There's still no guarantee of a fair hearing in a contract dispute
More than just creating obstacles and annoyances, the process can leave a party, often the contractor, without any remedy. A limited partnership called Bonneville Associates found itself in this position when its contract to renovate an office building in Las Vegas and sell it to the government went sour. Of the $10 million purchase price, about $2 million had been dedicated to repairs and alterations. The government found the repairs unsatisfactory and assessed $5 million in damages.
More than just creating obstacles and annoyances, the process can leave a party, often
the contractor, without any remedy.
A limited partnership called Bonneville Associates found itself in this position when
its contract to renovate an office building in Las Vegas and sell it to the government
went sour.
Of the $10 million purchase price, about $2 million had been dedicated to repairs and
alterations. The government found the repairs unsatisfactory and assessed $5 million in
damages.
Bonneville filed a timely appeal following the contracting officers final
decision with the General Services Board of Contract Appeals. But apparently, the
contractor almost immediately began to question whether the board truly had jurisdiction
over its appeal. GSBCA can rule on disputes over construction contracts but not over
contracts to acquire propertyand this contract had elements of both.
Bonneville promptly asked the board to dismiss the appeal so it could file in court.
The board dismissed it without prejudice. Under the boards rules, the dismissal
would convert to one with prejudice after three years.
Bonneville immediately filed suit in the Court of Federal Claims, again within the
statutory time limit. The court has jurisdiction over both construction and real property
disputes, so surely the case could proceed without being sidetracked over whether
Bonneville was in the right forum.
Wrong. The court dismissed the case on the governments motion without ever
hearing the merits. The court reasoned that when Bonneville first appealed to GSBCA, it
had elected its remedy. Under the judge-made doctrine, the contractor only gets one chance
to choose where it will appeal.
One wrinkle was that this doctrine would only apply if the board did have jurisdiction
over the case, in spite of the contracts dual nature. The Court of Federal Claims
determined that the filing at the board was proper and dismissed Bonnevilles case.
Bonneville appealed the dismissal but lost.
Thrown out of court, Bonneville returned to GSBCA. Because less than three years had
elapsed, its dismissal there was still without prejudice. Or was it?
The government again moved to have Bonnevilles case dismissed, this time on the
ground that it had been filed after the 90-day time limit for such appeals. The hapless
contractor pointed to its original timely appeal and the dismissal without prejudice.
The board, however, chose to interpret its rules differently. A dismissal without
prejudice, it said, didnt necessarily mean that the case could be revived. In these
circumstances it was as if the case had never been filed. Because the time limit had
passed before the so-called second appeal was filed, the board dismissed the case and
refused to hear the dispute.
Bonneville had one last hope. It went to the Court of Appeals for the Federal Circuit,
the same court which had ruled against it on the election-of-remedies issue. But the
appellate court agreed that Bonnevilles case at the board was untimely and could not
be heard.
A dissenting board judge best described Bonnevilles predicament as a catch-22.
The claims court had no jurisdiction to get to the merits of the case because the
contractor filed [at the board] first, but
the board has no jurisdiction because
Bonneville effectively never filed here until recently, he wrote.
The contractor had been booted out of court for filing an appeal to a case the courts
said never existed. The contractor had filed two timely appeals, but it would never get
its day in court.
Various opinions note the need for narrowly construing waivers of sovereign immunity
and that time and other limits in the Contract Disputes Act need to be strictly enforced.
But this is mere window-dressing. Nothing in the act mandates Bonnevilles loss of
rights. The company was entirely the victim of judge-made rules.
What was lost in the legal briar patch was the purpose of the Contract Disputes Act: to
give an aggrieved contractor a fair forum for dispute resolution. To ensure that goal is
still viable, Congress must return to the act and clear this latest obstacle.
Joseph J. Petrillo is an attorney with the Washington law firm of Petrillo &
Powell, PLLC. E-mail him at jpetrillo@counsel.com.
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