Embrey v. United States

35 Cont. Cas. Fed. 75,692, 17 Cl. Ct. 617, 58 U.S.L.W. 2116, 1989 U.S. Claims LEXIS 135
CourtUnited States Court of Claims
DecidedJuly 17, 1989
DocketNo. 444-88C
StatusPublished
Cited by8 cases

This text of 35 Cont. Cas. Fed. 75,692 (Embrey v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Embrey v. United States, 35 Cont. Cas. Fed. 75,692, 17 Cl. Ct. 617, 58 U.S.L.W. 2116, 1989 U.S. Claims LEXIS 135 (cc 1989).

Opinion

OPINION

RADER, Judge.

On May 1, 1985, the Smith-Embrey Company (Smith-Embrey or plaintiff) entered into a two-year contract with the United States Department of Housing and Urban Development (HUD) to manage real estate near Tulsa, Oklahoma. On March 10,1986, HUD terminated the contract for the convenience of the Government.

Pursuant to the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-13 (1982) (CDA), plaintiff challenged the convenience termination by submitting a claim to the HUD contracting officer. Plaintiff claimed no specific amount of money. Instead Smith-Embrey asserted a right to $34.00 per month, per property that plaintiff would have managed had the contract continued to completion. The contracting officer denied the claim on August 11, 1987.

The contracting officer terminated this contract for convenience of the Government after extensive consultations with superior HUD officials. HUD determined that business relations with plaintiff had deteriorated beyond repair and that plaintiff had failed to maintain contract performance standards. Plaintiff challenges those determinations as arbitrary and capricious or motivated by bad faith.

Plaintiff filed a complaint in the United States Claims Court for $600,000.00 on July 27, 1988. On October 26, 1988, defendant moved to dismiss for lack of subject matter jurisdiction or, in the alternative, for summary judgment. Plaintiff opposes defendant’s motions. After briefing and oral argument, this court denies defendant’s motion to dismiss, but grants defendant’s motion for summary judgment.

FACTS

In 1985, HUD awarded plaintiff a contract to serve as an area real estate management broker. The contract covered the area known as the Tulsa South region [620]*620of Oklahoma. The two-year contract began May 1, 1985. The contracting office terminated the contract for convenience of the Government on March 10, 1986.

Under this contract, plaintiff promised to provide real estate management services for properties the Government acquired through foreclosure. The contract required plaintiff to perform services such as inspecting, cleaning, and maintaining properties. HUD promised to pay plaintiff specific fees for these services. In addition, plaintiff received $34.00 per month, per property managed.

This requirements contract obligated plaintiff to provide services for an undetermined and varying number of properties for the two-year contract term. When the contract commenced, HUD estimated plaintiff would manage approximately 75 to 120 properties per month. However, due to slumping economic conditions, foreclosures in the Tulsa area exceeded expectations. In the last month of the contract, plaintiff had 225 properties under management.

Two weeks after the contract commenced, HUD issued plaintiff the first of several notices of unsatisfactory performance. HUD charged plaintiff with inadequate supervision of contractors, insufficient documentation of personal property left by previous owners, untimely filing of reports, under-staffing its office, non-payment of utilities and homeowner’s association dues, and unauthorized winterization of 28 properties. Accordingly, the contracting officer advised plaintiff in August and again in October 1985 that HUD might terminate its contract.1

Plaintiff responded to these charges on February 15, 1986. In a letter to the contracting officer’s supervisor, plaintiff complained about the contracting officer. Plaintiff described the contracting officer as an “arrogant jerk,” “a bully,” “a running sore of malcontent,” an individual who “won’t change, without the pain and suffering he apparently needs.”

On February 27, 1986, the contracting officer requested the concurrence of his supervisor, Mr. Robert Falkenstein, to terminate the contract for convenience of the Government. The contract incorporated by reference the Federal Acquisition Regulation, which provides:

The Contracting Officer, by written notice, may terminate this contract, in whole or in part, when it is in the Government’s interest. If this contract is terminated, the Government shall be liable only for payment under the payment provisions of this contract for services rendered before the effective date of termination.

48 C.F.R. § 52.249-4 (1987). After receiving plaintiff’s February 27 letter and the contracting officer’s request to terminate the contract, the supervisor reviewed all activities and documents concerning plaintiff’s performance. In an effort to resolve the problems, Mr. Falkenstein met separately with plaintiff and the contracting officer.

As a result of those meetings, Mr. Falk-enstein determined that business relations between plaintiff and HUD were irreconcilable. He advised the contracting officer that he concurred in terminating the plaintiff’s contract for convenience. By letter on March 4, 1986, the contracting officer terminated the contract effective March 10, 1986.

Plaintiff filed a claim with the contracting officer under the Contract Disputes Act on July 22, 1987. Plaintiff claimed no specific amount of money, but asserted a right to $34.00 per month, per property. This claim covered, in addition to properties managed prior to March 10, 1986, properties plaintiff would have managed for the balance of the contract term.

The contracting officer denied plaintiff’s claim on August 11, 1987. The contracting officer applied 48 C.F.R. § 49.206-1 (1987), which requires a contractor to submit a settlement proposal within one year from the effective date of termination. Plaintiff [621]*621had not submitted its proposal within the deadline. Moreover, plaintiff had not requested an extension from the contracting officer.

On July 27, 1988, plaintiff instituted an action in the United States Claims Court seeking $600,000.00 in damages. Plaintiff amended its complaint on April 6, 1989, clarifying that the $600,000.00 was an approximate sum, which amount may prove lesser or greater at time of trial.

Plaintiff contends the contracting officer’s actions were arbitrary, capricious, and taken in bad faith. Further, plaintiff contends the dismissal resulted from plaintiffs’ exposure of wrong-doing and refusal to participate in illegal activity. Specifically, plaintiff alleges the contracting officer asked it to falsify Government forms, reports, inspections, and vouchers. Further, plaintiff contends HUD requested plaintiff to file false, unsatisfactory performance reports against subcontractors.2

With respect to the inflated estimate of damages,3 plaintiff states that it did not have access to information concerning potential management obligations after the contract termination date. In a letter to HUD dated July 22,1987, plaintiff requested an accurate accounting of the number of properties owned or acquired by HUD during the balance of the contract. Defendant has not responded.

Defendant asks this court to dismiss the case for lack of subject matter jurisdiction or, in the alternative, to grant its motion for summary judgment.

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Bluebook (online)
35 Cont. Cas. Fed. 75,692, 17 Cl. Ct. 617, 58 U.S.L.W. 2116, 1989 U.S. Claims LEXIS 135, Counsel Stack Legal Research, https://law.counselstack.com/opinion/embrey-v-united-states-cc-1989.