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Final Payment Did Not Bar Filing of a Claim

Posted on January 2nd, 2017 by


On December 21, 2016, in the appeal of AHTNA Environmental, Inc. v. Department of Transportation, CBCA No. 5456 (December 22, 2016), the Civilian Board of Contract Appeals held that final payment did not prevent a contractor from filing a claim. The Board found that the Contracting Officer “had or should have had” a full understanding of the scope and amount of the contractor’s anticipated Claims before making final payment.  As such, the Government cannot rely on the release in preventing the contractor from pursuing a claim after final payment. In this regard, the Board held that:

A tribunal may decline to find that a claim is barred by release “where the parties continue[d] to consider the claim after execution of a release.” Community Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1581 (Fed. Cir. 1993) (citing Winn-Senter Construction Co. v. United States, 75 F. Supp. 255, 260 (Ct. Cl. 1948)). “Such conduct manifests an intent that the parties never construed the release as an abandonment of plaintiff’s earlier claim.” Id. (quoting A& K Plumbing & Mechanical, Inc. v. United States, 1 Cl. Ct. 716, 723 (1983)). Where the Government continues to review, consider, and negotiate the contractor’s claim for a significant period of time after the supposed release, the release will generally be found not to bar the claim. Id.; see J.G. Watts Construction Co. v. United States, 161 Ct. Cl. 801, 807 (1963) (“where the conduct of the parties in continuing to consider a claim after the execution of the release makes plain that they never construed the release as constituting an abandonment of the claim, . . . the release will not be held to bar the prosecution of the claim”).

In summary, the Board’s correctly rejected the Government’s attempt to strip the contractor’s right to file a claim for two basic reasons. First, at the time of final payment, the Government was clearly on notice that a REA would be filed.  Second, once the REA was filed, the Government evaluated it and did not invoke a release defense.


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