverable. |
| Whether Scott could recover replacement costs and lost profits as damages | Delay caused damages including lost profits and replacement costs. | Partial breach rules limit damage types; profits and replacement costs disallowed. | Lost profits disallowed; replacement costs barred; overall damages reversed. |
Key Cases Cited
- Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir. 2003) (reasonableness standard for suspensions under contract clause C6.01; precludes breach finding on unreasonable suspensions if not unreasonable as a matter of fact)
- Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010) (duty during suspensions not breached when actions not targeted or reappropriating contract benefits)
- Hercules Inc. v. United States, 24 F.3d 188 (Fed. Cir. 1994) (superior knowledge doctrine requires government awareness of contractor lack of knowledge)
- Giesler v. United States, 282 F.3d 864 (Fed. Cir. 2000) (superior knowledge framework for disclosure of information impacting contract performance)
- Int’l Tech. Corp. v. Winter, 523 F.3d 1341 (Fed. Cir. 2008) (pass-through doctrine and subcontractor damages considerations)
- Yankee Atomic Elec. Co. v. United States, 536 F.3d 1268 (Fed. Cir. 2008) (damages framework for partial breach and timing of performance)