New Valley Corp. v. United States

34 Fed. Cl. 703, 1996 WL 18465
United States Court of Federal Claims·Decided January 5, 1996·No. No. 94-785C·Published·Cited by 3 cases

Opinion

Amended and Corrected Opinion and Order 1

WEINSTEIN, Judge.

Plaintiff seeks damages, for breach of contract or a taking, arising from the government’s failure to launch a commercial payload due to revisions to the nation’s space policy following the shuttle “Challenger” disaster. Defendant has moved to dismiss this action because plaintiff did not exhaust the contractual administrative disputes process, or, in the alternative, because plaintiff contractually waived all claims for non-performance. After oral argument, defendant’s motion to dismiss is granted.

Facts

The National Aeronautics and Space Administration (“NASA”) began providing commercial satellite launch services on the space shuttle in 1981. Complaint (“Comp.”) If 12. In January 1984, plaintiff New Valley Corporation (then known as the Western Union Telegraph Company, but referred to herein in both capacities as “NVC”) entered into a Launch Services Agreement (“LSA”),2 with NASA under which NASA would use its “best efforts” to furnish launch and associated services for NVC’s communications satellites Westar VI and Westar VII (later renamed Westar VI-S) on the space shuttle. The LSA was to remain in effect until September 1995 or until both satellites were launched, whichever came first. Comp. H16; Comp. Ex. A at II-4 to -5.

From 1981 to 1986, NASA flew numerous successful shuttle missions carrying commercial payloads, including the mission launching Westar VI. Comp. WI 12, 15. Westar VI-S was assigned a “Firm Launch Date” of March 6,1986. Comp. H18. On January 24, 1986, the LSA was amended to provide a June 1986 launch date. Id. Four days later, on January 28, 1986, tragically, the shuttle Challenger was destroyed shortly after launch. Comp. It 28.

A presidential commission formed to investigate the Challenger accident concluded that the press of NASA’s commercial responsibilities was at least partly responsible for the improper decision to launch the Challenger. Comp. 1129. On August 15, 1986, the Presi[706] dent issued a statement announcing that “NASA will no longer be in the business of launching private satellites,” because this interfered with the development of United States private industry’s capacity to provide commercial launch services. Comp. 1139; Statement by the President, 22 Weekly Comp.Pres.Doc. 1103, 1104 (Aug. 15, 1986). At that time, forty-four commercial payloads containing satellites, including Westar VI-S, were ■ scheduled for launch under arrangements similar to the LSA. Comp. U 40 (citing White House Press Briefing (Aug. 15, 1986)).

Thereafter, the President received recommendations from the Working Group on Commercial Space of the President’s Economic Policy Council (“Space Working Group”), composed of, among others, the Departments of Commerce, Transportation, and Defense, and the Office of Management and Budget. Comp. UU34-35, 41; see Hughes Communications Galaxy, Inc. v. United States, 26 Cl.Ct. 123, 131 n. 10 (1992), rev’d on other grounds, 998 F.2d 953 (Fed.Cir. 1993). On September 25, 1986, the President’s Cabinet Secretary informed NASA that the President had accepted the Working Group’s recommendation not to launch any more private satellites, except those requiring launch from a manned vehicle, or having national security or foreign policy implications. Comp. 1T 42; see Hughes Communications Galaxy, Inc., 26 Cl.Ct. at 132.

On October 3,1986, NASA’s Associate Administrator for Space Flight informed NVC by telex that the new shuttle manifest included only such satellites, and that the Westar VI-S did not qualify for any exception to the ban on private satellites. Comp. Ex. C at 2. An October 30 letter from NASA’s General Manager to NVC stated,

This manifest, which reflects current White House policy and represents NASA’s judgment on how best to satisfy launch requirements, which far exceed current capacity, outlines the launch schedule through calendar year 1994. Unfortunately, within the priorities from which we have developed this manifest, it has not been possible to set a launch date for [Westar VI-S].
It appears almost certain that you will not be provided launch services either prior to or after your current contract expires in September 1995____
I wish to express our regret at having to inform you of our inability to accommodate your payload.

Comp. 1148.

On January 21,1987, NVC representatives met with NASA representatives to discuss NVC’s claim for compensation for losses caused by NASA’s failure to launch Westar VI-S. Comp. 1157; Pl.Opp. Ex. H at 1. NVC’s follow-up letter to the General Manager provided a written schedule of the costs (including indirect damages) to be recovered, totalling $38,596,964.3 Pl.Opp. Ex. H at 3; see id. at 1 (“As agreed, I am attaching a sheet listing some of these losses.”). In March 1987, NASA agreed to refund $4,783,-264 in progress payments and earnest money. Comp. U 58; PLOpp. Exs. K, L. Each party expressly reserved “any and all claims or rights it may have with respect to damages arising from the LSA.” Comp. U 58.

In May 1988, NVC sold Westar VI-S to Hughes Communications Galaxy, Inc. Comp. 1154, Exhibit F. It was launched commercially by Arianespace in October 1990. Comp. Ex. E at 1.

Seven years after the refund, on March 24, 1994, NVC wrote NASA demanding additional, unspecified and unquantified, damages. Comp. Ex. D. (It remains unclear whether the damages demanded by NVC in 1987 were diminished by the sale of Westar VI-S to Hughes.) NASA’s April 14 response noted that NVC’s receipt of a refund and its sale of Westar VI-S to Hughes raised questions of whether NVC had violated the anti-assignment clause of the LSA, Comp. Ex. A at VIII-1; see also Anti-Assignment Act, 31 [707] U.S.C. § 3727, or was entitled to the full measure of damages claimed in 1987. Comp. Ex. E. Nevertheless, while it believed there was no “basis for a ... damage claim,” NASA agreed to review NVC’s claim under the LSA disputes clause. Id.

On May 24, 1994, NVC wrote that it had not surrendered its claim to Hughes, but again did not specify or quantify the damages currently claimed, or the contractual basis for them. Comp. Ex. F. On August 3, NVC wrote the NASA Administrator, stating that, unless NASA quickly arranged to meet and discuss resolution of the March letter, NVC would consider the 60-day disputes procedures prescribed by Article XVIII of the LSA to have been exhausted. Comp. Ex. G. Again, however, no claim for specified damages, or any support for such a claim, was provided.

In October 1994, NVC filed suit claiming a breach of contract and the taking of property without just compensation, asserting damages of thirty million dollars, including the lost revenue from its sale of Westar VI-S, “reconfiguration costs,” expenses and expenditures unreimbursed by NASA and “increased launch support services and insurance costs.” Comp. 1152.

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New Valley Corp. v. United States, 34 Fed. Cl. 703, 1996 WL 18465 (uscfc 1996).

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