Reliance Insurance v. United States

37 Cont. Cas. Fed. 76,090, 23 Cl. Ct. 108, 1991 U.S. Claims LEXIS 170, 1991 WL 73595
CourtUnited States Court of Claims
DecidedMay 8, 1991
DocketNo. 27-88C
StatusPublished
Cited by4 cases

This text of 37 Cont. Cas. Fed. 76,090 (Reliance Insurance 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
Reliance Insurance v. United States, 37 Cont. Cas. Fed. 76,090, 23 Cl. Ct. 108, 1991 U.S. Claims LEXIS 170, 1991 WL 73595 (cc 1991).

Opinion

OPINION

LYDON, Senior Judge:

This government contract case is before the court on defendant’s motion to dismiss plaintiff's complaint for lack of subject matter jurisdiction, pursuant to RUSCC 12(b)(1), which plaintiff opposes. At issue is whether plaintiff, Reliance Insurance Company (Reliance), properly certified its claim for an equitable adjustment to the contract before submitting it to the contracting officer for final decision. Reliance maintains that its claim was properly certified by an assistant vice-president of bond claims, who was also a bond claims regional manager. After careful consideration of the parties’ submissions, oral argument having been heard on May 7, 1991, the court grants defendant’s motion to dismiss for lack of jurisdiction.

FACTS

The following facts pertinent to the jurisdictional issue now before the court are not in dispute. The contractor Sonaz Construction Company (Sonaz) entered into a contract with the United States Postal Service (Postal Service) on April 13,1984, to build a new postal facility at the Diamond Bar station in Pomona, California (Diamond Bar project), for the sum of $1,296,560. On April 18,1984, Sonaz, as principal, executed [110]*110performance and payment bonds with plaintiff Reliance Insurance Company (Reliance), as surety, for the amount of the contract.

The construction contract contains the following “Claims and Disputes” clause:

d) For contractor claims of more than $50,000, the contractor shall submit with the claim a certification that: (i) the claim is made in good faith; (ii) supporting data are accurate and complete to the best of the contractor’s knowledge and belief; and (iii) the amount requested accurately reflects the contract adjustment for which the contractor believes the Postal Service is liable____ If the contractor is not an individual, the certification shall be executed by a senior company official in charge at the contractor’s plant or location involved; or by an officer or general partner of the contractor having overall responsibility for the conduct of the contractor’s affairs. ... (emphasis added)

On May 7, 1984, Sonaz began work on the Diamond Bar project. During the performance of the contract, Reliance became aware that Sonaz was having financial difficulties when Sonaz sent Reliance a telegram. In the telegram, Sonaz indicated it was having financial difficulties immediately affecting two projects bonded by Reliance, and that those difficulties could extend to three other projects bonded by Reliance, one of which was the Diamond Bar project. After investigating the financial problems of Sonaz, Reliance sent a telegram to the Postal Service on June 21, 1984, advising it to withhold contract funds from Sonaz. Sonaz claims it was forced to stop work on the Diamond Bar project because the Postal Service thereafter withheld contract funds on the advice of Reliance. Sonaz left the Diamond Bar project on June 25, 1984 and did not return to it. Although representatives of Sonaz, Reliance and the Postal Service subsequently tried to make financial arrangements so Sonaz could complete the postal facility contract, those efforts were unsuccessful, and the Postal Service terminated Sonaz for default on September 6, 1984.

Thereafter, Reliance assumed its obligation as surety to complete the project, and executed a takeover agreement with the Postal Service on November 20, 1984. Under the takeover agreement, Reliance agreed to complete the Diamond Bar project in accordance with the terms of the original construction contract between So-naz and the Postal Service. Also on November 20, 1984, Reliance entered into a completion agreement with a construction contractor, John R. Hundley Construction, Inc. (Hundley). Both the takeover agreement and the completion agreement were executed by R.M. Laursen (Laursen) on behalf of Reliance. Laursen was a bond claims representative at that time in Reliance’s Tacoma (Federal Way), Washington regional office. Gary Judd (Judd) assisted Laursen with the Diamond Bar project and other Sonaz claims. When Laursen left Reliance, Judd assumed responsibility for the Diamond Bar project. Throughout performance of the contract, Reliance’s correspondence to Hundley and the Postal Service concerning the Diamond Bar project was signed by either Laursen or Judd, as bond claims representatives.

During the course of Reliance’s performance of the contract, a dispute arose between Reliance and the Postal Service concerning extra work required to complete the project. On April 8,1986, Reliance and Hundley submitted a claim to the contracting officer for an equitable adjustment of $394,865 and a time extension of ninety-seven days. The claim was accompanied by plaintiff’s purported certification as follows:

We hereby certify that the claim as prepared by Global Construction Services, Inc. and presented by our attorney George Mitchel, of Booth, Mitchel, Strange & Smith,
a. [sic] Made in good faith.
b. That the supporting data is accurate and complete to the best of our knowledge.
c. That the amount requested accurately reflects the contract adjustment for which we believe the Government (USPS) is liable.
[111]*111d. That the undersigned is an officer of Reliance Insurance Company and is duly authorized to execute this Certificate.

The statement was signed “H.H. Stebbins, Assistant Vice-President—Reliance Insurance Company.” Mr. H.H. Stebbins (Steb-bins) worked for Reliance in its Tacoma, Washington office for twenty years until his retirement in 1989. At the time Reliance submitted its claim to the contracting officer, Stebbins was an assistant vice-president of bond claims in Reliance’s Tacoma, Washington office, and he was also Bond Claims Manager for Reliance’s western region, which covered ten or eleven states, including California, the location of the Diamond Bar project.

At all times relevant to this dispute, Reliance’s corporate headquarters were located in Philadelphia, Pennsylvania, but its operations were managed through three regional offices in Philadelphia, Kansas City and Tacoma. The western region was managed by the Tacoma office and covered ten or eleven states, including California, the location of the Diamond Bar project. Reliance provided typical insurance services as well as fidelity and surety bonding. Bonds represented six to seven percent of Reliance’s premiums. The bond department was divided into claims and underwriting.

In the Tacoma office, Stebbins’ managerial authority was limited to making decisions concerning bond claims for the western region. Another manager (ostensibly Vincent Fasano) handled decisions relating to bond underwriting for the western region. It is not clear from the record whether Stebbins was in complete charge of operations at the Tacoma office, or whether Stebbins shared that responsibility with the Bond Underwriting Manager. The record does indicate that, by 1989, Fa-sano had been promoted to Vice-President (Claims) at the Philadelphia headquarters.

Stebbins supervised seven to nine bond claims representatives, including Laursen and Judd. According to Stebbins, he reported directly to the vice-president in charge of bond claims in Philadelphia, Mr. Ruck, who made national managerial decisions on bond claims.

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Cite This Page — Counsel Stack

Bluebook (online)
37 Cont. Cas. Fed. 76,090, 23 Cl. Ct. 108, 1991 U.S. Claims LEXIS 170, 1991 WL 73595, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reliance-insurance-v-united-states-cc-1991.