Appealed from: U.S. Court of Federal Claims. Judge Futey
Before Lourie, Circuit Judge, Skelton, Senior Circuit Judge, and Rader, Circuit Judge.
William C. Godley sued the United States Postal Service in the United States Court of Federal Claims for breach of contract. The Court of Federal Claims granted Mr. Godley's motion for summary judgment. Godley v. United States, 26 Cl. Ct. 1075 (1992). Genuine issues of material fact require this court to vacate the summary judgment and remand for further proceedings.
Mr. Godley owned an interest in a tract of land in Mecklenburg County, North Carolina. When the Postal Service advertised its need for a postal facility, Mr. Godley offered to build one on his land. Mr. Godley made this offer to Charles D. Paramore, the Postal Service agent responsible for this project. Mr. Godley offered to build a postal facility and to provide a ten-year lease with an option to buy after the first year. The Postal Service accepted Mr. Godley's offer in February 1989.
On September 5, 1989, Mr. Paramore was indicted for conspiracy and bribery. The charges stemmed from his involvement with Postal Service projects. On November 22, 1989, Mr. Paramore pled guilty to several counts of conspiracy and bribery. United States v. Paramore, No. 91-6630, (4th Cir. June 10, 1992). The bribery and conspiracy charges involved a subcontractor, not Mr. Godley. Mr. Godley allegedly lacked any knowledge of the illegal activities.
In October 1989, the facility was complete and the Postal Service took possession. Mr. Godley and the Postal Service entered a final lease agreement on December 5, 1989. On March 27, 1990, however, the Postal Service informed Mr. Godley that the contract was not valid because it was tainted by Mr. Paramore's illegal conduct. The Postal Service offered instead to renegotiate. The Postal Service stopped paying the lease amount in the contract.
On May 17, 1990, Mr. Godley filed claims against the Postal Service under the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-613 (1988). Mr. Godley claimed that the Postal Service breached the contract. As damages, Mr. Godley sought the payments required by the original lease. In addition, Mr. Godley sought compensation for changes in the contract. On June 21, 1990, the Postal Service began paying a reduced lease rate. In November 1990, the contracting officer for the Postal Service denied Mr. Godley's claims.
In the Court of Federal Claims, Mr. Godley claimed that the contract was valid and sought to enforce the lease. The Postal Service answered that the contract was void ab initio due to the alleged taint from Mr. Paramore's illegal actions and alleged fraud on the part of Mr. Godley. The Postal Service also counterclaimed based on alleged fraudulent claims by Mr. Godley. The parties filed cross motions for summary judgment.
On August 14, 1992, the Court of Federal Claims granted summary judgment in favor of Mr. Godley. The trial court stated:
Where the prime contractor is innocent of wrongdoing, the government must exercise the right to avoid the contract within a reasonable time of learning that it is tainted by wrongdoing. The failure to do so results in the loss of the right of avoidance.
Godley, 26 Cl. Ct. at 1081. The Court of Federal Claims then concluded that the Government had forfeited its right to avoid Mr. Godley's contract by "failing to exercise that right in a timely manner." Id. Specifically, the trial court noted that the Government had accepted the building and entered the contract well after Mr. Paramore's indictment. Therefore, the court awarded Mr. Godley $9,076.67 for each month after the Postal Service accepted the facility plus interest under 41 U.S.C. § 611 (1988).
In the absence of genuine issues of material fact, a trial court may award summary judgment to a party according to the law. Fed. R. Civ. P. 56(c). In reaching summary judgment, the trial court must construe facts and resolve inferences in the light most favorable to the non-movant. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970); United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962). In reviewing the trial court's decision, this court reviews ...