546 F. App'x 952
Fed. Cir.2013Background
- FHA contracted White Buffalo to repair Sikiyou National Forest roads in 1998; termination for default issued December 1, 1998 and work stopped.
- White Buffalo filed 1999 case challenging the default termination and, a year later, 2000 case seeking recovery of liquidated damages paid by its surety.
- DOJ authorized FHA to convert the default termination to a termination for convenience; after conversion, liquidated damages were released.
- White Buffalo pursued EAJA relief and filed the 2007 case for lost profits and to challenge the termination-for-convenience settlement amount.
- CFC found 1999 and 2000 cases moot due to conversion, no bad-faith finding, and awarded $353,237.36 for the termination-for-convenience claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the conversion to convenience | White Buffalo claims conversion mooted EAJA claims and relief. | Conversion appropriately moots the cases regardless of EAJA. | Conversion mooted the claims; remand to dismiss 1999 and 2000 cases. |
| Need for de novo review after conversion | White Buffalo contends the CFC failed proper de novo review of the default decision. | Post-conversion, White Buffalo was no longer a defaulting party; de novo review unnecessary. | No de novo review required; affirmed no error on this point. |
| Unawarded subcontractor damages | Subcontractor settlement expenses of $29,528 were overlooked. | Question not clearly decided in judgment; needs resolution. | Vacate in part and remand to determine whether to add $29,528. |
| Profit-margin methodology | White Buffalo presented 44% profit margin evidence on pre-termination work. | Court’s rate-of-profit method should be assessed for abuse of discretion, not outcome. | No abuse of discretion in chosen methodology; calculated profit within proper standard. |
| Missing-witness evidentiary presumption | Trial court should infer testimony unfavorable due to missing witnesses. | Adverse-inference is discretionary and not mandatory. | Court did not err; discretionary negative inference upheld. |
Key Cases Cited
- Chapman Law Firm Co. v. Greenleaf Const. Co., 490 F.3d 934 (Fed. Cir. 2007) (EAJA fees not controlling disposition of case)
- Home Savings of America v. United States, 399 F.3d 1341 (Fed. Cir. 2005) (abuse of discretion vs. clear error in profit methodology)
- Ring Plus, Inc. v. Cingular Wireless Corp., 614 F.3d 1354 (Fed. Cir. 2010) (adverse inference discretion in missing witness cases)
- Bogosian v. Woloohojian Realty Corp., 323 F.3d 55 (1st Cir. 2003) (missing witness rule permits but does not require adverse inference)
- Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320 (Fed. Cir. 2003) (legitimate contract interpretation not bad faith demonstrates injury)
- Krygoski Const. Co. v. United States, 94 F.3d 1537 (Fed. Cir. 1996) (heavy burden of proving bad faith by government)
- Pratt v. United States, 50 Fed. Cl. 469 (2001) (implied covenant bad faith standard guidance)
- Bannum, Inc. v. United States, 80 Fed. Cl. 239 (Fed. Cir. 2008) (presumption of good faith by government officials; requires specific intent to pierce)
- Catawba Indian Tribe of S.C. v. United States, 982 F.2d 1564 (Fed. Cir. 1993) (accrual for government liability claims)