%PDF-1.31 0 obj<< /Type /Catalog/Outlines 2 0 R/Pages 3 0 R/Names <> >>endobj2 0 obj<< /Type /Outlines /Count 0 >>endobj3 0 obj<< /Type /Pages/Kids [6 0 R18 0 R]/Count 2/Resources <</ProcSet 4 0 R/Font << /F1 8 0 R/F2 9 0 R/F3 10 0 R>>/XObject << /I1 13 0 R>>/ExtGState << /GS1 11 0 R/GS2 12 0 R/GS3 14 0 R/GS4 15 0 R>>>>/MediaBox [0.000 0.000 595.280 841.890] >>endobj4 0 obj[/PDF /Text /ImageC ]endobj5 0 obj<</Producer (dompdf + CPDF)/CreationDate (D:20231225094410+00'00')/ModDate (D:20231225094410+00'00')/Title (Breach of the Duty of Good Faith and Fair Dealing - Smith Currie)>>endobj6 0 obj<< /Type /Page/MediaBox [0.000 0.000 595.280 841.890]/Parent 3 0 R/Annots [ 16 0 R ]/Contents 7 0 R>>endobj7 0 obj<</Length 5821 >>stream0.200 0.200 0.200 rgBT 264.567 780.245 Td /F1 16.0 Tf [(Breach of the Duty of Good Faith )] TJ ETBT 264.567 760.709 Td /F1 16.0 Tf [(and Fair Dealing)] TJ ETBT 264.567 735.034 Td /F1 8.0 Tf [(Recently, the Civilian Board of Contract Appeals \(CBCA\) held that a )] TJ ETBT 264.567 722.824 Td /F1 8.0 Tf [(federal government contractor does not have to demonstrate that the )] TJ ETBT 264.567 710.614 Td /F1 8.0 Tf [(government acted in )] TJ ETBT 339.271 710.614 Td /F2 8.0 Tf [(bad faith)] TJ ETBT 372.607 710.614 Td /F1 8.0 Tf [( in order to recover for a breach of the )] TJ ETBT 264.567 698.404 Td /F1 8.0 Tf [(duty of good faith and fair dealing. )] TJ ETBT 387.311 698.404 Td /F3 8.0 Tf [(See Sigma Servs., Inc. v. )] TJ ETBT 264.567 686.194 Td /F3 8.0 Tf [(Department of Housing and Urban Development)] TJ ETBT 435.751 686.194 Td /F1 8.0 Tf [(, CBCA No. 2704, )] TJ ETBT 264.567 673.984 Td /F1 8.0 Tf [(12-2 BCA ¶ 35,173.)] TJ ETBT 264.567 649.285 Td /F2 5.4 Tf [(One Sentence Takeaway)] TJ ETBT 264.567 624.587 Td /F1 8.0 Tf [(To recover for breach of the duty of good faith and fair dealing, a )] TJ ETBT 264.567 612.377 Td /F1 8.0 Tf [(contractor need only show the other party acted with a lack of good )] TJ ETBT 264.567 600.167 Td /F1 8.0 Tf [(faith i.e. deprived the contractor of the fruits of the contract; bad )] TJ ETBT 264.567 587.957 Td /F1 8.0 Tf [(faith is not required.)] TJ ETBT 264.567 563.258 Td /F2 5.4 Tf [(Background)] TJ ETBT 264.567 538.559 Td /F1 8.0 Tf [(Sigma Services, Inc. contracted with the Department of Housing and )] TJ ETBT 264.567 526.349 Td /F1 8.0 Tf [(Urban Development to perform marketing and management services )] TJ ETBT 264.567 514.139 Td /F1 8.0 Tf [(on HUD properties in Arizona, Nevada, and Idaho. The HUD )] TJ ETBT 264.567 501.929 Td /F1 8.0 Tf [(properties consisted of two types: new acquisition properties and )] TJ ETBT 264.567 489.719 Td /F1 8.0 Tf [(transition properties. When bidding the job, Sigma estimated that the )] TJ ETBT 264.567 477.509 Td /F1 8.0 Tf [(transition properties were more profitable because they would )] TJ ETBT 264.567 465.299 Td /F1 8.0 Tf [(require fewer services, thus resulting in lower costs. As HUD )] TJ ETBT 264.567 453.089 Td /F1 8.0 Tf [(intended to award the contract to two different contractors, Sigma )] TJ ETBT 264.567 440.879 Td /F1 8.0 Tf [(based its bid on an equal distribution of the property types between )] TJ ETBT 264.567 428.669 Td /F1 8.0 Tf [(the two contractors.)] TJ ETBT 264.567 408.459 Td /F1 8.0 Tf [(Sigma and one other contractor were awarded indefinite quantity, )] TJ ETBT 264.567 396.249 Td /F1 8.0 Tf [(fixed-unit rate contracts with a one year base followed by four option )] TJ ETBT 264.567 384.039 Td /F1 8.0 Tf [(years. Each contract contained a 90-day transition period during )] TJ ETBT 264.567 371.829 Td /F1 8.0 Tf [(which HUD evaluated each contractors performance. HUD then )] TJ ETBT 264.567 359.619 Td /F1 8.0 Tf [(used this performance evaluation to divide the properties between )] TJ ETBT 264.567 347.409 Td /F1 8.0 Tf [(the contractors. Despite HUD rating Sigmas performance favorably, )] TJ ETBT 264.567 335.199 Td /F1 8.0 Tf [(Sigma received fewer transition properties than the other contractor.)] TJ ETBT 264.567 314.989 Td /F1 8.0 Tf [(Sigma submitted a certified claim to the contracting officer for lost )] TJ ETBT 264.567 302.779 Td /F1 8.0 Tf [(revenue and costs associated with HUDs unequal transition )] TJ ETBT 264.567 290.569 Td /F1 8.0 Tf [(property distribution. The contracting officer denied Sigmas claim )] TJ ETBT 264.567 278.359 Td /F1 8.0 Tf [(and Sigma filed an appeal. The appeal alleged HUD breached its )] TJ ETBT 264.567 266.149 Td /F1 8.0 Tf [(contract with Sigma by breaching the implied duty of good faith and )] TJ ETBT 264.567 253.939 Td /F1 8.0 Tf [(fair dealing. More specifically, Sigma argued that HUD breached the )] TJ ETBT 264.567 241.729 Td /F1 8.0 Tf [(implied duty of good faith and fair dealing by refusing to respond to )] TJ ETBT 264.567 229.519 Td /F1 8.0 Tf [(Sigmas requests for its contractual share of the transition properties.)] TJ ETBT 264.567 204.820 Td /F2 5.4 Tf [(The CBCAs Decision)] TJ ETBT 264.567 180.121 Td /F1 8.0 Tf [(On appeal, HUD moved to dismiss Sigmas claim for breach of the )] TJ ETBT 264.567 167.911 Td /F1 8.0 Tf [(implied duty of good faith and fair dealing because Sigma failed to )] TJ ETBT 264.567 155.701 Td /F1 8.0 Tf [(allege bad faith. Sigma responded that it was unnecessary to allege )] TJ ETBT 264.567 143.491 Td /F1 8.0 Tf [(bad faith in order to recover. Rather, Sigma only needed to allege )] TJ ETBT 264.567 131.281 Td /F1 8.0 Tf [(that HUD acted with a lack of good faith.)] TJ ETBT 264.567 111.071 Td /F1 8.0 Tf [(The CBCA agreed with Sigma, first finding that the duty of good faith )] TJ ETBT 264.567 98.861 Td /F1 8.0 Tf [(and fair dealing is inherent in every contract and then finding Sigma )] TJ ETBT 264.567 86.651 Td /F1 8.0 Tf [(did not have to allege bad faith in order to recover. Instead of bad )] TJ ETBT 264.567 74.441 Td /F1 8.0 Tf [(faith, the CBCA found that Sigmas allegations of a lack of good faith )] TJ ET0.643 0.647 0.663 rg53.418 704.988 190.584 70.886 re f/GS1 gs/GS2 gsq0.400 0 0 0.400 55.418 769.474 cm /I1 DoQ/GS3 gs/GS4 gs0.200 0.200 0.200 rgBT 57.598 763.623 Td /F2 6.4 Tf [(Lochlin B. 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See Sigma Servs., Inc. v. Department of Housing and Urban Development, CBCA No. 2704, 12-2 BCA ¶ 35,173. To recover for breach of the duty of good faith and fair dealing, a contractor need only show the other party acted with a lack of good faith â i.e. deprived the contractor of the fruits of the contract; bad faith is not required. Sigma Services, Inc. contracted with the Department of Housing and Urban Development to perform marketing and management services on HUD properties in Arizona, Nevada, and Idaho. The HUD properties consisted of two types: new acquisition properties and transition properties. When bidding the job, Sigma estimated that the transition properties were more profitable because they would require fewer services, thus resulting in lower costs. As HUD intended to award the contract to two different contractors, Sigma based its bid on an equal distribution of the property types between the two contractors. Sigma and one other contractor were awarded indefinite quantity, fixed-unit rate contracts with a one year base followed by four option years. Each contract contained a 90-day transition period during which HUD evaluated each contractorâs performance. HUD then used this performance evaluation to divide the properties between the contractors. Despite HUD rating Sigmaâs performance favorably, Sigma received fewer transition properties than the other contractor. Sigma submitted a certified claim to the contracting officer for lost revenue and costs associated with HUDâs unequal transition property distribution. The contracting officer denied Sigmaâs claim and Sigma filed an appeal. The appeal alleged HUD breached its contract with Sigma by breaching the implied duty of good faith and fair dealing. More specifically, Sigma argued that HUD breached the implied duty of good faith and fair dealing by refusing to respond to Sigmaâs requests for its contractual share of the transition properties. On appeal, HUD moved to dismiss Sigmaâs claim for breach of the implied duty of good faith and fair dealing because Sigma failed to allege bad faith. Sigma responded that it was unnecessary to allege bad faith in order to recover. Rather, Sigma only needed to allege that HUD acted with a lack of good faith. The CBCA agreed with Sigma, first finding that the duty of good faith and fair dealing is inherent in every contract and then finding Sigma did not have to allege bad faith in order to recover. Instead of bad faith, the CBCA found that Sigmaâs allegations of a lack of good faith met the pleading requirements for breach of the duty of good faith and fair dealing. In reaching this decision, the CBCA distinguished between bad faith, which is a claim separate and apart from the breach of the duty of good faith and fair dealing, and claims based on a partyâs lack of good faith. Simply put, allegations for the breach of the duty of good faith and fair dealing are premised on the opposing party denying the complaining party the fruits of the contract. Examples of such breaches include lack of diligence, negligence, or a failure to cooperate. Breaches of the duty of good faith and fair dealing may also result from a partyâs subterfuges and evasion, even where party believes its conduct to be justified. In other words, a partyâs intent does not necessarily govern whether the duty was breached. By contrast, bad faith is motivated by malice and does not necessarily deprive the complaining party of the fruits of the contract, but does require specific bad intent. Accordingly, as Sigma met the standards for breach of the implied duty of good faith and fair dealing by pleading a lack of good faith, the CBCA denied HUDâs motion to dismiss. â¢Implied in Every Contract â The duty of good faith and fair dealing is implied in every contract. Thus, this claim is potentially available each time a dispute arises over a contract subject to CBCA jurisdiction. â¢Lower Standard of Proof â To recover for breaches of this duty, a party need only show a lack of good faith. This is a substantially lower standard than establishing another party acted in bad faith as, generally, a partyâs intent does not govern whether a breach occurred. The Sigma Services decision illustrates an additional remedy available from the CBCA in situations where an express breach of the contract may not have occurred but where the government may nevertheless have deprived the contractor of the fruits of the contract. Due to the broad applicability of the breach of the duty of good faith and fair dealing, this duty acts as a catch-all claim for damages that might otherwise be difficult to categorize or recover. And, by holding bad faith is not required, the CBCA reiterated the broad applicability of the duty to contract claims. LochlinB.Samples vCard Partner Atlanta T: 404.582.8116 E: lbsamples@smithcurrie.com × Newsletter Sign Up One Sentence Takeaway
Background
The CBCAâs Decision
Practical Implications
Conclusion
This text seems to be a PDF file's content discussing a legal case about the breach of the duty of good faith and fair dealing. It involves a contractor, Sigma Services, Inc., and the Department of Housing and Urban Development (HUD). The case revolves around a disagreement regarding the distribution of properties between the contractors and whether HUD deprived Sigma of its contractual share of transition properties.
The content highlights that the Civilian Board of Contract Appeals (CBCA) determined that a federal government contractor doesn't need to prove bad faith by the government to recover for a breach of the duty of good faith and fair dealing. Instead, it's sufficient for the contractor to show a lack of good faith, meaning the other party deprived them of the contract's benefits.
The document outlines the bidding process, contract terms, performance evaluations, and HUD's distribution of properties. It discusses Sigma's claim for lost revenue due to unequal property distribution, the denial of the claim by the contracting officer, Sigma's subsequent appeal alleging breach of implied duty of good faith and fair dealing by HUD, and the CBCA's decision not requiring an allegation of bad faith but recognizing a lack of good faith as meeting the requirements for breach.
The practical implications outlined include the understanding that the duty of good faith and fair dealing is inherent in every contract, potentially available whenever disputes arise under CBCA jurisdiction. Additionally, the standard of proof required for breaches of this duty is lower, as showing a lack of good faith is sufficient and doesn't necessarily involve proving bad intent.
The conclusion emphasizes the CBCA's acknowledgment of a remedy available even when an express breach of contract might not have occurred but where one party might have been deprived of the contract's benefits. This duty acts as a broader claim for damages that might otherwise be challenging to categorize or recover.
As for my expertise, I'm familiar with legal concepts, including contractual obligations, breach of contract, implied duties, and the standard of proof required in legal disputes. I've studied various legal cases and understand the intricacies of legal reasoning and the application of law in such scenarios. If you have any specific questions or need further insights into legal matters, feel free to ask!
