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Champagne v. United States

United States District Court, N.D. New York

April 10, 2014

EDWARD C. CHAMPAGNE, JR., d/b/a H.E. Automotive, Plaintiff,

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[Copyrighted Material Omitted]

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For Edward C. Champagne, Jr., doing business as H.E. Automotive, Plaintiff: Allan B. Cruikshank, Jr., LEAD ATTORNEY, Ruchelman, Cruikshank Law Firm, Plattsburgh, NY.

For United States of America, Defendant: Karen Folster Lesperance, LEAD ATTORNEY, Office of United States Attorney - Albany, Albany, NY.

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Thomas J. McAvoy, Senior United States District Judge.

Plaintiff Edward C. Champagne, Jr., d/b/a H.E. Automotive, commenced the instant action pursuant to the Federal Tort Claims Act, 28 U.S.C. § § 2674, 1346(b), et seq., alleging that Defendant tortiously interfered with a contract, breached its duty of good faith and fair dealing with the Plaintiff, acted to destroy his business, and failed to correct past performance ratings, causing Plaintiff and his business substantial harm. Presently before the Court is Defendant's motion to dismiss Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6).


This case involves work done by H.E. Automotive, Plaintiff's business, to process and handle seized vehicles for the United States Marshals Service (" USMS" ). H.E. Automotive was awarded contract number MS-97-D-0019 by the USMS on or about April 25, 1997. Complaint (" Cmplt." ) Dkt. #1, at ¶ 9. Plaintiff's company was awarded the contract despite being forced to disprove false and slanderous allegations against Plaintiff by the former incumbent contractor, who was hoping to maintain the contract. Id. at ¶ 10. The former contractor was working with the assistance of a friend, an Assistant District Marshal, who provided false information

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about Plaintiff to the USMS in Washington, D.C. Id. Plaintiff and his firm disproved these claims by filing protests and appeals with the Small Business Administration, and Plaintiff's firm received the contract. Id. at ¶ 11. As a precondition of the contract, H.E. Automotive received a guarantee that no one involved in the then-current administration would be involved in the contract. Id. at ¶ 12.

H.E. Automotive performed under this contract for a number of years, and obtained a number of successive contracts. Id. at ¶ 13. While performing under the contract, H.E. instituted a number of new policies that assisted the Marshals Service and taxpayers, such as opening seized asset sales to the public and implementing new maintenance programs that increased the value of government vehicles sold. Id. at ¶ 14. Plaintiff recovered $140,000 in cash from a vehicle scheduled for auction and also prevented efforts of two persons to steal the vehicle by breaking into the H.E. facility. Id. at ¶ 15. H.E. also alerted the F.B.I, which led to a search of H.E.'s facility and the recovery of illegal drugs worth hundreds of thousands of dollars. Id. at ¶ 16. Because of these efforts, H.E. received an average rating of 4.5 on a five-point scale during the lives of H.E's contracts with the Marshals Service. Id. at ¶ 17.

Under the terms of the contract, H.E. Automotive was to receive a minimum of 30% of all vehicles seized within the geographic area designated in the contract. Id. at ¶ 18. Despite these terms, during the life of the contract Anne Deminski, who worked in the Utica/Syracuse District Office, " intentionally interfered with H.E. Automotive's contract by circumventing the existing contract," and by " withholding sums owed under the contracts [sic] specified guaranteed minimum quantity charge." Id. at ¶ 19. Deminiski also convinced personnel in the Washington Contract Office to refuse renewal of the contract option unless the contract eliminated minimum guarantees. Id. at ¶ 20.

When Plaintiff inquired about why fewer cars were being sent to his facility, he discovered that hundreds of vehicles were being diverted to various agencies and non-contract vendors. Id. at ¶ ¶ 21-22. These " diversions" came at the direction of Anne Deminski. Id. at ¶ 22. Deminski was the only remaining employee from the administrator of the former Contractor and Assistant Chief. Id. at ¶ 23. Plaintiff alleges that Deminski worked " actively" to " [circumvent] the contract" and to " [deprive] H.E. of guaranteed stated minimums." Id. at ¶ 24. She also acted to divert vehicles to other " entities," who did not care for the vehicles properly and cost the government money. Id. Some of those " diverted" vehicles actually disappeared. Id. Plaintiff alleges that, when confronted by Contracting Officer Gary Insley, Deminski retaliated against Plaintiff and Plaintiff's company by refusing to pay Plaintiff more than $150,000, the minimum amount he was owed under the contract. Id. at ¶ 25.

Plaintiff also alleges that Deminski had the contract location moved from Plattsburgh to Syracuse. Id. at ¶ 26. When a new procument was then let, H.E. emerged as the successful bidder. Id. at ¶ 27. H.E. leased an approved facility in Brewerton, New York and operated that facility with " record setting sales." Id. Still, Deminski allegedly interfered with the operations of this facility too; at times there were less than 5 cars in H.E.'s inventory. Id. at ¶ 28. She also allegedly arranged to replace certain administrative personnel with personnel of her choosing. Id. at ¶ 29. These new officers worked with Deminski to " discredit H.E. Automotive through excessive inspections and fabricated

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reports about H.E.'s performance under the contract." Id. On two separate occasions Deminski allegedly had all vehicles moved to a contractor she chose, CNY NY, even though the Marshals Service was still under contract with H.E. Automotive. Id. at ¶ 30. After a protest, the vehicles were eventually returned to H.E. Id. at ¶ 31. These actions cost the Marshals Service in excess of $10,000. Id.

On April 6, 2010, H.E. Automotive submitted an offer under RFQ number DJMS-09-AFD-Q-0054. Id. at ¶ 32. Plaintiff alleges that only two quotations were submitted under that number, H.E. Automotive's and one from a Baldwinsville, New York firm known as Simply the Best. Id. at ¶ 33. Simply the Best quoted a price with options of $617,544.50. Id. The company had been newly created for the purpose of submitting an offer, and worked out of a garage. Id. at ¶ 34.

H.E. Automotive first learned of negative past performance ratings on February 1, 2010, during the evaluation process for this new procurement. Id. at ¶ 35. Those negative past performance ratings came, however, during the October 2007-October 2008 contract period, and the evaluations were performed by Anne Deminski and Daniel Driscoll. Id. Plaintiff had long complained that Deminski had a personal animus towards him, and that she had interfered with performance of the prior contract. Id. at ¶ 36. He had also alleged that Deminski had attempted to steer an earlier procurement towards a competitor, CNY. Id. H.E. Automotive protested Deminski's involvement in the DJMS-09-AFD-Q-0054 procurement process, requesting that the Government Accountability Office (" GAO" ) exclude her from any role in the procurement. Id. at ¶ 37. The GAO had earlier agreed with Plaintiff's claims of animus against Deminski, and the Marshals Service had precluded her from participating in the process of awarding an interim contract. Id. at ¶ 38. Despite this preclusion, Plaintiff alleges that Deminski " played an integral role" in evaluating H.E. Automotive and, acting contrary to instructions from her superiors, worked to " circumvent a then existing contract" by directing that seized vehicles be sent to " non-contract vendors and agencies of her choosing." Id. at ¶ 39.

H.E. Automotive's last contract with Defendant came in 2007 and 2008. Id. at ¶ 40. The government had an option to continue the contract. Id. at ¶ 41. An attorney for H.E. Automotive wrote the government's contracting officer on September 28, 2008 to request that the option be exercised. Id. The letter noted that H.E.' s record was excellent, and also pointed out that a decision not to exercise the option that was made in bad faith could be protested. Id. at ¶ 42. The letter also detailed Deminski's actions, as well of those of other officials, alleging that those actions were taken in bad faith and breached the contract. Id. at ¶ 43.

The agency decided not to exercise the option and the contract terminated on October 24, 2008. Id. at ¶ 44. The USMS unilaterally determined to issue purchase orders, and did not invite H.E. Automotive to participate. Id. H.E. Automotive filed a protest on October 20, 2008, alleging that Deminski violated the Competition in Contracting Act by initiating a new procurement without seeking input from the incumbent contractor. Id. This protest was amended after the Northern District of New York issued a formal solicitation of bids. Id. at ¶ 45. The protest was also resolved when the USMS returned vehicles which had been improperly removed from H.E. Automotive's facility and paid H.E. the cost of returning the vehicles. Id. at ¶ 46. The protest continued however, since H.E. alleged that the contracting

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process had been marred by conflict of interest, bias and improprieties. Id. at ¶ 47. The protest specifically alleged that Deminski acted improperly in the interest of CNY and had provided CNY with information on the bid process. Id. at ¶ ¶ 48-9. H.E. Automotive sought preclusion of Anne Deminski from the process of evaluating bids and a review of any inside information that CNY allegedly received. Id. at ¶ 49. H.E. also sought removal of CNY from the bid process if it had received improper information. Id. A GAO attorney promised to review the allegations in H.E.'s protest and issue a report by December 10, 2008. Id. at ¶ 50. After the USMS cancelled the solicitation the GAO dismissed the protest as moot. Id. at ¶ ¶ 51-52.

The USMS issued another solicitation on December 18, 2008. Id. at ¶ 52. Bids were due by December 31, 2008. Id. H.E. Automotive contacted the contracting officer for information on the bid, as well as to determine the role that Anne Deminski would play in the bid process. Id. at ¶ 53. H.E. sought to exclude her from the bid. Id. at ¶ 54. The agency did not offer a timely response, and H.E. Automotive filed another protest, again seeking Deminski's removal from the evaluation process. Id. H.E. asserted that Deminski's " demonstrated" bias should preclude her from evaluating bids. Id. After examining the protest, the agency issued an amended solicitation that answered several of the questions in the protest. Id. at ¶ 55. Several issues remained open, however, including the wage rates that the bidder was required to pay and the identity of the Contracting Offices Technical Representative (" COTR" ). Id. The USMS requested dismissal of the protest, claiming that minimum guarantees were not required under the contracting procedure, that the COTR need not be identified, and that Deminski would ...

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