             ARMED SERVICES BOARD OF CONTRACT APPEALS

Application Under the Equal Access          )
 to Justice Act of --                       )
                                            )
Assessment and Training Solutions           )      ASBCA No. 6104 7
 Consulting Corporation                     )
                                            )
Under Contract No. H92240-14-P-0155         )

APPEARANCE FOR THE APPELLANT:                      James S. DelSordo, Esq.
                                                    Argus Legal, PLLC
                                                    Manassas, VA

APPEARANCES FOR THE GOVERNMENT:                    Jeffrey P. Hildebrant, Esq.
                                                    Air Force Deputy Chief Trial Attorney
                                                   Phillip E. Reiman, Esq.
                                                   Lt Col Nathaniel H. Sears, USAF
                                                    Trial Attorneys

               OPINION BY ADMINISTRATIVE JUDGE CLARKE

       On October 3, 2017, the Board issued a decision sustaining in substantial part
Assessment and Training Solutions Consulting Corporation's (A TSCC' s) appeal of a
contracting officer's (CO's) final decision denying ATSCC's claims for costs resulting
from damage to two boats it leased to the Navy. ATSCC's total claim was for
$57,596.01. The major damage was to one of the engines on the Free Spirit for which
ATSCC claimed $39,645.88. The Board sustained ATSCC's appeal in the amount of
$50,637.08. Assessment and Training Solutions Consulting Corporation, ASBCA
No. 61047, 17-1 BCA ,i 36,867 at 179,635. On November 9, 2017, the Navy filed a
motion for partial reconsideration. 1 On January 8, 2018, A TSCC timely 2 applied for
attorney's fees and expenses pursuant to the Equal Access to Justice Act (EAJA),
5 U.S.C. § 504. On January 10, 2018, the Board notified ATSCC that its EAJA
application would be held in abeyance until the Board issued its decision on the
Navy's motion for reconsideration. On March 6, 2018, the Board issued its decision
denying the Navy's motion. Assessment and Training Solutions Consulting

1
  The Navy received the October 3, 2017 decision on October 13, 2017 (gov't mot.
       at 1) and therefore the November 9, 2017 motion for reconsideration is timely.
2
  But for the Navy's motion for reconsideration ATSCC's EAJA application would
       have been untimely. However, the motion for reconsideration has the effect of
       preventing the ~oard's decision from becoming final. E. W Bliss Co., ASBCA
       No. 9489 et al., 68-2 BCA ,i 7119 at 32,974.
                                                                                               f
Corporation, ASBCA No. 61047, 18-1 BCA ,i 37,001. On April 26, 2018, the Board                 I
directed the Navy to respond to ATSCC's EAJA application. On May 24, 2018, the
Navy filed its opposition to ATSCC's application.                                              i
£AJA/Substantial Justification

       The EAJA provides:

                      An agency that conducts an adversary adjudication
              shall award, to a prevailing party other than the United
              States. fees and other expenses incurred by that party in                        f
                                                                                               '.
              connection with that proceeding, unless the adjudicative
              officer of the agency finds that the position of the agency
              was substantially justified or that special circumstances
                                                                                               I
              make an award unjust. Whether or not the position of the
              agency was substantially justified shall be determined on
              the basis of the administrative record, as a whole, which is
              made in the adversary adjudication for which fees and
                                                                                               If
              other expenses are sought.                                                       f
                                                                                               I
5 U.S.C. § 504(a)(l). For purposes of EAJA, a "party" includes any corporation the
net worth of which did not exceed $7,000.000 at the time the adversary adjudication
was initiated, and which had not more than 500 employees at the time the adversary
adjudication was initiated. 5 U.S.C. § 504(b)(l)(B)(ii). The Air Force does not
contest that ATSCC is eligible for possible recovery under the EAJA (gov't br. at 3-4).
                                                                                               I
                                                                                               ;



We find that the documents presented in support of the EAJA application demonstrate
that ATSCC is a "party," satisfied the net worth and employee limitations required for
EAJA eligibility (declaration of John Janota attached to application). and that, the
Board having substantially sustained the appeal, A TSCC prevailed.

       The Supreme Court has ruled that "a position can be justified even though it is
not correct, and we believe it can be substantially (i.e., for the most part) justified if a
reasonable person could think it correct, that is, if it has a reasonable basis in law and
fact." Pierce v. Underwood, 487 U.S. 552. 566 n.2 ( 1988). Only one threshold



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determination is to be made for the entire proceeding. including the underlying agency
action. Comm 'r, INS v. Jean, 496 U.S. 154 (1990); see also Hubbard v. United States,
480 F.3d 1327, 1332 (Fed. Cir. 2007).

        We discussed the role of legal precedence in determining substantial
justification in Rex Systems, Inc., ASBCA No. 52247, 02-1 BCA ,i 31,760:

                    Another important consideration in determining
                                                                                               I
              whether the Government's position was substantially


                                             2
              justified is the clarity of the governing law. JANA, Inc.,
              ASBCA No. 32447, 89-2 BCA ~ 21,638 (citing Mattson v.
              Bowen, 824 F .2d 655, 657 (8th Cir. 1987). The 10th
              Circuit, in Martinez v. Secretary of Health and Human
              Services, 815 F.2d 1381 (10th Cir. 1987) (quoting Spencer
              v. NLRB, 712 F.2d 539,559 (D.C. Cir. 1983), cert. denied,
              466 U.S. 936 (1984)), discussed the relationship between
              the clarity of the applicable law and the determination of
              substantial justification, as follows:

                     For purposes of the EAJA, the more clearly
                     established are the governing norms, and the more
                     clearly they dictate a result in favor of the private
                     litigant, the less "justified" it is for the government
                     to pursue or persist in litigation. Conversely, if the
                     governing law is unclear or in flux, it is more likely
                     that the government's position will be substantially
                     justified.

Id. at 156,855. We discussed the role of factual questions in determining substantial
justification in Pro-Built Construction Firm, ASBCA No. 59278, 18-1 BCA ~ 36,975:

              In addition, the government's litigating position is more
              likely to be substantially justified when there are close
              factual questions and the Board's resolution of the appeal
              turns upon the weight, persuasiveness and credibility
              assigned to conflicting evidence. Job Options, [ASBCA
              No. 56698,] 11-1 BCA ii 34,663 at 170.761.

Id. at 180,116.

Positions of the Parties

        ATSCC's argues that because the Board "specifically rejected the Respondent's
argument on the bailment issue" the Navy's litigation position was not substantially
justified (app. br. at 5). The Navy argues that just because the Board disagreed with its
litigation position does not automatically mean the Navy was not substantially justified
in litigating as it did (gov't br. at 5). The Navy argues that the fact the trial judge
found that ATSCC failed to directly prove the damages were caused by the Navy's
negligence supports the conclusion that the Navy's position was substantially justified.
The Navy contends the trial judge erred in resorting to the law ofbailment
presumption to sustain the appeal. (Gov't br. at 6)



                                            3
Discussion

         Relying on Pierce v. Underwood quoted above, we agree that the fact the Board
disagreed with the Navy's litigation position is not in-and-of-itself proof that the Navy
was not substantially justified in adopting that position. However, in this case the
Navy ignored Board precedent that clearly dictated a decision in favor of ATSCC.
The case is Mohammad Darwish Ghabban Est., ASBCA No. 51994, 00-2 BCA
,r 3 1,114. In this case the government leased construction equipment, including a road
grader for use in Saudi Arabia. The grader was received in good working order. The
government used the grader for 80 days without a problem except for a hydraulic leak
that appellant repaired. On the 81 st day the grader suffered a blown engine. Appellant
submitted a technical report indicating that the engine failure was caused by a lack of
water ( coolant) and oil causing high temperature operation and engine failure.
Appellant submitted a claim alleging that the blown engine was caused by government
negligence. Mohammad Darwish, 00-2 BCA ,r 31,114 at 153,669-70. The contract
included a clause that the Board interpreted as "no more than an expression of the
common law liability of the bailee." The Board explained the common law:

                      Under the common law liability of a bailee, the
              Governmenfs obligation was to exercise reasonable and
              ordinary care in safeguarding the bailed items. Appellant
              has shown that the equipment was delivered to the
              Government in good condition and returned in a damaged
              condition which gives rise to the presumption that the
              cause of the damage to the property was the Government's
              failure to exercise ordinary care or its negligence.

Id. at 153,672 ( citation omitted).

        In ATSCC the Navy leased several boats that were received in good operating
condition. The contract included a clause that made ATSCC responsible for
performing repairs unless "it can be proven that such repairs were due to negligence or
willful damages caused by the government." Assessment and Training Solutions,
17-1 BCA ,r 36,867 at 179,628. Two of the boats were returned damaged, one with a
blown engine. The facts in ATSCC are directly analogous with the facts in
Mohammad Darwish. The maintenance clause in ATSCC's contract that made the
Navy liable for damage caused by negligence is no more than an expression of the
common law liability of the bailee. Therefore, just as in Mohammad Darwish, the
common law presumption applies to ATSCC. In ATSCC the Navy ignored
Mohammad Darwish, and argued that the presumption did not apply because the
maintenance clause required ATSCC to prove negligence. The Navy persisted making
this same argument in its motion for reconsideration. The Navy's position in both the       f
case-in-chief and the motion for reconsideration was not substantially justified because


                                            4
Board caselaw clearly dictates a decision in favor of ATSCC. Rex Systems, 02-1 BCA
,i 31,760 at 156,855.

       There are also factual reasons that support our finding that the Navy was not
substantially justified in pursuing this litigation. All of these facts are found in our
decision. It has to do with the engine logs kept by the Navy during training operations.
The Navy entered numerous checklists and engine logs into the record. Logs from
July 2014 indicate that the Navy operated Free Spirit with overheated engines. In
September 2014 Free Spirit's port engine failed to start. It was determined it needed
an overhaul and two cylinders, a bent rod and an exhaust manifold were replaced.
ATSCC paid the $12,134.80 repair cost. Free Spirit's port engine failed again on
August 6, 2015. The Navy introduced testimony that the crew conducted hourly spot
checks and filled out inspection logs kept on the boat. The Navy introduced sworn
testimony that the Free Spirits engines were operating properly before the August 6,
2015 failure in the port engine. The problem is that the Navy failed to enter into
evidence any of the engine logs after May 27, 2015. No explanation was given.
The Navy had within its grasp proof of how the port engine was operated but entered
only testimony that it was operated properly. The documents, if they corroborate the
testimony, would have sealed the deal for the Navy and rebutted the presumption.
However, the unexplained absence of the documents raises questions as to why the
Navy proceeded with the case.

ATSCC's Fees and Costs

      ATSCC claims the following fees and costs:

 Invoice No.           Attorney            Hours         Rate       Amount Requested
     104           James S. DelSordo        32.50          $450            $15,070.00
     29            James S. DelSordo        12.10          $450             $5,445.00
     149           James S. Delsordo         8.30          $450             $3,735.00
     129           James S. DelSordo        23.70          $450            $10,665.00
     129                Postage                                                $23.50
     129                FedEx                                                   $1.86
     129               Copying                                                $173.63
                                 Total        76.60        Total           $35,113.99

       ATSCC argues for enhanced attorney's fees of $450 per hour based on "COLA
adjustment" and "Special Factors" (app. br. at 6-7). As we explained in Optimum
Services, Inc., ASBCA Nos. 58755, 59952, 17-1 BCA ,i 36,816, we have no authority
to award fees at more than the EAJA $125 per hour:

                    With respect to the question of fee enhancement, the
               EAJA provides that ··attorney ... fees shall not be awarded in

                                             5
              excess of $125 per hour unless the agency determines by
              regulation that an increase in the cost of living or a special
              factor, such as the limited availability of qualified
              attorneys or agents for the proceedings involved. justifies a
              higher fee." 5 U.S.C. § 504(b)(l)(A) (emphasis added).
              Our Board jurisprudence has long held that the EAJA
              ''does not confer on the ASBCA discretion to apply cost of
              living or special factor increases without an agency
              determination so prescribing by regulation." Freedom, NY,
              Inc., ASBCA No. 43965, 09-1 BCA 134,097 at 168,595;
              see also ABS Baumaschinenvertrieb, GmbH, ASBCA
              No. 48207, 01-2 BCA 131,549 at 155,826-27 (declining to
              enhance fees where "the Department of Defense has not
              issued such a regulation authorizing enhancement of fees
              based on cost of living or any other special factor'');
              Arapaho Commc 'ns, Inc./Steele & Sons, Inc., Joint
              Venture, ASBCA No. 48235, 98-1BCA129,563 at
              146,544 ("No such regulation has been issued by the
              Department of Defense. We have no authority in this
              instance to award more than [the statutory rate.]").

Id. at 179,429-30. As of the date of this Decision, no such regulation has been issued
by the Department of Defense. We have no authority to award enhanced fees.

        We find the total number of hours 76.60 reasonable. Recalculating the amount
for attorney's fees using $125 per hour for the total hours of 76.60 results in $9,575.
We find the claimed expenses reasonable. The total amount for postage, FedEx and
copying is $198.99. The total amount ofEAJA recovery is $9,575.00 + $198.99 =
$9,773.99.

                                    CONCLUSION

       For the forgoing reasons, ATSCC is awarded reasonable attorney's fees and
other expenses incurred in the amount of $9,773.99.

       Dated: June 18, 2018



                                                   Administ ative Judge
                                                   Armed Services Board
                                                   of Contract Appeals
 (Signature continued)


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                                                                                            t
 I concur in result
 (see separate opinion)
                                                                                            i
 Administrative Judge
 Vice Chairman
 Armed Services Board
 of Contract Appeals




                                                                                            I
                OPINION BY ADMINISTRATIVE JUDGE PROUTY

        I concur in the result. As in the original decision in this appeal and in the
decision on reconsideration, I respectfully disagree with Judge Clarke's reasoning
regarding the application of the presumption of negligence from bailment law in this
matter. Nevertheless, I agreed that the evidence supported a finding of negligence
here, even without the presumption, and that opinion stands. Inasmuch as the law on
negligence is clear, under the facts presented in this appeal, the government's position
was not substantially justified. See Rex Systems, Inc., ASBCA No. 52247, 02-1 BCA
,i 31,760 at 156,855. In all other material aspects, I agree with Judge Clarke's opinion.

       Dated: June 18, 2018




                                                   Administrative Judge
                                                   Vice Chairman
                                                   Armed Services Board
                                                   of Contract Appeals




                                            7
       I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals on an application for fees and other
expenses incurred in connection with ASBCA No. 61047, Appeal of Assessment and
Training Solutions Consulting Corporation, rendered in accordance with 5 U.S.C.
§ 504.

                                                                                        ·.
                                                                                        I
      Dated:                                                                            .




                                                 JEFFREY D. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals




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