Government’s motion to dismiss for lack of jurisdiction is denied. The contractor sought damages arising out of an office lease with the government. The government argued that the court lacked jurisdiction because the legal theory asserted in the underlying claim—breach of implied covenant of reasonable use—differed from the theory asserted in the court complaint—breach of the implied covenant of good faith and fair dealing. The court, however, found that the two legal theories were not so different as to deprive the court of jurisdiction. What’s more the claims relied on the same set of operative facts—namely, that the government’s tawdry visitors, who brought drugs, weapons, and crime, had damaged the property and the contractor’s business relationships.
CanPro Investment had a lease agreement with the General Services Administration. The lease was for office space in Florida for the Social Security Administration (SSA). CanPro began to have problems with the number of visitors coming the to the SSA office and their unruly conduct. CanPro filed a claim with GSA alleging that the visitors to the office had resulted in arrests at the premises for drugs and weapons, litter, harassment of other tenants, loitering, and smoking areas in waiting rooms.
GSA denied the claim, and CanPro filed a complaint with the Court of Federal Claims, alleging various theories for breach of contract and breach of the implied duty of good faith and fair dealing. The court dismissed CanPro breach of contract claims, leaving only the claim for the breach of the implied duty.
GSA moved to dismiss the implied duty claim, alleging that the court lacked jurisdiction under the Contract Disputes Act because CanPro was asserting a different legal theory in court than it had in its claim. Specifically, GSA contended, in its claim, CanPro's theory had been for breach of the implied covenant of reasonable use, while in its complaint it asserted a claim for breach of the implied duty of good faith and fair dealing.
But the court did not find the two legal theories that different; in fact, the court opined that they were somewhat complementary. Throughout its claim CanPro used the terms “reasonable” and “unreasonable use” to refer to its dissatisfaction with the volume and conduct of the SSA’s visitors. Rather than reading this as an invocation of the implied covenant against waste or reasonable use, the court saw this as really an objection to the conduct of the SSA’s visitors , which was compatible with the theory asserted in the complaint. The failure to abide by reasonable use certainly violates the duty of good faith and fair dealing by destroying CanPro’s reasonable expectation regarding the fruits of the bargain.
Moreover, the court found even if the claims asserted different legal theories, the court was not deprived of jurisdiction if the claims arise from the same operative facts. Here, since it filed its underlying claim, CanPro had maintained that the problem with the lease concerned visitors volume, and the impact of that volume. The court saw no material differences between the evidence relating to the theory asserted in the claim and the theory asserted in the complaint.
CanPro is represented by Leonor M. Lagmomasino. The government is represented by Amanda L. Tantum of the Department of Justice.
COFC - CanPro Investments Ltd