Estes Express Lines v. United States ( 2017 )

In the United States Court of Federal Claims
No. 11-597C
Filed August 8, 2017
NOT FOR PUBLICATION
)
ESTES EXPRESS LINES, )
)
Plaintiff, ) Interstate Commerce Act; 49 U.S.C.
) § 14705; Summary Judgment, RCFC 56;
v. ) Privity of Contract; Assumption of Risk.
)
THE UNITED STATES, )
)
Defendant. )
)
Robert D. Moseley, Jr., Counsel of Record, Smith Moore Leatherwood LLP, Greenville,
SC, for plaintiff.
Daniel B. Volk, Trial Attorney, Martin F. Hockey, Jr., Deputy Director, Robert E.
Kirschman, Jr., Director, Chad A. Readler, Acting Assistant Attorney General, Commercial
Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, for
defendant.
MEMORANDUM OPINION AND ORDER
GRIGGSBY, Judge
I. INTRODUCTION
Plaintiff, Estes Express Lines (“Estes”), brings this breach of contract action to recover
certain freight charges allegedly due to Estes for providing transportation and freight
management services to the Marine Corps Community Services (“MCCS”). See generally
Compl. This matter is on remand from the United States Court of Appeals for the Federal
Circuit to consider whether the Interstate Commerce Act (“ICA”), 49 U.S.C. § 14705, applies to
Estes’s claim. Estes Express Lines v. United States, No. 11-597C (Fed. Cir. 2016); Pl. App. at
84.
The parties have filed renewed cross-motions for summary judgment, pursuant to Rule 56
of the Rules of the United States Court of Federal Claims (“RCFC”), upon the issues of whether
the Court may consider this matter under the ICA; whether Estes has entered into a valid contract
1
with the government; and, if so, whether the government is liable to Estes for certain freight
charges under that contract. For the reasons set forth below, the Court GRANTS-IN PART and
DENIES-IN-PART Estes’s renewed motion for summary judgment and GRANTS-IN PART
and DENIES-IN-PART the government’s renewed cross-motion for summary judgment.
II. FACTUAL AND PROCEDURAL BACKGROUND1
A. Factual Background
This matter involves a long-standing dispute over unpaid freight charges. On October 31,
2007, the MCCS awarded contract number H0107-D-0005 to Salem Logistics, Inc. (“Salem”), a
freight broker (the “Salem Contract”). Def. Renewed Mot. at 1. Pursuant to the Salem Contract,
Salem provided MCCS with certain transportation, and freight management services, including
coordinating the pickup, transport and delivery of vendor products to and from various MCCS,
Marine Corps Exchange (“MCX”), and Navy Exchange (“NCX”) locations. Pl. Renewed Mot.
at 4. Under the Salem Contract, Salem billed MCCS for these services, and then Salem paid the
freight carriers that actually provided the transportation and freight services. Id. at 5.
1. Estes’s Freight Services
Between June 2008 and February 2009, Salem arranged for Estes to make various
shipments called for under the Salem Contract. Id. at 4. Although Estes did not execute a
written contract with Salem for these freight services, Estes handled the shipments under its
common carrier tariff. Id.; see also Pl. App. at 17-84. Pursuant to the Salem Contract, third-
party freight charges were billed to “Marine Corps Exchange c/o Salem Logistics.” Pl. Renewed
Mot. at 4-5; Def. Renewed Mot. at 3.
1
The facts recounted in this Memorandum Opinion and Order are taken from the United States Court of
Appeals for the Federal Circuit’s decision in Estes Express Lines v. United States, 739 F.3d 689 (Fed. Cir.
2014), as well as from plaintiff’s complaint (“Compl.”), the government’s appendix to its cross-motion
for summary judgment and response to plaintiff’s motion for summary judgment (“Def. App.”),
plaintiff’s renewed motion for summary judgment (“Pl. Renewed Mot.”), plaintiff’s appendix to its
renewed motion for summary judgment (“Pl. App.”), and the government’s renewed motion for summary
judgment (“Def. Renewed Mot.”). Except where otherwise noted, the facts recited herein are undisputed.
2
Generally, each shipment was identified by a bill of lading, a delivery receipt and a
freight bill. Pl. Renewed Mot. at 5. In addition, all bills of lading listed MCCS as the consignee,
while various third parties were listed as the shipper. Id. at 4-5; Pl. App. at 6-15.
Typically, Estes picked up freight from a third-party vendor, also known as a shipper.
Def. Renewed Mot. at 2. The shipper, in turn, would provide Estes with a bill of lading that the
shipper and Estes’s driver would sign when Estes picked up the freight. Id. After picking up the
shipment from the shipper, Estes’s driver would bring the bill of lading, along with the freight, to
an Estes’s terminal facility, where the bill of lading would be stored. Id.
Upon arrival at the delivery destination, Estes’s driver would obtain a signature from the
government confirming delivery on an Estes-generated delivery receipt. Pl. Renewed Mot. at 4
n.1. These delivery receipts do not itemize the charges for each shipment, but the receipts do
contain the signature of Estes’s driver, a description of the shipment, and the consignee’s and
shipper’s name and address. Pl. App. at 6.
For certain shipments, the government acted as both the shipper and consignee of freight
moving between MCCS and NCX. Pl. Renewed Mot. at 4. For these shipments, the shipments
were documented by a shipping order–rather than a bill of lading–a delivery receipt and freight
bill. Def. Renewed Mot. at 11-12; Def. App. at 4-5. In such cases, a government representative
signed the shipping order, which stated “Bill Salem Logistics.” Def. Renewed Mot. at 12. In
addition, the freight bills generated by Estes after a delivery, were addressed to “Marine Corps
Exchange c/o Salem Logistics” and mailed directly to Salem. Id. at 3.
2. Payment Dispute With Salem
Although MCCS paid Salem for some of the freight services performed by Estes, Salem
did not, in turn, pay Estes for all of these services. Def. App. at 15-16; Compl. ¶ 8. And so, on
February 27, 2009, MCCS terminated the Salem Contract for default. Def. Renewed Mot. at 3;
Def. App. at 8-9. MCCS also agreed to pay Estes directly for freight services rendered for which
MCCS had not yet paid Salem. Def. App. at 15-16, 45. To that end, on July 2, 2009, MCCS
paid Estes $28,931.28 for freight services for which it had not already paid Salem. Compl. ¶ 14;
Def. App. at 49.
3
This arrangement did not resolve Estes’s concerns about instances in which MCCS had
paid Salem, but Salem failed to pay Estes. Def. App. at 8-9, 25-32. On July 13, 2009, MCCS
informed Estes that it would not pay Estes “for amounts that MCCS has already paid to Salem
Logistics.” Id. at 45. And so, to date, Estes has not received payments for the freight services
that it provided for which the government had previously paid Salem.2 Id.; Compl. ¶ 14.
B. Relevant Procedural Background
On February 3, 2010, Estes brought an action to recover its unpaid freight charges against
several parties, including MCCS and NCX, in the United States District Court for the Middle
District of North Carolina. See Estes Express Lines v. Salem Logistics, Inc., et al., No. 1:10-cv-
00102 (M.D.N.C. 2011). On July 8, 2011, that case was transferred to this Court. See Estes
Express Lines v. United States, 108 Fed. Cl. 416, 420 (2013).
Estes filed the transfer complaint on October 17, 2011. Id. Thereafter, on January 6,
2012, the government moved to dismiss the complaint for lack of subject-matter jurisdiction and
for failure to state a claim upon which relief may be granted, pursuant to RCFC 12(b)(1) and
(b)(6). Id. On January 15, 2013, the Court dismissed Estes’s complaint for lack of subject-
matter jurisdiction, because Estes failed to show that there was privity of contract between Estes
and the government with respect to the transportation and freight services that Estes provided.
Id. at 421-22.
On February 13, 2013, Estes appealed the Court’s decision to the United States Court of
Appeals for the Federal Circuit. Notice of Appeal, Feb. 13, 2013. On January 3, 2014, the
Federal Circuit reversed the Court’s decision and remanded the case. See generally Estes
Express Lines v. United States, 739 F.3d 689 (Fed. Cir. 2014).
In its decision, the Federal Circuit held that the Court should not have dismissed the
complaint upon the ground that Estes had not established privity of contract, because the factual
circumstances of this case show that the bills of lading that Estes relied upon were sufficient to
establish privity of contract with the government. Id. at 693-94. Specifically, the Federal Circuit
found that:
2
Estes alleges that the total undiscounted amount of freight charges due from the government is
$91,344.20. Pl. Renewed Mot. at 6.
4
Each shipment handled by Estes was identified by a bill of lading, a freight bill, and
a delivery receipt. All bills of lading listed a MCCS or MCX destination as the
“consignee,” and most bills of lading identified the third-party vendor as the
“shipper.” In some instances, goods were moved from a Navy Exchange location
to an MCX location, or from one MCX location to another, in which case a
government entity was listed as the “shipper.” Pursuant to the Salem-MCCS
contract, all bills of lading further indicated that “third party freight charges” were
to be billed to “Marine Corps Exchange C/O Salem Logistics.” The delivery
receipts also specified that charges should be billed to the “Marine Corps
Exchange.” Each delivery receipt was signed by a representative of the MCCS or
MCX location to which the goods were delivered. Following delivery, Estes
invoiced “MCX, care of Salem” for freight charges.
Id. at 691. And so, the Federal Circuit concluded that:
Here, the undisputed facts are sufficient to establish that the Government is a
party to the bills of lading not only as the "bill to" party, but also as the shipper at
least in those instances in which goods were moved from one Government location
to another. MCCS expressly authorized, by contract, its designation as a party to
the bills of lading. Indeed, the Government concedes that all bills of lading were
generated consistent with the instructions in the MCCS-Salem contract. The
Claims Court also found that MCX accepted all shipments without exception, and
that a MCX representative signed each delivery receipt listing MCX as the "bill to"
party. Under these circumstances, the bills of lading are sufficient to meet Estes's
burden to show privity with the Government.
Id. at 693-94. The Federal Circuit did not, however, “express any opinion regarding the merits
of Estes’s claims and the issue of ultimate liability.” Id. at 694.
Following the remand and the completion of discovery, Estes filed a motion for summary
judgment on April 7, 2015. See generally Pl. Mot. On May 8, 2015, the government filed a
response to Estes’s motion for summary judgment and a motion to dismiss or, in the alternative,
for summary judgment upon the ground that the Court did not possess jurisdiction to consider
Estes’s claim under the Contract Disputes Act (“CDA”). See generally Def. Mot.
On September 29, 2015, the Court issued a Memorandum Opinion and Order, dismissing
the case for lack of subject-matter jurisdiction because Estes did not comply with the
requirements of the CDA before commencing this action. Estes Express Lines v. United States,
123 Fed. Cl. 538 (2015). On November 24, 2015, Estes appealed the Court’s decision to the
United States Court of Appeals for the Federal Circuit. See Notice of Appeal, November 24,
2015. On September 28, 2016, the Federal Circuit issued a per curiam decision remanding the
5
case to this Court, at the parties’ request, to consider whether the Interstate Commerce Act
provides the Court with jurisdiction to hear plaintiff’s claims. Estes Express Lines v. United
States, No. 2016-1298 (Fed. Cir. Sept. 28, 2016) (order granting joint motion to remand).
On February 16, 2017, the parties filed renewed cross-motions for summary judgment on
the issues of whether the Court may consider this matter under the ICA; whether Estes has
entered into a valid contract with the government; and, if so, whether the government is liable to
Estes under that contract. See generally Pl. Renewed Mot.; Def. Renewed Mot. On March 16,
2017, the parties filed responsive briefs in connection with the parties’ renewed cross-motions
for summary judgment. See generally Pl. Renewed Resp.; Def. Renewed Resp.
On April 4, 2017, the Court directed the parties to file supplemental briefs addressing: (1)
if the Court determines that there is a valid contract by and between Estes and the government
with respect to the shipping services and bills of lading at issue in this litigation, whether the
government assumed the risk that Salem would not pay Estes for the shipment services; and (2)
whether there are any material facts that are in dispute, or unknown, with respect to whether the
government assumed the risk that Salem would not pay Estes for the shipment services and bills
of lading at issue in this litigation. See generally Scheduling Order. On May 4, 2017, the parties
filed their initial supplemental briefs. See generally Pl. Supp.; Def. Supp. On May 25, 2017, the
parties filed their responsive supplemental briefs. See generally Pl. Supp. Resp.; Def. Supp.
Resp.
These matters having been fully briefed, the Court resolves the pending renewed cross-
motions for summary judgment.
III. LEGAL STANDARDS
A. Jurisdiction And The Interstate Commerce Act
It is well-settled that subject-matter jurisdiction is a “threshold matter,” and that a case
may proceed no further if the Court lacks jurisdiction. Copar Pumice Co., Inc. v. United States,
112 Fed. Cl. 515, 527 (2013) (citing Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006)). In this
regard, the United States Court of Federal Claims is a court of limited jurisdiction and
“possess[es] only that power authorized by Constitution and statute . . . .” Kokkonen v. Guardian
6
Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). And so, the Tucker Act grants
the Court jurisdiction over:
[A]ny claim against the United States founded either upon the Constitution, or any
Act of Congress or any regulation of an executive department, or upon any express
or implied contract with the United States, or for liquidated or unliquidated
damages in cases not sounding in tort.
28 U.S.C. § 1491(a)(1) (2012).
In this action, Estes asserts breach of contract claims pursuant to the ICA. 49 U.S.C.
§ 14705. Section 14705 of the ICA provides:
(f) Government transportation.--This section applies to transportation for the
United States Government. The time limitations under this section are
extended, as related to transportation for or on behalf of the United States
Government, for 3 years from the later of the date of--
(1) payment of the rate for the transportation or service involved;
(2) subsequent refund for overpayment of that rate; or
(3) deduction made under section 3726 of title 31.
49 U.S.C. § 14705 (2012). And so, the ICA requires that a carrier bring a claim against the
government under the ICA within three years from the later date of either, receiving payment,
receiving a refund, or having a deduction made. Id. The Federal Circuit has also held that the
ICA operates as a waiver of the government’s sovereign immunity. Inter-Coastal Xpress, Inc. v.
United States, 296 F.3d 1357, 1365 (Fed. Cir. 2002). And so, a timely claim for payment under
a transportation contract with the United States may be brought directly to this Court pursuant to
the ICA. Sheridan Transp. Sys., Inc. v. Gen. Servs. Admin., 651 F. App’x 987, 988 (Fed. Cir.
2016).
B. Summary Judgment, RCFC 56
Under RCFC 56, a party is entitled to summary judgment when there is “no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” RCFC
56; see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). A fact is material if it might
affect the outcome of a case. See Anderson, 477 U.S. at 248 (“Only disputes over facts that
might affect the outcome of the suit under the governing law will properly preclude the entry of
summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.”)
7
(citation omitted); see also Applied Med. Res. Corp. v. Tyco Healthcare Grp. LP, 534 F. App’x
972, 977 (Fed. Cir. 2013). An issue is genuine if a reasonable trier of fact could find for the non-
moving party. Anderson, 477 U.S. at 250 (“The inquiry performed is the threshold inquiry of
determining whether there is the need for a trial—whether, in other words, there are any genuine
factual issues that properly can be resolved only by a finder of fact because they may reasonably
be resolved in favor of either party.”); see Frolow v. Wilson Sporting Goods, Co., 710 F.3d 1303,
1310 (Fed. Cir. 2013).
In resolving motions for summary judgment, the Court will not make credibility
determinations and will draw all inferences ‘“in the light most favorable to the party opposing
the motion.”’ Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88
(1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)). In doing so, the Court
does not weigh the evidence presented, but instead must “determine whether there is a genuine
issue for trial.” Anderson, 477 U.S. at 249; Agosto v. INS, 436 U.S. 748, 756 (1978); see Am.
Ins. Co. v. United States, 62 Fed. Cl. 151, 154 (2004). And so, the Court may only grant
summary judgment when “the record taken as a whole could not lead a rational trier of fact to
find for the nonmoving party . . . .” Matsushita, 475 U.S. at 587 (citation omitted).
The above standard also applies when the Court considers cross-motions for summary
judgment. Principal Life Ins. Co. & Subsidiaries v. United States, 116 Fed. Cl. 82, 89 (2014);
see Estate of Hevia v. Portrio Corp., 602 F.3d 34, 40 (1st Cir. 2010). And so, when both parties
move for summary judgment, ‘“the court must evaluate each party’s motion on its own merits,
taking care in each instance to draw all reasonable inferences against the party whose motion is
under consideration.”’ Abbey v. United States, 99 Fed. Cl. 430, 436 (2011) (quoting Mingus
Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)).
C. Contract Claims Against The United States
To maintain a cause of action under the Tucker Act based upon a contract with the United
States, a plaintiff must show that there is a contract directly between itself and the government,
i.e., that there is privity of contract. Cienega Gardens v. United States, 194 F.3d 1231, 1239
(Fed. Cir. 1998) (citation omitted); see also Anderson v. United States, 344 F.3d 1343, 1351
(Fed. Cir. 2003). The Federal Circuit has held that the effect of finding privity of contract is to
find a waiver of sovereign immunity. Cienega Gardens, 194 F.3d at 1239 (citation omitted).
8
And so, the question of whether a contract exists is a mixed question of law and fact, but, where
the parties do not dispute the relevant facts, the privity issue reduces to a question of law. Id.
(citation omitted); Estes Express Lines, 739 F.3d at 693 (quoting Cienega Gardens, 194 F.3d at
1293).
The Tucker Act also grants this Court jurisdiction to consider claims based “upon any
express or implied contract with the United States.” 28 U.S.C. § 1491(a)(1). The Court does
not, however, possess jurisdiction to consider claims against the United States “based on
contracts implied in law.” United States v. Mitchell, 463 U.S. 206, 218 (1983) (citing Merritt v.
United States, 267 U.S. 338, 341 (1925)); Aboo v. United States, 86 Fed. Cl. 618, 626 (2009)
(citation omitted), aff’d, 347 F. App’x 581 (Fed. Cir. 2009). And so, to bring a valid contract
claim against the United States in this Court, a plaintiff must establish either an express or
implied-in-fact contract with the government. Aboo, 86 Fed. Cl. at 626 (citations omitted). Such
a contract claim must also be for “actual, presently due money damages . . . .” King v. United
States, 395 U.S. 1, 3 (1969); see also Speed v. United States, 97 Fed. Cl. 58, 66 (2011) (citations
omitted).
In addition, plaintiff bears the burden of proving the existence of a contract with the
United States, and plaintiffs must show that there is “something more than a cloud of evidence
that could be consistent with a contract to prove a contract and enforceable contract rights.” D &
N Bank v. United States, 331 F.3d 1374, 1377 (Fed. Cir. 2003). To establish the existence of
either an express or implied-in-fact contract with the United States, a plaintiff must show: (1)
mutuality of intent; (2) consideration; (3) lack of ambiguity in the offer and acceptance; and (4)
actual authority to bind the government in contract on the part of the government official whose
conduct is relied upon. Kam-Almaz v. United States, 682 F.3d 1364, 1368 (Fed. Cir. 2012)
(quoting Hanlin v. United States, 316 F.3d 1325, 1328 (Fed. Cir. 2003). A government official’s
authority to bind the United States must be express or implied. Roy v. United States, 38 Fed. Cl.
184, 187-89 (1997), dismissed, 124 F.3d 224 (Fed. Cir. 1997). And so, “the [g]overnment,
unlike private parties, cannot be bound by the apparent authority of its agents.” Id. at 187.
In this regard, a government official possesses express actual authority to bind the United
States in contract “only when the Constitution, a statute, or a regulation grants it to that agent in
unambiguous terms.” Jumah v. United States, 90 Fed. Cl. 603, 612 (2009) (quoting Tracy v.
United States, 55 Fed. Cl. 679, 682 (2003) (internal quotation marks omitted), aff'd, 385 F.
9
App’x 987 (Fed. Cir. 2010); see also City of El Centro v. United States, 922 F.2d 816, 820 (Fed.
Cir. 1990). On the other hand, a government official possesses implied actual authority to bind
the United States in contract “when the employee cannot perform his assigned tasks without such
authority and when the relevant agency’s regulations do not grant the authority to other agency
employees.” SGS-92-X003 v. United States, 74 Fed. Cl. 637, 652 (2006) (citations omitted); see
Aboo, 86 Fed. Cl. at 627 (implied actual authority “is restricted to situations where ‘such
authority is considered to be an integral part of the duties assigned to a [g]overnment employee’”
(quoting H. Landau & Co. v. United States, 886 F.2d 322, 324 (Fed. Cir. 1989)) (brackets
existing)). In addition, when a government agent does not possess express or implied actual
authority to bind the United States in contract, the government can still be bound by contract if
the contract was ratified by an official with the necessary authority. Janowsky v. United States,
133 F.3d 888, 891–92 (Fed. Cir. 1998).3
IV. LEGAL ANALYSIS
The parties have filed renewed cross-motions for summary judgment on three issues: (1)
whether the Court possesses jurisdiction to consider this matter under the Interstate Commerce
Act; (2) whether Estes has entered into a valid contract with the government; and, if so, (3)
whether the government is liable to Estes for certain freight charges under that contract. See Pl.
Renewed Mot.; Def. Renewed Mot. The undisputed material facts in this matter show that the
Court may consider Estes’s claim under the ICA. In addition, the undisputed material facts and
the Federal Circuit’s January 3, 2014, decision show that Estes has entered into a valid contract
with the government. Estes has not, however, demonstrated that the government is obligated to
pay the freight charges in dispute under that contract. And so, for the reasons set forth below,
the Court GRANTS-IN-PART and DENIES-IN-PART Estes’s renewed motion for summary
3
Ratification may take place at the individual or institutional level. SGS-92-X003 v. United States, 74
Fed. Cl. 637, 653-54 (2006). Individual ratification occurs when a supervisor: (1) possesses the actual
authority to contract; (2) fully knew the material facts surrounding the unauthorized action of his or her
subordinate; and (3) knowingly confirmed, adopted, or acquiesced to the unauthorized action of the
subordinate. Id. at 654 (quoting Leonardo v. United States, 63 Fed. Cl. 552, 560 (2005)). In contrast,
institutional ratification occurs when the government “seeks and receives the benefits from an otherwise
unauthorized contract.” Id. (citation omitted); see Janowsky v. United States, 133 F.3d 888, 891-92 (Fed.
Cir. 1998).
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judgment; GRANTS-IN-PART and DENIES-IN-PART the government’s renewed cross-
motion for summary judgment; and DISMISSES the complaint.
A. The Court Possesses Jurisdiction To Consider Estes’s Claim
As a threshold matter, the undisputed material facts in this matter show that the Court
possesses subject-matter jurisdiction to consider Estes’s claim to recover outstanding freight
charges under the ICA. It is well-established that a carrier may bring a claim to recover charges
pursuant to a transportation contract with the United States directly to this Court under the ICA.
Sheridan Transp. Sys., Inc., 651 F. App’x at 988. In this regard, section 14705 of the ICA
provides that a carrier providing transportation or service for the government must begin a civil
action to recover charges for the transportation or service provided within three years from the
later of the date of:
(1) payment of the rate for the transportation or service involved;
(2) subsequent refund for overpayment of that rate; or
(3) deduction made under section 3726 of title 31.
See 49 U.S.C. § 14705. And so, the Court may entertain Estes’s claim under the ICA if Estes
brought this claim within three years of receiving payment from MCCS.
In this case, the undisputed material facts show that MCCS paid Estes $28,931.28 for
freight services that the government had not already paid to Salem on July 2, 2009. Compl. ¶ 14;
Def. App. at 49. The undisputed material facts also show that, on July 13, 2009, MCCS
informed Estes that the government would not pay Estes “for amounts that MCCS has already
paid to Salem Logistics.” Def. App. at 45. In addition, it is without dispute that, on February 3,
2010, Estes brought an action against MCCS and several other defendants in the United States
District Court for the Middle District of North Carolina to recover these outstanding freight
charges. See generally Estes Express Lines v. Salem Logistics, Inc., No. 1:10-cv-00102
(N.C.M.D. filed Feb. 3, 2010).4 Given this, Estes has brought its claim within three years of
receiving payment from MCCS. And so, the Court possesses jurisdiction to consider Estes’s
4
On July 8, 2011, the district court transferred the case to this Court and Estes filed the transfer complaint
on October 7, 2011. Estes Express Lines v. Salem Logistics, Inc., No. 1:10-cv-00102 (N.C.M.D.
July 8, 2011) (order transferring case); Docket Entry No. 1.
11
claim under the ICA and the Court GRANTS Estes’s renewed motion for summary judgment on
this threshold jurisdictional issue.
B. Estes Has Established The Existence Of A Contract With The Government
1. The Federal Circuit Has Settled The Question Of Whether
Estes Has Entered Into A Contract With The Government
The undisputed material facts and the Federal Circuit’s January 3, 2014, decision in this
matter also demonstrate that Estes has entered into a valid contract with the government for
transportation services. In their renewed cross-motions for summary judgment, the parties
disagree about whether the Federal Circuit has settled the question of whether Estes has entered
into a valid contract with the government. Specifically, Estes argues that the Federal Circuit has
resolved this question in Estes’s favor, because “the Federal Circuit expressly held that ‘we
conclude that the bills of lading are sufficient to establish privity.’” Pl. Renewed Resp. at 3. The
government counters that the Federal Circuit only rendered a jurisdictional ruling in that decision
and the government further argues that the Federal Circuit has not decided the merits of Estes’s
contract claim. Def. Renewed Mot. at 9-10.
For the reasons discussed below, the Court agrees with the government that the Federal
Circuit has not addressed the ultimate question of whether the government is contractually liable
to Estes in this case. But, the Court reads the Federal Circuit’s January 3, 2014, decision to
conclude that Estes has entered into a valid contractual relationship with the government with
respect to transportation services at issue in this case.
In the January 3, 2014, decision the Federal Circuit recognized that:
To maintain a cause of action under the Tucker Act based on a contract,
Estes must show that there is a contract directly between itself and the Government,
i.e., that there is privity of contract. The effect of finding privity of contract is to
find a waiver of sovereign immunity. Whether a contract exists is a mixed question
of law and fact, but where “the parties do not dispute the relevant facts, the privity
issue reduces to a question of law, which we review de novo.”
Estes Express Lines, 739 F.3d at 693 (quoting Cienega Gardens, 194 F.3d at 1239) (internal
citations omitted). The Federal Circuit also found that the factual circumstances of this case
show that the bills of lading that Estes relies upon are sufficient to establish privity of contract
12
with the government. See generally Estes Express Lines, 739 F.3d 689. Specifically, the Federal
Circuit held that the undisputed evidence in this case showed that:
Each shipment handled by Estes was identified by a bill of lading, a freight bill, and
a delivery receipt. All bills of lading listed a MCCS or MCX destination as the
“consignee,” and most bills of lading identified the third party vendor as the
“shipper.” In some instances, goods were moved from a Navy Exchange location
to an MCX location, or from one MCX location to another, in which case a
government entity was listed as the “shipper.” Pursuant to the Salem-MCCS
contract, all bills of lading further indicated that “third party freight charges” were
to be billed to “Marine Corps Exchange C/O Salem Logistics.” The delivery
receipts also specified that charges should be billed to the “Marine Corps
Exchange.” Each delivery receipt was signed by a representative of the MCCS or
MCX location to which the goods were delivered. Following delivery, Estes
invoiced “MCX, care of Salem” for freight charges.
Id. at 691. And so, the Federal Circuit also concluded that:
Here, the undisputed facts are sufficient to establish that the Government is a
party to the bills of lading not only as the "bill to" party, but also as the shipper at
least in those instances in which goods were moved from one Government location
to another. MCCS expressly authorized, by contract, its designation as a party to
the bills of lading. Indeed, the Government concedes that all bills of lading were
generated consistent with the instructions in the MCCS-Salem contract. The
Claims Court also found that MCX accepted all shipments without exception, and
that a MCX representative signed each delivery receipt listing MCX as the "bill to"
party. Under these circumstances, the bills of lading are sufficient to meet Estes's
burden to show privity with the Government.
Id. at 693-94.
The Court reads the Federal Circuit’s decision to hold that a valid contract exists between
Estes and the government with regards to the transportation services that Estes provided for the
government. In the January 3, 2014, decision, the Federal Circuit specifically held that the bills
of lading for the shipments that Estes transported for the government are sufficient to show
privity of contract with the government, given the factual circumstances presented in this case.
In reaching this conclusion, the Federal Circuit found that, among other things, Estes was a
party to the bills of lading at issue, and that this Court had previously found that “MCX accepted
all shipments without exception, and that a MCX representative signed each delivery receipt
listing MCX as the ‘bill to’ party.” Id. at 693. Additionally, the Federal Circuit observed that
13
Salem’s contract with the government “provided that Salem would pay the carriers directly and
then invoice MCCS.” Id. at 691.
As the Federal Circuit states in the January 3, 2014, decision, “[t]he effect of finding
privity of contract is to find a waiver of sovereign immunity.” Id. at 693 (citations omitted).
Black’s Law Dictionary defines “privity of contract” to mean “[t]he relationship between the
parties to a contract, allowing them to sue each other but preventing a third party from doing so.”
Privity of Contract, Black’s Law Dictionary (10th ed. 2014). Because the Federal Circuit has
held that such privity exists between Estes and the government here, the Court concludes that the
Federal Circuit has resolved the question of whether a contractual relationship exists between
Estes and the government in Estes’s favor. See Suel v. Sec’y of Health & Human Servs., 192
F.3d 981, 984 (Fed. Cir. 1999) (citing Gould, Inc. v. United States, 67 F.3d 925, 927–28 (Fed.
Cir. 1995)) (The “[l]aw of the case is a judicially created doctrine, the purpose of which is to
prevent relitigation of issues that have been decided.”); Cardiac Pacemakers, Inc. v. St. Jude
Med., Inc., 576 F.3d 1348, 1356 (Fed. Cir. 2009) (citation omitted) (“The mandate rule requires
that [this Court] follow an appellate decree as the law of the case.”).
2. The Material Facts Are Not Substantially Different
The Court is also unpersuaded by the government’s argument that the Federal Circuit’s
conclusion of law regarding privity of contract “cannot control the outcome of the merits of this
case,” because “the post-discovery facts are not substantially the same as the pre-discovery
factual allegations [that] Estes presented to the Federal Circuit.” Def. Renewed Mot. at 10; see
Wheeler v. City of Pleasant Grove, 896 F.2d 1347, 1350 (11th Cir. 1990) (holding that “(1) a
subsequent trial produces substantially different evidence, (2) controlling authority has since
made a contrary decision of law applicable to that issue, or (3) the prior decision was clearly
erroneous and would work manifest injustice”) (internal quotation marks and citation omitted).
Specifically, the government argues that the Court should not be bound by the Federal Circuit’s
mandate, because the post-discovery evidence shows that a government representative did not
sign the bills of lading, although Estes previously alleged that the government signed the bills of
lading at the destination. Def. Renewed Mot. at 10; Pl. Renewed Mot. at 4. The government
also argues that the Court should not follow the Federal Circuit’s mandate, because the post-
discovery evidence in this case shows that there were no bills of lading for certain shipments
14
between the Navy Exchange and MCCS, and that these shipments have been documented instead
by shipping orders. Def. Renewed Mot. at 11; Pl. Renewed Mot. at 4.
The undisputed material facts in this case demonstrate, however, that the evidence before
the Court is not substantially different from the evidence previously considered by this Court and
the Federal Circuit. As Estes argues in its renewed cross-motion for summary judgment, the
Federal Circuit did not find that the government signed the bills of lading at issue in this case.
Estes Express Lines, 739 F.3d at 693-94. Rather, the Federal Circuit noted that this Court found
that “a MCX representative signed each delivery receipt listing MCX as the ‘bill to’ party.” Id.
(emphasis supplied). And so, evidence showing that a government representative did not sign
the bills of lading at issue is consistent with the facts previously considered and addressed by the
Federal Circuit.
The government is on somewhat firmer ground in arguing that the post-discovery
evidence showing that the shipments between the Navy Exchange and MCCS are identified by
shipping orders, rather than bills of lading, changes the evidence in this case. Def. Renewed
Mot. at 11. In the January 3, 2014, decision, the Federal Circuit held that the bills of lading were
sufficient for Estes to show privity with the government. Estes Express Lines, 739 F.3d at 693-
94. But, the Federal Circuit also relied upon other evidence–that remains unchanged and
undisputed in this case–to reach the conclusion that privity of contract exists. For example, the
Federal Circuit considered evidence showing that each shipment handled by Estes was also
identified by a freight bill and a delivery receipt. Id. at 691. The Federal Circuit also considered
evidence that the MCX accepted each delivery and that a MCX representative signed each
delivery receipt listing MCX as the “bill to” party. Id. at 693-94. Neither party disputes that this
evidence remains unchanged since the close of discovery. Def. Renewed Mot. at 11; Def. App.
at 6; Pl. Renewed Mot. at 4.5 Given this, the evidence before the Court is not substantially
5
The government also acknowledges that the subject shipping orders—unlike the bills of lading—contain
the signature of a Navy Exchange warehouse employee. Def. Renewed Mot. at 11. In addition, a review
of the shipping orders that have been provided to the Court reveals that these documents contain
information that is substantially similar to the bills of lading previously considered by the Court and the
Federal Circuit. Both documents contain “to/from” shipping information, a description of the items to
be shipped, and a place for the shipper and carrier to sign the document. Pl. App. at 6-15; Def. App. at 6-
7. But, as the government correctly argues, the shipping orders do not specifically mention MCX. Def.
Renewed Mot. at 12.
15
different from the evidence previously considered by the Federal Circuit. The Court is bound by
the Federal Circuit’s legal conclusions regarding the existence of privity between Estes and the
government in this case. And so, the Court GRANTS Estes’s renewed motion for summary
judgment and DENIES the government’s renewed cross-motion for summary judgment on the
issue of whether Estes has established a valid contract with the government.
C. The Undisputed Material Facts Show That The
Government Did Not Assume The Risk That Estes Would Not Be Paid
Having determined that Estes has established the existence of a valid contract with the
government, the Court turns to the question of whether the government assumed the risk that
Salem would not pay Estes for the freight charges in dispute under the terms of that contract.
See Sprague v. Ticonic Nat’l Bank, 307 U.S. 161, 168 (1939) (“While a mandate is controlling as
to matters within its compass, on the remand a lower court is free as to other issues.”) (citations
omitted). For the reasons discussed below, the Court concludes that the government did not
assume the risk that Salem would not pay Estes for the freight charges in dispute. And so, the
Court GRANTS the government’s renewed cross-motion for summary judgment and DENIES
Estes’s renewed motion for summary judgment in the issue of whether the government is liable
to Estes for the outstanding freight charges.
Generally, contract interpretation is a matter of law. Dalton v. Cessna Aircraft Co., 98
F.3d 1298, 1305 (Fed. Cir. 1996). To determine whether a party to a contract has assumed a risk,
the Court generally looks to the terms of the contract. See, e.g., id. And so, for Estes to show
that the government assumed the risk of paying Estes if Salem did not, Estes must point to
something in its contractual relationship with the government that obligates the government to do
so. Baltimore & O. R. Co. v. United States, 261 U.S. 592, 598 (1923) (holding that to assume
liability based on an implied in-fact contract theory, the circumstances must be such that a
meeting of the minds can be inferred); City of Cincinnati v. United States, 153 F.3d 1375, 1378
(Fed. Cir. 1998) (holding like an express contract, an implied-in-fact contract requires “(1)
mutuality of intent to contract; (2) consideration; and, (3) lack of ambiguity in offer and
acceptance” and when the government is a party that “the government representative whose
conduct is relied upon must have actual authority to bind the government in contract.”). Estes
makes no such showing for four reasons.
16
First, Estes has not demonstrated, based upon the undisputed material facts in this case,
that an authorized representative of the government contractually obligated the government to
pay Estes for any outstanding freight charges should Salem fail to do so.6 In fact, Estes points to
no facts to show that the government assumed such a risk under its contract with the government.
See generally Pl. Renewed Mot.; Pl. Supp. Rather, Estes baldly argues that the government has
assumed the risk of nonpayment because, “[i]n the transportation industry, the case law is clear
that the party who inserts a broker into the transportation relationship assumed the risk that the
broker will fail to pay the freight charges owed.” Pl. Supp. at 1-2.
Estes’s failure to point to any facts to show that the government is contractually obligated
to pay Estes if Salem failed to remit payment is fatal to its claim. Moreover, even if Estes could
identify such a contractual obligation, Estes fails to identify a government representative with
actual authority to obligate the government to accept that obligation.7 See generally Pl. Renewed
Mot. And so, Estes has not shown that the undisputed material facts in this case demonstrate that
the government is liable to Estes for its outstanding freight charges. RCFC 56; Anderson, 477
U.S. at 256-57 (movant bears the burden of showing that the undisputed material facts
demonstrate that it is entitled to summary judgment in its favor).
Second, a careful reading of Estes’s renewed motion for summary judgment makes clear
that the contractual obligation that Estes alleges exist here may arise only as an operation of law
and cannot be enforced in this Court under the Tucker Act. It is well-established that “[t]he
Tucker Act does not give a right of action against the United States in those cases where, if the
transaction were between private parties, recovery could be had upon a contract implied in law.”
Merritt, 267 U.S. at 341 (citations omitted).
As discussed above, Estes, relies upon transportation industry practice and “legal
doctrine” regarding the payment of carriers to argue that it must be paid. Pl. Renewed Mot. at
6
The parties agree that there are no material facts in dispute or unknown relevant to the issue of whether
the government assumed the risk of non-payment. Def. Supp. at 2; Pl. Supp. at 5-6.
7
Additionally, to the extent that Estes relies upon the undisputed fact that a MCX representative signed
the delivery receipts for the shipments at issue in this case, this fact, alone, is insufficient to establish that
a government representative–with the authority to contractually bind the government–agreed to make
such payments. Pl. App. at 6-15; Def. App. at 6-7; City of Cincinnati, 153 F.3d at 1378.
17
12-13. But, as the government correctly argues in its supplemental brief, “[r]elief cannot be
granted in this court based upon an implied-in-law contract claim, for which sovereign immunity
has not been waived.” Def. Supp. at 4; Hercules, Inc. v. United States, 516 U.S. 417, 423
(1996); City of Cincinnati, 153 F.3d 1377; Merritt, 267 U.S. at 341. Estes makes no argument to
show that the government’s sovereign immunity has been waived to permit a recovery in this
case. See Pl. Renewed Mot.; Pl. Renewed Resp.; Pl. Supp.; Pl. Supp. Resp. And so, this Court
simply cannot award any relief to Estes.
Third, the cases upon which Estes relies to support its argument that the government must
pay for the outstanding freight charges at issue in this case do not support its claim. Specifically,
Estes’s reliance upon Southern Pacific and Reading Co.–two cases which involve carriers
seeking to recover freight charges from the government–is misplaced, because these cases are
factually distinguishable from this dispute. Pl. Supp. at 2-3; S. Pac. Co. v. United States, 192
F.2d 438 (3d Cir. 1951); Reading Co. v. United States, 128 F. Supp. 745 (Cl. Ct. 1955). In
Southern Pacific, the United States Court of Appeals for the Third Circuit held that an authorized
government representative contractually bound the government in connection with a
transportation contract, because the government representative possessed implied authority to do
so.8 S. Pac., 192 F.2d at 439-40. But, as discussed above, Estes points to no facts in this case to
show that an authorized government representative contractually obligated the government to
pay Estes under the circumstances presented here. See generally Pl. Supp. Resp.
Reading Co. is also inapposite to this case. In that case, the Court of Claims held that the
government was liable for payment to a railroad company that shipped certain goods, because a
contracting officer knowingly agreed that the government would ship the goods after inviting
bids to purchase surplus goods. See generally Reading Co., 128 F. Supp. at 746-48. But again,
Estes points to no facts in this case to show that a government representative knowingly agreed
that the government would pay Estes should Salem fail to do so. See generally Pl. Renewed
Mot.
8
As the government observes in its responsive brief, the facts of this case are also distinguishable from
the facts of Southern Pacific, because the bills of lading in Southern Pacific had been signed by a
government representative. Def. Supp. Resp. at 2-3.
18
Lastly, Estes’s argument that several other cases–which are not binding on this Court and
involve transportation contracts between private parties–support its argument that the
government assumed the risk of nonpayment is equally unavailing. Pl. Renewed Mot. at 13-16;
Pl. Supp. at 3-5. In Hawkspere Shipping Co., Ltd. v. Intamex, S.A., 330 F.3d 225 (4th Cir. 2003),
the shipper in that case contacted a broker to ship cargo and the broker, in turn, contracted with a
carrier to make the shipment. Id. at 228-29. After the carrier invoiced the broker, who, in turn,
invoiced the shipper, the shipper paid the broker. Id. at 229. But, the broker failed to remit
payment to the carrier. Id. And so, the United States Court of Appeals for the Fourth Circuit
held that the shipper was liable to the carrier for shipping charges because:
[O]nly if the carrier has released the shipper from liability under the bills of lading
is the shipper discharged from his duty to pay the carrier by remitting payment to
the consolidator; otherwise, the shipper, by choosing not to pay the carrier directly,
assumes the risk that the consolidator might fail to forward the freight payment on
to the carrier.
Hawkspere, 330 F.3d at 237.9
But, neither Hawkspere, nor the other cases upon which Estes relies, involve
transportation contracts with the government. More importantly, none of these cases address the
waiver of the government’s sovereign immunity from suit within the context of transportation
contract claims. See id.; Strachan Shipping Co. v. Dresser Indus., Inc., 701 F.2d 483 (5th Cir.
1983); Oak Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 513 F.3d 949 (9th Cir. 2008);
Nat’l Shipping Co. of Saudi Arabia v. Omni Lines, Inc., 106 F.3d 1544 (11th Cir. 1997).
As the Supreme Court has long recognized, the government enjoys a unique status as
sovereign and “[t]he United States, as sovereign, is immune from suit save as it consents to be
sued.” United States v. Sherwood, 312 U.S. 584, 586 (1941) (citations omitted). Because Estes
has not demonstrated that the government has consented to be sued under the “assumption of
risk” doctrine articulated in Hawkspere, the Court must DENY Estes’s renewed motion for
9
The United States Courts of Appeals for the Fifth, Ninth, and Eleventh Circuits have adopted the
“assumption of risk” doctrine articulated in Hawkspere within the context of motor carriers. See Strachan
Shipping Co. v. Dresser Indus., Inc., 71 F.2d 483, 489-90 (5th Cir. 1983); Oak Harbor Freight Lines, Inc.
v. Sears Roebuck & Co., 513 F.3d 949, 954-57 (9th Cir. 2008); Nat’l Shipping Co. of Saudi Arabia v.
Omni Lines, Inc., 106 F.3d 1544, 1546-47 (11th Cir. 1997). But, again, none of these cases involve
transportation contracts with the government. Id.
19
summary judgment and GRANT the government’s renewed cross-motion for summary
judgment on this final issue of liability.10
V. CONCLUSION
In sum, the undisputed material facts in this case and the Federal Circuit’s January 3,
2014, decision demonstrate that the Court may consider this matter under the ICA and that Estes
has established the existence of a valid contract with the government. But, the undisputed
material facts also show that the government is not contractually obligated to pay Estes for the
outstanding freight charges in dispute, after Salem failed to do so. Rather, the undisputed
material facts show that an authorized government representative did not contractually bind the
government in this manner. And so, Estes has not shown that the government is liable for the
outstanding freight charges at issue in this case.
For the foregoing reasons, the Court
1. GRANTS-IN-PART and DENIES-IN-PART Estes’s renewed motion for summary
judgment;
2. GRANTS-IN-PART and DENIES-IN-PART the government’s renewed cross-
motion for summary judgment; and
3. DISMISSES the complaint.
The Clerk’s Office shall enter judgment accordingly.
No costs.
IT IS SO ORDERED.
s/ Lydia Kay Griggsby
LYDIA KAY GRIGGSBY
Judge
10
Because the Court concludes that Estes has not shown that an authorized government representative
contractually obligated the government to pay the outstanding freight charges in dispute, the Court does
not reach the issue of whether Estes is equitably estopped from recovering such charges. Def. Supp. at 6-
7; Pl. Renewed Mot. at 13-14.
20