Huntington Promotional & Supply, LLC v. United States

In the United States Court of Federal Claims

No. 11-692C

(E-Filed: February 27, 2014)

)

HUNTINGTON PROMOTIONAL & ) Motion to Dismiss for Lack of Jurisdiction,

SUPPLY, LLC, ) RCFC 12(b)(1); Motion to Dismiss for

) Failure to State a Claim, RCFC 12(b)(6);

Plaintiff, ) Conversion to Motion for Summary

) Judgment under RCFC 56, RCFC 12(d);

v. ) Substantive Contract Provisions on which a

) Party Relies, RCFC 9(k); Equal Access to

THE UNITED STATES, ) Justice Act (EAJA); Implied-in-Fact

) Contract; Authority of Government

Defendant. ) Official; Ratification

)

Lawrence M. Magdovitz, II, Cordova, TN, for plaintiff.

Alex P. Hontos, with whom were Stuart F. Delery, Assistant Attorney General, Jeanne E.

Davidson, Director, and Claudia Burke, Assistant Director, Commercial Litigation

Branch, Civil Division, United States Department of Justice, Washington, DC, for

defendant.

OPINION AND ORDER

CAMPBELL-SMITH, Chief Judge.

This case involves a claim for breach of contract. Plaintiff alleges that its invoices

for promotional goods that were custom made for, and shipped to, various Army and Air

Force Exchange Services (AAFES) locations have not been paid.

Before the court is defendant’s motion to dismiss plaintiff’s complaint (Def.’s

Mot.), Dkt. No. 25, filed October 27, 2012, pursuant to Rule 12(b)(1) of the Rules of the

United States Court of Federal Claims (RCFC), or, in the alternative, under RCFC

12(b)(6) for failure to state a claim, or for violation of RCFC 9(k). Defendant challenges

the sufficiency of the allegations in the complaint and points to deficiencies in the

contracting authority of the alleged government actors. Also before the court are:

plaintiff’s response to defendant’s motion (Pl.’s Resp.), Dkt. No. 26, filed November 28,

2012, attached to which is plaintiff’s appendix (Pl.’s App.), Dkt. No. 26-1, and

defendant’s reply to plaintiff’s response (Def.’s Reply), Dkt. No. 27, filed December 17,

2012, attached to which is defendant’s appendix (Def.’s App.), Dkt. No. 27-1. 1 The court

heard oral argument on February 28, 2013.

Documents appended to the parties’ filings suggest that plaintiff may have been

sending unsolicited goods to Army and Air Force exchange posts. If true and unrebutted,

plaintiff’s effort to prove that it had a valid contract with the government would be

unavailing. But, plaintiff insists that it can identify by name those exchange post

employees who confirmed the orders for Huntington’s promotional goods. Alternatively,

plaintiff asserts that a contracting officer ratified the oral arrangements for the goods.

The allegations in plaintiff’s complaint and its response to defendant’s

jurisdictional challenge are sufficient to defeat defendant’s motion to dismiss. But

questions about the contracting authority of the government actors persist. An evaluation

of the legal effect of the actions taken by various store employees and the contracting

officer, requires further development of the factual record.

As more fully explained below, defendant’s motion to dismiss is DENIED-IN-

PART and is CONVERTED-IN-PART to a RCFC 56 motion for summary judgment.

The court STAYS the summary judgment motion to allow the parties, if desired, to

conduct discovery and to file supplemental briefing. The court DISMISSES plaintiff’s

EAJA claim without prejudice.

I. Background 2

Huntington Promotional & Supply, LLC, (Huntington Promotion, Huntington, or

plaintiff) is a promotional products company based in Tennessee. Compl., Dkt. No. 1, ¶¶

1, 5. Plaintiff alleges that it filled orders from several Army and Air Force Exchanges

(exchanges, stores, or posts) at various times in 2009 for custom imprinted promotional

items. Id. ¶ 7. The promotional items included pens, license plate holders, and ice

1

When citing to the appendix to plaintiff’s response (Pl.’s App.), Dkt. No. 26-1,

and the appendix to defendant’s reply (Def.’s App.), Dkt. No. 27-1, the court cites to the

page number assigned by the party.

2

The court recites facts taken from the complaint as well as from the appendix to

the joint preliminary status report (JPSR App.), Dkt. No. 13-1, plaintiff’s appendix and

defendant’s appendix. The court has examined the parties’ allegations of fact for the

purpose of determining its jurisdiction.

2

scrapers; each item was imprinted with the name of the ordering military installation. 3

See id. ¶ 7; id. at 7–9 (invoices). Plaintiff states that its representatives telephonically

confirmed orders with local military exchanges before authorizing the manufacture of the

products by a third party and arranging for shipping to the posts. Id. ¶¶ 8, 10. Plaintiff

generated an invoice for each order and attached twenty-one invoices to its complaint.

Id. ¶ 9; id. at 6–26 (invoices). The invoices total $61,473.50. Id. ¶ 9; id. at 5 (invoice

summary).

Several months prior to the transactions referenced in the complaint,

representatives from Huntington met with contracting officer Robert Schmid to explore

potential business opportunities with AAFES. Def.’s App. 16 ¶ 4 (Decl. of Robert F.

Schmid) (stating that Mr. Schmid and a colleague met with Huntington representatives on

June 10, 2009). At that meeting, Mr. Schmid adverted to an impending change in the

AAFES policy governing how stores acquired goods for sale. Id. ¶ 5. Mr. Schmid

described the policy change as follows:

Prior to 2009, AAFES used a “store/headquarters buying responsibility,”

meaning some purchase decisions were made by stores and others were

made by headquarters. During 2009, this process changed and headquarters

took responsibility for purchasing decisions for individual stores. One

requirement of the change was that all potential vendors have an AAFES-

approved retail agreement. Without such an agreement, a vendor cannot

sell goods to AAFES for resale purposes. . . . A retail agreement must be

signed by both the Contracting Officer and the vendor. I discussed these

changes with Huntington, including explaining to its representatives that all

buying decisions would be made by headquarters (i.e., me and my team)

after August 1, 2009. Huntington has never had an AAFES retail

agreement.

Id. The majority of plaintiff’s invoices—seventeen of the twenty-one submitted—are

dated after August 1, 2009. 4 See Compl. 5 (invoice summary) (listing the dates of the

3

Plaintiff attached a summary of its invoices and the twenty-one underlying

individual invoices to its complaint. See generally Compl., Dkt. No. 1. When citing to

the invoices, the court cites to the complaint and page number assigned by the court’s

electronic case filing system that appears at the top of the referenced page.

4 Plaintiff’s invoices bear “invoice dates,” but do not list the dates on which the

orders were placed. See Compl. 6–26 (invoices). Plaintiff’s counsel represented at oral

argument that Huntington does not have any record of the dates on which the orders were

placed. Tr. Oral Arg., Dkt. No. 34, at 56: 3–7 (“[M]y client doesn’t have any . . . specific

information on what day the call was made, but in the course of business practice, it

would have been . . . if not the day of the invoice, it would have been around that time.”).

3

invoices). Four of the invoices predate the change in buying responsibility for AAFES:

one invoice is dated April 26, 2009, and three are dated July 30, 2009. See id.

In October of 2009, a general manager at the Dyess Exchange, Sheila Miller (Ms.

Miller), sent an e-mail stating that Huntington had shipped unordered goods to the

exchange. 5 Def.’s App. 11 (e-mail from Sheila L. Miller, Oct. 13, 2009). The e-mail

contains the subject line “Huntington Promotion” and states, in relevant part:

This company has shipped several cases of souvenir type items to our store.

The problem is, no one ordered the merchandise. It arrived without

invoices or any contact information. The merchandise was not even in the

system. After finally tracking down the company . . . , they asked if we

would keep it for a lower cost. Of course, we said no. They then said they

would provide call tags for pick up. The merchandise is still in our store.

After all the contact with this company, they then sent us invoices. We are

still trying to get this company to pick up the merchandise.

Id.

Plaintiff instead submitted a document to the court purporting to represent when certain

orders were verified. See Pl.’s App. 29–30 (e-mail from Larry Magdovitz, Sept. 13,

2011) (Contact List E-mail). In response to the contracting officer’s request for proof of

delivery, plaintiff submitted a list of its local exchange contacts. See id. The Contact

List E-mail contains the following information for each entry: name of exchange, contact

person at that exchange, phone number, and the date the order was verified. Id. For

some of the entries, a tracking number of the shipment is also listed. Id. Of note, the

dates listed in the Contact List E-mail do not match the invoice dates. Compare id., with

Compl. 6–26 (invoices). One possible explanation for this discrepancy is that Huntington

verified orders on different dates. While the Contact List E-mail provides some

indication of what and when Huntington communicated with the exchanges, it does not

provide a comprehensive summary of the dates on which orders were placed. For

example, plaintiff attached to its complaint four invoices for Dyess Air Force Base—two

orders invoiced on September 3, 2009 and two orders invoiced on October 3, 2009. See

Compl. 15–16, 22–23 (invoices). But, review of the Contact List E-mail reveals only one

entry for a verified order for Dyess Air Force Base. See Pl.’s App. 29–30 (Contact List

E-mail). Unclear to the court is whether all of the invoices were generated from one

verified order, or whether additional orders were verified—beyond those listed in the

Contact List E-mail—which correspond to the additional invoices.

5

The e-mail recipient is identified as “zzWR MSM.” Def.’s App. 11 (e-mail from

Sheila L. Miller, Oct. 13, 2009.)

4

A series of e-mails ensued conveying Ms. Miller’s concerns up the chain of

command. See Joint Preliminary Status Report App. (JPSR App. 6), Dkt. No. 13-1, 39–42

(Oct. 13, 2009 emails). Instructions were given to place an immediate hold on payments

to Huntington. Id. at 39 (e-mail from Edward W. Brassart, Oct. 13, 2009). As the

contracting officer, Mr. Schmid sent an action alert directing that any deliveries received

from Huntington were to be refused at the dock. Def.’s App. 12 (e-mail from SD Store

Communications, Oct. 14, 2009); see also Def.’s App. 17 ¶ 7 (Schmid Decl.). Plaintiff

complains in this action that its products were returned after it had confirmed the orders.

See Compl. ¶ 11.

On February 15, 2011, plaintiff submitted its invoices with a demand for payment

or, alternatively, a decision from the contracting officer regarding its claim. Id. ¶ 13.

The contracting officer had doubts about the received invoices, 7 Def.’s App. 17 ¶ 9

(Schmid Decl.), and requested more information from Huntington about the alleged

transactions. Specifically, he asked plaintiff to furnish copies of the purchase orders and

the correlative proof of receipt, bearing the requisite signatures of an authorized AAFES

agent. Id. ¶ 10. The court cannot discern from the documents before it either when Mr.

Schmid made this request or whether plaintiff responded.

In June of 2011, nearly three months after plaintiff submitted its invoices,

plaintiff’s counsel contacted the contracting officer complaining that no response to the

February demand had been received. Def.’s App. 15 (e-mail from Larry Magdovitz, June

8, 2011). Plaintiff advised that it would file suit if no payment were received. Id.

The contracting officer responded to plaintiff that same day. Def.’s App. 14 (e-

mail from Robert Schmid, June 8, 2011). He stated that he was awaiting information

about the alleged orders from those AAFES associates with whom plaintiff claimed to

6

When citing to the JPSR Appendix, the court cites to the page number assigned by

the court’s electronic case filing system that appears at the top of the referenced page.

7

Mr. Schmid described his concerns about the invoices:

[T]he box labeled ‘Customer PO [(Purchase Order)]’ number was blank on

each invoice. If these orders had been placed, the AAFES official making

the order would have provided Huntington a PO number, which Huntington

would have put in the Customer PO blank. Likewise, the invoiced unit

prices were high: $10.44 wholesale for an ice scraper is very expensive.

Finally, the quantities appeared to often be far in excess of the quantities I

would have expected: in some cases the quantities amounted to a five-year

supply.

Def.’s App. 17 ¶ 9 (Schmid Decl.).

5

have had contact. Id. Of particular interest were the associates’ recollections of any

business dealings with Huntington. Id. Plaintiff’s failure to supply the information

earlier requested of it had prompted the contracting officer to inquire of the AAFES

associates directly. Def.’s App. 17, ¶¶ 10, 12 (Schmid Decl.). The contracting officer

intended to forward the associates’ responses to AAFES’s general counsel who, in turn,

would contact plaintiff. Def.’s App. 14 (e-mail from Robert Schmid, June 8, 2011).

Two days later, on June 10, 2011, the contracting officer sent a follow-up e-mail

to plaintiff’s counsel. Def.’s App. 14 (e-mail from Robert Schmid, June 10, 2011)

(Approval E-mail). He stated:

After consulting with our General Counsel and reviewing all open invoices

due I have decided to approve the payment of open invoices presented by

your client to our accounts payable department. This decision does not

condone the business practices of your client but speaks more for the desire

of [t]he Exchange to at all times follow all applicable laws regarding

payments and receipts from our vendors.

The fact remains that your client shipped product to our stores which had

not been ordered and in most cases could not be received. Repeated

attempts by our stores to return this merchandise were ignored. A copy of

this correspondence is being placed in your client[’]s effectiveness file and

will certainly be reviewed and considered in determining responsibility for

future awards.

Our Finance department is compiling these invoices and will also calculate

any applicable late payment fees. I’ll update this E-MAIL when I have

been given the invoice total hopefully before I leave today. 8

8

Mr. Schmid provided more detail in his declaration about his e-mail dated June 10,

2011, explaining that “‘open invoices’ [referred to] any invoice . . . received by [the]

accounts payable department that met all the requirements for payment (e.g., that

accounts payable actually had the invoices and that Huntington had satisfied the proof-of-

delivery requirement) but had not yet been paid.” Def.’s App. 18 ¶ 13 (Schmid Decl.).

When Mr. Schmid authorized payment of plaintiff’s invoices in the June 10, 2011 e-mail,

he was unaware that there were no open invoices from Huntington before the accounts

payable department. Id.

Although Mr. Schmid’s declaration contains a definition of “open invoices,” his

earlier June 10, 2011 e-mail sent to plaintiff’s counsel did not. Compare id., with Def.’s

App. 14 (e-mail from Robert Schmid, June 10, 2011) (Approval E-mail). But when

plaintiff demanded payment in February 2011, Mr. Schmid had concerns about plaintiff’s

invoices, Def.’s App. 17 ¶ 9 (Schmid Decl.), and in the subsequent e-mail in which he

6

Id. (footnote added). But, this e-mail did not resolve the matter.

One week later, the contracting officer e-mailed plaintiff’s counsel again reporting

that the accounts payable department had no unpaid invoices from Huntington. Def.’s

App. 13 (e-mail from Robert Schmid, June 17, 2011). The contracting officer asked to

have the unpaid invoices, together with proof of delivery, forwarded to him. Id.

In response, plaintiff’s counsel forwarded the requested invoices to the contracting

officer. Pl.’s App. 31 (e-mail from Larry Magdovitz, June 30, 2011). However, counsel

did not forward any proof of delivery. Pl.’s App. 30–31 (e-mail from Robert Schmid,

June 30, 2011).

A few months later, plaintiff sent an e-mail to the contracting officer containing a

list of contact persons at the ten different exchange locations that allegedly had ordered

goods from Huntington. Pl.’s App. 29–30 (e-mail from Larry Magdovitz, Sept. 13, 2011)

(Contact List E-mail); see supra note 4 (discussing the Contact List E-mail). Plaintiff

also provided tracking information for two of the twenty-one orders and indicated that

“proof of delivery [was] attached” for one order. 9 Pl.’s App. 29–30. The contracting

officer reiterated in his response to plaintiff that payment would be authorized only for

those orders that had proof of delivery. Pl.’s App. 29 (e-mail from Robert Schmid, Sept.

18, 2011).

Huntington has not received payment for its invoices. Compl. ¶ 14. Nor has the

contracting officer issued a final decision denying plaintiff’s claim. Id. Plaintiff filed a

complaint against the government on October 18, 2011. See id.

Plaintiff alleges that defendant failed to pay the amounts it was invoiced in breach

of the parties’ contract. See id. ¶¶ 16, 19. Plaintiff complains that the custom imprinted

goods cannot be resold, id. ¶ 18, and it seeks attorneys’ fees under the Equal Access to

Justice Act (EAJA) asserting that defendant’s refusal to pay for the shipped custom goods

is not a substantially justified position, see id. ¶¶ 21–23.

Defendant has moved to dismiss plaintiff’s complaint on jurisdictional grounds.

Def.’s Mot. 1. Defendant argues that the allegations in the complaint, on their face, do

not support a breach-of-contract claim. Alternatively, defendant argues that the

agreed to pay the invoices, he alluded to plaintiff’s questionable business practices, see

Def.’s App. 14 (Approval E-mail).

9

The court has no record of the referenced proof of delivery and no information

regarding whether, in fact, proof of delivery was attached.

7

allegations are missing the factual underpinnings that would establish the existence of a

legally binding agreement. Id.

The government asks the court, in a footnote, to evaluate the allegations in the

complaint by applying a failure to state a claim standard, “[i]n the event that the [c]ourt

declines to review the complaint through the RCFC 12(b)(1) prism.” Id. at 4 n.1. In a

subsequent footnote, defendant urges the court to dismiss the complaint because it does

not comply with RCFC 9(k), id. at 8 n.2, which requires “a party [to] identify the

substantive provisions of the contract . . . on which the party relies[,] . . . [or] annex to the

complaint a copy of the contract,” RCFC 9(k). The government further asserts that

plaintiff’s request for attorneys’ fees pursuant to EAJA is premature and must be

dismissed. Def.’s Mot. 3.

II. Applicable Legal Standards

A. The Standards for Dismissal Under RCFC 12(b)(1) and the Requirements

of RCFC 9(k)

Plaintiff bears the burden of establishing the court’s jurisdiction by a

preponderance of the evidence. See Reynolds v. Army & Air Force Exch. Serv., 846

F.2d 746, 748 (Fed. Cir. 1988). In the circumstance in which a plaintiff alleges a breach

of contract, “[a] well pleaded allegation of a breach of either an express or implied-in-fact

contract is sufficient to overcome challenges to jurisdiction.” Bank of Guam v. United

States, 578 F.3d 1318, 1325 (Fed. Cir. 2009) (citing Trauma Serv. Grp. v. United States,

104 F.3d 1321, 1325 (Fed. Cir. 1997)).

Moving for dismissal pursuant to RCFC 12(b)(1), defendant questions the

sufficiency of the allegations in the complaint on their face and thus, mounts a facial

challenge. The United States Court of Appeals for the Federal Circuit instructs that in

such circumstances, the allegations in the complaint are taken as true and all reasonable

inferences are made in plaintiff’s favor. Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d

1573, 1583 (Fed. Cir. 1993).

Defendant also mounts a factual challenge to the complaint by denying plaintiff’s

allegations of jurisdiction. The Federal Circuit has distinguished the standard for

reviewing factual challenges from the standard for reviewing facial challenges,

explaining that when a factual challenge is presented in the complaint, “only [the]

uncontroverted factual allegations are accepted as true for purposes of the motion.”

Cedars-Sinai Med. Ctr., 11 F.3d at 1583. To resolve the disputed jurisdictional facts, the

court may examine more than the face of the pleadings; it may consider extrinsic

evidence. Id. at 1584.

8

Defendant here further challenges the sufficiency of plaintiff’s complaint on the

ground that it fails to satisfy the requirements of RCFC 9(k). RCFC 9(k) sets forth the

special manner in which contract claims are to be pleaded:

In pleading a claim founded on a contract or treaty, a party must identify

the substantive provisions of the contract or treaty on which the party relies.

In lieu of a description, the party may annex to the complaint a copy of the

contract or treaty, indicating the relevant provisions.

RCFC 9(k). If a plaintiff fails to comply with RCFC 9(k) and to allege sufficient facts to

show that it had a contract with the United States, the court cannot exercise jurisdiction

over the claim. Gonzalez-McCaulley Inv. Grp., Inc. v. United States, 93 Fed. Cl. 710,

715 (2010) (citing Mendez-Cardenas v. United States, 88 Fed. Cl. 162, 168 (2009));

Phang v. United States, 87 Fed. Cl. 321, 330 (2009)). 10

B. The Standard for Dismissal Under RCFC 12(b)(6) and Conversion to a

Motion for Summary Judgment Under RCFC 56

A claim for relief must contain “a short and plain statement of the claim showing

that the pleader is entitled to relief.” RCFC 8(a)(2). This “pleading standard . . . does not

require ‘detailed factual allegations,’ but it demands more than an unadorned, the-

defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal (Iqbal), 556 U.S. 662,

678 (2009) (quoting Bell Atl. Corp. v. Twombly (Twombly), 550 U.S. 544, 555 (2007)).

The “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim

to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550

U.S. at 570). When evaluating a motion to dismiss for failure to state a claim upon which

relief can be granted under RCFC 12(b)(6), the court must accept the allegations

contained in the complaint as true and construe them in the manner most favorable to the

non-moving party. Cedars-Sinai Med. Ctr., 11 F.3d at 1584 n.13. The court’s 12(b)(6)

inquiry is limited to examining the facts pleaded in the complaint. See Advanced

Cardiovascular Sys., Inc. v. Scimed Life Sys., Inc., 988 F.2d 1157, 1164 (Fed. Cir. 1993).

“[T]he tenet that a court must accept as true all of the allegations contained in a

complaint is inapplicable[, however,] to legal conclusions.” Iqbal, 556 U.S. at 678.

When legal conclusions are asserted in a complaint, “[t]he court must determine ‘whether

10

In each of the rulings cited, the court did not dismiss the claim solely due to a

failure to satisfy RCFC 9(k); rather, in each instance, the court conducted a RCFC 9(k)

analysis and evaluated its jurisdiction by applying the RCFC 12(b)(1) standard. See

Gonzalez-McCaulley Inv. Grp., Inc. v. United States, 93 Fed. Cl. 710, 715 (2010);

Mendez-Cardenas v. United States, 88 Fed. Cl. 162, 168 (2009); Phang v. United States,

87 Fed. Cl. 321, 330 (2009).

9

the claimant is entitled to offer evidence to support the claims,’ not whether the claimant

will ultimately prevail.” Chapman Law Firm Co. v. Greenleaf Constr. Co., 490 F.3d 934,

938 (Fed. Cir. 2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

If the court considers materials outside of the pleadings in its deliberation, a

motion to dismiss under RCFC 12(b)(6) must be converted to a motion for summary

judgment under RCFC 56 and evaluated under the applicable standard. RCFC 12(d) (“If,

on a motion under RCFC 12(b)(6) . . . , matters outside the pleadings are presented to and

not excluded by the court, the motion must be treated as one for summary judgment

under RCFC 56.”); Advanced Cardiovascular Sys., Inc., 988 F.2d at 1164. In these

circumstances, the parties are afforded the opportunity to present any material that would

be pertinent to a motion for summary judgment. RCFC 12(d).

C. The Standard for a Fee Award Under the Equal Access to Justice Act

(EAJA)

EAJA authorizes the payment of reasonable attorney fees if: (1) the claimant is a

prevailing party; (2) the government’s position was not substantially justified; and (3) no

special circumstances exist that would make an award unjust. Libas, Ltd. v. United

States, 314 F.3d 1362, 1365 (Fed. Cir. 2003). An application for such fees may be filed

after entry of judgment; the filing must be made within 30 days after the court enters

judgment. See 28 U.S.C. § 2412(d)(1)(B) (2012).

III. Discussion

A. Plaintiff’s Allegations Are Sufficient to Invoke This Court’s Jurisdiction

The Court of Federal Claims has jurisdiction over any suit founded upon an

express or implied-in-fact contract with the United States pursuant to the Tucker Act. 28

U.S.C. § 1491 (“The United States Court of Federal Claims shall have jurisdiction to

render judgment . . . upon any express or implied contract with the United States . . . .

For the purpose of this paragraph, an express or implied contract with the Army and Air

Force Exchange Service . . . shall be considered an express or implied contract with the

United States.”). “[J]urisdiction under [the Tucker Act] requires no more than a non-

frivolous allegation of a contract with the government.” Engage Learning, Inc. v.

Salazar, 660 F.3d 1346, 1353 (Fed. Cir. 2011).

Plaintiff must allege the elements of a contract to invoke the court’s jurisdiction

over a contract claim. See Trauma Serv. Grp., 104 F.3d at 1325. The elements are the

same for an express or implied-in-fact contract: “a mutual intent to contract including an

offer, an acceptance, and consideration,” and actual authority on the part of the

government representative to bind the United States in contract. Id. In the circumstance

in which an implied-in-fact contract has been alleged, the element of an express offer and

10

acceptance may be missing, but the parties’ conduct can demonstrate mutual assent. City

of Cincinnati v. United States, 153 F.3d 1375, 1377 (Fed. Cir. 1998).

If a government representative is discovered to have acted without appropriate

contracting authority, the action can be ratified to create an enforceable contract.

Ratification of a contract requires a showing, by plaintiff, that: (1) the government agent

who lacked contracting authority had some similar type of authority; (2) some

government agents were aware of the proposed agreement; and (3) the government

received a “direct benefit” from the unauthorized contract. Doe v. United States, 58 Fed.

Cl. 479, 486 (2003) (citing Janowsky v. United States, 133 F.3d 888, 889–92 (Fed. Cir.

1998)), aff’d, 112 Fed. App. 54 (Fed. Cir. 2004). Proof of ratification also requires a

showing that the ratifying official had actual or constructive knowledge of the

unauthorized act based on “‘full knowledge of all the facts’” and yet, actively approved

the contract. Id. (emphasis omitted) (quoting Harbert/Lummus Agrifuels Projects v.

United States, 142 F.3d 1429, 1433 (Fed. Cir. 1998)).

Plaintiff asserts that after it confirmed orders for its custom-made promotional

goods with various AAFES stores, shipped the ordered goods and sent billing invoices,

defendant breached its contractual arrangement with plaintiff by failing to pay. Compl.¶¶

8, 10, 16, 19. In the alternative, plaintiff asserts that if the arranged orders did not

constitute enforceable contracts, the contracting officer subsequently ratified the arranged

orders in an e-mail sent to plaintiff’s counsel. Pl.’s Resp. 9. On its face, plaintiff’s claim

for relief appears to fall squarely within the jurisdiction of the court over claims founded

upon a contract with the government. See 28 U.S.C. § 1491; Trauma Serv. Grp., 104

F.3d at 1325 (“[Plaintiff’s] complaint alleges that an express and, in the alternative, an

implied-in-fact contract underlies its claim. This allegation suffices to confer subject

matter jurisdiction in the Court of Federal Claims.”).

Defendant, however, denies the existence of a contract between Huntington and

the government, challenging the factual sufficiency of plaintiff’s complaint on the ground

that plaintiff failed to allege that the named contacts at the exchange posts had the

requisite contracting authority to bind the government. Defendant assails the

underpinnings of plaintiff’s claim, setting forth a factual account that differs from

plaintiff’s account.

Defendant contends that plaintiff shipped its goods to AAFES stores without first

confirming orders. Def.’s Mot. 9. Then plaintiff invoiced the stores for the delivered

goods, with the hope of obtaining payment—notwithstanding the absence of a contract.

Id. Urging the court to look beyond the face of the complaint, defendant mounts a

jurisdictional challenge to the facts on which plaintiff’s complaint is based. Id.

11

In support of its jurisdictional challenge, defendant has presented extrinsic

evidence to the court that has not been excluded. 11 Therefore, the allegations in the

complaint are not controlling. See Cedars-Sinai Med. Ctr., 11 F.3d at 1583–84.

Consistent with the applicable standards of review, the court accepts as true only the

uncontroverted facts alleged by plaintiff, and considers the evidence provided by the

parties outside of the pleadings to determine whether this court has jurisdiction over

plaintiff’s claim. Id.

The salient question presented here is not whether plaintiff has proven

satisfactorily the elements of contract formation, but whether plaintiff has alleged the

existence of a contract sufficiently for the court to exercise its jurisdiction over plaintiff’s

claim. See Total Med. Mgmt. v. United States, 104 F.3d 1314, 1319 (Fed. Cir. 1997)

(“[T]he law is clear that, for the Court of Federal Claims to have jurisdiction, a valid

contract must only be pleaded, not ultimately proven.”); see also Engage Learning, Inc. v.

Salazar, 660 F.3d 1346 (Fed. Cir. 2011) (“‘[J]urisdiction is not defeated . . . by the

possibility that the averments might fail to state a cause of action on which petitioners

could actually recover.’ Rather, . . . ‘it is well settled that the failure to state a proper

cause of action calls for a judgment on the merits and not for a dismissal for want of

jurisdiction.’” (internal citations omitted) (alterations in original) (quoting Bell v. Hood,

327 U.S. 678, 682 (1946))).

Plaintiff argues that its allegations paired with evidence in the form of invoices, e-

mail correspondence listing government actors at each of the exchanges, and a possible

ratification e-mail from the contracting officer are sufficient to invoke the court’s

jurisdiction. The court agrees.

1. Plaintiff’s Allegations Concerning the Authority Element of

Contract Formation Are Sufficient

Defendant argues that plaintiff has not alleged sufficiently the authority element of

its claimed contract. Def.’s Mot. 7. According to defendant, plaintiff has failed to assert

that the government officials listed in the Contact List E-mail were the ones who ordered

the goods; that the government actors had either the position or authority to bind

defendant contractually; and that the agency followed the pertinent procedures to place

the orders at issue. Id.

11

The court has considered the following evidence submitted by the parties outside

of the pleadings: e-mail exchanges between the parties, see Pl.’s App. 27–31; JPSR App.

passim, and declarations of the contracting officer and of two exchange managers, who

ostensibly were working at the named exchanges when the alleged events occurred,

Def.’s App. 16–21. Plaintiff did not request a sur-reply after defendant submitted the

aforementioned materials with its reply brief. Nor has plaintiff had the opportunity to

depose the declarants.

12

Defendant contends the cited omissions warrant dismissal of plaintiff’s complaint,

and defendant points to two decisions in which courts found that the plaintiff’s failure to

identify with particularity who contracted on behalf of the government defeated

plaintiff’s contract claim. Def.’s Reply 2. But, the cases defendant references for this

proposition were decided on the merits, not on the jurisdictional grounds defendant urges

here. See, e.g., Trauma Serv. Grp., 104 F.3d at 1327 (finding that “[a] well-pleaded

allegation in the complaint [was] sufficient to overcome challenges to jurisdiction,” but

ruling that plaintiff had failed to state a meritorious claim because it had not identified

any particular government representative who entered into the alleged contract); Pennco

Trucking Inc. v. United States, 20 Cl. Ct. 534, 540 (1990) (In the context of a summary

judgment ruling to recover freight charges, the court found that a declaration furnished by

plaintiff that failed to identify the pertinent government personnel did not satisfy

plaintiff’s burden of proof, but letters demonstrating the same proposition were sufficient

to grant relief in plaintiff’s favor.). The court does not find these cases helpful to the

instant jurisdictional analysis.

Defendant also relies on the exhibits it attached to its briefing to refute plaintiff’s

claim that it formed contracts with AAFES’s store managers. For example, attached to

the government’s reply brief is a declaration from Andrea Frazier (Ms. Frazier), who

served as the manager of the exchange post at Nellis Air Force Base and whom plaintiff

identified as a key contact person. Def.’s App. 21 (Decl. of Andrea Frazier); see Pl.’s

App. 29–30 (Contact List E-mail). Ms. Frazier denies meeting with Huntington, and

does not recall any other contact with Huntington as a vendor. Def.’s App. 21 (Frazier

Decl.).

Defendant provides, as another exhibit, the declaration of Ms. Miller, the store

manager who first alerted upper management that Huntington was shipping unordered

goods. Def.’s App. 20 (Decl. of Sheila L. Miller). Ms. Miller’s declaration was

consistent with the earlier e-mail she sent reporting that Huntington had shipped

unordered goods to Dyess Air Force Base. Compare id., with Def.’s App. 11 (e-mail

from Sheila Miller, Oct 13, 2009).

The statements of Ms. Frazier and Ms. Miller call into question—but do not

resolve—whether plaintiff confirmed the alleged orders for promotional goods with

either authorized officials or other personnel at the various exchanges. Neither Ms.

Miller nor Ms. Frazier addressed their authority to contract. Moreover, plaintiff asserts

that it formed contracts with at least eight additional AAFES stores for which there is not

yet any evidence or deposition testimony regarding the authority or recollections of the

government actors listed as plaintiff’s contacts at those exchanges.

Plaintiff has presented a list of the government actors who allegedly ordered goods

or confirmed orders with plaintiff. Pl.’s App. 29–30 (Contact List E-mail); see Tr. Oral

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Arg. 59:10–17. And controlling case law teaches that an allegation of contract formation

with an authorized government agent is sufficient for plaintiff to meet its burden of

demonstrating the court’s jurisdiction. See Engage Learning, Inc., 660 F.3d at 1353

(“[J]urisidction under [the Tucker Act] requires no more than a non-frivolous allegation

of a contract with the government.”) (emphasis omitted); Gould, Inc. v. United States, 67

F.3d 925, 930 (Fed. Cir. 1995) (ruling that “[t]he Court of Federal Claims must first

assume jurisdiction” before it could determine whether plaintiff had proven the elements

of an implied-in-fact contract.) see also Sommers Oil Co. v. United States, 241 F.3d 1375

(Fed. Cir. 2001) (finding that although “the complaint is not a model of pleading, as it

does not specifically assert that the government’s contractual commitment was made by a

person with statutory or regulatory authority to do so[,] . . . we conclude that the

complaint alleges authorization sufficiently to withstand a motion to dismiss,” and “[t]o

the extent that the government means that [plaintiff] was required to identify and plead

the particular person who approved the contractual arrangement with [plaintiff] and the

particular statute or regulation that authorized that person to commit the government in

contract, we disagree. It was sufficient for the complaint to allege that the government’s

promise was authorized by a person having legal authority to do so . . . .”).

Absent additional evidence, plaintiff’s claim that it contracted with named store

managers is sufficient to invoke the court’s jurisdiction, provided the remaining elements

of a contract are sufficiently alleged.

Of the elements required for a contract, the parties have focused primarily on the

authority of the government’s agents. The parties devote less attention to the remaining

elements of contract formation here, but the court is satisfied that those elements were

pled sufficiently for jurisdictional purposes. 12 Additional factual development is

necessary to determine whether the store-level personnel with whom plaintiff

12

Defendant argues that Mr. Schmid’s suspicion concerning plaintiff’s invoices

demonstrates ambiguity in the offer and the acceptance of the purported contract. Def.’s

Reply 7; Def.’s App. 17 ¶ 9 (Schmid Decl.) (stating that the invoices were suspicious

because the purchase order number was blank, the prices were high, and the quantities

were in excess of what would have been expected). Defendant adds that had the contract

terms been clear, plaintiff would not have proposed that the exchanges keep the delivered

goods at a lower price. Def.’s Reply 7–8; see Def.’s App. 11 (E-mail from Sheila L.

Miller, Oct. 13, 2009) (stating that plaintiff shipped unordered goods and then asked if

the store would keep the merchandise for a lower cost).

Mr. Schmid’s concerns about the invoices prepared by plaintiff, in part triggered

by the absence of any customer purchase order number on the invoices, merit closer

attention. But for the purpose of establishing the court’s jurisdiction, the combination of

plaintiff’s invoices and plaintiff’s list of alleged contacts at each exchange is sufficient.

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communicated regarding its promotional goods were authorized to enter into the alleged

contracts, and if not, whether defendant subsequently acted to ratify the implied

agreements.

2. The Cases Defendant Cites in Support of Dismissal for Lack of

Jurisdiction Are Inapposite on the Facts of This Case

Defendant cites decisions on which it relies in support of its dismissal motion.

Defendant asserts that in each of the cases, plaintiff’s claim was dismissed on

jurisdictional grounds due to the insufficiency of plaintiff’s evidence regarding whether a

contract with the government had been formed. Def.’s Mot. 5–6.

In Cain v. United States, the appeals court affirmed this court’s dismissal of a

failed savings and loan association case. 350 F.3d 1309, 1310 (Fed. Cir. 2004). The

government had approved, in a letter to plaintiff, the proposed conversion from a mutual

association to a stock company. Id. at 1311–12. Plaintiff argued that the letter, together

with other correspondence, was evidence of a contract between the parties. Id. at 1314–

16. The court found that the letter simply reflected the Bank Board’s regulatory approval

of the proposed conversion, and observed that “‘[a]n agency’s performance of its

regulatory or sovereign functions does not create contractual obligations. Something

more is necessary.’” Id. at 1315 (quoting D&N Bank v. United States, 331 F.3d 1374,

1378–79 (Fed. Cir. 2003)). Absent the formation of a contract between the parties, the

court affirmed the dismissal of plaintiff’s claim for lack of jurisdiction. See id. at 1317;

see also Cain v. United States, 53 Fed. Cl. 658, 667 (2002) (dismissing plaintiff’s claim

for lack of jurisdiction).

In Ryan v. United States, another savings and loan case, plaintiff contended that

regulatory approval of its transition from a savings and loan association to a state-

chartered bank resulted in a contract between the bank and the government. 57 Fed. Cl.

731, 733 (2003). Although plaintiff alleged that the “totality of the conduct” of the

Office of Thrift Supervision and the Federal Deposit Insurance Corporation had produced

an implied-in-fact contract, plaintiff failed to allege any of the elements of an implied-in-

fact contract. Id. Nor did plaintiff identify a government actor with whom it had

communicated at the bank who might have had authority to enter into the purported

contract. Id. The court dismissed plaintiff’s claim, on defendant’s motion, for lack of

jurisdiction. Id. at 734.

In another Court of Federal Claims decision, Central Freight Lines, Inc. v. United

States, plaintiff argued that it had a contract with the United States for transportation

services based on its name appearing on bills of lading. 87 Fed. Cl. 104, 108–09 (2009).

The court ruled that no contract existed between plaintiff and the government because,

inter alia, plaintiff was a subcontractor and did not have privity of contract with the

government. Id. at 109. The court also found that the prime contractor was not an agent

15

of the United States and had no authority to bind the government. Id. The court

dismissed for lack of jurisdiction. Id. at 113.

The rulings in Cain and Ryan turned on a finding that the government’s regulation

of the plaintiff bank failed to create a contractual relationship. And in Central Freight

Lines, the plaintiff was a subcontractor and was therefore unable to allege privity of

contract. In contradistinction to the cases cited by defendant, plaintiff here describes a

contract for the sale of goods to defendant—not a regulatory one. Moreover, the

government does not contend that Huntington was a subcontractor or lacks privity of

contract with the government for some other reason. In the instant case, plaintiff has

supplied the court with the invoices it presented to defendant and the names of plaintiff’s

contacts at each AAFES store to support its claim of having formed a contract with

defendant.

Plaintiff alleges that it formed a contract with defendant either by its initial

communication with personnel at the exchange posts or by a subsequent ratification e-

mail from Mr. Schmid. And in satisfaction of the special pleading requirement set forth

in RCFC 9(k) that a claimant either “identify the substantive provisions of the contract or

. . . annex to the complaint a copy of the contract,” plaintiff annexed to its complaint

copies of the invoices sent to the AAFES exchanges.

Defendant’s challenge to the existence of a contract and the evidence it has

introduced compel a closer look at whether a contract, in fact, was formed in this case.

But defendant does not point to a case —and the court has not found one—in which the

plaintiff has alleged the elements of a contract for goods, and the claim was dismissed on

jurisdictional grounds because the factual underpinnings for the elements of the contract

were called into question. Cf. Bailey v. United States, 40 Fed. Cl. 449, 461–62 (1998)

(denying the government’s motion to dismiss for lack of jurisdiction where additional

factual development was necessary to resolve the issues of authority to contract and

contract formation). The court finds that further factual development is necessary to

determine whether the parties formed the contract plaintiff alleges. That determination is

pending. At this juncture, however, the court is satisfied that plaintiff’s assertions survive

the jurisdictional challenge posed.

B. On the Record Before It, the Court Cannot Rule on Whether Plaintiff Has

Failed to State a Claim for Which Relief Can be Granted

Defendant, alternatively, moves the court to evaluate plaintiff’s claim under the

standard governing a RCFC 12(b)(6) motion to dismiss for failure to state a claim. Def.’s

Mot. 4 n.1. But, plaintiff has alleged in its complaint the existence of a contract with the

United States and a breach of that contract caused by the government’s failure to pay

plaintiff’s invoices. These claims, and the uncontroverted facts presented here, would

appear to satisfy the plausibility standard announced in the Supreme Court’s decisions in

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Twombly and Iqbal. See Iqbal, 556 U.S. at 678 (“[The] complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

face.’” (quoting Twombly, 550 U.S. at 570 (2007))).

Defendant disputes the existence of a contract and has attached exhibits to its

filings that the court has considered and declines to exclude. See supra note 11,

(identifying the extrinsic evidence submitted by the parties and considered by the court).

Because the court has examined the materials provided it by the parties outside of the

pleadings, it cannot decide the motion as one brought under RCFC 12(b)(6). See RCFC

12(d) (“If, on a motion under RCFC 12(b)(6) or 12(c), matters outside the pleadings are

presented to and not excluded by the court, the motion must be treated as one for

summary judgment under RCFC 56. All parties must be given a reasonable opportunity

to present all the material that is pertinent to the motion.”). Instead, the court must

convert defendant’s 12(b)(6) motion to one for summary judgment. Id.

The rules of this court require that the court provide the parties with notice of its

intention to treat defendant’s motion as a motion for summary judgment and an

opportunity to proceed pursuant to the rules of summary judgment. See id.; Easter v.

United States, 575 F.3d 1332, 1335 (Fed. Cir. 2009) (“Before the court may convert a

motion for judgment on the pleadings into a motion for summary judgment, the court

must ordinarily provide notice of its intention to do so.”); Advanced Cardiovascular Sys.,

Inc., 988 F.2d at 1164 (“[O]n motion to dismiss on the complainant’s pleading it is

improper for the court to decide the case on facts not pleaded by the complainant, unless

the complainant had notice thereof and the opportunity to proceed in accordance with the

rules of summary judgment.”).

As notified, the parties shall proceed by conducting any necessary discovery and

supplementing their filings with any pertinent material of their choosing. On or before

March 14, 2014, the parties shall file a joint status report proposing a schedule for

further proceedings.

C. Plaintiff’s EAJA Claim Is Dismissed as Premature

Defendant argues that Huntington’s request for attorneys’ fees is premature and

must be dismissed because it is not ripe. Def.’s Mot. 9–10. The court agrees that the

application was filed too early. An application for attorneys’ fees under EAJA must be

filed within the thirty day period after entry of judgment. See 28 U.S.C. § 2412(d)(1)(B).

Attorneys’ fees are awarded under EAJA when “the party is a prevailing party,” 13 and the

13

To qualify as a prevailing party, “there must be an actual, court-ordered alteration

in the legal relationship [of] the parties in the form of an entry of judgment or a consent

decree.” Chapman Law Firm Co. v. Greenleaf Constr. Co., 490 F.3d 934, 939 (Fed. Cir.

2007).

17

government’s position in the litigation “was not substantially justified.” See id. None of

these requirements are satisfied presently. Plaintiff does not dispute the court’s lack of

jurisdiction to entertain its EAJA claim at this time, but expresses its concern that should

the court dismiss its EAJA claim now, the government would attempt to use that ruling

against plaintiff in the event that Huntington prevails on the merits. Pl.’s Reply 9–10.

Huntington’s request for fees is not yet ripe, and must be dismissed without

prejudice. See, e.g., Tippett v. United States, 98 Fed. Cl. 171, 183 (2011) (dismissing

plaintiff’s claims for costs and fees for the instant suit as unripe). Should the time

become appropriate, the court will consider a claim for attorneys’ fees.

IV. Conclusion

Defendant’s motion to dismiss is DENIED-IN-PART as to the jurisdictional

challenge and CONVERTED-IN-PART to an RCFC 56 motion for summary judgment

as to the challenge for failure to state a claim, the consideration of which is STAYED to

afford the parties an opportunity, if desired, to conduct additional discovery. Plaintiff’s

EAJA claim is DISMISSED without prejudice. On or before March 14, 2014, counsel

shall file a joint status report proposing a schedule for further proceedings.

IT IS SO ORDERED.

s/ Patricia E. Campbell-Smith

PATRICIA E. CAMPBELL-SMITH

Chief Judge

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