Reliance Insurance v. United States

38 Cont. Cas. Fed. 76,494, 27 Fed. Cl. 815, 1993 U.S. Claims LEXIS 302, 1993 WL 80507
CourtUnited States Court of Federal Claims
DecidedMarch 22, 1993
DocketNo. 387-87C
StatusPublished
Cited by4 cases

This text of 38 Cont. Cas. Fed. 76,494 (Reliance Insurance 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
Reliance Insurance v. United States, 38 Cont. Cas. Fed. 76,494, 27 Fed. Cl. 815, 1993 U.S. Claims LEXIS 302, 1993 WL 80507 (uscfc 1993).

Opinion

OPINION

HORN, Judge.

BACKGROUND

This case is before the court on defendant’s motion to dismiss claims three through twelve of plaintiff’s complaint and for summary judgment on claims one and two of plaintiff’s complaint, and on defendant’s supplemental motion to dismiss claims one and two. Plaintiff invokes jurisdiction of this court pursuant to 28 U.S.C. § 1491 (1982), and 41 U.S.C. § 609 (1982). In its original dispositive motion, defendant contends that claims three through twelve of the complaint should be dismissed for lack of jurisdiction pursuant to 41 U.S.C. § 605(c)(1) (1982), and that the court should grant summary judgment for the defendant on claims one and two of the complaint. Defendant’s supplemental motion, however, contends that claims one and two of plaintiff’s complaint also should be dismissed for lack of jurisdiction.

Defendant alleges that although claims one and two of the complaint were certified, the balance of the claims were not. Defendant further asserts that what is framed in the complaint as ten separate claims (claims three through twelve) actually arose from a common set of operative facts and, therefore, should be considered as one claim. If these claims are addressed as “one claim,” the total amount of the claim would exceed $50,000.00, in which case, defendant contends, the claim should have been certified, as required by the Contract Disputes Act. 41 U.S.C. § 601 et seq. (1982). Claims one and two were originally the subject of defendant’s motion for summary judgment, however, after the decision in Reliance Ins. Co. v. United States, 23 Cl.Ct. 108 (1991), the defendant filed a supplemental motion to dismiss claims one and two alleging that the certification for those two claims was defective.

[817]*817As is more fully discussed below, the defendant’s motion to dismiss claims three through twelve of plaintiff’s complaint is DENIED and defendant’s motion to dismiss plaintiff’s claims one and two is GRANTED.

FACTS

On September 28, 1983, the United States Department of Agriculture (USDA), Food Safety and Inspection Service (FSIS) entered into prime contract # 50-5721-3-21 with the Small Business Association (SBA) for the installation of laboratory furniture and equipment at the FSIS Western Laboratory in Alameda, California, for an initial contract price of $1,023,400.00. On the same day, by contract # 98320496, the SBA subcontracted the work to H.T. Engineers and Contractors, Inc. (H.T. Engineers), to “fulfill and perform all of the requirements of contract No. 50-5721-3-21 for the consideration stated herein.”

As required by the Miller Act, 40 U.S.C. § 270a et seq. (1982), H.T. Engineers secured the necessary bonds. Plaintiff, Reliance Insurance Company (Reliance) issued both a performance bond (in the amount of $1,023,400.00) and a payment bond (in the amount of $511,700.00) on September 28, 1983 as surety for contract #98320496. The bonds were signed by Terrence T. Casey, attorney-in-fact for Reliance, and H.T. Liu, president of H.T. Engineers.

The notice to proceed with the project appears to have been sent to H.T. Engineers on July 16, 1984, and work on the project began on August 6,1984. The original agreement between H.T. Engineers and the SBA called for completion of the project within 120 calendar days from the commencement of the work for a price of $1,023,400.00. After numerous problems at the work site, a meeting was held on February 14, 1985 to address the failure of H.T. Engineers to perform. Kenneth Huber (contracting officer), Kenneth Dunn (contracting officer’s representative) and H.T. Liu (president of H.T. Engineers) were present at the meeting. At the meeting, a 10-day cure notice was delivered to H.T. Liu who was told that H.T. Engineers would be terminated for default if the conditions detailed were not cured within ten (10) days. On February 15, 1985, Huber and Dunn met with Terrence Casey, attorney-in-fact for Reliance, to inform him of the contract status. Huber wrote in his “trip report”:

[w]e met with Terry Casey of the bonding company & went over contract status. We gave him copies of invoices that are known to be outstanding. This equals almost $130,000. Terry said they are gearing up for take over, but cannot do anything until the termination is in effect. They would like to keep the same crews on for continuity. He said we should hold the $54,000.00 we have in Finance.

By letter dated February 20, 1985, Terrence Casey informed Pete Fjellstad at Reliance of the meetings taking place and the possibility of declaring H.T. Engineers in default. Casey wrote “The tone of the meeting [the February 25, 1985 meeting with Casey] was friendly. The government people struck me as reasonable and fair.” The minutes in the record taken by Kenneth Huber reflect that on February 25, 1985 he talked to Mr. Stebbins of the bonding company and told him of the impending default. Stebbins told Huber to contact Gerald Knecht, Reliance’s representative.

On February 25, 1985, USDA/FSIS terminated H.T. Engineers for default and called upon the surety to complete the project. At the time of default, the contract had undergone eleven change orders and H.T. Engineers had received seven progress payments totaling $810,815.13. One pending progress payment was withheld during the cure/default period. At the time of default, the contract had a total value of $1,215,489.79 and a completion date of January 31, 1985.

By letter dated April 3, 1985, Rodoni-Beeker Company, Inc. (Rodoni-Becker), a construction contractor, which Reliance anticipated hiring to complete the project following the takeover, sent its “in-depth” [818]*818review of the project to Gerald R. Knecht, attorney for Reliance. In that review Rodoni-Becker reported that “[t]he status of the project appears deceptively further along than it actually is.” The report estimated costs for completion of the project at $472,767.00. On April 5, 1985, Knecht responded to Rodoni-Becker’s review, writing, “[t]his letter will constitute acceptance upon behalf of our client, Reliance Insurance Company, of your proposal dated April 3, 1985____” Thereafter, Reliance entered into a takeover agreement with the USDA on April 17, 1985 to complete the work on the Alameda project. This agreement named Rodoni-Becker as the agent/contractor for Reliance and stated that a completion date would be agreed upon later.

Following the completion of the project, Reliance submitted uncertified claims to the contracting officer in the following amounts:

CLAIM NO. DESCRIPTION AMOUNT

1 Premature Payment $315,211.00

2 Fume Hood-Ductwork Connections 8,549.24

3 Fume Hood Exhaust Air Fans 27,860.57

4 Director’s Office Ceiling 1,040.20

5 Extension of Time

7 Reinforcing Duct Penetrations 7,225.00

8 Explosion Proof Fittings 1,184.59

9 Lower Ceiling in Room 17 974.00

10 Damaged Air Deflectors 2,340.00

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Bluebook (online)
38 Cont. Cas. Fed. 76,494, 27 Fed. Cl. 815, 1993 U.S. Claims LEXIS 302, 1993 WL 80507, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reliance-insurance-v-united-states-uscfc-1993.