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Published on June 5, 2023 • Law

COFC Thinks Government May Have Impeded Contractor’s Performance

The court found the government may have breached the contract’s duty of good faith and fair dealing by allowing another company to compete against the claimant.

American Ground Transportation and Liberty Launch, Inc. v. United States, COFC No. 20-123C

Exclusivity – The claimant had a contract to provide shuttle services on a Marine base. The claimant alleged the government breached by permitting other shuttle operators to operatie on the base. The court dismissed the breach theory for failure to state a claim. The contract did not give the claimant exclusive rights to operate on the base. In fact, the contract explicitly disclaimed exclusivity.
Enforcement of State Law – The claimant contended the government breached a contractual duty to enforce state law governing shuttle buses. The court reasoned the government may have a duty as a property owner or government actor to enforce state law But the government did not have a contractual duty to enforce the law. The court dismissed this alleged breach.
Good Faith and Fair Dealing – The claimant further alleged that by allowing another company to provide shuttle services on the base, the government breached the contract’s duty of good faith and fair dealing. The government moved to dismiss this claim. The court denied the motion, finding the contractor had alleged a plausible argument. The contract required the government to coordinate with the claimant. By allowing another company to provide shuttle services, the government may have breached the duty to coordinate. What’s more, the claimant alleged additional facts showing the government behaved in a manner that benefitted the competitor at the claimant’s expense.
Other Business Torts – The claimant asserted additional torts—interference with economic relations, negligence. The court reasoned it only has jurisdiction over torts that arise entirely out of the contract. These torts were separate from the contract. The court lacked jurisdiction.

American is represented by Maryann Cazzell of Cazell & Associates. The government is represented by Joshua A. Mandlebaum of the Department of Justice.

--Case summary by Craig LaChance, Senior Editor

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