Axion Corp. v. United States

75 Fed. Cl. 99, 2007 U.S. Claims LEXIS 11, 2007 WL 221528
CourtUnited States Court of Federal Claims
DecidedJanuary 25, 2007
DocketNos. 03-2644C, 04-297C
StatusPublished
Cited by7 cases

This text of 75 Fed. Cl. 99 (Axion Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Axion Corp. v. United States, 75 Fed. Cl. 99, 2007 U.S. Claims LEXIS 11, 2007 WL 221528 (uscfc 2007).

Opinion

OPINION ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

FIRESTONE, Judge.

This matter comes before the court on the parties’ cross-motions for summary judgment pursuant to Rule 56 of the Rules of the United States Court of Federal Claims (“RCFC”). In this case, the plaintiff, Axion Corporation (“Axion”), has sued the United States (“government”) challenging the termination for default of its $1,313,974.20 contract to provide PS-115 batteries (“batteries” or “units”) for use in munitions. The court denied the parties’ earlier cross-motions for partial summary judgment and the government’s partial motion to dismiss in its decision dated October 31, 2005. Axion v. United States, 68 Fed.Cl. 468 (2005). The court’s prior decision dealt primarily with the government’s contention that Axion’s claims for compensation were barred by the general release1 contained in three bilateral modifications.2 Axion had argued that the releases should be reformed based on principles of “unilateral mistake.” In its October 31, 2005 decision, the court held that it could not say, based on the limited record presented, whether the release contained in modifications signed by the parties was unenforceable due to unilateral mistake. 68 Fed.Cl. at 479.

Discovery in the case is now completed. Based on the evidence gathered, Axion moves for summary judgment to convert the termination of the contract for default into a termination for convenience. In addition, Axion claims compensation in the amount of $3,747,298.3 Axion contends that it is entitled to have the termination converted into one for convenience because the government allegedly breached the contract under various theories and therefore Axion’s failure to meet the second First Article Test (“FAT”) was “excused.” Axion argues that the general releases should be reformed so as not to bar Axion’s compensation claims, and that the releases, even if enforced, do not bar Axion’s claim that the above-cited breaches “excuse” Axion’s failures and require that the termination for default be converted to a termination for convenience.

The government, in response, renews its request for summary judgment. The government contends that the termination for default was justified and that Axion’s “excuses” for failing to meet its contract obligations are either barred by the general releases or are unfounded. The government argues, with respect to the releases, that Axion cannot succeed on its theory of unilateral mistake because the uneontested evidence establishes that the contracting officer did not know and had no reason to know of an alleged unilateral mistake by Axion concerning the legal significance of the releases. The government further argues that the termination was justified and asks the court to uphold the government’s decision to terminate Axion for default.

For the reasons stated below, the court holds that the release contained in the modifications signed by the parties bars all of Axion’s claims for compensation related to the air gun, the plating, and the leaking batteries. The court also holds that Axion’s failure to meet the second FAT was not excused by any of the alleged breaches in [102]*102connection with the air gun, plating, or leaking batteries. However, there are disputed issues of material fact as to whether Axion’s failure to meet FAT may have been excused by the government’s alleged breach of its duty to cooperate during the second FAT. Therefore, the government’s motion for summary judgment is GRANTED-IN-PART and DENIED-IN-PART and Axion’s motion for summary judgment is DENIED.

BACKGROUND

Many of the background facts are included in the court’s October 31, 2005 decision. 68 Fed.Cl. at 470-473. The court does not repeat all of these facts here. The following facts are undisputed unless otherwise noted. On December 14, 1995, the Naval Inventory Control Point (“Navy”) and Axion entered into a fixed price contract for the delivery of batteries used in Navy munitions. The contract required delivery of 540 first articles within 90 days of contract award and then the delivery of 55,209 batteries (exclusive of first article samples, production lot samples, and option quantities) to be delivered in increments, starting with a first production lot due within in 90 days after approval of first article testing (or by the summer of 1996). The contract established a unit price of $23.80, and the total price, exclusive of option quantities, was $1,313,974.20.

Axion received numerous extensions of the first article delivery schedule. The first three extensions (modifications P00002, P00004, and P00005) provided Axion with additional time to deliver FAT samples from the initial due date in March 1996 until May 15, 1997. One year after the May 1997 due date, in modification P00007, the government reduced the number of FAT samples from 540 to 360. Almost one year thereafter, on April 12, 1999, Axion delivered its first FAT report. Def.’s App. 187-188. The government approved FAT on May 17,1999. Def.’s App. 189. As noted, Axion was required to deliver the first production units within 90 days. Axion, however, failed to deliver the production units within 90 days. The government, through numerous extensions, provided Axion with additional time to deliver the first lot of production units. Eventually the delivery date was extended from the initial August 1999 deadline until August 8, 2001 (modifications P00011, P00013, P00014, P00015, and P00016). Axion failed to meet the August 8, 2001 deadline. This led to modification P00017 in October 2001. Modification P00017 required a new first article test because of changes Axion had made after the first FAT had been approved. Modification P00017 required Axion to do testing on 120 samples because Axion had decided to do its own plating and because Axion told the Navy that some of its batteries were leaking. Axion was not able to meet the October 3, 2001 date set in P00017, which led to two additional modifications (P00019 and P00020). Modifications P00019 and P00020 reduced the number of required FAT samples from 120 to 80 and further extended the deadline for the second submission of FAT samples until September 9, 2002.

Axion completed its testing of the FAT samples on September 6, 2002, and submitted a second FAT report on September 9, 2002. In the report Axion submitted data on 74 batteries. The report indicated that 25 of the batteries did not meet FAT requirements. Under the contract, only eight batteries could fail FAT. After giving Axion an opportunity to respond to the Navy’s concerns, the government terminated the contract for default on November 12, 2002, on the ground that Axion had failed to satisfy the contract’s FAT requirements.

I. Problem Areas Under the Contract

A. The Air Gun

It is undisputed that Axion experienced difficulties manufacturing an air gun (which is also referred to as a “spin gun”) to test the batteries. The contract required Axion to provide all testing equipment (or “acceptance inspection equipment”), Def.’s App. 109, although the contract did not specify the use of an air gun.

The Navy’s contract solicitation referred to two previous contracts for batteries that had been awarded to Accudyne Corporation (“Accudyne”).[103]*1034 Pl.’s App. 20.

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Cite This Page — Counsel Stack

Bluebook (online)
75 Fed. Cl. 99, 2007 U.S. Claims LEXIS 11, 2007 WL 221528, Counsel Stack Legal Research, https://law.counselstack.com/opinion/axion-corp-v-united-states-uscfc-2007.