Government’s motion for summary judgment on claim asserting an implied-in-fact contract is granted. A racing company claimed that the government had breached an implied-in-fact contract to sponsor its IndyCar team. But the protester based its implied contract on statements made by a government official who lacked authority to bind the government. The racing company argued that regardless of that official’s contracting authority, the government subsequently ratified the contract. The court, however, found no evidence that anyone with contracting authority ratified or even knew of the alleged implied contract. The protester also argued that the government had breached an implied contract to fund its jobs program. The court rejected this argument, finding there was no evidence the parties mutually assented to this alleged implied contract.
Since 2008, The Army National Guard had been sponsoring Panther Racing LLC’s racing teams in the IndyCar series. The Guard used the sponsorship as a way to market it itself and recruit new soldiers. The Guard and Panther, however, did not have a direct contractual relationship. Instead, the Guard contracted with an advertising contractor, Laughlin, Marinaccio & Ownes Inc. (LM&O). LM&O’s subcontractor had a sponsorship agreement with Panther. These sponsorship agreement had a one year term. Under the agreement, Panther would supply a car, driver, personnel and equipment for an IndyCar team. The car and the uniforms would be branded with the Guard’s marks.
Although the Guard’s contractual relationship was with LM&O, it was common for Panther and Guard officials to interact with each other. Each year, it was customary for the Guard to verbally notify Panther of its intent to exercise the annual renewal option under the sponsorship contract. Panther would thus prepare for races before the contract was renewed.
In addition to racing teams, Panther provided the Guard with a program, called the Boss Lift program, with job-focused initiatives designed to encourage employers to hire Guardsmen. The program was funded through a contract between the Guard and LM&O.
In early 2013, the Guard’s contracting officer representative (COR) verbally told Panther’s CEO that Guard was going to renew it’s IndyCar contract for 2014 and that Panther should start preparing for the 2014 season. In light of this, Panther obtained new personnel, a new driver, and a car for the 2014 racing season. Additionally, without any authorization from the government, Panther spent millions on its Boss Lift program, hiring new personnel for the program and purchasing race tickets for companies that employ Guardsmen.
Despite the statements made by the COR, the Guard did not exercise its option. In fact, the government selected another racing company to sponsor for the 2014 season. Panther filed suit with the Court of Federal Claims alleging the government breached implied-in-fact contracts to (1) reimburse the money Panther expended preparing for the 2014 season, and (2) pay the costs of Panther’s expanded Boss Lift program. Following discovery, the government moved for summary judgment on Panther’s claims.
The government first argued that the existence of an express contract precludes a claim for an implied contract. Here, the government contended, Panther had an express contract with LM&O’s subcontractor and thus could not maintain its implied claim. But the court was not persuaded, noting that the express-precludes-implied rule cited by the government presupposes that the express contract is between the same parties. In this case, Panther and the government did not have an express contract.
Nevertheless, the court still found that Panther could not maintain its implied-in-fact contract claims. As an initial matter, the COR that Panther interacted with did not have actual authority to bind the government in a contract and thus his statement could not form an enforceable implied-in-fact contract.
Panther argued that the COR had implied actual authority to bind the government as part of his assigned duties. The court disagreed, reasoning that the doctrine of implied actual authority cannot be used to create an agent’s actual authority to bind the government when an agency’s internal procedures specifically preclude the agency from exercising that authority. Here, the memorandum that delegated authority to COR stated that he did not have authority to award, agree to, or sign a contract on behalf of the government.
Still, Panther contended that the doctrine of equitable estoppel barred the government from claiming that the COR lacked authority. Citing U.S. Supreme precedent, however, the court reasoned that anyone entering into an arrangement with the government runs the risk that the government official they interact with may not stay within the bounds of their authority. Thus, it is well established that the government is not estopped from denying limitations on an agent’s authority even though a contractor may have relied on that agent’s apparent authority to its detriment.
Panther further argued that even if the COR lacked authority to bind the government, his actions were subsequently ratified by the government. The court noted that to establish ratification, Panther needed to establish that some government with authority to bind had actual or constructive knowledge of the COR’s statements. Here, there was no evidence that anyone with contracting authority knew about the COR’s communications with Panther.
Aside from its claim for race preparation expenditures, Panther also claimed that it had an implied-in-fact contract for the money spent on its Boss Lift program. But there was almost no evidence supporting this claim. Panther provided no specificity regarding what the parties agreed Panther would be obligated to do, and Panther was unable to identify any specific deliverable under the agreement. This indicated the parties lacked a mutual intent to contract. Indeed, at the time the government was allegedly entering the implied-in-fact contract with Panther, it was modifying its contract with LM&O to include the Boss Lift program. If the government modifying its contract with LM&O regarding the Boss Lift program, it likely did not agree to a separate implied contract concerning the program.
Panther is represented by James R. Fisher and Debra H. Miller of Miller & Fisher, LLC. The government is represented by Michael D. Austin, Deborah A. Bynum, Robert E. Kirschman, Jr., and Joseph H. Hunt of the U.S. Department of Justice.
