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Nexus Between Tort and Contract Sufficient for Jurisdiction

A motion to dismiss an appeal as premised on a tort was denied by the Armed Services Board of Contract Appeals because a sufficient nexus existed between the alleged tort and the contract to substantiate jurisdiction over the claim. The dispute arose from a contract to provide satellite telephone services. The contract included two financial limitation clauses, which required the contractor not to exceed the total price in the schedule and to stop performance and inform the contracting officer if it could not adhere to this requirement. After several months of service, the amount the contractor billed the government for telephone usage increased dramatically and, consequently, the government terminated the contract for convenience. The contractor submitted a certified claim, which the CO denied except for a small amount. Following the appeal filing, the government investigated misuse of the telephones and concluded government users did not make the disputed calls. The government also determined the suspicious calls were likely made by "cloning" telephones, which involved capturing and duplicating identifying telephone numbers on another wireless telephone.

Government's Defense

The government then moved to dismiss the appeal on the basis the claim sounded in tort. According to the government, the disputed calls were generated by third-party tortfeasors, which relieved the government of its obligation to pay the contractor and divested the board of jurisdiction to hear the appeal. The contractor countered by arguing the government breached its express and implied contractual obligations and that any misuse occurred as a result of the government's failure to safeguard the telephones. Where the basis of a claim lies in an independent tort rather than in a government contract, boards of contract appeals lack jurisdiction. However, where there is a sufficient nexus between the alleged tort and the contract, the board may entertain the appeal. Here, the contractor alleged the government breached its contractual duty to pay for all calls originating from the active telephone numbers delivered under the contract. To the extent it was the government's defense, and not the contractor's claim, that introduced the concept of tortious conduct into the dispute, the board had jurisdiction to examine the contract to determine which party bore the risk of unauthorized calls. Thus, because the contractor alleged negligence by the government to avoid the "not-to-exceed" provisions in the contract, a sufficient nexus existed between the contract and the alleged tort to justify jurisdiction to adjudicate the appeal. (Qatar International Trading Co., ASBCA, 92,382)

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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