Motion for leave to amend a complaint is granted, where ASBCA has jurisdiction to hear the additional allegation, because it is based on the same operative facts as its earlier claims against the government, and where the government would not be prejudiced by the introduction of new expert witnesses, because an already approved change in the hearing date will allow the government time to take its own depositions.
John C. Grimberg Company Inc. moved the Armed Services Board of Contract Appeals to reconsider its order rejecting the appellant’s amended complaint due to the absence of an accompanying motion for leave to amend.
Grimberg initially filed a non-monetary claim requesting a final decision to interpret disputed contract terms regarding certain valves it asserts were required by the contract but wrongfully rejected by the U.S. Army Corps of Engineers. After the contracting officer denied the claim, appellant converted its non-monetary claim into a monetary claim in the amount of $727,244.00. One year passed without a final decision on the subsequent claim and appellant filed an appeal with the board.
Less than three weeks before the scheduled hearing date, the appellant filed a lone document titled “amended complaint,” which added a new count based on the government’s alleged failure to disclose superior knowledge of the requirement for damper-style air valves in lieu of the valves provided by the contractor. However, the amended complaint was not accompanied by a motion requesting the board grant leave to file the pleading. In response, the government moved to adjourn the hearing date or dismiss the amended complaint, arguing that it could not prepare a defense to the new claim in the time remaining before the hearing. In the absence of a motion for leave to amend, the board rejected the amended complaint.
The appellant then filed a motion for reconsideration and for leave to amend. Grimberg argued that its superior knowledge claim is based upon the same operative facts and seeks the same relief as its existing claims before the CO, i.e.: that the government always knew that the end user did not want the valve type provided by the appellant and had imposed “extra-contractual requirements” when it finally rejected them.
The government argued that Grimberg’s amendment would be futile, because the appellant cannot demonstrate the merits of its claim. The government also argued that the end user’s preferences for certain valves were neither the basis of design, nor part of the contract, and that Grimberg was obliged to comply with the terms of the contract.
The board concluded that it possessed jurisdiction, finding that the superior knowledge claim set forth in the appellant’s proposed amended complaint relies on the same operative facts as its earlier claims. Specifically, the claims and the amended complaint alleged that the basis of design for the contract was a certain type of valve and that the government was aware of appellant’s intent to use such valves as set forth in its technical proposal. Further, the claim that the government induced Grimberg to believe that its proposed valves satisfied the contract specification is similar in nature to allegations in the amended complaint that the government misled appellant about the valves.
Next, the board considered whether the proposed amendment would be made under conditions fair to both parties. Grimberg maintained that the government would not be prejudiced by the assertion of its superior knowledge claim, because its breach of contract and bad faith claims before the CO were similar in nature. According to Grimber, its allegation that the government acted in bad faith by rejecting the valves put the government on notice that appellant would be investigating whether the government possessed superior knowledge of the end user’s rejection of the valves.
In response, the government noted that Grimberg could have included its superior knowledge allegations in its original claim, but did not. The government further argued that the appellant’s attempt to amend its complaint on the eve of the hearing is prejudicial, particularly because appellant has subpoenaed a new witness after the close of discovery to elicit testimony at the hearing, apparently in support of the superior knowledge claim. Grimberg explained that the two witnesses who are likely to testify about the superior knowledge claim are government employees who were made available for deposition and whose documents the government produced.
The board first noted that under normal circumstances, Grimberg’s attempt to amend its complaint so near to the hearing date would likely be prejudicial to the government, especially when the appellant intends to rely on testimony from a witness who was not deposed during discovery. The board also noted that Grimberg did not explain why it did not include the superior knowledge claim in its claims submitted to the CO. However, because the board already rescheduled the hearing, it concluded that there was an opportunity to cure the prejudice, as the government would have additional time to take depositions from the newly introduced witnesses. Accordingly, the board granted the motion to amend.
John C. Grimberg Company Inc. is represented by Kathleen Olden Barnes and Edward J. Parrott of Watt, Tieder, Hoffar & Fitzgerald, L.L.P. The government is represented by Thomas J. Warren, Acting Engineer Chief Trial Attorney, and by William J. Selinsky, Martin Chu, David B. Jerger, Engineer Trial Attorneys, U.S. Army Engineer District, Baltimore.
