Sunrez Corporation v. United States
21-568
| Fed. Cl. | Jan 20, 2022Background
- Sunrez (small business) contracted with USAF under SBIR Contract FA8501-14-C-0013 to develop and deliver six prototype composite 463L air‑cargo pallets (payment ≈ $1.49M) according to an attached Work Plan.
- The Work Plan required pallets be developed to MIL‑DTL‑27443F standards and delivered “for post Phase II environmental/airworthiness certification,” and included milestones such as “Pallet build for Certification Testing.”
- The parties disputed technical data (Level III data / TDP) rights; the Air Force repeatedly sought more data and raised testing concerns; testing delays at Warner Robins AFB extended performance and communications were allegedly poor.
- Sunrez delivered prototypes in June–July 2016; the Air Force did not submit Sunrez’s pallets for ATTLA certification and later selected an aluminum pallet from another contractor.
- Sunrez filed a certified CDA claim (denied by the CO) and sued in the Court of Federal Claims alleging: breach of contract (failure to submit pallets for ATTLA certification), breach of the implied duty of good faith and fair dealing, a regulatory takings claim, and a request for declaratory relief.
- The government moved to dismiss under RCFC 12(b)(6); the court granted dismissal of the express breach and takings claims, denied dismissal of the implied‑duty claim, and stayed/limited declaratory relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Contract required the USAF to submit Sunrez’s prototypes to ATTLA for airworthiness certification | Contract/Work Plan required submission for ATTLA upon meeting MIL‑DTL‑27443F and milestone language shows certification was an expected outcome | Work Plan and Schedule only require Sunrez to deliver prototypes ready for certification; certification would occur post‑Phase II at government discretion; SBIR phasing does not obligate Phase III certification | Dismissed — Court found no express contractual duty for the government to submit the pallets for ATTLA certification |
| Breach of implied duty of good faith and fair dealing (coercion on data rights, raising testing bar, communications failures) | Government interfered with performance and reasonable expectations (bait‑and‑switch, pressure to surrender data rights, improper testing), hindering Sunrez’s fruits of the bargain | Implied duty cannot create obligations beyond the contract; actions did not prevent Sunrez from delivering prototypes and the claims depend on facts | Survives dismissal — Court denied 12(b)(6) as fact‑intensive; plaintiff plausibly alleged interference and coercive conduct |
| Regulatory taking: did government actions effect a compensable taking of Sunrez’s property/interests? | Government’s unreasonable shelving and testing practices destroyed Sunrez’s investment‑backed expectations and economic viability, amounting to a regulatory taking | Takings claims rarely arise from government contracts; plaintiff has not identified a cognizable property interest outside the contract; remedies are contractual | Dismissed — Court held plaintiff failed to plead a cognizable property interest beyond contractual expectations |
| Declaratory relief: should court declare pallets met deliverables and require ATTLA submission? | A live dispute exists over the government’s obligation to submit pallets for ATTLA; declaratory relief is needed because monetary relief would not restore a certified pallet | Declaratory relief is discretionary and limited; no live dispute because government has no obligation to submit for certification and a declaration would not resolve the practical dispute | Dismissed/stayed — Court rejected the certification mandate request (no live dispute) and stayed further declaratory relief as likely meaningless |
Key Cases Cited
- Bell/Heery v. United States, 739 F.3d 1324 (Fed. Cir.) (contract interpretation is a legal question appropriate at motion to dismiss)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
- Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (pleading standards requiring factual content to state a plausible claim)
- San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957 (Fed. Cir.) (elements required to state a breach of contract)
- Night Vision Corp. v. United States, 469 F.3d 1369 (Fed. Cir.) (SBIR phase contracts do not create an obligation to award a Phase III contract or related certification)
- Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir.) (scope of implied duty of good faith and fair dealing; bait‑and‑switch framework)
- Metcalf Const. Co. v. United States, 742 F.3d 984 (Fed. Cir.) (implied duty may be breached absent violation of express contractual term; reasonable expectations guide inquiry)
- Alliant Techsystems, Inc. v. United States, 178 F.3d 1260 (Fed. Cir.) (Court’s discretion to grant declaratory relief in limited contract circumstances)
- Piszel v. United States, 833 F.3d 1366 (Fed. Cir.) (takings claims seldom arise from government contracts; contractual remedies govern)
- Conti v. United States, 291 F.3d 1334 (Fed. Cir.) (property interests for takings must derive from independent sources; threshold for takings claim)