from the Armed Services Board of Contract Appeals in No.
59041, Administrative Judge Craig S. Clarke.
Irving Saltman, Smith, Currie & Hancock LLP, Washington,
DC, argued for appellant.
Barbara E. Thomas, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington,
DC, argued for appellee. Represented by Chad A. Readler,
Robert E. Kirschman, Jr., Martin F. Hockey, Jr., Jeffrey a.
Elizabeth Graham Weber, Dressman Benzinger LaVelle PSC,
Crestview Hills, KY, for amici curiae Kentucky Marina
Association, Tennessee Marina Association. Also represented
by Kevin Fitzpatrick Hoskins, Cincinnati, OH.
Taranto, Schall, and Stoll, Circuit Judges.
SCHALL, CIRCUIT JUDGE.
case comes to us from the Armed Services Board of Contract
Appeals ("Board"). Lee's Ford Dock, Inc.
("LFD") appeals the decision of the Board granting
summary judgment in favor of the Secretary of the Army and
denying LFD's claims for contract reformation and breach
of contract. Lee's Ford Dock, Inc., ASBCA No.
59041, 16-1 BCA ¶ 36, 298 ("LFD II").
The contract at issue is LFD's lease agreement with the
U.S. Army Corps of Engineers ("Corps"). For the
reasons set forth below, we affirm-in-part and
operates a marina at Lake Cumberland, Kentucky on land leased
from the Corps. LFD entered into the lease on August 29, 2000
under Lease No. DACW62-1-00-0105 (the "Lease").
LFD II, 16-1 BCA ¶ 36, 298, at *2 (citing J.A.
237). The Lease superseded prior leases between LFD and the
Corps dating back to 1971. The lease area, referred to as the
"premises" throughout the Lease, comprises
approximately 166 acres (130 acres of water and 36 acres of
land). Id. The Lease runs for a 25-year term,
effective from September 1, 2000 to August 31, 2025.
Id. On October 7, 2003, the Corps and LFD executed a
first supplemental agreement (the "Supplemental
Agreement"). The Supplemental Agreement gives LFD the
option to extend the Lease for another 25 years to 2050 when
it expires in 2025. See J.A. 271-72.
particular provision of the Lease is pertinent to this
appeal. Condition 9, "RIGHT TO ENTER AND FLOOD, "
The right is reserved to the United States, its officer[s],
agents, and employees to enter upon the premises at any time
and for any purpose necessary or convenient in connection
with Government purposes; to make inspections; to remove
timber or other material, except property of the Lessee; to
flood the premises; to manipulate the level of the lake or
pool in any manner whatsoever; and/or to make any other use
of the lands as may be necessary in connection with project
purposes, and the Lessee shall have no claim for damages on
account thereof against the United States or any officer,
agent, or employee thereof.
Cumberland was impounded from the Cumberland River when the
Corps constructed Wolf Creek Dam in 1951. The Wolf Creek
Dam-Lake Cumberland project is managed by the Corps. On
January 19, 2007, Brigadier General ("BG") Bruce
Berwick, Commander of the Corps' Great Lakes and Ohio
River Division, and Lieutenant Colonel ("LTC")
Steven Roemhildt, Commander of the Corps' Nashville
District, signed a Memorandum for Record titled "Wolf
Creek Dam Interim Risk Reduction Measures" (the
"IRR Memo"). LFD II, 16-1 BCA ¶ 36,
298, at *3. The IRR Memo documented the decision by BG
Berwick and LTC Roemhildt to "lower the pool [of Lake
Cumberland] to elevation 680 immediately and hold that
elevation for an indefinite period, unless and until the
Corps determines that a different pool elevation is more
appropriate." Id. at *4 (citing J.A. 74). The
IRR Memo's Executive Summary stated: "I consider
Wolf Creek Dam to be in a high risk of dam failure and
therefore I am taking necessary emergency measures to reduce
imminent risk of human life, health, property, and severe
economic loss." Id. (citing J.A. 67). The IRR
cited four reviews, conducted in 2005 and 2006, documenting
the condition of Wolf Creek Dam. Three of the reviews
concluded that the dam was at a high risk of failure.
January 22, 2007, in accordance with the IRR Memo, the Corps
began lowering the water level in Lake Cumberland.
Id. When the drawdown was completed, the level of
the lake was reduced to an elevation of 680 feet. J.A. 81.
The lake was maintained at that level while restorative
construction was undertaken to repair Wolf Creek Dam. The
Corps returned the lake to its previous levels in 2014 after
the restoration work was completed.
32 of the Lease is titled "DISPUTES CLAUSE." J.A.
250. It provides, in subsection a., that, "[e]xcept as
provided in the Contract Disputes Act . . ., all disputes
arising under or relating to this lease shall be resolved
under this clause and the provisions of the
Act."Id. The DISPUTES CLAUSE further
provides, in subsection c., that "[a] claim by the
Lessee shall be made in writing and submitted to the District
Engineer for a decision." Finally, subsection c. (2) of
the DISPUTES CLAUSE requires that all claims in excess of
$100, 000 be certified. Id.
January 18, 2013, LFD submitted a certified claim to the
District Engineer, who was acting as the contracting officer
for the Lease. In its claim, LFD asserted that, at the time
they entered into the Lease, the parties "could not have
envisioned" that Lake Cumberland "would be drawn
down to such an extreme degree for such a long period of
time, as the Lake has only been lowered to 680' once in
its more than fifty year history." J.A. 63. LFD
continued that, "[a]gainst this background, the purpose
of the Lease contract has been frustrated to such an extent
that . . . the Lease should be reformed in a manner that
requires the Corps to compensate [LFD] for the damages it has
incurred as a result of the long-term drawdown of the
Lake." Id. LFD stated that these damages
amounted to at least $4, 000, 000. J.A. 65. In a final
decision dated August 26, 2013, the District Engineer denied
LFD's claim. The District Engineer informed LFD that it
had the option of appealing the final decision to the Board
or to the U.S. Court of Federal Claims. J.A. 176.
November 27, 2013, LFD timely appealed the District
Engineer's final decision to the Board. J.A. 83. In its
one-count complaint, LFD alleged that the Corps had breached
its contract with LFD by failing to disclose to it superior
knowledge on the Corps' part. See J.A. 87-88.
According to LFD, the Corps conducted major inspections of
Wolf Creek Dam in 1994 and 1999, and in 1999 inspectors
identified expanding leaks in the dam and called for a crack
survey. J.A. 86 ¶ 14. LFD asserted that, prior to
entering into the Lease, the Corps failed to disclose this
information to LFD, and also failed to disclose to LFD
concerns it had about the condition of the dam. Id.
February 5, 2014, the Corps filed a motion to dismiss
LFD's complaint. The Corps argued that the Board lacked
jurisdiction under the CDA because LFD had failed to submit
its superior knowledge claim to the District Engineer and had
failed to certify the claim. See J.A. 90-91.
23, 2014, the Board issued a decision addressing the
Corps' motion to dismiss. Lee's Ford Dock,
ASBCA No. 59041, 14-1 BCA ¶ 35, 679 ("LFD
I"). After stating that it had jurisdiction to
entertain LFD's appeal under both the Lease's
DISPUTES CLAUSE and the CDA, id. at *1, the Board
turned to the substance of the Corps' motion. The Board
held that the superior knowledge claim was a new claim that
had not been certified to the District Engineer for a
decision because there was nothing in the operative facts of
LFD's certified claim that supported a superior knowledge
theory. Id. at *10-11. The Board found that the only
allegation related to knowledge at the time of the award was
the allegation that the parties could not have envisioned
that Lake Cumberland would be drawn down to such an extreme
degree for such a long time. Id. In that regard, the
[LFD's] assertion that the parties could not have
envisioned at the time they entered into the Lease that the
lake would be drawn down to such an extreme degree for such a
long period of time communicates a common understanding that
is inconsistent ...