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Quiman, S.A. v. United States

U.S. Court of Appeals, Federal Circuit

January 21, 1999


Before Mayer, Chief Judge, Clevenger and Bryson, Circuit Judges.

The opinion of the court was delivered by: Per Curiam.

Quiman, S.A. de C.V., a Mexican corporation, appeals a judgment of the United States Court of Federal Claims, Quiman, S.A. de C.V. v. United States, 39 Fed. Cl. 171 (1997), denying Quiman's claim that the United States Department of Agriculture, Animal and Plant Health Inspection Service ("APHIS") breached its contract with Quiman. The court held that the cooperative agreement between Quiman and APHIS was not an enforceable contract; alternatively, the court held that APHIS did not breach the contract and that Quiman suffered no compensable damages. Because we agree that APHIS did not breach the contract, we affirm.

Questions of contract formation and interpretation are questions of law that we review de novo. See Trauma Serv. Group v. United States, 104 F.3d 1321, 1325 (Fed. Cir. 1997). Accordingly, we review without deference the court's holding that no contract was formed between Quiman and APHIS, or alternatively that there was no breach of that contract.

Quiman asserts that its agreement with APHIS constitutes a contract enforceable under the Tucker Act, 28 U.S.C. § 1491 (1994). In alleging a valid contract with the United States, Quiman has the burden to prove: "a mutual intent to contract including offer, acceptance, and consideration; and authority on the part of the government representative who entered or ratified the agreement to bind the United States in contract." Total Med. Management, Inc. v. United States, 104 F.3d 1314, 1319 (Fed. Cir. 1997). Quiman has met this burden. The plain language of the cooperative agreement executed by Quiman and APHIS clearly demonstrates a mutual intent to contract.

The government argues that the cooperative agreement is too indefinite to constitute an enforceable contract, noting that it is silent as to several important terms, including the remedy for its breach. While it is true that "[i]n the absence of . . . sufficiently definite terms, no contractual obligations arise," Modern Sys. Tech. Corp. v. United States, 979 F.2d 200, 202 (Fed. Cir. 1992), here there are definite terms outlining APHIS' obligation to provide inspectors for Quiman's facilities and Quiman's obligation to make a deposit to defray expenses of the inspections. Although the contract does not specifically define a remedy for its breach, "few contract cases would be in court if contract language had articulated the parties' postbreach positions as clearly as might have been done, and the failure to specify remedies in the contract is no reason to find that the parties intended no remedy at all." United States v. Winstar Corp., 518 U.S. 839, 869 n. 15 (1996). Thus, we are "left with the familiar task of determining which party's interpretation was more nearly supported by the evidence." Id.

The government next argues that the contract should fail for lack of consideration. It says that in the context of government contracts, the consideration given by the contractor must benefit the government, and not merely cause detriment to the contractor. Because Quiman's actions under the contract provided no direct monetary value to the United States, APHIS asserts that there was no authority for the contract. However, this argument ignores the benefit that the United States received by encouraging the importation of fetal bovine serum ("FBS") at a time of heightened demand. Additionally, APHIS received $15,000 to defray inspection expenses. Together, the deposit and the establishment of Quiman as a viable FBS source provided sufficient consideration for the contract.

Having established that the cooperative agreement constitutes a contract, Quiman argues that the agreement incorporates APHIS' Veterinary Services Notice ("VSN"), dated April 6, 1987. The VSN describes the Overseas Source Inspection ("OSI") program through which Quiman planned to ship FBS into the United States, having obtained inspections of its facilities under the cooperative agreement. We agree with the trial court that the contract between Quiman and APHIS does not incorporate the VSN. The cooperative agreement contains no integration clause incorporating the VSN, or even language referencing the VSN; it merely sets out the procedure by which Quiman would pay for inspections of its facilities. It leaves no room for us to infer other terms. Moreover, even if ambiguity exists, the rule is clear that "an ambiguous term of a grant or contract [will not] be construed as a conveyance or surrender of sovereign power." Winstar, 518 U.S. at 878. As a contractual term, the VSN would restrict the government's absolute authority over imports, and therefore it would be inappropriate to incorporate it into an ambiguous government contract.

Because the VSN was not a contractual term, it follows that APHIS' failure to provide Quiman with 60 days' notice of termination of the OSI program did not constitute a breach of APHIS' contractual obligation. The contract obligated APHIS to provide inspections when requested to do so, to make accountings of Quiman's deposit, and to return the remainder of the deposit to Quiman after providing 60 days' notice of the termination of the agreement. APHIS met all of these requirements.


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