The Court of Appeals for the
Federal Circuit vacated and remanded an
award of breach damages to the third-party
beneficiary of a contract modification
because the claim was time-barred by 28
USC 2501, the Tucker Act's six-year
statute of limitations. The unpaid
subcontractor asserted the government
breached a modification of a contract to
install floor coating when it paid the prime
contractor directly instead of issuing a
two-party check to the prime and the
subcontractor. The Court of Federal Claims
held the 2009 complaint was timely because
it accrued in 2004 when the government filed
a brief at the Armed Services Board of
Contract Appeals contending the
subcontractor had no enforceable rights
under the modification, and the
subcontractor "did
not sleep on its rights" by
first filing suit at the ASBCA ( 54
CCF ¶79,429). The CFC also determined
the subcontractor was entitled to breach
damages as the modification's intended
third-party beneficiary ( 55
CCF ¶79,557).
Complete
and Present Cause of Action
The Federal Circuit held the
subcontractor's cause of action accrued in
2002 when the government breached the
modification by paying the prime directly.
The subcontractor had "a
complete and present cause of action"
when, three weeks later, the government
informed the subcontractor in a letter that
it had paid the prime directly but believed
it had fulfilled its contract obligations
and would not make any payment to the
subcontractor. There was no merit to the
subcontractor's contention the government
did not repudiate the modification until it
filed its ASBCA brief, because the letter
was an unequivocal refusal to pay the
subcontractor under the terms of the
modification. In addition, the Supreme Court
has made clear that §2501 sets an "absolute,"
jurisdictional time limit ( R.
Sand & Gravel Co. v. U.S. 52
CCF ¶78,875), and equitable tolling did
not apply. ( FloorPro,
Inc. v. U.S., CA-FC, 56
CCF ¶79,836)
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