EXTREME COATINGS, INC. v. USA

Filing 11

PUBLISHED OPINION on 8 MOTION to Dismiss pursuant to Rule 12(b)(6) Counts I, II, III, IV, V, & portions of Count IX of the Complaint filed by USA ; denying 8 Motion to Dismiss - Rule 12(b)(6). Defendant shall file an ANSWER, or otherwise respond to the complaint, by 3/22/2013. Signed by Judge Lynn J. Bush. (TQ) Copy to parties.

In the United States Court of Federal Claims
No. 12-516 C
(Filed February 26, 2013)
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EXTREME COATINGS, INC.
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Plaintiff,
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v.
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THE UNITED STATES,
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Defendant.
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Contract Dispute;
RCFC 12(b)(6);
Elements of a Differing Site
Conditions Claim;
“Act of God” Weather
Conditions.

* * * * * * * * * * * * * * * *
Michael H. Paine, Philadelphia, PA, for plaintiff. Lane F. Kelman,
Philadelphia, PA, of counsel.
Alex P. Hontos, United States Department of Justice, with whom were Stuart
F. Delery, Principal Deputy Assistant Attorney General, Jeanne E. Davidson,
Director, Steven J. Gillingham, Assistant Director, Washington, DC, for defendant.
____________________________
OPINION AND ORDER
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BUSH, Judge.
The court has before it defendant’s motion for partial dismissal, brought
under Rule 12(b)(6) of the Rules of the United States Court of Federal Claims
(RCFC). The motion challenges Counts I-V, and a portion of Count IX, of the
complaint. Def.’s Mot. at 1. Plaintiff’s suit is a not atypical contractor claim for
monetary relief brought under the Contract Disputes Act of 1978, 41 U.S.C.A.
§§ 7101–7109 (West 2011) (CDA). Compl. ¶ 3. Defendant’s motion is not
persuasive and must be denied.

BACKGROUND1
Plaintiff Extreme Coatings, Inc. (ECI) was awarded a contract valued at
$705,368.35 on June 3, 2009 to perform “partial recoating of the downstream side
of the spillway radial gates at Yellowtail Dam [on Big Horn Lake], located
approximately forty-five (45) miles southwest of Hardin, Montana.” Compl. ¶¶ 4,
12, 151. The contracting agency was the United States Department of the Interior,
Bureau of Reclamation (Bureau). The project was to proceed in two phases. Phase
I was to take place within 120 days from the issuance of the Notice to Proceed,
which, in this case, meant that ECI was to finish Phase I by October 10, 2009. Id.
¶¶ 14, 16-18. Phase II was to take place during a forty-five (45) day window
which would be triggered by lower water levels (and this window would likely not
occur until 2010). Id. ¶¶ 7-8, 15. Phase II of the project was eventually scheduled
for April 14, 2010 through May 29, 2010. Id. ¶ 63.
According to plaintiff, neither Phase I nor Phase II was performed within the
schedule set forth in the contract, and government-caused delays were costly to
ECI. Compl. at 4-13. The complaint contains numerous allegations of fault
attributed to the government, but a lengthy recitation of plaintiff’s allegations is not
needed here. On May 23, 2011, ECI filed a certified claim with the contracting
1

/ The court makes no findings of fact in this opinion. The facts recited here are taken
from the complaint. Although defendant invites the court to consider an exhibit attached to its
reply brief, the court declines to do so, for two reasons. See Def.’s Reply at 7 & n.2 (discussing
an attached appendix of “relevant portions of [plaintiff’s] contract”). First, when considering a
motion filed under Rule 12(b)(6), the court typically limits its inquiry to the facts alleged in the
complaint. See Am. Contractors Indem. Co. v. United States, 570 F.3d 1373, 1376 (Fed. Cir.
2009) (“On a motion to dismiss, the court generally may not consider materials outside the
pleadings.”) (citations omitted); Advanced Cardiovascular Sys., Inc. v. Scimed Life Sys., Inc.,
988 F.2d 1157, 1164 (Fed. Cir. 1993) (stating that “on motion to dismiss on the complainant’s
pleading it is improper for the court to decide the case on facts not pleaded by the complainant,
unless the complainant had notice thereof and the opportunity to proceed in accordance with the
rules of summary judgment”) (citations omitted). Second, defendant raised its argument
regarding the “relevant portions” of plaintiff’s contract only in its reply brief. This argument is
thus not properly before the court. See Arakaki v. United States, 62 Fed. Cl. 244, 246 n.9 (2004)
(“The court will not consider arguments that were presented for the first time in a reply brief or
after briefing was complete.” (citing Novosteel SA v. United States, 284 F.3d 1261, 1274 (Fed.
Cir. 2002); Cubic Def. Sys., Inc. v. United States, 45 Fed. Cl. 450, 467 (1999))). The court
therefore shall rule on defendant’s motion without further reference to the “relevant portions” of
plaintiff’s contract attached to defendant’s reply brief.
2

officer requesting an equitable adjustment of the contract amount. Id. ¶ 97. This
claim was apparently denied in large part, although an adjustment of $28,500 was
provided through a unilateral modification to the contract. Id. ¶¶ 99-100.
On August 15, 2012, ECI filed its CDA claims in this court. The complaint
is divided into Counts I-IX. The court adopts plaintiff’s shorthand list which
provides the nature and subject of the claim presented in each count:
Count I – Type I Differing Site Conditions
(Design & Configuration of the Vertical Side Seal
Assembly)
Count II – Type II Differing Site Conditions
(Hardness or Rigidity of the Existing Rubber Seal Side
Seals)
Count III – Type II Differing Site Conditions
(Excessive Rust on Side Seal Retainer Bar)
Count IV – Type II Differing Site Conditions
(Rust Encountered Under the Existing Layer of Paint
During Sandblasting Operations)
Count V – Type I Differing Site Conditions
(Upper Pool Water Elevations)
Count VI – Constructive Changes
(Suspension of Work)
Count VII – Constructive Changes
(Reinstall Temporary Water Impediment Measures)
Count VIII – Defective Designs and Specifications
Count IX – Delays for which the Government is
Responsible.

3

Pl.’s Opp. at 6-7 (formatting altered). The court reserves its discussion of
defendant’s challenges to Counts I-V, and to a portion of Count IX, for the analysis
section of this opinion.
DISCUSSION
I.

Standard of Review for a Motion Filed under RCFC 12(b)(6)

It is well-settled that a complaint should be dismissed under RCFC 12(b)(6)
“when the facts asserted by the claimant do not entitle him to a legal remedy.”
Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002). When considering
a motion to dismiss brought under RCFC 12(b)(6), “the allegations of the
complaint should be construed favorably to the pleader.” Scheuer v. Rhodes, 416
U.S. 232, 236 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457
U.S. 800, 814-15 (1982). The court must inquire, however, whether the complaint
meets the “plausibility” standard described by the United States Supreme Court,
i.e., whether it adequately states a claim and provides a “showing [of] any set of
facts consistent with the allegations in the complaint.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 560, 563 (2007) (Twombly). “To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (Iqbal) (quoting Twombly, 550 U.S. at 570).
The United States Court of Appeals for the Federal Circuit has not
specifically addressed the magnitude of the changes wrought by Twombly and
Iqbal. There are, however, enough references by the Federal Circuit to the postTwombly Rule 12(b)(6) standard to provide adequate guidance to this court in the
circumstances of this case.2 Here is a brief passage touching on the standard which
should be applied here:
We must presume that the facts are as alleged in the
complaint, and make all reasonable inferences in favor of
2

/ Many decisions of the Federal Circuit interpret regional circuit precedent as to
procedural matters, and these decisions do not necessarily state the Federal Circuit’s position on
procedural matters arising in this court. See, e.g., Riverwood Int’l Corp. v. R.A. Jones & Co.,
324 F.3d 1346, 1352 (Fed. Cir. 2003) (stating that “we apply the law of the regional circuit to the
procedural question” in a patent dispute arising in a district court) (citation omitted).
4

the plaintiff. To state a claim, the complaint must allege
facts “plausibly suggesting (not merely consistent with)”
a showing of entitlement to relief. The factual allegations
must be enough to raise a right to relief above the
speculative level. This does not require the plaintiff to
set out in detail the facts upon which the claim is based,
but enough facts to state a claim to relief that is plausible
on its face.
Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009) (quoting and citing
Twombly, 550 U.S. at 555-57, 570 and citing Gould, Inc. v. United States, 935 F.2d
1271, 1274 (Fed. Cir. 1991)). Similar brief renditions of the standard may be
found in a handful of precedential decisions of the Federal Circuit deciding appeals
arising from this court. See, e.g., Indian Harbor Ins. Co. v. United States, 704 F.3d
949, 954 (Fed. Cir. 2013) (citing Twombly, 550 U.S. at 557; Acceptance Ins. Cos.
v. United States, 583 F.3d 849, 853 (Fed. Cir. 2009); Cary, 552 F.3d at 1376;
Lindsay, 295 F.3d at 1257); Kam-Almaz v. United States, 682 F.3d 1364, 1367-68
(Fed. Cir. 2012) (citing Twombly, 550 U.S. at 555, 557; Papasan v. Allain, 478
U.S. 265, 286 (1986); Acceptance Insurance, 583 F.3d at 853); Acceptance
Insurance, 583 F.3d at 853 (citing Twombly, 550 U.S. at 557; Papasan, 478 U.S. at
286; Cambridge v. United States, 558 F.3d 1331, 1335 (Fed. Cir. 2009)).
The Federal Circuit has also engaged in discussions of the post-Twombly
standard in appeals from the United States Court of International Trade, in, for
example, Totes-Isotoner Corp. v. United States, 594 F.3d 1346, 1354-55 (Fed. Cir.
2010) (extensively quoting Twombly, 550 U.S. at 555-56 and citing Iqbal, 556 U.S.
at 677-80). The equal protection claim at issue in that case, however, is not at all
similar to the contract claims at issue in this suit. Thus, the application of the
standard in Totes-Isotoner may not be all that helpful in this case, because the postTwombly standard has frequently been described as context-specific in its
application. See, e.g., Iqbal, 556 U.S. at 679 (“Determining whether a complaint
states a plausible claim for relief will . . . be a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.”) (citation
omitted). In another Court of International Trade case, Sioux Honey Ass’n v.
Hartford Fire Ins. Co., 672 F.3d 1041, 1062-63 (Fed. Cir. 2012), the Federal
Circuit applied Twombly and Iqbal to claims that the government “failed to take
various actions required by law involving the assessment, collection, and
distribution of antidumping duties,” claims which also have little resemblance to
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the contract claims at issue here. Thus, the application of the standard in Sioux
Honey, too, provides little guidance in this case.
To further complicate precedent on this issue, the Supreme Court has issued
a number of decisions that discuss and interpret Twombly, and lower courts have
varied greatly in their interpretation of the post-Twombly Rule 12(b)(6) standard of
review. E.g., Dobyns v. United States, 91 Fed. Cl. 412, 422-28 (2010) (conducting
a thorough analysis of the impact of Twombly and Iqbal on this court’s standard of
review for RCFC 12(b)(6) motions). Although Dobyns is not binding on this court,
Judge Allegra’s analysis is informative. Rather than attempt to repeat the
extensive analysis in Dobyns here, the court instead quotes the concluding passage
which rendered the holding in that case:
[T]he court believes that this case, in the main, should
proceed. Research reveals breach-of-contract complaints
far less detailed than plaintiff’s that have survived
scrutiny under the dismissal standards outlined in
Twombly and/or Iqbal. While it goes without saying
(almost) that each case stands on the particulars of the
complaint at issue, these cases, nevertheless, collectively
belie the notion that a plaintiff must jump through
considerably more hoops now, in pleading a breach of
contract claim, than was the case previously. In this
court’s view, plaintiff’s contract claims have “enough
heft” to traverse the new “plausibility” standard,
Twombly, 550 U.S. at 557, 127 S. Ct. 1955, and enough
factual detail to put defendant on notice as to the basic
nature of the claims raised, so as to allow this case to
proceed to discovery.
91 Fed. Cl. at 430 (footnoted omitted).
As the court interprets these cases, Twombly and Iqbal are properly read to
establish a slightly more inhospitable review of the sufficiency of factual
allegations presented in a complaint. E.g., Dobyns, 91 Fed. Cl. at 427. Under
Twombly and Iqbal, the court must not mistake legal conclusions presented in a
complaint for factual allegations which are entitled to favorable inferences. See,
e.g., Sioux Honey, 672 F.3d at 1062 (“The Supreme Court explained in Twombly
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that while Rule 8 does not require ‘detailed factual allegations,’ it does require
more than ‘labels and conclusions.’” (citing Twombly, 550 U.S. at 555)).
Nonetheless, the requirement of facial plausibility should not be construed as a
revolutionary redrafting of the notice pleading requirement that a complaint
contain “a short and plain statement of the claim showing that the pleader is
entitled to relief.” RCFC 8(a)(2); see Dobyns, 91 Fed. Cl. at 428 (“Thus, the
Supreme Court did not, by requiring plausibility, transmogrify the ‘short and plain’
pleading requirement of Rule 8 into a pedantical one that requires the extensive
pleading of specific facts or every variation or corollary of a claim.”).
Furthermore, the court must not attempt to try plaintiff’s case on the basis of the
allegations in the complaint. See, e.g., Petro-Hunt, L.L.C. v. United States, 90 Fed.
Cl. 51, 71 (2009) (cautioning against the government’s attempt “to collapse
discovery, summary judgment and trial into the pleading stages of a case” (citing
Iqbal, 556 U.S. at 679; Twombly, 550 U.S. at 555)).
The following passage from Sioux Honey appears to capture the essence of
post-Twombly standard of review for motions brought under RCFC 12(b)(6):
To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
of relief that is plausible on its face. A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. The
plausibility standard is not akin to a probability
requirement, but it asks for more than a sheer possibility
that a defendant has acted unlawfully. Determining
whether a complaint states a plausible claim for relief
will . . . be a context-specific task that requires the
reviewing court to draw on its judicial experience and
common sense.
672 F.3d at 1062-63 (citing Iqbal, 556 U.S. at 678-79; Twombly, 550 U.S. at 55658, 570) (internal quotations omitted). In the government contracts context, this
standard requires a plaintiff to provide sufficient factual allegations in the
complaint to support success on the type of contract claim alleged in the complaint.
See, e.g., Todd Constr., L.P. v. United States, 656 F.3d 1306, 1317 (Fed. Cir. 2011)
(noting that for a claim alleging that a negative performance evaluation was
7

arbitrary and capricious, the contractor would “need to allege facts indicating that
all of [its] substantial [performance] delays were excusable”). The court now turns
to the application of this standard of review to defendant’s motion.
II.

Analysis
A.

The Differing Site Conditions Claims in Count I-V of the
Complaint

Defendant urges this court to dismiss plaintiff’s Counts I-V, the differing
site conditions claims, for failure to state a claim upon which relief may be
granted.3 As discussed above, the court must apply the post-Twombly standard of
review to defendant’s motion. Under this standard, defendant has not shown that
ECI’s factual allegations do not entitle plaintiff to a legal remedy on its differing
site conditions claims. See Lindsay, 295 F.3d at 1257.
1.

The Parties’ Arguments as to the Standard of Review

Both parties cite to the correct standard of review discussed supra, with little
substantive analysis of how the standard must be applied in the context of
defendant’s motion. See Def.’s Mot. at 4-6; Pl.’s Opp. at 8. Defendant provides
two citations to RCFC 8(a). Def.’s Mot. at 4 (“Under RCFC 8(a), a pleading must
contain ‘a short and plain statement of the claim showing that the pleader is
entitled to relief.’” (quoting RCFC 8(a)(2)); id. at 6 (stating that “[ECI’s] pleadings
must allege facts that, if later proven, would entitle it to relief” (citing RCFC
8(a)(2)). These citations do little to advance the analysis required here.
Plaintiff points the court to Gould for its holding as to the sufficiency of
pleadings in a complaint dismissed for failure to state a claim. Pl.’s Opp. at 8.
Relying on a prior version of RCFC 8(a)(2), the Federal Circuit vacated this court’s
dismissal of a count of a contractor’s complaint for failure to state a claim. Gould,
935 F.2d at 1276. The defect in the complaint, according to the trial court, was a
failure to specifically allege that a contract specification was misleading. Id. at
1275. The Federal Circuit held, instead, that the complaint’s allegation of

3

/ Defendant does not address Counts VI-VIII in its motion, and these counts will not be
discussed further in this opinion.
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“‘deficiencies in the performance specification,’” in support of a claim of superior
knowledge withheld by the United States, was all that was needed at the motion to
dismiss stage of the litigation. Id. at 1276. Gould continues to be cited as good
law, see, e.g., Cary, 552 F.3d at 1376, and the court agrees with plaintiff that there
is no obvious defect in the factual allegations in the complaint, under either RCFC
8(a)(2) or Gould.
2.

The “Temporal” Element of Differing Site Conditions
Claims

The more substantive issue before the court is whether, under Twombly and
Iqbal, plaintiff has provided factual allegations that support the facial plausibility
of its differing site conditions claims. Defendant’s RCFC 12(b)(6) challenge to the
differing site conditions claims in Counts I-V rests upon the implied proposition
that a differing site conditions claim is facially implausible unless the complaint
specifies when each differing site condition was in existence. See Def.’s Mot. at 1
(“To state a viable claim for a differing site condition, a contractor must allege
facts showing that the differing condition existed at the time of contract
execution.”). Defendant seeks to generalize the holdings in three cases discussing
the point in time a differing site condition must have been in existence, so as to
create a rigorous pleading standard for differing site conditions claims.
Defendant’s rigorous pleading standard is not supported by the cases upon which
defendant relies, and, even if it were, Counts I-V, accorded all favorable
inferences, would survive the test created by defendant.
a.

Elements of Type I and Type II Differing Site
Conditions Claims

Defendant and plaintiff both rely on the same case, Randa/Madison Joint
Venture III v. Dahlberg, 239 F.3d 1264 (Fed. Cir. 2001), to describe the requisite
elements of differing site conditions claims. Def.’s Mot. at 5-6; Pl.’s Opp. at 9.
Randa/Madison defines Type I differing site conditions as
“subsurface or latent physical conditions at the site which
differ materially from those indicated in this contract.”
239 F.3d at 1269 (quoting 48 C.F.R. § 52.236-2 (2000)). The Federal Circuit also
noted that to prevail on a Type I differing site conditions claim, “‘the contractor
9

must prove, by a preponderance of the evidence, that the conditions indicated in
the contract differ materially from those it encounters during performance.’” Id. at
1274 (citations omitted). A later case from the Federal Circuit defines four
elements required to prevail on a Type I differing site conditions claim:
First, the contractor must prove that a reasonable
contractor reading the contract documents as a whole
would interpret them as making a representation as to the
site conditions. . . . Second, the contractor must prove
that the actual site conditions were not reasonably
foreseeable to the contractor, with the information
available to the particular contractor outside the contract
documents, i.e., that the contractor “reasonably relied” on
the representations. . . . Third, the contractor must prove
that the particular contractor in fact relied on the contract
representation. . . . Fourth, the contractor must prove that
the conditions differed materially from those represented
and that the contractor suffered damages as a result . . . .
Int’l Tech. Corp. v. Winter, 523 F.3d 1341, 1348-49 (Fed. Cir. 2008) (International
Technology) (citations omitted).
Randa/Madison defines Type II differing site conditions as
“unknown physical conditions at the site, of an unusual
nature, which differ materially from those ordinarily
encountered and generally recognized as inhering in
work of the character provided for in the contract.”
239 F.3d at 1276 (quoting 48 C.F.R. § 52.236-2 (2000)). The Federal Circuit
noted further that there are three elements required to prevail on a Type II differing
site conditions claim:
“the unknown physical condition must be one that could
not be reasonably anticipated by the contractor from his
study of the contract documents, his inspection of the
site, and his general experience[,] if any, as a contractor
in the area.”
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Id. (quoting Perini Corp. v. United States, 381 F.2d 403, 410 (Ct. Cl. 1967))
(alteration in original). This court has sometimes adopted a different three-element
test for a Type II differing site conditions claim. See, e.g., All Power, Inc. v.
United States, 60 Fed. Cl. 679, 685 (2004) (“A Type II differing site condition
depends on the existence of three elements – (1) the condition must be unknown to
the contractor; (2) unusual; and (3) materially different from comparable work.”
(citing Kiewit Constr. Co. v. United States, 56 Fed. Cl. 414, 417 n.8 (2003)));
Lathan Co. v. United States, 20 Cl. Ct. 122, 128 (1990) (“A Type II claim requires
plaintiff to show three elements. First, plaintiff must show that it did not know
about the physical condition. Second, plaintiff must show that it could not have
anticipated the condition from inspection or general experience. Third, plaintiff
must show that the condition varied from the norm in similar contracting work.”
(citing Perini, 381 F.2d at 410; S.T.G. Constr. Co. v. United States, 157 Ct. Cl.
409, 415 (1962))). For the court’s purposes here, the court adopts the
three-element standard stated in Randa/Madison, but notes the utility of the other
formulations employed by this court.
The court notes that none of these cases describing the elements of proof for
Type I or Type II differing site conditions claims mentions the element of proof
proposed by defendant in its motion, which would add a fifth required element, a
“temporal” element, for Type I claims, and a fourth required element, the same
“temporal” element, for Type II claims.
b.

Defendant’s Reliance on a Trio of Holdings to
Require that a Temporal Element Be Pled in All
Differing Site Conditions Claims

Defendant suggests that Counts I-V of the complaint fail to state a claim
because plaintiff has neglected to specifically allege that the differing site
conditions identified in the complaint were in existence at the time of contract
formation. See Def.’s Mot. at 1 (“Because ECI’s complaint lacks factual
allegations that each differing site condition existed at the time of contract
execution, . . . the Court should dismiss those portions of ECI’s complaint for
failure to state claims upon which the Court can grant relief.”). Thus, the court
must determine whether defendant has correctly identified a heightened pleading
standard, or whether the requirement identified by defendant should be applied, as
needed, to evidence provided by the parties at some later point in the litigation of
differing site conditions claims.
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Defendant relies on three precedential decisions binding on this court for the
proposition that “there is a temporal aspect to a differing site condition claim.”
Def.’s Mot. at 6 (punctuation altered). These cases are: Olympus Corp. v. United
States, 98 F.3d 1314, 1316-18 (Fed. Cir. 1996); Turnkey Enters., Inc. v. United
States, 597 F.2d 750, 759 (Ct. Cl. 1979); and John McShain, Inc. v. United States,
375 F.2d 829, 833 (Ct. Cl. 1967). See Def.’s Mot. at 6-7; Def.’s Reply at 1, 3-4.
The Federal Circuit’s discussion of differing site conditions in Olympus makes it
clear that there is a temporal limitation on differing site conditions claims:
Our precedent has long imposed a temporal limitation on
the applicability of the Differing Site Conditions clause
. . . . Th[is] clause[] ha[s] only been applied to
conditions existing when a contract was executed, not to
those that developed during performance.
98 F.3d at 1317.
The Federal Circuit noted that the differing site conditions alleged by the
contractor in Olympus were oil contamination of the contractor’s work-site and a
labor strike, and that both of these events occurred after the contract was awarded
to the contractor (and after a notice to proceed had issued). Id. at 1315, 1318. In
these circumstances, the Federal Circuit concluded that the government could not
be held liable for differing site conditions which were not in existence at the time
the contract was awarded.4 Id. at 1318.
Turnkey and John McShain are similar cases. In Turnkey, there was
adequate river water for the contractor’s purposes at the time of contract formation,
and inadequate river water at a later point during contract performance. 597 F.2d
at 758-59 & n.18. In the circumstances of that case, after discrediting the
contractor’s evidence as to the timing of the reduced river water phenomenon, the
Court of Claims held that the inadequate river water was not a differing site
condition because the condition occurred after contract execution. Id. at 754 n.11,
758 n.18, 759. In John McShain, the contractor asserted that a cave-in at its
excavation, which was caused by a broken water main that was the fault of neither

4

/ The Federal Circuit also held that labor strikes are not differing site conditions and that
strikes cannot support a claim founded solely on a differing site conditions contract clause.
Olympus, 98 F.3d at 1318.
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the contractor nor the United States, was a differing site condition. 375 F.2d at
831-33. The Court of Claims noted that break in the water main, and the cave-in,
were conditions that occurred near the end of contract performance, not at the time
of contract formation. Id. at 833. For this reason, the cave-in was not a differing
site condition. Id.
The court is not convinced that the temporal limitation on differing site
conditions claims identified by defendant, as evidenced by the holdings in these
three cases, constitutes an element of proof of such general applicability that the
precedential four-part test for Type I differing site conditions claims, and the
precedential three-part test for Type II differing site conditions claims, must, in
effect, be expanded. While the court agrees that a temporal limitation to differing
site conditions is applicable in appropriate circumstances, see Olympus, 98 F.3d at
1317, this temporal limitation may have variations or exceptions which preclude its
application or requirement as a heightened pleading standard. For example, in
Olympus the Federal Circuit noted that the Court of Claims, in one instance,
considered the temporal limitation to cover conditions in existence at the time of
the issuance of a notice to proceed, rather than those in existence at the time of
contract execution. See id. (citing Hoffman v. United States, 340 F.2d 645, 648-51
(Ct. Cl. 1964)). Furthermore, in Turnkey the Court of Claims noted that in a
previous case, the court had approved a finding of a “changed condition,” similar
to a differing site condition, which was in existence not at the time of contract
formation but at the time the contractor discovered that he was denied access to
valuable water in a pond near the contractor’s work-site. See 597 F.2d at 759
(citing Briscoe v. United States, 442 F.2d 953 (Ct. Cl. 1971); Hoffman, 340 F.2d at
651). Thus, although defendant has correctly identified a temporal limitation as
generally applicable to differing site conditions claims, this limitation, unlike the
precedential tests to establish Type I and Type II differing site conditions claims, is
not a bedrock hurdle at the notice pleading level.
In any case, the court notes that Counts I-IV of the complaint all refer to
allegedly latent conditions that, when accorded favorable inferences, were likely in
existence at the time ECI was awarded the contract. See Pl.’s Opp. at 2 (arguing
that “the Court could reasonably infer from the pleadings that the differing site
conditions did in fact exist prior to the entry of the Contract”). Even Count V,
which appears to focus on unexpectedly high water levels occurring from “late
summer [through] early winter of 2009,” Compl. ¶ 158, references higher than
expected water levels in May and June 2009, id. ¶¶ 152, 157, which is around the
13

time the contract was executed and the notice to proceed was issued, id. ¶¶ 12, 16.
According all favorable inferences to the allegations in Count V, the temporal
limitation discussed in Olympus, Turnkey and John McShain, as tempered by
Briscoe and Hoffman, does not foreclose recovery by plaintiff for the differing site
conditions claim stated in Count V of the complaint.5 Thus, even when the
temporal limitation of differing site conditions claims is considered by the court,
Counts I-V survive a challenge under RCFC 12(b)(6) because these claims are
plausible differing site conditions claims.
Plaintiff argues, and the court must agree, that the temporal limitation on
differing site conditions claims has more relevance once the factual record of a
case has been developed. None of the cases relied upon by defendant for the
temporal limitation “element” was decided upon a motion to dismiss. In this
regard, plaintiff states that “[n]one of the cases cited by the Government establish a
requirement that a plaintiff must specifically allege in the complaint that differing
site conditions existed at the time that the contract was executed.” Pl.’s Opp. at 12.
Defendant concedes that Olympus, Turnkey and John McShain “were not decided
at the motion-to-dismiss phase” of litigation. Def.’s Reply at 3. In light of the
four-part test for Type I differing site conditions claims, and the three-part test for
Type II differing site conditions claims, and in light of defendant’s failure to cite a
single case where a motion to dismiss was granted for failure to allege that the
differing site conditions mentioned in the complaint were in existence at the time
of contract formation, the court holds that Counts I-V of the complaint are not
defective, under Twombly and Iqbal, for failure to include the temporal allegations
sought by defendant.
B.

“Act of God” Weather Conditions

Defendant seeks dismissal of Count V, and a portion of Count IX, because
these claims rely on the impact of high water levels on the contract work and
schedule. Defendant’s argument rests on two assumptions that cannot be verified
by reference to the complaint. The first is that the government did not warrant or
affirmatively represent the water levels that would be encountered by ECI at the
dam. Def.’s Reply at 7 (stating that “the contract provides no support for [ECI’s]
interpretation that the Government ‘warranted’ the water level of Big Horn Lake or
that it agreed to maintain a certain level for contract performance”). The second is
5

/ The court does not address the merits of plaintiff’s claims in this opinion.
14

that the high water levels at the dam were the result of an act of God. Def.’s Mot.
at 8 (stating that “the alleged high water in Big Horn Lake, which is fed by the Big
Horn River and its tributaries, is an act of God”). Neither of defendant’s
assumptions are necessarily true when favorable inferences are accorded the
factual allegations in the complaint.
Government estimates in a solicitation, at times, provide information that
influences the contractor’s bid and, under certain circumstances, these estimates
may give rise to a Type I differing site conditions claim. E.g., Travelers Cas. &
Sur. Co. of Am. v. United States, 75 Fed. Cl. 696, 719 (2007). Here, plaintiffs
assert that the contract “affirmatively represented the conditions with regard to the
. . . water elevations” at the dam. Compl. ¶ 151. This assertion rests upon two
factual allegations: statements in the solicitation regarding average water
elevations at the dam, and statements by the Bureau at a pre-bid site visit as to the
water levels that ECI would encounter during contract performance. Id. ¶¶ 152,
155. According all favorable inferences to plaintiff’s allegations of fact, the court
cannot decide, at this juncture, whether ECI reasonably interpreted the contract “as
making a representation as to the [water levels to be encountered at the dam].”6
International Technology, 523 F.3d at 1348. The court therefore cannot accept
defendant’s assumption, for the purposes of its “act of God” challenge to Count V
and a portion of Count IX, that no representation that could support a Type I
differing site conditions claim was made by the government as to the water levels
at the dam. The court now turns to defendant’s second assumption, i.e., the “act of
God” nature of the high water levels encountered by ECI.
The term “act of God” is typically applied, in the government contract
context, to occurrences of unusually severe weather conditions, such as abnormal
heat, drought, high winds, excessive rains, or flooding. See, e.g., Fru-Con Constr.
Corp. v. United States, 43 Fed. Cl. 306, 328 (1999) (examining whether contract
performance in that case was affected by an act of God in the form of “[u]nusually
severe heat conditions”); L & A Jackson Enters. v. United States, 38 Fed. Cl. 22,
43 (1997) (discussing whether “an Act of God in the form of unusually rainy
weather” had occurred so as to interrupt contract performance in that case). As to
defendant’s contention that the high water levels at the dam were the result of an

6

/ It is appropriate to note that the only claim approved by the contracting officer was the
one related to “ECI’s claim for the differing site conditions encountered with respect to the
[high] water elevations.” Compl. ¶ 99.
15

“act of God,” this assumption, too, cannot be confirmed merely by reference to the
complaint. The complaint repeatedly mentions the high water levels encountered
in 2009 and 2010 at the dam, but not once suggests that these levels were the result
of unusual weather.7 See Compl. ¶¶ 7-8, 60-61, 79, 99, 150, 155-64, 191-92.
Although plaintiff concedes that some portion of its high water level claims
in Counts V and IX is weather-related, ECI quite clearly argues that “[t]here is no
factual basis for this Court to conclude that the weather related delays in this matter
were caused by ‘acts of God.’” Pl.’s Opp. at 12. In addition, plaintiff argues that
because water levels at a dam are subject to government control, these water levels
cannot be attributed, necessarily, to an act of God.8 Id. at 13. Furthermore,
plaintiff notes that some of the weather-related high water levels encountered at the
dam were seasonal in nature, and ECI’s problems with high water levels could be
attributed not to an act of God but to multiple government-caused delays in
contract performance which pushed the schedule into an unfavorable time of the
year. Id. at 13-14.
The court agrees with plaintiff that issues of fact cloud the high water level
differing site conditions and delay claims. According favorable inferences to the
factual allegations supporting Count V and Count IX of the complaint, the high
water level claims are not necessarily barred by precedent regarding acts of God
and unusual weather conditions. For these reasons, defendant’s RCFC 12(b)(6)
challenge to the high water claims in Counts V and IX, reviewed under the postTwombly standard discussed supra, has not shown that these claims are merely
speculative or are otherwise facially implausible. Defendant’s RCFC 12(b)(6)
challenge to the high water claims in Counts V and IX is denied.

7

/ The court need not address defendant’s many citations to “act of God” cases. Here,
the factual predicate for defendant’s legal argument, that unusual weather caused the high water
levels at the dam, is not among the factual allegations in the complaint. Because it is not certain
that unusual weather, or an act of God, underlies plaintiff’s high water level claims, the cases
cited by defendant discussing unusual weather conditions are inapposite.
8

/ Defendant’s motion argues, in a final footnote, that plaintiff has not attributed the high
water levels at the dam to any act or fault of the government. Def.’s Mot. at 9 n.5. Plaintiff
responded that “there is an intrinsic question of fact with respect to the Government’s ability to
utilize the dam to control water elevations.” Pl.’s Opp. at 16. The court, according all favorable
inferences to the factual allegations in the complaint, cannot assume that the government had no
liability for the high water levels encountered by ECI at the dam.
16

CONCLUSION
Defendant’s motion to dismiss Counts I-V, and a portion of Count IX of the
complaint, is denied, for the reasons stated in this opinion.
Accordingly, it is hereby ORDERED that
(1)

Defendant’s Motion to Dismiss Counts I, II, III, IV, V and Portions of
Count IX of Plaintiff’s Complaint, filed October 12, 2012, is
DENIED; and

(2)

Defendant shall FILE an Answer, or otherwise respond to the
complaint, on or before March 22, 2013.

/s/ Lynn J. Bush
LYNN J. BUSH
Judge

17