Equity, in law, is the same that the spirit is in religion: What everyone pleases to make it – John Seldon.
Contractor’s motion for summary judgment on government’s laches defense is granted. The contractor appealed a denied claim. In response to the appeal, the government asserted the affirmative defense of laches. Based on Supreme Court precedent, the board found that laches cannot be asserted as a defense to a legal claim that already has a statute of limitations. Because Congress has already set a six-year statute of limitations for CDA claims, laches is not available as defense to a CDA claim.
Lockheed Martin Aeronautics Company had a contract with the Air Force to upgrade C-5 aircraft. In October 2018, Lockheed submitted a claim to the Air Force contracting officer seeking $143 million in alleged excessive work and constructive change. The Air Force denied the claim. Lockheed appealed to the ASBCA. In response to Lockheed’s appeal, the government asserted the affirmative defense of laches, arguing that Lockheed’s delay in asserting the claim had prejudiced the government.
Lockheed moved for summary judgment on the government laches defense. Lockheed argued that in SCA Hygiene Products Atkiebolag v. First Quality Baby Products, LLC, 135 S. Ct. 954 (2017), the U.S. Supreme Court held that the equitable defense of laches could not be asserted against a legal claim when Congress has already prescribed a statute of limitations for that claim. Here, Lockheed reasoned, Congress has provided a six-year statute of limitations for claims under the Contract Disputes Act. Thus, laches was unavailable as a defense.
The board noted that laches is an equitable defense that denies relief to one who has unreasonably and inexcusably delayed in asserting a claim. Unlike a statute of limitations, laches is not a mechanical rule that depends on a mere matter of time. Rather, the application of laches is a question of equity founded on a change in the relations of the parties.
The government argued that the laches defense was warranted because Lockheed had made a “cumulative impact” claim. The company’s claim involved thousands of Manufacturing Deficiency Reports. The government contended that it was unfair to expect it to defend each claim arising from individual reports even though the claims still feel within the CDA’s limitations period.
But the board found that the this ignored the Supreme Court’s decision in SCA Hygiene, which held that laches is not available when there is a legislatively enacted statute of limitations. The Supreme Court reasoned that permitting a laches defense would allow a judge to override legislation. Courts are not at liberty to ignore Congress’ judgment on the timeliness of suit.
The government argued that the board should hold off on applying SCA Hygiene because the Federal Circuit had not yet applied it and not otherwise held that laches was not available as a defense. But the board reasoned that while it would be nice if the Federal Circuit had considered the issues, the board is still subject to the U.S. Supreme Court precedent and will adhere to those decisions.
The government also argued that FAR 33.202(c), which governs that applicability of the FAR to contract disputes, had preserved the defense of laches. That provision states that boards of contract appeals authorized by the CDA have all the authority they possessed before the CDA. Thus, the government reasoned, because boards could consider a laches defense before the CDA, they could continue to consider laches.
The board was unconvinced. Nothing in FAR 33.203(c) preserves the affirmative defense of laches, and the government had not shown that the provision somehow supersedes Supreme Court precedent.
Lockheed is represented by Stephen J. McBrady, Sky Mathieson, J. Chris Haile, Michelle D. Coleman, and John Nakoneczny of Crowell & Moring LLP. The government is represented by Jeffrey P. Hildebrant, Caryl A. Potter III, Lawrence M. Anderson, and Danielle A. Runyan of the Air Force.ASBCA - Lockheed Martin Aeronautics Company