Fuentes-Fernandez & Company, Psc v. Corvus Group, Inc.

174 F. Supp. 3d 378, 2016 U.S. Dist. LEXIS 41683, 2016 WL 1258462
CourtDistrict Court, District of Columbia
DecidedMarch 30, 2016
DocketCivil Action No. 2015-0751
StatusPublished
Cited by5 cases

This text of 174 F. Supp. 3d 378 (Fuentes-Fernandez & Company, Psc v. Corvus Group, Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fuentes-Fernandez & Company, Psc v. Corvus Group, Inc., 174 F. Supp. 3d 378, 2016 U.S. Dist. LEXIS 41683, 2016 WL 1258462 (D.D.C. 2016).

Opinion

MEMORANDUM OPINION

AMY BERMAN JACKSON, United States District Judge

Plaintiff Fuentes-Fernandez & Company, PSC (“FFC”) entered into a Teaming Agreement with defendant The Corvus Group, Inc. (“Corvus”) in 2014 so that the two companies could jointly submit a response to a particular Request for Proposal (“RFP”) issued by the Small Business Administration. The Teaming Agreement contemplated that if the bid succeeded, Corvus would be the prime contractor and FF.C would have the opportunity to serve as a subcontractor or consultant, but the *381 contract was ultimately awarded to another offeror.

In this case, plaintiff FFC claims that Corvus breached the Teaming Agreement and improperly. used FFC’s proprietary information when it later submitted its own proposal in response to another RFP issued by the same agency. Compl. [Dkt. # 1] at 1. FFC, which was the incumbent on both projects, and which submitted its own solo proposal in response to the second RFP, is obviously disappointed that its joint bid with Corvus was unsuccessful, and that Corvus has now secured a contract that was previously FFC’s. It sued Corvus for breach of the Teaming Agreement, misappropriation of its trade secrets, and for other torts related to Corvus’s success on the subsequent bid. See Compl.

Defendant moved to dismiss the entire complaint for failure to state a claim. Def.’s Mot. to Dismiss [Dkt. #11] (“Def.’s Mot.”). After the motion to dismiss was fully briefed, FFC filed a motion for leave to amend its complaint to add a claim of breach of fiduciary duty and to clarify a number of the allegations in the original complaint. Pl.’s Mot. for Leave to File Amended Compl. [Dkt. # 17]. (“Pl.’s Mot. to Amend”). The Proposed Amended Complaint focuses on the use of confidential information and eliminates the specific performance and breach of contract claims predicated on any continuing validity of the Teaming Agreement. The revised lawsuit is premised on FFC’s contention that Corvus would not have been able to submit a competitive proposal on the subsequent RFP had it not made improper use of the confidential information it received when it teamed with FFC. Compl. ¶¶ 65, 70; Proposed Am. Compl. [Dkt. # 17-1] ¶¶ 65, 70. In the original complaint, plaintiff alleged that Corvus was contractually bound by the Teaming Agreement to team with FFC on the second- procurement, and it sought specific performance and compensatory damages for the lost opportunity. Compl. ¶¶ 84-85. *'■

But the proposed amendments do not eliminate the deficiencies in the complaint, so the motion for leave to amend will be denied on futility grounds, and the motion to dismiss will be granted. Plaintiffs con-clusory allegations that its trade secrets have been misappropriated do not survive the test to be applied when a court considers a motion under Rule 12(b)(6), and neither the claims set forth in the proposed amended complaint nor those in the original complaint state a claim upon which relief can be granted. The Court emphasizes that this ruling is founded upon a close reading of the Teaming Agreement, the two complaints, and the applicable legal authorities, and it is not premised upon defendant’s allegations of bad faith. 1

BACKGROUND

FFC is a government contractor that provided services to the SBA relating to three risk oversight programs. Compl. ¶¶ 6-7. FFC is “in the business of providing financial services to its clients” such as “auditing, consulting, taxes, and other services.” Id. ¶12. In March of 2014, SBA held a “Pre-Solicitation Conference” in advance of soliciting bids for the “7a Guaranteed Loan Program.” Id. ¶¶ 6, 14; see also Ex. 2 to Compl. [Dkt. # 1-2] 2 at 8 *382 (SBA PowerPoint from the March'2014 meeting describing the program). The purpose of-the conference was to “allow prospective bidders the opportunity to gain a better understanding of the objective of the solicitation,” and to “offer[] SBA an opportunity to stress the importance of the significant elements of the Request for Proposal.” Compl. ¶ 21; Ex. 2 to Compl. at 6. FFC was the incumbent contractor for the program, and both FFC and Corvus attended the March 2014 meeting. Compl. ¶ 6.

Two months later, FFC agreed to meet with Corvus to discuss a potential teaming agreement to bid on the RFP discussed at the March 2014 meeting together. Compl. ¶¶ 8, 25, 27. 3 On May 9, 2014, they entered into the contract at the heart of this case, entitled “Teaming Agreement.” Compl. ¶¶ 31, 33; Ex. 5 to Compl. [Dkt. 1-7] (the “Agreement” or “TA”). The Agreement stated that the SBA had “issued a Request for Proposal, RFP Number SBAHQ-14-R-0003 ... for SBA 7A Risk Oversight Support Services (“the Program”),” 4 and that the parties sought to enter into an arrangement for the preparation and submission of a proposal. TA Recitals ¶¶ A-B. The Teaming Agreement contemplated that if Corvus was selected by the SBA as the prime contractor on RFP-3, and if the “performance thereof require[d] the services of [a subsidiary] as set forth in the proposal,” Corvus would “offer to [FFC] a subcontract for such services and the parties [would] in good faith negotiate a mutually acceptable subcontract for such services.” TA ¶2. The contract contains a termination provision in which the parties agreed that the Teaming Agreement would terminate upon notice that RFP-3 had been awarded to another contractor. TA ¶ 3(B). The Agreement was also explicit about its scope: “[t]his Agreement shall relate only to the Program specified herein, and nothing herein shall be deemed to ... confer any right or impose any obligation or restriction on either party with respect to any other program ....” TA ¶ 7(A).

The Teaming Agreement contained several other provisions relevant to this litigation. First, the Agreement contained a non-solicitation provision: both parties agreed that, for a period of one year following the termination of the Agreement, neither would “actively solicit, employ or otherwise engage any of the other party’s employees (including former employees) who were involved in the proposal.” TA ¶ 11. The Agreement also included two provisions related to proprietary information: the parties agreed in paragraph 4 to keep any proprietary information exchanged in the performance of the agreement confidential and to use it only in connection with their obligations under the agreement, and in paragraph 12, they defined “confidential information,” and each agreed not to disclose or use confidential information received from the- other for its own use for a period of two years. Id. ¶¶ 4; *383 12(B), (E), (K). 5

On September 22, 2014, the parties received a Notice of Award announcing that the contract had been awarded to another bidder. See Ex. 10 to Compl. [Dkt. # 1-10]; Compl. 1156 (alleging that the contract for the 7a Program was awarded to Garcia & Ortiz, P.A.).

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Cite This Page — Counsel Stack

Bluebook (online)
174 F. Supp. 3d 378, 2016 U.S. Dist. LEXIS 41683, 2016 WL 1258462, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fuentes-fernandez-company-psc-v-corvus-group-inc-dcd-2016.