WOLF CREEK RAILROAD LLC v. USA

Filing 19

UNREPORTED OPINION GRANTING 8 Motion to Dismiss - Rule 12(b)(1) and (6). The Clerk is directed to enter judgment. Signed by Judge Carolyn N. Lerner. (btd) Service on parties made.

In the United States Court of Federal Claims
WOLF CREEK RAILROAD, LLC,
Plaintiff,
v.
THE UNITED STATES,

No. 23-1684
(Filed: March 26, 2024)

Defendant.

Lewis Philip Rhodes, Reston Law Group LLP, Reston, VA, for Plaintiff.
Sean Kelly Griffin, Civil Division, United States Department of Justice, Washington, DC, for
Defendant.
OPINION AND ORDER
LERNER, Judge.
This matter comes before the Court on the Government’s Motion to Dismiss for lack of
subject-matter jurisdiction and failure to state a claim. Mot. to Dismiss, ECF No. 8. For the
reasons below, the Court GRANTS the Motion to Dismiss.
I.

Background

The United States Army Joint Munitions Command (“Army” or “JMC”) owns the Milan
Army Ammunition Plant (“MLAAP”), a government facility near Milan, Tennessee. Compl. at
1–2, ECF No. 1. In 2008, the Army awarded American Ordnance, LLC (“AO”) Contract No.
W52P1J-09-E-0001 (“Facility Contract” or “Prime Contract”), which required AO to provide
operations and maintenance services for MLAAP. Id. at 2; Mot. to Dismiss, Attach. A, ECF No.
8-1. The Army also issued Basic Ordering Agreement No. W52P1J-09-G-0001 (“BOA”) to AO,
which allowed it to acquire operation and maintenance services beyond the specified tasks in the
Facility Contract. Mot. to Dismiss, Attach. B at 4, ECF No. 8-2. The BOA included a statement
of work for the Armament Retooling and Manufacturing Support (“ARMS”) initiative. Id. at 15.
The Government could authorize AO to use government facilities in support of third-party
agreements under the Facility Contract. Mot. to Dismiss at 7. The BOA also expressly stated
that the Government was not a party to tenant use agreements (“TUA”) entered by AO under the
Facility Contract. Mot. to Dismiss, Attach. B, at 17, ECF No. 8-2.
In 2018, AO requested authorization from the Army to contract with Plaintiff Wolf Creek
Railroad, LLC (“WCRR”) to operate a rail system at MLAAP. Mot. to Dismiss, Attach. C, ECF

No. 8-3; Attach. E, ECF No. 8-5 (“WCRR’s TUA”). The Army approved this request but
required the contract to be construed as a TUA. Mot. to Dismiss, Attach. D, at 1, ECF No. 8-4.
The Government reserved the right to cancel the approved use if MLAAP was closed, sold, or
transferred outside the Department of the Army. Id. at 3. Any cancellation would be at no cost
to the Government. Id. Additionally, the Government required the TUA to stipulate that it could
not be held liable if WCRR ceased operations because of changes in MLAAP’s status. Id. On
June 5, 2018, AO entered a twenty-five-year TUA with WCRR (TUA No. AO 18-0002) with an
optional twenty-five-year extension. WCRR’s TUA.
Two years later, in 2019, the Army notified AO that it was ending the “current mission
needs for the entirety of MLAAP.” Compl. Ex. 4, ECF No. 1-4. This notice instructed AO to
“cease all [Armament Retooling and Manufacturing Support] efforts” and listed Patrick Lootens
as the point of contact for further inquiries. Compl. Ex. 4. AO then directed WCRR to cease
soliciting new leases at MLAAP. Compl. at 4. On April 26, 2021, the Army rescinded
authorization for MLAAP facilities under all the TUAs. Id.; Compl. Ex. 5, ECF No. 1-5
(substituting David Deanda as the primary point of contact). As a result, AO terminated its TUA
with WCRR. Compl. at 4.
WCRR alleges that it submitted a claim letter via email to the Army Contracting Officer
(“CO”) on May 30, 2023, seeking damages from the TUA’s termination. Id. at 5; Pl.’s Resp. to
Mot. to Dismiss (“Pl.’s Resp.”) at 5, ECF No. 11. In the same email, WCRR attached a
document titled “Claim Certification.” Pl.’s Resp., Ex. 1, Attach. A, at 3, ECF No. 11-1. The
Army did not respond to the email. Compl. at 5. WCRR claims that it followed up with the
Army on August 1, 2023, and September 5, 2023, and both times the Army did not respond. Id.
On September 29, 2023, WCRR filed the instant Complaint alleging both breach of
contract and the covenant of good faith and fair dealing. Compl. at 5–6. In response, the
Government moved to dismiss the Complaint for lack of subject-matter jurisdiction and failure to
state a claim. Mot. to Dismiss. The Government argues that the Court must dismiss this action
for two independent reasons: 1) WCRR failed to properly submit a certified claim, and 2) WCRR
cannot establish privity of contract with the Government. Id. at 9.
II.

Legal Standards
A.

Jurisdiction

The Tucker Act grants this Court “jurisdiction to render judgment upon any claim by or
against, or dispute with, a contractor arising under” the Contract Disputes Act (“CDA”). 28
U.S.C. § 1491(a)(2); see also 41 U.S.C. § 7102(a) (CDA applies to “any express or implied
contract . . . made by an executive agency”). “If a plaintiff meets the jurisdictional requirements
of the Tucker Act, the plaintiff also must demonstrate compliance with the mandatory
requirements of the [CDA].” Crewzers Fire Crew Transp., Inc. v. United States, 111 Fed. Cl.
148, 153 (2013), aff’d, 741 F.3d 1380 (Fed. Cir. 2014). For this Court to exercise jurisdiction
over a CDA claim, a contractor must bring an action “within 12 months from the date of receipt
of a contracting officer’s decision.” 41 U.S.C. § 7104(b)(3). Further, jurisdiction “requires both
a valid claim and a contracting officer’s final decision on that claim.” M. Maropakis Carpentry,
Inc. v. United States, 609 F.3d 1323, 1327 (Fed. Cir. 2010). If a claim seeks more than
$100,000, it must also meet the CDA’s certification requirements. 41 U.S.C. § 7103(b)(1).
2

B.

Motion to Dismiss Under Rule 12(b)(1) and 12(b)(6)

The Government moves to dismiss the Complaint under Rule 12(b)(1) for lack of subjectmatter jurisdiction and 12(b)(6) for failure to state a claim. Rules of the Court of Federal Claims
(“RCFC”) 12(b)(1), (b)(6). “In determining jurisdiction, a court must accept as true all
undisputed facts asserted in the plaintiff’s complaint and draw all reasonable inferences in favor
of the plaintiff.” Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir.
2011). Plaintiff bears the burden of establishing jurisdiction by a preponderance of evidence. Id.
“If jurisdictional facts are challenged, the court is not limited to the pleadings in determining
whether it possesses subject-matter jurisdiction to entertain the plaintiff’s claims.”
Groundbreaker Dev. Corp. v. United States, 163 Fed. Cl. 619, 623 (2023) (citing Banks v.
United States, 741 F.3d 1268, 1277 (Fed. Cir. 2014)). If the Court lacks jurisdiction over a
claim, RCFC 12(h)(3) requires dismissal.
In evaluating a Rule 12(b)(6) motion, “the court must accept all well-pled factual
allegations as true and draw all reasonable inferences in the plaintiff[’]s favor.” Ainslie v. United
States, 355 F.3d 1371, 1373 (Fed. Cir. 2004). Plaintiff “must allege facts ‘plausibly suggesting
(not merely consistent with)’ a showing of entitlement to relief” to state a valid claim and survive
a 12(b)(6) motion. Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009) (citing Bell Atl.
Corp v. Twombly, 550 U.S. 544, 555 (2007)) (finding that these facts must “raise a right to relief
above the speculative level”); Leider v. United States, 301 F.3d 1290, 1295 (Fed. Cir. 2002)
(holding that dismissal under 12(b)(6) is proper when a plaintiff “can prove no set of facts in
support of [its] claim which would entitle [it] to relief”). Thus, the key inquiry here is whether
Plaintiff has pled sufficient facts to draw a reasonable inference that the Government is liable.
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Whether Plaintiff is in privity with the Government is a threshold inquiry impacting both
subject-matter jurisdiction (i.e., whether the waiver of sovereign immunity under the Tucker Act
applies) and the merits of WCRR’s claims (i.e., whether the Government is liable for termination
and breach of the TUA). See First Annapolis Bancorp, Inc. v. United States, 644 F.3d 1367,
1373 (Fed. Cir. 2011) (discussing how lack of privity impacts subject-matter jurisdiction);
Riviera Drilling & Expl. Co. v. United States, 61 Fed. Cl. 395, 400 (2004) (collecting authority
supporting opposing views that privity of contract is jurisdictional or goes to the merits). In any
case, if the jurisdictional issue and the merits are “inextricably intertwined, and the former
cannot be resolved without considering and deciding (at least in part) the latter[,]” the Court may
“bypass[] the jurisdictional question and decide[] the merits.” Nippon Steel Corp. v. United
States, 219 F.3d 1348, 1353 (Fed. Cir. 2000); see also Ransom v. United States, 17 Cl. Ct. 263,
267 (1989).
III.

Discussion
A.

WCRR Did Not Submit a Certified Claim.

The Federal Circuit defines a valid CDA “claim” as “a written demand or written
assertion by one of the contracting parties seeking, as a matter of right, the payment of money in
a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or
relating to this contract.” Zafer Constr. Co. v. United States, 40 F.4th 1365, 1367 (Fed. Cir.
2022) (quoting 48 C.F.R. § 52.233-1(c)). If the contractor seeks more than $100,000, as is the
3

case here, the contractor must certify the claim. 41 U.S.C. § 7103(b)(1) (certification
requirement generally), (b)(3) (definition of “defective certification”). No magic words are
required, but the contractor must unequivocally seek the CO’s final decision addressing the
contractor’s claim for its alleged losses. Zafer, 40 F.4th at 1369 (finding persuasive “a sworn
statement attesting to the truth of the submission, includ[ing] detailed factual bases for its alleged
losses, and . . . a sum certain based on the losses”).
Because the Government challenges Plaintiff’s jurisdictional assertion that a CDA claim
was properly submitted and certified, 1 the Court may consider relevant evidence outside the
pleadings to resolve that factual dispute. Banks, 741 F.3d at 1277. WCRR must show by a
preponderance of the evidence that it submitted its claim to the contracting officer. See M.
Maropakis Carpentry, Inc., 609 F.3d at 1327, 1329 (finding “strict limits of the CDA as
jurisdictional prerequisites to any appeal”) (citations omitted); 41 U.S.C. § 7103(a)(1). A
contractor can meet this submission requirement by sending its claim directly to the CO or to
their “primary contact with a request for a final decision of the contracting officer and a
reasonable expectation that such a request will be honored, and the primary contact in fact timely
delivers the claim to the contracting officer.” Neal & Co. v. United States, 945 F.2d 385, 388
(Fed. Cir. 1991) (emphasis omitted).
Here, Plaintiff relies on a purported copy of the May 30, 2023 Claim Letter, its counsel’s
affidavits declaring that he emailed the Claim Letter to Mr. Patrick Lootens and Mr. David
Deanda, and screenshots of the emails. Compl., Ex. 2; Pl.’s Resp., Ex. 1 at 1; Pl.’s Sur-reply in
Opp. to Mot. to Dismiss (“Pl.’s Sur-reply”), Ex. 1, ECF No. 18-1. In both its Complaint and
Response to the Motion to Dismiss, WCRR identifies Mr. Lootens as the Army CO. Compl. at
5; Pl.’s Resp., Ex. 1 at 1. Plaintiff also alleges that it “reached out” to Mr. Deanda on September
5, 2023, another Army CO, and “confirmed through email delivery receipts” that both
individuals received the Claim Letter. Compl. at 5; Pl.’s Sur-reply, Ex. 1, at 1-2. Specifically,
Plaintiff asserts that it forwarded the claim to Mr. Deanda at his email address provided on the
rescission letter ([e-mail]). Pl.’s Sur-reply, Ex. 1, at 4; Compl., Ex. 5, at 1.
In contrast, the Government submitted two affidavits, one from Mr. Deanda and another
from Mr. Beau Bixler, the CO for the Facility Contract from March 2022 to present. Def.’s
Reply, Ex. 1 (“Bixler Decl.”), ECF No. 15-1; Def.’s Reply, Ex. 2 (“Deanda Decl.”), ECF No. 152. These affidavits assert that 1) Mr. Lootens, the former CO for the Facility Contract, retired on
August 3, 2020, and was not an Army CO in May 2023; 2) Mr. Deanda was only a CO for this
contract from December 2020 to March 2022, and never received correspondence from WCRR
regarding the TUA; and 3) Mr. Bixler also never received any emails from Plaintiff or its counsel
about the TUA. Bixler Decl.; Deanda Decl. Mr. Deanda also averred that the agency migrated
his previous email account ([e-mail]) to a new account on November 23,
1

WCRR’s purported email to Mr. Lootens included the Claim Letter and FAR 33.207(c)’s
certification language as two separate attachments. Pl.’s Resp., Ex. 1 at 3-5. If WCRR had
timely emailed two documents, while technically deficient, it would be a curable error. FAR
33.201 (defining defective certification); see Midatlantic Constr. & Design Assocs., Inc. v.
United States, No. 22-447C, 2023 WL 3269668, *4 (Fed. Cl. May 5, 2023) (holding that a
defective certification does not deprive the Court of jurisdiction). Accordingly, any debate over
certification of Plaintiff’s claim is moot.
4

2021, at which time his previous account was deleted and not archived. Deanda Decl. Both Mr.
Deanda and Mr. Bixler stated that these declarations were prepared after thoroughly searching
their records. Deanda Decl.; Bixler Decl.
Even if the Court took all of Plaintiff’s assertions as true, “[t]he contractor bears the risk
for delayed or lost submissions prior to receipt by the CO.” Am. Pac. Roofing Co. v. United
States, 21 Cl. Ct. 265, 268 (1990); see also Dawco Constr., Inc. v. United States, 930 F.2d 872,
880 (Fed. Cir. 1991), overruled on other grounds by Reflectone, Inc. v. Dalton, 60 F.3d 1572
(Fed. Cir. 1995). WCRR contends that receipt by the Government’s email server constitutes a
proper submission and cites Insight Sys. Corp. v. United States for support. 110 Fed. Cl. 564,
581 (2013) (“[T]he Government Control exception applies where the electronic proposal is
received by a government server (or comparable computer) and is under the agency’s control
prior to the deadline.”). But this case is unpersuasive, as it addresses an exception under FAR
52.212-1(f)(2)(i) in the context of bid protests. Id. There is no analogous carve out for
contractors under 41 U.S.C. § 7104. And even though the Insight court allowed an exception
under the FAR, it cautioned against construing such exceptions too broadly. 110 Fed. Cl. at 575
(“Courts construing these exceptions admittedly must walk a fine line.”). Thus, the risk falls on
WCRR even if it emailed the claim to Mr. Deanda and the message was redirected or lost. See
Diversified Maint. Sys., Inc. v. United States, 110 Fed. Cl. 612, 617 (2013) (holding that even if
the court found that plaintiff mailed its claim but it was not received, plaintiff still bears the risk).
Under these circumstances, Plaintiff has presented insufficient evidence 2 that would
allow the Court to conclude that the Claim Letter was actually submitted to or received by the
Army CO for a final decision. WCRR fails to meet its jurisdictional burden. See, e.g., id. at 616
(comparing plaintiff’s lack of evidence on its purported claim submission with defendant’s
affidavit asserting that “despite a thorough search,” the claim letter was not found in a retired
CO’s files); Emiabata v. United States, 135 Fed. Cl. 213, 219 (2017) (concluding that plaintiff
did not establish jurisdiction because he “fail[ed] to present a single document in support of his
allegations”); Capelouto v. United States, 99 Fed. Cl. 682, 693 (2011) (dismissing suit for lack of
jurisdiction because plaintiff “failed to prove that he submitted a CDA claim to any contracting
officer responsible for his alleged contracts”); L.A. Ruiz Assocs., Inc. v. United States, 94 Fed.
Cl. 768, 772 (2010) (holding that the court lacked jurisdiction because plaintiff did not present
evidence that could allow the court to conclude that the letter was “actually submitted to, or
received by, the contracting officer for review”).
B.

WCRR Is not in Privity with the Government.

This dispute involves three contracts; WCRR is a party only to the TUA. None of these
agreements establish privity of contract between WCRR and the Army.

2

It appears that Plaintiff submitted the claim letter to the wrong email address. Compare
Pl.’s Sur-reply, Ex. 1 (email addressed to [e-mail]) with Deanda Decl.
(showing that Mr. Deanda’s email username, before and after the mailbox migration, was
david.d.deanda.2.civ). While the email Plaintiff used was listed on the rescission letter, the
contractor bears the risk.
5

To begin, this Court must strictly construe waivers of sovereign immunity. United States
v. Johnson Controls, Inc., 713 F.2d 1541, 1557 (Fed. Cir. 1983); Flexfab, L.L.C. v. United States,
424 F.3d 1254, 1263 (Fed. Cir. 2005) (“[T]he government does not lightly consent to suit.”).
The CDA provides a waiver of sovereign immunity for contractors because by entering directly
into a contract with a party, the Government expresses an intent to open itself to a suit by that
party under the Tucker Act. 28 U.S.C. § 1491(a)(1) (allowing suits based “upon [an] express or
implied contract with the United States”). “When the government chooses instead to employ a
two-tier contracting scheme whereby it has no direct contractual relationship with an entity, the
intent . . . is not similarly apparent.” Nat’l Leased Hous. Ass’n v. United States, 32 Fed. Cl. 454,
459 (1994). Accordingly, “[f]inding subcontractors in contractual privity . . . would represent a
dramatic extension of this waiver.” Lockheed Martin Corp. v. United States, 50 Fed. Cl. 550,
562 (2001), aff’d, 48 F. App’x 752 (Fed. Cir. 2002).
WCRR claims that it is in privity with the Government because AO acted as the
Government’s agent. Pl.’s Resp. at 13. The Federal Circuit established three prerequisites for
the Government to be directly liable to a subcontractor on an agency theory. Johnson Controls,
Inc., 713 F.2d at 1551. To establish privity, the subcontractor must satisfy three factors: “(1) [the
prime contractor] act[ed] as a purchasing agent for the government, (2) the agency relationship
between the government and the prime contractor was established by clear contractual consent,
and (3) the contract stated that the government would be directly liable to the vendors for the
purchase price.” Id. (citing Kern–Limerick, Inc. v. Scurlock, 347 U.S. 110, 112 n.2 (1954))
(emphasis omitted). Given these stringent prerequisites and the Court’s review of the relevant
contracts, WCRR has failed to sufficiently allege facts supporting an agency relationship
between AO and the Government.
1.

AO Did not Act as the Government’s Purchasing Agent.

WCRR contends that AO was a purchasing agent because it procured services for the
Army. Pl.’s Resp. at 14. In support, WCRR notes that the Facility Contract and BOA were both
issued under the ARMS initiative, which aims “[t]o reduce or eliminate the cost of Government
ownership of eligible facilities, including the costs of operations and maintenance” via contracts
with private parties such as AO. Pl’s Resp. at 14 (citing 10 U.S.C. § 7553(b)(6)). WCRR
overstates AO’s role, which is closer to an operator of the MLAAP facility. The implementation
of the Facility Contract and BOA under the ARMS initiative does not show that AO bought
WCRR’s rail services for the Army. Rather, WCRR paid AO to use the facilities. WCRR’s
TUA at 5; Pl.’s Resp. at 15. In fact, the Army bought nothing from WCRR. At most, the Army
is a third-party beneficiary of a contract between two private parties—an attenuated relationship
to WCRR that cannot support privity. See Wagner v. United States, 71 Fed. Cl. 355, 364 (2006)
(citing Fireman’s Fund Ins. Co. v. United States, 909 F.2d 495, 499-500 (Fed. Cir. 1990)).
Moreover, the BOA’s requirement that the Army authorize the TUAs and other thirdparty contracts does not show that AO was a purchasing agent. To establish an agency
relationship, the Army must have “meaningful control” over AO, such as a right of control over
the methods by which it accomplishes its task. Pac. Gas & Elec. Co. v. United States, 838 F.3d
1341, 1359–60 (Fed. Cir. 2016) (citing Restatement (Third) of Agency § 1.01 cmt. e.).
The requisite control is absent here. Instead, the TUA reflects AO’s supervisory role
over WCRR, rather than the Army’s control over AO. For example, WCRR needs express,
6

written approval from AO to remove any government property from the facilities. WCRR’s
TUA at 4. AO and WCRR must also agree on how to conduct an environmental baseline survey
and remedy environmental violations. Id. Similarly, AO and WCRR negotiate the length and
conditions of any renewal, even if a renewed contract would be subject to the Government’s
approval. Id. And WCRR sends statements that itemize all its revenue to AO, along with
documentation to support the number of railcars stored and moved. Id. at 5. Thus, the TUA
shows AO’s control over its own management of its lessees without agency interference. Indeed,
“the need for [a prime contractor] to obtain [agency] approval does not create an agency
relationship.” Ground Improvement Techniques, Inc., 618 F. App’x 1020, 1031 (Fed. Cir. 2015).
In fact, where courts have found that a contractor was a purchasing agent, the prime
contract included an express term identifying the contractor as such. See, e.g., Kern–Limerick,
Inc., 347 U.S. at 112 n.2 (construction contract provided that “‘[t]he Contractor shall act as the
purchasing agent of the Government in effecting such procurement.’”); W. Union Tel. Co. v.
United States, 66 Ct. Cl. 38, 39 (1928) (contract provided that construction manager was
“‘empowered and authorized to make, as agent for the United States of America, all
contracts . . . .’”). Cf. U.S. W. Commc’ns Servs., Inc. v. United States, 940 F.2d 622, 629–30
(Fed. Cir. 1991) (finding that a contractor was not an “agent or conduit” for an agency because
the contact did not expressly allow the contractor to act as the procurement agent). No such term
exists here.
At most, the ARMS statute defines entities such as AO as “property managers”
performing under a “property management contract.” Pl.’s Resp. at 15; see 10 U.S.C. § 7553.
There is no explicit language identifying AO as an agent. Also, while WCRR falsely equates
“property managers” to government agents, Pl.’s Resp. at 15, this argument suggests that the
Government intended to create an agency relationship with every private entity it contracts with
under the ARMS statute—an untenable conclusion.
2.

AO and the Army Did Not Consent to an Agency Relationship.

Plaintiff’s allegations do not establish that AO and the Government consented to an
agency relationship. The principal and agent must both manifest their assent to create an agency
relationship, and this intent must be expressed in either words or conduct. Pac. Gas & Elec. Co.,
838 F.3d at 1359 (citing 12 Williston on Contracts § 35:1 (4th ed. 2016)). Again, the contracts
do not contain an express term identifying AO as the Army’s agent. WCRR instead relies on the
BOA’s seventeen references to the CO providing direction and authorization to AO. Pl.’s Resp.
at 15. But these provisions simply require AO to perform certain specified actions in a manner
prescribed by the agency. “Government agencies make analogous demands in every government
contract,” and under Federal Circuit authority, such limitations are not enough to establish clear
contractual consent. Nat’l Leased Hous. Ass’n, 32 Fed. Cl. at 461 (citing Johnson Controls, Inc.,
713 F.2d at 1551).
The BOA shows the Army’s intent was exactly the opposite—government approval for
use of the MLAAP under the ARMS initiative was not to be construed as an extension of the
Facility Contract. Mot. to Dismiss, Attach. B, at 15 (“The contractor [AO] shall be authorized to
use the facilities for commercial, non-Government, third party, or tenant use under the
authorization of FAR Part 45 and the ARMS Initiative. In no instance shall the approval for use
of facilities within the guidelines of this scope be considered an extension of the basic facility
7

contract.”) (emphasis added). Likewise, the TUA specifically states that the Government is not
a party to the tenant use agreements. Id. at 17 (“3.3.7 The Government is not a party to the
Tenant Use Agreements and does not deal directly with the tenants.”).
WCRR claims that these provisions have “no impact on whether or not AO was acting as
JMC’s agent.” Pl.’s Resp. at 15. Instead, under Plaintiff’s theory, the Court should find the
requisite “clear contractual consent” in the BOA’s seventeen references to government
authorization. Id. WCRR provides no legal authority for this argument. The Court declines to
adopt this interpretation, especially as it contradicts the plain language of the contract and would
render “a portion of the contract useless, inexplicable, void, or superfluous.” NVT Techs., Inc. v.
United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (requiring courts to interpret contracts “so as
to harmonize and give reasonable meaning to all of its parts”).
3.

The Relevant Contracts Did not “Plainly State” that the Government
Will Be Liable for Termination Costs.

The BOA, a contract between the Army and AO, incorporated FAR Part 49. According
to WCRR, this incorporation—in a contract to which it was not a party—demonstrates that the
Army guaranteed that it would pay termination settlement costs for any terminated TUA. Pl.’s
Resp. at 15. But this does not serve as a plain statement “that the government would be directly
liable to [WCRR] for the purchase price”—the third requirement needed to establish an agency
relationship between the Government and AO. Johnson Controls, 713 F.2d at 1551. In fact,
WCRR concedes that “[t]here is no ‘purchase price’ in the TUA.” Pl.’s Resp. at 15.
WCRR does not identify any explicit provision in FAR Part 49 allowing direct
subcontractor appeals to the Government after a termination for convenience. Indeed, direct
subcontractor appeals occur in unique circumstances, none of which are present here. Instead,
FAR Part 49 provides processes by which subcontractors can seek payment from the prime
contractor, but not the Government. See, e.g., FAR 49.108-1 (“A subcontractor has no
contractual rights against the Government upon the termination of a prime contract. A
subcontractor may have rights against the prime contractor or intermediate subcontractor with
whom it has contracted. Upon termination of a prime contract, the prime contractor and each
subcontractor are responsible for the prompt settlement of the settlement proposals of their
immediate subcontractors.”), 49.108-7 (“In unusual cases the TCO may determine, with the
consent of the prime contractor, that it is in the Government’s interest to provide assistance to the
prime contractor in the settlement of a particular subcontract.”), 49.108-8(b) (“[The
Government’s discretionary right to settle and pay any settlement proposal arising out of
termination of subcontractors] does not obligate the Government to settle and pay settlement
proposals of subcontractors.”) (emphasis added). Accordingly, the Court does not find direct,
unavoidable Government liability based on Plaintiff’s superficial citation to FAR Part 49.
4.

WCRR’s Request for Jurisdictional Discovery Is Denied.

Alternatively, WCRR requests that the Court allow it to conduct discovery on whether
AO and the Army had an agency relationship. Pl.’s Resp. at 16. Discovery is unnecessary here,
and the Court declines to stay proceedings on the Motion to Dismiss to allow it. While Plaintiff
provides no persuasive legal authority for its request, when a party challenges a jurisdictional
fact alleged in a complaint, the court may permit limited discovery to resolve the factual dispute.
8

See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n.13 (1978) (“[W]here issues arise as
to jurisdiction or venue, discovery is available to ascertain the facts bearing on such issues.”).
That said, if challenges to the complaint “implicate legal questions for which no fact discovery
[i]s required,” then a court can deny a party’s request for jurisdictional discovery. Harris v.
United States, 868 F.3d 1376, 1378 (Fed. Cir. 2017).
WCRR seeks to discover “communications between AO and JMC or any knowledge of
JMC’s directions other than what is apparent from the documents.” Pl.’s Resp. at 16. This
assertion regarding lack of access to communications departs from the theory of privity Plaintiff
asserted in its Complaint and briefs. See Compl. at 3; Pl.’s Resp. at 13 (stating that this case
“falls squarely” within the theory of privity discussed in Johnson Controls). In its jurisdictional
arguments, WCRR alleges that the Facility Contract, BOA, and TUA’s terms formed the agency
relationship between AO and the Army. See, e.g., Compl. at 3 (“At all relevant times, AO was
operating as the Army’s agent . . . under the Operations & Maintenance Contract [or the Facility
Contract] . . . . The agency relationship between the Army and AO was established by clear
contractual consent.”); Pl.’s Resp. at 11 (“[B]oth the BOA and the TUA incorporate FAR Part
49, which is the FAR section governing a termination by the Government. This part of the FAR
provides the basis for . . . the Claim advanced by WCRR.”). Now, faced with the Motion to
Dismiss, WCRR seems to suggest a second, fact-driven theory of privity—that privity may have
been created via the Army’s direct control over AO and WCRR’s actions under the TUA.
Johnson Controls’ test focuses on contract provisions for proof of agency relationship,
and thus does not apply when a plaintiff alleges that the government’s day-to-day control over a
contractor established privity. Johnson Controls, Inc., 713 F.2d at 1553 (“It is also significant to
note that it has not been asserted . . . that direct dealings between the government and Johnson
created privity of contract[.]”). WCRR also offers no authority supporting this second theory of
privity, and this court previously rejected similar arguments. See, e.g., Lockheed Martin Corp.,
50 Fed. at 559 (finding that plaintiffs’ “fact-driven theory of privity is not supported by
authority, and that their factual case is, in a word, irrelevant”). Indeed, WCRR does not allege
any facts showing that the Army’s control over WCRR was significant such that the Government
subverted AO’s independent authority and “convert[ed] the government contractor into a federal
agency.” Demodulation, Inc. v. United States, 123 Fed. Cl. 98, 104 (2015) (citing Blue Water
Envtl., Inc. v. United States, 60 Fed. Cl. 48, 51 (2004) and United States v. Orleans, 425 U.S.
807, 814 (1976)).
The implications of Plaintiff’s theory of privity are far-reaching. If this Court allows for
discovery on this issue, then “any subcontractor who had a dispute concerning its subcontract
would have the right to obtain discovery exploring the entire course of contract activity between
the parties”—simply to establish jurisdiction. Lockheed Martin Corp., 50 Fed. Cl. at 559 (noting
that discovery involving access to about 5 million pages of documents “provide[d] a dramatic
illustration” of how the privity by conduct theory “simply goes too far”).
The central issues—whether the Complaint sufficiently alleges jurisdiction under Rule
12(b)(1) and states a claim under Rule 12(b)(6)—can be resolved without further discovery. See,
e.g., Lea v. United States, 120 Fed. Cl. 440, 444 (2015) (denying plaintiff’s discovery request
because the court would still lack jurisdiction to entertain its noncontractual claims, even if they
were factually supported). Based on the relevant contracts, WCRR fails to allege contractual
privity with the Government, and the Court must dismiss the Complaint. RCFC 12(h)(3).
9

IV.

Conclusion

A middleman is not automatically an agent. While the Army did provide direction and
authorization to AO in discrete situations, it also apparently intended to use AO “as a buffer
between it and the claims of the subcontractors.” Johnson Controls, Inc., 713 F.2d at 1541.
Thus, the agreements here have not created an agency relationship between AO and the Army,
and WCRR is not in privity of contract with the Government.
For these reasons, the Court GRANTS the Government’s Motion to Dismiss and directs
the Clerk of the Court to enter judgment accordingly.
IT IS SO ORDERED.

s/ Carolyn N. Lerner
CAROLYN N. LERNER
Judge

10