The Court of Federal Claims has ruled that a contractor may continue to litigate its claim for breach of the implied duty of good faith and fair dealing against a federal agency.
Last month, in CanPro Investments Ltd. v. United States, COFC No. 16-268C (April 2017), the Court of Federal Claims (COFC or “Court”) denied the Government’s motion for reconsideration and reaffirmed its prior decision that CanPro Investments Ltd. (CanPro) may continue to litigate its claim for breach of the implied duty of good faith and fair dealing against the General Services Administration (GSA).
CanPro alleged that the Government breached the implied duty by receiving an unreasonable number of visitors at the building it leased from CanPro – and despite their being no specific contractual provision regulating the number of permitted visitors.
This decision is important because it reinforces the implied duty as a mechanism to protect a party’s reasonable expectations arising from a government contract.
In 2012, GSA leased certain office space in Boca Raton, Florida from CanPro for a local Social Security Administration (SSA) office. Although the lease included a release provision under which CanPro waived any claims arising from “the Government’s normal and customary use of the leased premises,” CanPro understood from GSA that visitors to the SSA during “peak times” would not exceed 250 per day. After the SSA’s West Palm Beach location closed, CanPro experienced an “overwhelming amount of visitors” to its Boca Raton building which, in turn, resulted in CanPro incurring significant additional expenses.