Motion to dismiss government’s counterclaim for breach is granted. The government issued a final decision that found an architect and a builder jointly and severally liable for damages to a government building. The architect appealed the final decision to the COFC, and the government asserted a counterclaim for breach based on its theory of joint and several liability. The court found that it lacked jurisdiction over the entire case. The COFC has jurisdiction under the Contract Disputes Act to hear cases arising out of a federal procurement contract, but not over cases sounding in tort. The government’s joint and several liability theory sounded in tort. The theory applies when a tortious act is committed by people acting in concert. It does not apply to a case where multiple contractors have allegedly breached separate contracts.
The General Services Administration awarded a contract to Johnson Lasky Kindelin Architects, Inc. (JLK) to design office space for the National Labor Relations Board. GSA then entered a second contract with Master Design Build, Inc. (MDB) for construction of the office space.
After the space had been built out, a condenser pipe in the cooling system malfunctioned and caused extensive damages to the NLRB offices. The GSA contracting officer issued a final decision jointly to JLK and MDB claiming $1.9 million in damages for the broken pipe. The decision stated that both JLK and MDB were at fault and were “jointly and severally liable.”
MDB appealed the decision to the CBCA. JLK filed suit in the Court of Federal Claims, requesting the court vacate the final decision because it failed to attribute percentages of fault to JLK and MDB. In response to JLK’s complaint, the government asserted counterclaim, alleging the JLK breached its contract and seeking the full $1.9 million in damages. Still, the counterclaim alleged that JLK and MDB were jointly and severally liable for damages.
JLK moved to dismiss the government’s counterclaim for failure to state a claim. Although the parties did not raise the issue, the court asked for additional briefing on whether it had jurisdiction over a claim that asserted joint and several liability. After the parties submitted additional briefs, the court issued an opinion
The court found that it lacked jurisdiction over the claim because both the government’s counterclaim and the underlying claim were premised on a damages theory—joint and several liability—that sounded in tort. Under the Tucker Act, the COFC has jurisdiction to hear suits pursuant to the Contract Disputes Act (CDA). The CDA, in turn, applies to dispute concerning federal procurement contracts. A long line of cases, however, holds that the COFC’s CDA jurisdiction does not encompass damages sounding in tort.
Joint and several liability applies when a tortious act is committed by several people acting in concert. In such cases, each tortfeasor is entirely responsible for the damages resulting from that concerted conduct. The caselaw, including U.S. Supreme Court cases, is overwhelming clear that joint and several liability is a tort doctrine.
The court noted there are a couple of narrow circumstances in which court will apply joint and several liability to contract cases. For instance, the court may apply joint and several liability where multiple signatories to a single contract undertake a joint obligation. In such a case, each signatory stands as a guarantor of the other. But that was not the situation in this case. JLK and MDB each signed separate contracts with GSA.
Courts may also apply joint and several liability to a contact case when two parties independently breach separate contracts, and it is not possible to segregate the damages between them. The court note, that this application of joint and several liability had a superficial appeal in this case. Nevertheless, the court found that this application of the joint and several liability doctrine had firm roots in tort law and had only been applied by a few jurisdictions. Indeed, those courts that had applied joint and several liability to contract parties had reasoned that the doctrine was still based on the negligence theory of multiple tortfeasors, not breach of contract.
The government, however, argued that the court had jurisdiction because the case was still ultimately rooted in contract. The contract with JLK was, after all, a CDA contract. But no one disputed that the case arose out of a CDA contract. The problem was the government’s theory of liability was based on tort and thus could not be invoked in the COFC. As the court noted, if a contractor submitted a CDA claim seeking punitive damages, the claim would still arise out of a CDA contract, but the court would not have jurisdiction to award punitive damages.
The government further argued that nothing in the plain language of the CDA prohibits a contracting officer from making findings regarding multiple claims. The court, however, dismissed this argument as a red herring. The CDA covers claims by the government “against a contractor related to a contract.” But the final decision in this case related to two distinct contracts and seeks to hold both liable for damages resulting from the other’s alleged breach. JLK could not be held liable for MDB’s independent breach of separate contract to which JLK was not a party.
The court found further support for its decision in the CDA’s consolidation statute. Under that statue, the COFC has authority to consolidate separate cases that are filed in the court and with an agency or board of contract appeal. But the court can only consolidate those cases if they arise from a single contract. In this case, JLK’s contract was separate from MDB’s. Indeed, even if MDB had been joined in the case as and additional party, it was not clear that JLK and MDB would have any right to contribution against each other because they were not jointly obligated under one contract.
The court was also concerned that allowing the case against JLK to proceed could result in a potential double recovery windfall to the government. The government was asserting claims for the full amount of damages against both MDB and JLK in separate actions. The government tried to allay these concerns with what the court referred to as a “trust us” argument—i.e., we’ll be extra careful to ensure we don’t get a double recovery. But the court found there was simply no mechanism to actually preclude a double recover.
The court thus dismissed the government’s counterclaim for lack jurisdiction. The court further found that dismissal of the counterclaim effectively resolved JLK appeal and ended the entire case in JLK’s favor. The court noted that the government was free to issue separate final decisions against each contractor or gather all interested parties before the court in a single matter under the Rule of the Court of Federal Claims 14.
JLK is represented by Lucas T. Hanback, Stephen L. Bacon, and Matthew Ligda of Rogers Joseph O’Donnell, P.C. The government is represented by P. Davis Oliver, Joseph H. Hunt, Robert E. Kirschman, Jr., and Elizabeth M. Hosford of the Department of Justice.
