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7). This point brings up one of the larger issues suggested by the opinion (which will be discussed in greater detail later), namely, the fact that the conflict between the law's position on jurisdiction and this kind of estoppel is "yet another case where the government has 'taken entirely irreconcilable positions regarding the jurisdiction of the federal courts," leading to increased litigation and cost (Lettow, 2012, p. 7). Thus, though he is reluctant, Lettow agreed that "draconian as it may be, this court nonetheless is compelled by law to ignore the government's prior acceptance of jurisdiction in the district court" (Lettow, 2012, p.7). Though this will be addressed in greater detail later, the problematic nature of this legal obligation is the fact that the time spent litigating the case in the district court, when Union Pacific believed that court to have jurisdiction, contributed to the expiration of the statue of limitations, suggesting that plaintiffs with legitimate claims may ultimately fail in litigation solely due to a kind of confusion on the part of the courts.
Normally the accrual begins at the time of the breach, but Union Pacific was able to make a convincing case that neither the Katy nor Union Pacific could have been aware of the Corps' installation of the incorrect culverts at the time or subsequently. Judge Lettow ultimately decided that accrual did not begin at the time of the breach, but rather when it was discovered, because even though the contract required the Katy to "make a detailed inspection' to determine whether 'the completed sector of the railroad [was] constructed in accordance with the approved plans and specifications,'" the fact that there was no water in the adjacent reservoir would have made it difficult if not impossible for an inspector to determine on sight that the culverts were below the eventual water line (Lettow, 2012, p. 8). Furthermore, Lettow decided that the accrual should not have begun at the time of the derailment, because even though an investigator could have seen that the culverts were made of metal instead of concrete, investigators may not have been aware of the details of the contract at that time.
Union Pacific attempted to further argue that the date of accrual should begin in February 2007, when it first received the Corps' "as-built" drawings which demonstrated that it had in fact installed metal culverts without the consent of a Katy engineer, but Lettow denied this date, deciding instead that the accrual began in May 2005, when Union Pacific first filed its administrative claim with the Corps. Because Union Pacific acknowledged the metal culverts as both the cause of the derailment and a breach of contract in that administrative claim, there was no choice but to determine that Union Pacific was aware a breach occurred, and thus accrual must begin. As a result, Lettow had no choice but to dismiss the claim, given that the statue of limitations had expired by the time Union Pacific brought the case to the Court of Federal Claims in February 2012.
Perhaps the most obvious issue raised by this decision is the aforementioned "draconian" necessity of enforcing a statute of limitations such that a case is dismissed even as the plaintiff, acting in good faith, specifically did not take the case to the Court of Federal Claims out of a belief that the district court had jurisdiction over the matter. From an outside observer, this would seem to grant an unfair advantage to the government, who, as in this case, can acquiesce to a district court's jurisdiction simply as a means of "running out the clock" until the applicable statute of limitations expires. The problem is not that claims can expire, but rather that the particular process of the courts, and particularly the Court of Federal Claims, may be set up in such a way as to give the government unwarranted advantage in defending itself from legitimate claims.
That the government attempts to exploit jurisdictional issues in its cases before the Court of Federal Claims is not in question, as evidenced by two recent opinions issued by that same court, Extreme Coatings Inc. v. The United States and Hartford Fire Insurance Company v. The United States. In the former case the government attempted to have the case dismissed on the grounds that the plaintiff did not properly file a claim to the government contracting officer, and as such the court did not have subject matter jurisdiction over the claim (Wheeler, 2012, p. 1-2). In that case the judge denied the government's motion and stayed the case for thirty days to allows for the claim to be filed and responded to (which was largely a formality). This is not to begrudge the government its right to question jurisdiction in its own defense, but simply to point out that it is a common and (although not in the case of Extreme Coatings Inc.) useful tool.
The other decision, Hartford Fire Insurance Company v. The United States, did not rest entirely on issues if jurisdiction, but questioning jurisdiction was a central component of the government's defense that the plaintiff had failed to make a claim that could be compensated. At issue was a contract between the Hartford Fire Insurance Company and the Army Corps of Engineers, and in particular whether or not the Corps had wrongly disbursed funds to another contractor with whom Hartford was associated. In that case, the government argued (among other things) that "any lawsuit Hartford might have would be more akin to an impairment of suretyship claim, which cannot be maintained against the United States" (Futey, 2012, p. 5). The judge ultimately denied the government's motion, finding both that Hartford successfully stated its claim and that the court itself had jurisdiction over the case.
Both opinions further demonstrate the importance of the Court of Federal Claims to contract law, because the Tucker Act makes the Court the preeminent authority on large government contracts, which have rapidly become one of the most lucrative kinds of employment for large firms. Anytime something happens with these (sometimes multibillion dollar) contracts, the Court of Federal Claims hears the case, such as "a multibillion dollar government contracts claim regarding the B-2 stealth bomber [and] a multibillion dollar claim and $111 million award to Hughes Aircraft for unauthorized government use of its satellite guidance technology" (Carter, 1997, p. 75). More recently the court decided in a multimillion dollar suit between Daewoo Engineering and Construction and the government, deciding that Daewoo had submitted false claims and was responsible for over seven million dollars in damages after failing to complete a road in the Republic of Palau (Rosetti & McKeeman, 2007, p. 13). Thus, the Court of Federal Claims plays an outsized role in the economy at large, because it is responsible for hearing claims from the world's largest companies, many of whom got that way via government contracts. As a result, problems or complications with federal contract law can have far-reaching ramifications, not only for the companies involved, but also for the public at large, who frequently deals with these companies or their handiwork without their knowledge.
The issue of the Court of Federal Claims' jurisdiction is a serious one, because relatively recent Supreme Court decisions have served to gradually erode that jurisdiction, such that in some cases "two plaintiffs with substantively identical claims may thus end up in different courts, merely because the form of their pleadings differ" (Thies, 2010, p. 1203). For example, in its 1988 decision in Bowen v. Massachusetts, the Supreme Court decided that district courts could hear contract cases against the government "so long as the pleadings characterized the claim as seeking 'declaratory or injunctive relief' rather than 'money damages,'" (Thies, 2010, p. 1203). The problem with this complication of jurisdiction is that it opens up plaintiffs and defendants alike to the kind of jurisdictional and statute of limitations issues that arise when cases are bounced from one court to another independent of the regular appeals process. As Lettow lamented in his opinion, and other commentators have expressed elsewhere, the "costly and time-consuming path through federal District and appellate courts" frequently serves to derail the course of justice by using the letter of the law to contradict the spirit of it ("Taking on takings law," 1997, p. 74).
Considering the sheer monetary value of the cases considered by the Court of Federal Claims, the public policy implications of the Union Pacific Railroad decision should be staggering. Although this particular case only concerned roughly $4.5 million, which is not very large in the world of government contracts, the fact that its conclusion ultimately rested on the government being able to run out the statue of limitations by initially agreeing to the jurisdiction of the Oklahoma district court should give legislators and the public pause, because this suggests that the law governing federal contracts…[continue]
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