June 30, 1993

Appeal of

HOTEL SYSTEMS, INC.

Under Contract Nos. 489990-87-V-A001, 482271-86-V-A007, 489990-87-V-A008, 482271-84-V-A018, 482271-86-V-A095, 482271-85-V-A020

PSBCA Nos. 3253-3258

 

APPEARANCE FOR APPELLANT:

G. Michael Gruber, Esq.

 

APPEARANCE FOR RESPONDENT:

Mark E. Dennett, Esq.

 

OPINION OF THE BOARD ON MOTION FOR RECONSIDERATION

 

            Respondent has requested that the Board reconsider its March 29, 1993 denial of Respondent's motion for summary judgment in these appeals.  The appeals are from the contracting officer's refusal to consider on their merits Appellant's claims for damage to vehicles it leased to the Postal Service.  In its motion, Respondent argued that the appeals must be denied as a matter of law because the damage claims were filed beyond the sixty-day period allowed in the contract and the Postal Service was prejudiced by the delay.  As there remained genuine issues of material fact regarding the effect of the filing delays on the ability of the Postal Service to defend each of the damage claims, we denied the motion.[1]  Hotel Systems, Inc., PSBCA Nos. 3253-3258, 1993 WL 105304, March 29, 1993.

            In its request for reconsideration, Respondent argues that the decision of the United States Court of Appeals for the Federal Circuit in Do-Well Machine Shop, Inc. v. United States, 870 F.2d 637 (Fed. Cir. 1989), a case not cited or relied upon in Respondent's motion for summary judgment, requires that Appellant's late-filed claims be barred as a matter of law, regardless of prejudice to the government resulting from the delay.

            Appellant opposes the request for reconsideration, arguing that Do-Well is distinguishable on its facts and that it does not require that Appellant's claims be rejected under the circumstances before the Board in these appeals.

            In Do-Well, the court considered the requirement in the standard government Termination for Convenience clause that claims under the clause be filed within one year of the termination for convenience.  The contractor in Do-Well asserted that the claim limitations period in the Termination for Convenience clause was invalid because it was inconsistent with the Contract Disputes Act of 1978 ("CDA") which does not impose a limitations period.  The court held that the government, just as a private contracting party, can limit the remedies of a party with whom it contracts and that language in government contracts that establishes a deadline for filing claims does not contravene the CDA.  The court affirmed the denial of the contractor's late termination for convenience claim.  Do-Well Mach. Shop, Inc. v. United States, 870 F.2d at 641.

            The court in Do-Well addressed only the one-year limitation[2] applicable to termination for convenience claims, a provision afforded strict enforcement well before the Federal Circuit's decision.  See, e.g., Mictronics, Inc., ASBCA No. 30262, 85-2 BCA ¶ 18,119 (and cases cited therein).  We are not persuaded that in its consideration of the issue before it (whether the one-year claim limitations period contravened the CDA) the court also determined that all deadlines in government contracts must be strictly enforced, regardless of prejudice to the government, an issue that was not before it.  The latter conclusion would have reversed the long practice of boards and courts to decline to read various claim notice and presentation provisions in government contracts as an absolute bar to noncomplying claims.  E.g. Hoel-Steffen Constr. Co. v. United States, 456 F.2d 760 (Ct. Cl. 1972); Berkeley Constr. Co., Inc., PSBCA No. 1153, 85-3 BCA ¶ 18,254 at 91,629.  A number of post-Do-Well decisions have continued the previous practice of denying strict enforcement of time limits in contract provisions where no prejudice to the government is shown, e.g. Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 2859-2862, 92-1 BCA ¶ 24,444; Jake Sweeney Auto Leasing, Inc., PSBCA No. 2918, 91-3 BCA ¶ 24,161; M & M Builders, Inc., PSBCA No. 2886, 91-2 BCA ¶ 24,039; Michael, Inc., ASBCA No. 35653, 92-1 BCA ¶ 24,412; Kokosing Constr. Co., EBCA No. 439-2-90, 91-1 BCA ¶ 23,508; Sky Top Plastics, Inc., GSBCA Nos. 7000, 7110, 7116, 91-1 BCA ¶ 23,350; contra Stone Forest Indus., Inc. v. United States, 26 Cl.Ct. 410 (1992), or where the government was already aware of the operative facts underlying the claim, e.g. Meisel Rohrbau, ASBCA No. 35566, 92-1 BCA ¶ 24,434; C.M. Lowther, Jr., ASBCA No. 38407, 91-3 BCA ¶ 24,296; Sky Top Plastics, Inc., supra; Kokosing Constr. Co., supra.  Based on this state of the law and the record before us, we do not read Do-Well as requiring that Appellant's late claims be barred without a showing of prejudice to the Postal Service resulting from the late filings.

            Additionally, in Do-Well the Federal Circuit considered contract language that provided a deadline for filing a claim and stated the consequence of missing the deadline.  The language of the Termination for Convenience clause considered in Do-Well provided that the contractor could appeal under the Disputes clause the contracting officer's determination on the contractor's termination for convenience claim, "except that if the Contractor has failed to submit his claim within the time provided in paragraph (c) [the one-year period] . . . and has failed to request extension of such time, he shall have no such right of appeal."  Do-Well Mach. Shop, Inc., ASBCA No. 36090, 88-3 BCA ¶ 20,994 at 106,073.  Therefore, under the language of the contract in Do-Well, the contractor could not appeal the contracting officer's failure to act on its late-filed claim.  See Stone Forest Indus., Inc. v. United States, 26 Cl.Ct. at 412 (The claims court applied Do-Well to bar a late claim under a timber purchase contract clause that provided, "Failure by [contractor] to submit a claim within these time limits shall relinquish the United States from any and all obligations whatsoever arising under said contract or portions thereof . . . .").  However, in finding the language of the Termination for Convenience clause an effective bar to the contractor's late claim, the court did not conclude that a contract provision stating a deadline but not expressing the consequence of missing the deadline would also constitute a bar to late claims.  See Universal Dev. Corp., GSBCA Nos. 12138, 12139, 1993 WL 159996, May 11, 1993.

            The Liability Provision in Appellant's contracts, on the other hand, states a time limit for filing vehicle damage claims but does not state the consequence of missing the deadline.  The clause does not, unlike the clause considered in Do-Well, deny the contractor's right to pursue late claims.[3]   To establish with certainty the effect of missing the claim deadline would require examination of additional factual information regarding the parties' intentions and understandings, and, thus, summary judgment on the record before us is not appropriate.  See Northway Development, Inc., PSBCA No. 1453, 86-2 BCA ¶ 18,998; Marine Design Technologies, Inc., ASBCA No. 39391, 93-1 BCA ¶ 25,220 at 125,629-30; Big Chief Drilling Co. v. United States, 15 Cl.Ct. 295, 300 (1988); D & S Universal Mining Co., Inc. v. United States, 4 Cl.Ct. 94, 96 (1983).

            The request for reconsideration is denied.

Norman D. Menegat

Administrative Judge

Board Member

 

I concur:

James A. Cohen

Administrative Judge

Chairman

 

I concur:

James D. Finn, Jr.

Administrative Judge

Vice Chairman


[1]In addressing this request for reconsideration, we incorporate and refer to the findings made in the March 29, 1993 opinion.  For convenience of reference, however, we restate the pertinent language of the contracts' Liability Provision:

 

"The Contractor shall file a claim with the Contracting Officer within sixty days after the earliest of the following dates:

 

(1)  the date that the vehicle is returned to the custody of the Contractor or agent for servicing, repair, or as a result of termination or expiration of the contract, . . ." (Finding 2)

 

[2]In its opposition to the request for reconsideration, Appellant argues that Do-Well is distinguishable as the court considered a one-year claim limitations period while the limit in Appellant's contracts is a much shorter sixty-day period.  In view of our discussion below, we do not address this argument.

[3]Evidence in the record suggests that the sixty-day filing period was not interpreted as an absolute bar by the Postal Service before this request for reconsideration was filed.  The contracting officer mentioned in his final decisions that the contractor had failed to offer any reason for the late filing and that if the Postal Service had been put on notice that the claims would be delayed, they might have been considered (Finding 7).  The contracting officer's apparent willingness to consider late claims under appropriate circumstances, the suggestion in the Smith Declaration that claims filed within a reasonable time after expiration of the sixty-day limit could be considered (Smith Declaration ¶ 15) and evidence that late claims on other vehicle hire contracts have been considered on their merits (Findings 11-14) raise issues of fact regarding the intended consequence of filing damage claims late.