Aero Union Corp. v. United States

47 Fed. Cl. 677, 2000 U.S. Claims LEXIS 195, 2000 WL 1429501
United States Court of Federal Claims·Decided September 26, 2000·No. No. 99-952C·Published·Cited by 11 cases

Opinion

OPINION

MILLER, Judge.

This case is before the court after argument on plaintiffs motion for summary judgment. Three questions are presented concerning whether a transferee is protected from a claim by the Government for the return of six aircraft exchanged for other refurbished aircraft. The transferee challenges the Government’s right to assert a claim under the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-613 (1994 & Supp. IV 1998), after initially declaring the contracts void and filing an unjust enrichment claim. The transferee claims protection under section 203(d) of the Federal Property and Administrative Services Act, 40 U.S.C.A. §§ 471-489 (West 1987 & Supp.2000) (the “FPASA”), which protects the holders of bills of sale issued by the Government. Finally, [679] the transferee contends that it will suffer economic harm by returning the aircraft such that laches should bar the Government’s claim. The court rules that genuine issues of material fact are present concerning whether the transferee knew that the transactions did not comply with the law and whether the Government has delayed too long in attempting to exercise any legal or statutory remedies such that plaintiff has been prejudiced by the delay.

FACTS

Aero Union Corporation (“plaintiff’) is a contractor providing aerial firefighting services to the United States Forest Service (the “Forest Service”).1 Between 1988 and 1989, the Forest Service entered into Exchange Agreements with five of its firefighting contractors, including plaintiff, pursuant to the Forest Service’s Historic Aircraft Exchange Program (the “Program”). The Forest Service initiated the Program, and the primary goals of the Program included replacement of contractors’ obsolete and grounded planes and reduction of future contracting costs in fighting forest fires. Under the Program the Forest Service exchanged planes received from the Departments of the Army and Navy on a one-to-one basis for historic planes held by airtanker contractors. The contractors were responsible for making the subsequent modifications required to use the planes from the Government as firefighting airtankers. See Pacific Harbor Capital v. Dept. of Agriculture, 845 F.Supp. 1, 2 (D.D.C.1993).

The Forest Service and plaintiff entered into two Exchange Agreements, dated September 27, 1989 and December 12, 1989, which provided for plaintiff to receive six P-3A aircraft (four and two, respectively) in exchange for plaintiffs tendering to the Forest Service various restored and flyable aircraft at a plane-for-plane basis. Both agreements recite that they were made under the authority of GSA Regulation 101-46.203, 41 C.F.R. § 101-46.203 (1989); were signed by L.A. Amicarella, Director, Fire and Aviation Management for the Forest Service; and would be “considered consummated upon delivery of all aircraft by both parties.”

The aircraft exchanges were completed by 1991. Plaintiff received a bill of sale for each of the six P-3As signed by Fred A. Fuchs, the Forest Service’s Assistant Director for Aviation, and plaintiff registered the P-3As with the Federal Aviation Administration (the “FAA”). Plaintiff spent $3 million modifying the P-3As for use as airtankers in its firefighting contracts with the Forest Service.2 Although one P-3A was destroyed in a crash in 1992, the remaining five aircraft have been used by plaintiff in support of its Forest Service contracts.

In December 1989 the Office of the General Counsel of the Department of Agriculture (the “USDA”) issued a non-public letter questioning the legality of the aircraft exchanges. See Pacific Harbor, 845 F.Supp. at 2. After investigating the Exchange Program, the USDA Office of the Inspector General (“OIG”) published an audit of the aircraft exchange in 1992, taking the position that the Forest Service lacked the requisite authority to enter into the Exchange Agreements. See id., at 2. The Government did not take action to recover the exchanged aircraft from any of the contractors at that time.

In 1994, two years after the OIG determination, a relator filed a qui tam action under the False Claims Act, 31 U.S.C. § 3730(b) (1994 & Supp. IV 1998),3 against the five Forest Service contractors that participated in the Exchange Program4 and against a [680] broker for several of the transactions, Roy D. Reagan. See United States ex rel. Eitel v. Reagan, 898 F.Supp. 734 (D.Or.1995), remanded, Civ. No. 95-35969 (9th Cir. June 4, 1997). The qui tam suit put forth multiple allegations, the most relevant of which was that the defendants, including plaintiff in this suit, knew that they were making illegal purchases of government property and knew that the value represented of certain aircraft exchanged with the Forest Service was inaccurate. Eitel, 898 F.Supp. at 735. The Government gave notice on June 1, 1995, that it declined to intervene. Id. at 738. The court dismissed the qui tam suit for lack of subject matter jurisdiction on August 16, 1995, after it found that a majority of the relator’s information came from public sources and not his own personal knowledge.5 Id. at 739.

In June 1995 a grand jury indicted Messrs. Reagan and Fuchs for fraudulently obtaining the aircraft from the Department of Defense. The indictment alleged related wrongdoing by three of the five Forest Service contractors, which resulted in Mr. Reagan’s receiving over $1 million, but plaintiff was not mentioned. (Although Messrs. Fuchs and Reagan were convicted, the convictions were reversed on July 6, 2000, because the jury instructions allowed the jury to consider overt acts in furtherance of the conspiracy that were outside the statute of limitations. United States v. Fuchs, 218 F.3d 957, 961 (9th Cir.2000).)

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Aero Union Corp. v. United States, 47 Fed. Cl. 677, 2000 U.S. Claims LEXIS 195, 2000 WL 1429501 (uscfc 2000).

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