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McAllister Towing & Transp. Co., Inc. v. United States

United States District Court, E.D. Pennsylvania

April 22, 2014

MCALLISTER TOWING AND TRANSPORTATION COMPANY, INC., et al., Plaintiffs,
v.
UNITED STATES OF AMERICA, Defendant

Page 443

For MCALLISTER TOWING AND TRANSPORTATION COMPANY, INC., MCALLISTER TOWING OF PHILADELPHIA, INC., Plaintiffs: JEFFREY STEVEN MOLLER, LEAD ATTORNEY, BLANK ROME, LLP, PHILADELPHIA, PA; JEREMY A. HERSCHAFT, PRO HAC VICE, BLANK ROME LLP, NEW YORK, NY.

For UNITED STATES OF AMERICA, Defendant: PETER G. MYER, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, TORTS BRANCH, CIVIL DIVISION, WASHINGTON, DC; JACQUELINE CHRISTINE ROMERO, U.S. ATTORNEY'S OFFICE, PHILADELPHIA, PA.

Page 444

MEMORANDUM

RONALD L. BUCKWALTER, S. J.

Pending before the Court are Defendant United States of America (" the Government" or " U.S." )'s Second Motion to Dismiss, Plaintiffs McAllister Towing and Transportation Company, Inc. and McAllister Towing of Philadelphia, Inc. (collectively " McAllister" )'s Motion for Summary

Page 445

Judgment, and the Government's Motion for Summary Judgment. For the following reasons the Government's Second Motion to Dismiss is granted and McAllister's and the Government's Cross-Motions for Summary Judgment are each denied as moot.

I. FACTUAL AND PROCEDURAL HISTORY[1]

Plaintiff McAllister Towing and Transportation Company, Inc. is a New York corporation with its principal place of business in New York. (Compl. ¶ 13.) Plaintiff McAllister Towing of Philadelphia, Inc. is a Pennsylvania corporation with its principal place of business in New Jersey. (Id.) McAllister brings this action against the Government pursuant to the Federal Contract Disputes Act of 1978, 41 U.S.C. § 7101 et seq. (Id. ¶ 11.)

A. The U.S.-Global Contract and the Global-McAllister Contract

On August 29, 1996, the Government entered into a contract with Global Associates (" Global" ) in which the Government agreed to pay approximately $3,000,000 to " furnish direct labor, supervision, administrative support, materials and supplies, vehicles, tools and equipment as specified herein to operate and maintain the Naval Inactive Ship Maintenance Facility (NISMF) at Philadelphia, PA." (Def.'s Sec. Mot. Dismiss, Ex. B, U.S.-Global " Statement of Work." ) Signing the U.S.-Global contract on behalf of the Government as " Contracting Officer" was Peter Proko. (Def.'s Sec. Mot. Dismiss, Ex. A, U.S.-Global Contract, 1.) Under its contract with the Government, Global was also " responsible for receipt, inspection, survey, maintenance, and disposal of Naval vessels in locations other than the NISMF Philadelphia, PA (which includes sites outside the state of Pennsylvania)." (Id.) The contract specified that Global was " responsible for arranging the repositioning of vessels within the NISMF Philadelphia, PA" and that " [t]he Government will furnish support craft, if required, to accomplish any movement of the vessels." (Def.'s Sec. Mot to Dismiss, Ex. A, U.S.-Global Contract, 145.)

The contract required Global to generate and submit a " Subcontracting Plan" to the Government. (Id. at 8.) Global further agreed that it " shall not issue a subcontract for services or material that will exceed $50,000.00 without specific prior approval from the [U.S.] Contracting Officer." (Id. at 205.) Global was also responsible for having a " Purchasing Agent" with " a working knowledge and understanding of procurement regulations, procurement procedures, and other regulations and directives and [the] ability to apply them." (Id. at 179.)

B. McAllister's Performance as Subcontractor under the U.S.-Global Contract

On September 11, 1996, two weeks after Global finalized its contract with the Government, Global project manager James Connell sent a letter to McAllister via fax. (Pls.' Mot. Summ. J., Ex. App'x A, Tab 3, Letter of September 11, 1996 from Global to McAllister (" Global Solicitation Letter" ), 1.)[2] Global was " soliciting bids/pricing" for

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" furnish[ing] a tugboat and towing services and other such services as required . . . including docking and undocking, mooring, towing, shifting or other handling of small ships, barges, lighters, tugs, derricks and any other watercraft from time to time as may be ordered by Global Associates Project Manager." (Global Solicitation Letter, List of Services Required, 1.) In its letter to McAllister, Global stated the following:

Under the provisions of the [U.S.-Global] contract, when directed by the Contractor's On-Site Technical Representative, Global Associates has the authority to purchase material, supplies and services necessary in the performance of the contract, reimbursable by the U.S. Government. Thus, acting as an Agent of the U.S. Government, such purchases are tax exempt per the enclosed certificate.

(Global Solicitation Letter, 1.) Nine days later, on September 20, 1996, Franck Heusser, Port Manager for McAllister, submitted a bid to Global to " furnish . . . tug boats and the equipment that is normally used on our every day operation for moving vessels." (Pls.' Mot. Summ. J., Ex. App'x A, Tab 4, McAllister Bid Letter, 1.) On September 25, 1996, Global informed McAllister via fax that it had selected McAllister's bid and would award McAllister the contract " to provide Tug and Pilot services for the next five (5) years." (Pls.' Mot. Summ. J., Ex. App'x B, Tab 4, Global Award Notice.) The Global-McAllister contract specified that McAllister had received an initial award of one year and a series of four one-year options. (Def.'s Sec. Mot. Dismiss, Ex. D, Global-McAllister Contract, 4.) The contract named Global Associates as the " Prime Contractor." (Id. at 10.) Global exercised its one-year options with McAllister in each of the next three years. (Def.'s Sec. Mot. Dismiss, Ex. K, McAllister Option Letters.) Each time, Global sent a letter to McAllister confirming that it was exercising its option " of our Tug Boat and Pilot Service contract with your company." (Id.)

Over the next three years, whenever McAllister performed work for Global at the NISMF, it submitted an invoice to Global. (Pls.' Mot. Summ. J., Ex. App'x B, Tab 2, Deposition of Franck Huesser (" Huesser Dep." ), 76:23-78:19, May 8, 2013.) Included in each of McAllister's invoices to Global was the following language:

PILOTAGE We do not furnish pilots or pilotage to vessels making use of or having available their own propelling power, so that whenever any licensed pilot, or a captain of any tug which is furnished or is engaged in the service of assisting the vehicle making use or having available her own propelling power, participates in directing the navigation of such vessel, or in directing the assisting tugs, from on board such vessel or from elsewhere, it is agreed that he becomes the borrowed servant of the vessel assisted and her owner, operator and charterer for all purposes and in every respect, his services while so engaged being the work of the vessel assisted, her owner, operator and charterer, and being subject to the exclusive supervision and control of the vessel's personnel. Any such service performed by any such person is beyond the scope of his employment for us and neither those furnishing the tugs or lending any such person, nor the tugs, their owners, agents, charterers, operators or managers shall be liable for any act or admission of any such person. . . . With respect to vessels that are not owned by the person or company ordering the tug service, it is understood and agreed that such person or company warrants that it has authority to bind the vessel owner,

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operator and charterer to all the provisions of the preceding paragraphs and agrees to indemnify and hold harmless, and also those furnishing the tugs and the tugs, their owners, agents, charterers, operators and managers, from all damages and expenses that may be sustained or incurred in the event and in consequence of such person or company not having such authority.

(Pls.' Mot. Summ. J., Ex. App'x A, Tab 2, McAllister Invoice Form.)

C. Joseph Flaherty's Appointment as Contracting Officer Representative and S. Richard Wood's Appointment as Alternative Contracting ...


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