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CAPITAL ENGG. & MFG. CO. v. WEINBERGER

September 8, 1988

CAPITAL ENGINEERING & MANUFACTURING CO., INC., et al., Plaintiffs,
v.
CASPAR W. WEINBERGER, et al., Defendants



The opinion of the court was delivered by: PRATT

 JOHN H. PRATT, UNITED STATES DISTRICT JUDGE

 MEMORANDUM OPINION

 Background

 Capital is an Illinois-based corporation and long-time government contractor which manufactures and produces a variety of metal products. On September 24, 1981, the United States Army Tank Automotive Command awarded Capital a contract under which Capital was to produce 106 armored vehicle launch bridge kits at a total price of more than $ 9 million. Soon thereafter an additional 61 kits and about $ 5 million were added to the contract provisions. When completed, such kits are fitted to combat tank chases to enable river crossings. On September 11, 1986, after a wide-ranging investigation conducted by Army investigative units, Brigadier General Donald Hansen, the Army's suspending authority, determined that there existed evidence leading him to reasonably believe that Capital knowingly and intentionally produced defective launch bridge kits for the Army. Hence, Capital was informed by letter that it and its chief officers were being suspended from pursuing further Army contracts.

 Capital promptly moved to have the suspension action rescinded. On April 23, 1987, after reviewing various submitted materials, General Hansen terminated Capital's suspension, but, in a follow-up letter dated May 4, 1987, declined to declare the suspension void ab initio. During Capital's suspension, Army contracts were awarded to Intergy Co. and Universal Hydraulics, Inc., two of Capital's competitors. Capital's bids for these contracts were not entertained in light of its suspension.

 Capital and its chief officers filed this action in June 1987. On July 17, 1987, plaintiffs moved for partial summary judgment as to the suspension issue. Defendants duly responded by filing a cross-motion to dismiss or, in the alternative, for summary judgment. Because defendants' cross-motion raised colorable threshold challenges to the jurisdictional posture of this action, we ordered the parties to complete briefing on these pivotal questions before addressing other matters raised in the parties' pleadings. Memorandum Order of February 5, 1988.

 Discussion

 Defendants' Motion to Dismiss

 Consistent with our order of February 5, 1988, the parties have extensively briefed the threshold issues raised in defendants' cross-motion. In the course of the parties' briefing, the posture of this action and the parties' respective positions have been clarified considerably. Defendants' initial objections to this action were two-fold. First, defendants contended that plaintiffs' action, though framed as one seeking declaratory relief, amounted to a suit for over $ 10,000 in money damages against the government. Hence, defendants maintained that jurisdiction over this suit lies exclusively in the United States Claims Court. 28 U.S.C. § 1491(a)(1). Second, defendants asserted that plaintiffs had failed to join two indispensable parties to this action, those being the successful bidders for the two contracts sought by but denied Capital during its suspension. In opposing this motion, plaintiffs adamantly maintained that they were not suing in contract, either on an express or implied theory, and did not seek monetary, contract, or injunctive relief of any sort. As if to make this point plain, plaintiffs moved to amend their complaint to delete references therein to an amount in controversy and to the Federal Courts Improvements Act of 1982, 28 U.S.C. § 1491(a)(2), the latter of which pertains to the jurisdiction of the Claims Court. *fn1" With this amendment plaintiffs emphasized their intention to seek only declaratory relief. Presented with this clarified construction of plaintiffs' suit, defendants have reframed their objection. They now assert that plaintiffs seek declarations as to matters which do not present a live case and controversy, and which, therefore, are not suitable for adjudication.

 Armed with this understanding of the present posture of the parties' dispute, we turn to consider the two declarations sought by plaintiffs. Plaintiffs first take issue with the manner in which Capital was suspended from receiving Army contracts. Specifically, Capital charges that defendants imposed the suspension without having provided Capital adequate notice of the underlying charges, without affording Capital access to certain allegedly exculpatory evidence, and without providing "fundamental fairness" as required by government regulations governing suspension procedures. Plaintiffs' Opposition to Defendants' Motion to Dismiss or For Summary Judgment ("Pltf. Opp.") at 6. Capital contends that as a result of these procedural deficiencies the suspension was imposed in violation of its right to due process under the law. Accordingly, Capital seeks a declaration that its suspension is void ab initio. In their motion to dismiss, defendants contend that all matters pertaining to plaintiffs' suspension are moot, since the suspension has now been lifted.

 Defendants' position, while superficially appealing, is untenable. It is certainly true that defendants, by lifting the suspension, permit Capital to bid for Army contracts. Indeed, since the suspension was lifted Capital appears to have received at least one such contract. Nevertheless, it is undisputed that in lifting the suspension defendants did not purport to wipe Capital's slate clean of the potentially adverse implications of a government suspension. The Army's April 23, 1987 letter lifting the suspension was quite specific on this point: "General Hansen wants it understood that this decision does not amount to a finding that Capital is presently responsible. The evidence presented has not resolved the issue of present responsibility." Complaint Ex. E (emphasis supplied). Instead, the letter makes clear, General Hansen lifted the suspension upon a "balancing" of risks and interests, and upon recognition that Capital's submissions had raised genuine issues of material fact; that the risk to soldiers due to alleged defects in Capital's products was not as grave as originally thought; and that proceeding with a fact-finding hearing against Capital would interfere with an ongoing criminal investigation pertaining to related matters. Id.

 A follow-up letter, dated May 4, 1987, reiterates General Hansen's initially proffered reasons for lifting the suspension. It adds that in taking this action General Hansen "certainly did not make any findings as to 'serious procedural improprieties'" or as to "whether certain reports were exculpatory." Defendants' Motion to Dismiss or For Summary Judgment, Appendix B. The correspondence concludes that "General Hansen's recent action to terminate the suspension does not affect the fact that a ...


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