Assessment and Training Solutions Consulting Corporation

ARMED SERVICES BOARD OF CONTRACT APPEALS

Application Under the Equal Access )

to Justice Act of -- )

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Assessment and Training Solutions ) ASBCA No. 6104 7

Consulting Corporation )

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Under Contract No. H92240-14-P-0155 )

APPEARANCE FOR THE APPELLANT: James S. DelSordo, Esq.

Argus Legal, PLLC

Manassas, VA

APPEARANCES FOR THE GOVERNMENT: Jeffrey P. Hildebrant, Esq.

Air Force Deputy Chief Trial Attorney

Phillip E. Reiman, Esq.

Lt Col Nathaniel H. Sears, USAF

Trial Attorneys

OPINION BY ADMINISTRATIVE JUDGE CLARKE

On October 3, 2017, the Board issued a decision sustaining in substantial part

Assessment and Training Solutions Consulting Corporation's (A TSCC' s) appeal of a

contracting officer's (CO's) final decision denying ATSCC's claims for costs resulting

from damage to two boats it leased to the Navy. ATSCC's total claim was for

$57,596.01. The major damage was to one of the engines on the Free Spirit for which

ATSCC claimed $39,645.88. The Board sustained ATSCC's appeal in the amount of

$50,637.08. Assessment and Training Solutions Consulting Corporation, ASBCA

No. 61047, 17-1 BCA ,i 36,867 at 179,635. On November 9, 2017, the Navy filed a

motion for partial reconsideration. 1 On January 8, 2018, A TSCC timely 2 applied for

attorney's fees and expenses pursuant to the Equal Access to Justice Act (EAJA),

5 U.S.C. § 504. On January 10, 2018, the Board notified ATSCC that its EAJA

application would be held in abeyance until the Board issued its decision on the

Navy's motion for reconsideration. On March 6, 2018, the Board issued its decision

denying the Navy's motion. Assessment and Training Solutions Consulting

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The Navy received the October 3, 2017 decision on October 13, 2017 (gov't mot.

at 1) and therefore the November 9, 2017 motion for reconsideration is timely.

2

But for the Navy's motion for reconsideration ATSCC's EAJA application would

have been untimely. However, the motion for reconsideration has the effect of

preventing the ~oard's decision from becoming final. E. W Bliss Co., ASBCA

No. 9489 et al., 68-2 BCA ,i 7119 at 32,974.

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Corporation, ASBCA No. 61047, 18-1 BCA ,i 37,001. On April 26, 2018, the Board I

directed the Navy to respond to ATSCC's EAJA application. On May 24, 2018, the

Navy filed its opposition to ATSCC's application. i

£AJA/Substantial Justification

The EAJA provides:

An agency that conducts an adversary adjudication

shall award, to a prevailing party other than the United

States. fees and other expenses incurred by that party in f

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connection with that proceeding, unless the adjudicative

officer of the agency finds that the position of the agency

was substantially justified or that special circumstances

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make an award unjust. Whether or not the position of the

agency was substantially justified shall be determined on

the basis of the administrative record, as a whole, which is

made in the adversary adjudication for which fees and

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other expenses are sought. f

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5 U.S.C. § 504(a)(l). For purposes of EAJA, a "party" includes any corporation the

net worth of which did not exceed $7,000.000 at the time the adversary adjudication

was initiated, and which had not more than 500 employees at the time the adversary

adjudication was initiated. 5 U.S.C. § 504(b)(l)(B)(ii). The Air Force does not

contest that ATSCC is eligible for possible recovery under the EAJA (gov't br. at 3-4).

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We find that the documents presented in support of the EAJA application demonstrate

that ATSCC is a "party," satisfied the net worth and employee limitations required for

EAJA eligibility (declaration of John Janota attached to application). and that, the

Board having substantially sustained the appeal, A TSCC prevailed.

The Supreme Court has ruled that "a position can be justified even though it is

not correct, and we believe it can be substantially (i.e., for the most part) justified if a

reasonable person could think it correct, that is, if it has a reasonable basis in law and

fact." Pierce v. Underwood, 487 U.S. 552. 566 n.2 ( 1988). Only one threshold

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determination is to be made for the entire proceeding. including the underlying agency

action. Comm 'r, INS v. Jean, 496 U.S. 154 (1990); see also Hubbard v. United States,

480 F.3d 1327, 1332 (Fed. Cir. 2007).

We discussed the role of legal precedence in determining substantial

justification in Rex Systems, Inc., ASBCA No. 52247, 02-1 BCA ,i 31,760:

Another important consideration in determining

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whether the Government's position was substantially

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justified is the clarity of the governing law. JANA, Inc.,

ASBCA No. 32447, 89-2 BCA ~ 21,638 (citing Mattson v.

Bowen, 824 F .2d 655, 657 (8th Cir. 1987). The 10th

Circuit, in Martinez v. Secretary of Health and Human

Services, 815 F.2d 1381 (10th Cir. 1987) (quoting Spencer

v. NLRB, 712 F.2d 539,559 (D.C. Cir. 1983), cert. denied,

466 U.S. 936 (1984)), discussed the relationship between

the clarity of the applicable law and the determination of

substantial justification, as follows:

For purposes of the EAJA, the more clearly

established are the governing norms, and the more

clearly they dictate a result in favor of the private

litigant, the less "justified" it is for the government

to pursue or persist in litigation. Conversely, if the

governing law is unclear or in flux, it is more likely

that the government's position will be substantially

justified.

Id. at 156,855. We discussed the role of factual questions in determining substantial

justification in Pro-Built Construction Firm, ASBCA No. 59278, 18-1 BCA ~ 36,975:

In addition, the government's litigating position is more

likely to be substantially justified when there are close

factual questions and the Board's resolution of the appeal

turns upon the weight, persuasiveness and credibility

assigned to conflicting evidence. Job Options, [ASBCA

No. 56698,] 11-1 BCA ii 34,663 at 170.761.

Id. at 180,116.

Positions of the Parties

ATSCC's argues that because the Board "specifically rejected the Respondent's

argument on the bailment issue" the Navy's litigation position was not substantially

justified (app. br. at 5). The Navy argues that just because the Board disagreed with its

litigation position does not automatically mean the Navy was not substantially justified

in litigating as it did (gov't br. at 5). The Navy argues that the fact the trial judge

found that ATSCC failed to directly prove the damages were caused by the Navy's

negligence supports the conclusion that the Navy's position was substantially justified.

The Navy contends the trial judge erred in resorting to the law ofbailment

presumption to sustain the appeal. (Gov't br. at 6)

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Discussion

Relying on Pierce v. Underwood quoted above, we agree that the fact the Board

disagreed with the Navy's litigation position is not in-and-of-itself proof that the Navy

was not substantially justified in adopting that position. However, in this case the

Navy ignored Board precedent that clearly dictated a decision in favor of ATSCC.

The case is Mohammad Darwish Ghabban Est., ASBCA No. 51994, 00-2 BCA

,r 3 1,114. In this case the government leased construction equipment, including a road

grader for use in Saudi Arabia. The grader was received in good working order. The

government used the grader for 80 days without a problem except for a hydraulic leak

that appellant repaired. On the 81 st day the grader suffered a blown engine. Appellant

submitted a technical report indicating that the engine failure was caused by a lack of

water ( coolant) and oil causing high temperature operation and engine failure.

Appellant submitted a claim alleging that the blown engine was caused by government

negligence. Mohammad Darwish, 00-2 BCA ,r 31,114 at 153,669-70. The contract

included a clause that the Board interpreted as "no more than an expression of the

common law liability of the bailee." The Board explained the common law:

Under the common law liability of a bailee, the

Governmenfs obligation was to exercise reasonable and

ordinary care in safeguarding the bailed items. Appellant

has shown that the equipment was delivered to the

Government in good condition and returned in a damaged

condition which gives rise to the presumption that the

cause of the damage to the property was the Government's

failure to exercise ordinary care or its negligence.

Id. at 153,672 ( citation omitted).

In ATSCC the Navy leased several boats that were received in good operating

condition. The contract included a clause that made ATSCC responsible for

performing repairs unless "it can be proven that such repairs were due to negligence or

willful damages caused by the government." Assessment and Training Solutions,

17-1 BCA ,r 36,867 at 179,628. Two of the boats were returned damaged, one with a

blown engine. The facts in ATSCC are directly analogous with the facts in

Mohammad Darwish. The maintenance clause in ATSCC's contract that made the

Navy liable for damage caused by negligence is no more than an expression of the

common law liability of the bailee. Therefore, just as in Mohammad Darwish, the

common law presumption applies to ATSCC. In ATSCC the Navy ignored

Mohammad Darwish, and argued that the presumption did not apply because the

maintenance clause required ATSCC to prove negligence. The Navy persisted making

this same argument in its motion for reconsideration. The Navy's position in both the f

case-in-chief and the motion for reconsideration was not substantially justified because

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Board caselaw clearly dictates a decision in favor of ATSCC. Rex Systems, 02-1 BCA

,i 31,760 at 156,855.

There are also factual reasons that support our finding that the Navy was not

substantially justified in pursuing this litigation. All of these facts are found in our

decision. It has to do with the engine logs kept by the Navy during training operations.

The Navy entered numerous checklists and engine logs into the record. Logs from

July 2014 indicate that the Navy operated Free Spirit with overheated engines. In

September 2014 Free Spirit's port engine failed to start. It was determined it needed

an overhaul and two cylinders, a bent rod and an exhaust manifold were replaced.

ATSCC paid the $12,134.80 repair cost. Free Spirit's port engine failed again on

August 6, 2015. The Navy introduced testimony that the crew conducted hourly spot

checks and filled out inspection logs kept on the boat. The Navy introduced sworn

testimony that the Free Spirits engines were operating properly before the August 6,

2015 failure in the port engine. The problem is that the Navy failed to enter into

evidence any of the engine logs after May 27, 2015. No explanation was given.

The Navy had within its grasp proof of how the port engine was operated but entered

only testimony that it was operated properly. The documents, if they corroborate the

testimony, would have sealed the deal for the Navy and rebutted the presumption.

However, the unexplained absence of the documents raises questions as to why the

Navy proceeded with the case.

ATSCC's Fees and Costs

ATSCC claims the following fees and costs:

Invoice No. Attorney Hours Rate Amount Requested

104 James S. DelSordo 32.50 $450 $15,070.00

29 James S. DelSordo 12.10 $450 $5,445.00

149 James S. Delsordo 8.30 $450 $3,735.00

129 James S. DelSordo 23.70 $450 $10,665.00

129 Postage $23.50

129 FedEx $1.86

129 Copying $173.63

Total 76.60 Total $35,113.99

ATSCC argues for enhanced attorney's fees of $450 per hour based on "COLA

adjustment" and "Special Factors" (app. br. at 6-7). As we explained in Optimum

Services, Inc., ASBCA Nos. 58755, 59952, 17-1 BCA ,i 36,816, we have no authority

to award fees at more than the EAJA $125 per hour:

With respect to the question of fee enhancement, the

EAJA provides that ··attorney ... fees shall not be awarded in

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excess of $125 per hour unless the agency determines by

regulation that an increase in the cost of living or a special

factor, such as the limited availability of qualified

attorneys or agents for the proceedings involved. justifies a

higher fee." 5 U.S.C. § 504(b)(l)(A) (emphasis added).

Our Board jurisprudence has long held that the EAJA

''does not confer on the ASBCA discretion to apply cost of

living or special factor increases without an agency

determination so prescribing by regulation." Freedom, NY,

Inc., ASBCA No. 43965, 09-1 BCA 134,097 at 168,595;

see also ABS Baumaschinenvertrieb, GmbH, ASBCA

No. 48207, 01-2 BCA 131,549 at 155,826-27 (declining to

enhance fees where "the Department of Defense has not

issued such a regulation authorizing enhancement of fees

based on cost of living or any other special factor'');

Arapaho Commc 'ns, Inc./Steele & Sons, Inc., Joint

Venture, ASBCA No. 48235, 98-1BCA129,563 at

146,544 ("No such regulation has been issued by the

Department of Defense. We have no authority in this

instance to award more than [the statutory rate.]").

Id. at 179,429-30. As of the date of this Decision, no such regulation has been issued

by the Department of Defense. We have no authority to award enhanced fees.

We find the total number of hours 76.60 reasonable. Recalculating the amount

for attorney's fees using $125 per hour for the total hours of 76.60 results in $9,575.

We find the claimed expenses reasonable. The total amount for postage, FedEx and

copying is $198.99. The total amount ofEAJA recovery is $9,575.00 + $198.99 =

$9,773.99.

CONCLUSION

For the forgoing reasons, ATSCC is awarded reasonable attorney's fees and

other expenses incurred in the amount of $9,773.99.

Dated: June 18, 2018

Administ ative Judge

Armed Services Board

of Contract Appeals

(Signature continued)

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I concur in result

(see separate opinion)

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Administrative Judge

Vice Chairman

Armed Services Board

of Contract Appeals

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OPINION BY ADMINISTRATIVE JUDGE PROUTY

I concur in the result. As in the original decision in this appeal and in the

decision on reconsideration, I respectfully disagree with Judge Clarke's reasoning

regarding the application of the presumption of negligence from bailment law in this

matter. Nevertheless, I agreed that the evidence supported a finding of negligence

here, even without the presumption, and that opinion stands. Inasmuch as the law on

negligence is clear, under the facts presented in this appeal, the government's position

was not substantially justified. See Rex Systems, Inc., ASBCA No. 52247, 02-1 BCA

,i 31,760 at 156,855. In all other material aspects, I agree with Judge Clarke's opinion.

Dated: June 18, 2018

Administrative Judge

Vice Chairman

Armed Services Board

of Contract Appeals

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I certify that the foregoing is a true copy of the Opinion and Decision of the

Armed Services Board of Contract Appeals on an application for fees and other

expenses incurred in connection with ASBCA No. 61047, Appeal of Assessment and

Training Solutions Consulting Corporation, rendered in accordance with 5 U.S.C.

§ 504.

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Dated: .

JEFFREY D. GARDIN

Recorder, Armed Services

Board of Contract Appeals

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