Merchants' Funding Group v. United States

40 Cont. Cas. Fed. 76,805, 33 Fed. Cl. 445, 1995 U.S. Claims LEXIS 101, 1995 WL 294573
CourtUnited States Court of Federal Claims
DecidedMay 16, 1995
DocketNo. 92-100C
StatusPublished
Cited by2 cases

This text of 40 Cont. Cas. Fed. 76,805 (Merchants' Funding Group 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
Merchants' Funding Group v. United States, 40 Cont. Cas. Fed. 76,805, 33 Fed. Cl. 445, 1995 U.S. Claims LEXIS 101, 1995 WL 294573 (uscfc 1995).

Opinion

ORDER

LYDON, Senior Judge:

In this contract case, plaintiff, as the alleged assignee of a government contractor, seeks to recover certain proceeds from that contract, which, plaintiff alleges, were wrongfully paid by the government to the assignor contractor rather than to plaintiff. Defendant has moved for summary judgment contending that the government properly paid the proceeds in issue to the contractor because plaintiff had failed to comply timely with certain requirements of the Assignment of Claims Act, 31 U.S.C. § 3727 (1988), and 41 U.S.C. § 15 (1988). Plaintiff has cross moved for summary judgment maintaining that it did comply with the Assignment of Claims Act. Upon consideration of the submissions of the parties and oral argument, the court grant’s defendant’s motion for summary judgment and denies plaintiff’s cross-motion for summary judgment.

I

Plaintiff is a corporation organized and existing under the laws of the State of Arizona. It is in the business of providing financing for small businesses, many of which are engaged in government contracts. The [446]*446court understands that plaintiff is presently in bankruptcy. At oral argument, counsel for plaintiff advised that plaintiff had obtained approval from the Bankruptcy Court to proceed with this litigation.

On or about June 29,1987, the Sacramento Air Logistics Center, McClellan Air Force Base, California (SALC) entered into a fixed price contract with John E. Rogers Engineering Co., Inc., (Rogers) for the manufacture of six spring assemblies. The Contract Purchase Order was identified as No. FO4606-87-M-3915. The original contract price was $16,128, with delivery of the springs to be in accordance with the delivery schedule set forth in the contract. Payment was to be made on completion of delivery of the springs. The original date for delivery was November 29, 1988. However, as a result of contract modifications, signed by the parties to the contract, the delivery schedule was extended, with corresponding reductions in the contract price.1

Contract No. FO4606-87-M-3915 (Rogers’ contract) was signed by Karen L. Petering as “Contracting Officer.” Block 15 of the contract stated “Payment Will Be Made By DCASR [Defense Contract Administrative Service Region], Los Angeles, P.O. Box 45011-0011, Los Angeles CA 90045-6197.” It would appear that this Payment Block address was subsequently changed on more than one occasion after the Department of Defense switched to “Electronic Funds Transfer Payment Methods.”2

On June 7, 1990, a determination was made by the Administrative Contracting Officer (ACO) to institute termination for default proceedings since Rogers had failed to deliver the springs, even after receiving several extensions of time. Accordingly, the Rogers’ contract file was forwarded by the office of the ACO to the office of the Termination Contracting Officer (TCO). While the TCO was investigating the basis for such action, Rogers delivered five spring assemblies on or about July 15, 1990, and the remaining spring assembly on July 30, 1990. Because the springs were eventually delivered, the government aborted termination proceedings. On August 13, 1990, the Payment Office official responsible for verifying and making payments to Department of Defense contractors signed a check for $12,444.79, covering the delivery of five springs made out to Rogers for work on Contract Purchase Order No. FO4606-87-M-3915. On or about August 17, 1990, Rogers received and cashed the above check which proceeds Rogers refused to turn over to plaintiff. Thereafter, Rogers filed for bankruptcy. Plaintiff suggests that a second cheek in payment for delivery and acceptance, on July 30, 1990 of the sixth spring, was made on or about August 22, 1990.

Although Rogers entered into its contract with SALC on June 29,1987, it was not until June 21, 1989 that Rogers and plaintiff executed a document labeled “Assignment Of Government Contract” (Assignment). At oral argument, counsel for plaintiff explained the two year delay in forwarding the Notice of Assignment as due to an agreement between plaintiff and Rogers that the Notice of Assignment would not be forwarded to the government until plaintiff received “all the funding” necessary to complete the contract. The text of the June 21, 1989 Assignment stated, inter alia, that all moneys and claims for amounts due Rogers under “contract [447]*447J241-87-M-3915” were assigned by Rogers to plaintiff. The text also advised that a copy of the contract was attached to the document. The text of this document also provided in pertinent part:

The Assignor covenants and agrees that in the event it shall receive payment of any moneys assigned hereby, it will forthwith pay and deliver the same to MFG in precisely the form received and, until so paid over and delivered, will hold the same in trust for MFG, and will not commingle the same with _ any funds of the Assignor.

This Assignment was not submitted to the government until August 8,1990, over a year after its execution by Rogers and plaintiff. It should also be noted that the contract identified in the assignment, “No. J241-87M-3915” was not the contract in issue, i.e., “No. FO4606-867-M-3915.” Plaintiff asserts that this inconsistency is simply a typographical mistake.

Plaintiff, by letter dated August 8, 1990, signed by Richard Rock (Rock) an employee of plaintiff, to “Karen L. Petering, Contracting Officer,” stated:

Pursuant to our telephone conversation today, I am overnighting you the original signed and notarized assignment of government contract, a copy of the contract there mentioned, and an acknowledgment sheet. Upon your advice, I am sending a copy of all to the payment center, DCASR Los Angeles. (Emphasis added.)
I ask that, if at all possible, in a timely fashion I receive a signed copy of the acknowledgment sheet to complete my files.

By letter dated August 8, 1990 to “Greg Shubert [sic], [whom plaintiff believed was the disbursing or payment officer] DCASR, Los Angeles, P.O. Box 45011-0011, Los Angeles, CA 90045-6197,” Rock wrote:

Pursuant to our telephone conversation today, I am overnighting you a copy of the contract, the signed and notarized assignment of the government contract and an acknowledgment sheet. For your information, I have sent the originals of the same to the contracting officer. I ask that, if at all possible, in a timely fashion I receive a signed copy of the acknowledgment sheet to complete my files.

Although the letters did not refer to a specific contract number, each letter included a copy of the Rogers’ contract. While plaintiff in each letter set forth above requested a signed copy of acknowledgement, the government never formally acknowledged receipt of the assignment.

Plaintiff maintains that these two letters complied with the statutory requirement of the Assignment of Claims Act, 41 U.S.C. § 15, which requires that Notice of the Assignment be sent to both the contracting officer and to the disbursing officer. See also 48 C.F.R.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Nelson Construction Co. v. United States
79 Fed. Cl. 81 (Federal Claims, 2007)
Rochester Gas & Electric Corp. v. United States
65 Fed. Cl. 431 (Federal Claims, 2005)

Cite This Page — Counsel Stack

Bluebook (online)
40 Cont. Cas. Fed. 76,805, 33 Fed. Cl. 445, 1995 U.S. Claims LEXIS 101, 1995 WL 294573, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merchants-funding-group-v-united-states-uscfc-1995.