KDH Corp. v. United States

37 Cont. Cas. Fed. 76,087, 23 Cl. Ct. 34, 1991 U.S. Claims LEXIS 150, 1991 WL 67523
CourtUnited States Court of Claims
DecidedApril 30, 1991
DocketNo. 558-86C
StatusPublished
Cited by11 cases

This text of 37 Cont. Cas. Fed. 76,087 (KDH Corp. 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
KDH Corp. v. United States, 37 Cont. Cas. Fed. 76,087, 23 Cl. Ct. 34, 1991 U.S. Claims LEXIS 150, 1991 WL 67523 (cc 1991).

Opinion

OPINION

NETTESHEIM, Judge.

Defendant has moved to dismiss or, in the alternative, for partial summary judgment.1 The case was reassigned to this judge on November 2, 1990, after completion of briefing. Subsequently, argument was held during which defendant raised a new—its third—bar to the Claims Court’s exercising jurisdiction, to wit, that the contractor’s claim had not been submitted to the contracting officer, as required by the Contract Disputes Act of 1978, 41 U.S.C. § 605(a) (1988) (the “CDA”). Since on the date of argument this new issue was on appeal after argument in Dawco Construction Inc. v. United States, 18 Cl.Ct. 682 (1989), appeal docketed, No. 90-5074 (Fed. Cir. Apr. 6, 1990), plaintiff’s counsel suggested suspending the case until guidance was received from the appeals court. The Federal Circuit rendered its decision in Dawco on April 3, 1991, No. 90-5074, 930 F.2d 872 (Fed.Cir.1991), aff'g in part, rev’g in part, and remanding 18 Cl.Ct. 682, holding that submission of a claim to the resident officer in charge of construction was “submitted” as required by section 605(a) of the CDA. Dawco, at 880. After Dawco issued, defendant advised that also pending before the Federal Circuit is a permutation of the same issue—whether a claim must be directed to the contracting officer because section 611 of the CDA requires that interest begins to accrue from the date on which the contracting officer receives the claim, pursuant to section 605(a), from the contractor. Neal & Co., Inc. v. United States, 19 Cl.Ct. 463, appeal docketed, No. 90-5108 (Fed.Cir. June 7, 1990). Mercifully—since plaintiff had filed this case in 1986—defendant also advised that instead of a further stay the court may decide the case .on the jurisdictional arguments that have been briefed fully. Def’s Br. filed Apr. 17, 1991, at 4 nn. 1 & 2. Those issues are whether after the death of one co-venturer the remaining co-venturer may maintain a suit in the name of the joint venture without substituting a proper party having the right to continue the action and under what circumstances a co-venturer in its individual capacity permissibly may certify a contract claim for a joint venture contractor.

FACTS

KDH Corporation and Richard W. Bates, a joint venture (“plaintiff”), seeks an equitable adjustment of the joint venture’s contract with the United States Navy (the “Navy”). Plaintiff asserts that it is due an increase in contract price as a result of allegedly differing site conditions and purported ambiguities in the contract. Specifically, plaintiff seeks to recover overhead costs and labor overruns of $348,481.46, receive an extension of the contract time [36]*36for an additional 206 days, and obtain a release of liquidated damages.

On September 28, 1982, the Navy awarded plaintiff contract No. N 62474-82-C-D 705 for the construction of an integrated circuit facility in an existing concrete structure, Battery Ashbum North, Naval Ocean Systems Command, San Diego, California. The contract included demolishing portions of the structure; erecting new walls; providing roofing; and installing HVAC (heating/ventilation/air-conditioning); fire sprinkler, electrical, acoustical, and alarm systems. The original contract price was $817,719.00. As initially contemplated, contract performance consisted of a 150-day period, with a completion date of March 12,1983. Contract modifications extended the completion date to November 21, 1983, and increased the contract amount to $1,800,112.00.

During contract performance plaintiff encountered numerous alleged defects in the contract specifications resulting in 38 change orders for contract modifications. Plaintiff claims that it reached an accord with the Navy whereby plaintiff could later submit claims for Indirect/Impact Costs, notwithstanding the executed modification agreements. In its submitted cost proposals, plaintiff purportedly made an express reservation of the right to make future claims for costs. According to plaintiff, the parties understood that the cost proposals did not incorporate all costs sustained.

By letter dated March 25, 1986, the joint venture’s attorney submitted a certified claim “on behalf of the Joint Venture,” referred to as “KDH.”2 The claim letter stated:

The certification of this claim, duly executed by Richard W. Bates, appears below. On behalf of KDH, we hereby request that this claim be submitted to the Contracting Officer for a Final Decision, in accordance with Clause 6(e) of the subject Contract.

Mr. Bates signed the certification for KDH Corporation; he was designated as President. The Resident Officer in Charge of Construction (the “ROICC”) received the claim on April 7, 1986. The ROICC informed plaintiff that additional information, specifically a Form DD 633, was necessary to process the claim. Due to plaintiff’s delay in submitting a Form DD 633, an audit of its claim did not begin until July 31, 1986.

Plaintiff filed suit in the Claims Court on September 3, 1986, under section 605(c)(5) of the CDA, on the basis of the ROICC’s failure to issue a decision within the required 60 days. The case was suspended thereafter from March 6, 1987, to October 5,1987, because co-venturer Bates had died and because plaintiff’s financial records were “apparently inadvertently scattered to various locations when KDH Corporation closed its doors and ceased functioning as a viable business entity.” Plf’s Mot. filed Mar. 6, 1987, at 1-2. On November 16, 1987, the State of California, Secretary of State, Corporate Status Unit, suspended KDH Corporation’s corporate status. The case was suspended again at plaintiff’s request from December 11, 1987, through February 1, 1988, in order to enable plaintiff’s surety to determine whether to continue this suit. On November 3, 1989, the State of California, Secretary of State, Franchise Tax Board, suspended KDH Corporation for failure to pay its corporate taxes in 1988 and 1989.

DISCUSSION

By its motion to dismiss, defendant asserts that the Claims Court lacks jurisdiction to entertain this action, citing plaintiff’s want of the capacity to maintain the action and its failure to certify the claim properly. In evaluating a RUSCC 12(b)(1) motion, the court must accept as true any allegations of fact asserted by the non-movant. Scheur v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). However, plaintiff must establish jurisdiction. Reynolds v. Army & Air [37]*37Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir.1988).

1. Capacity

In order to establish jurisdiction in the Claims Court, a claimant must plead and prove that it has the capacity to file suit. Mather Constr. Co. v. United States, 201 Ct.Cl. 219, 225, 475 F.2d 1152, 1155 (1973) (per curiam) (motion to dismiss granted where corporate plaintiffs lacked capacity to sue under California law).

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Bluebook (online)
37 Cont. Cas. Fed. 76,087, 23 Cl. Ct. 34, 1991 U.S. Claims LEXIS 150, 1991 WL 67523, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kdh-corp-v-united-states-cc-1991.