Tetra Tech EC, Inc. v. CH2M Hill Inc.

Background

An earlier dismissal order left Tetra Tech EC, Inc. with two contract-related claims: inducing a breach of contract and intentional interference with contractual relations. Both claims concerned contracts and task orders for environmental remediation at Hunters Point that Tetra Tech had entered into with the United States Navy. The opinion identifies the contracts and task orders as Contract N62472-10-D-0809, Task Orders 0002, 0007, and 0012, and Contract N62473-12-D-2006, Task Order 004.

The Navy contracts incorporated Federal Acquisition Regulation provisions, including a clause allowing the government to terminate performance in whole or in part when the contracting officer determined that termination was in the government’s interest. The court treated this as establishing that the contracts were terminable at will.

Court’s analysis

Under California law, a plaintiff claiming interference with a contract that is terminable at will must show that the defendants committed an “independently wrongful act”—conduct wrongful for a reason separate from the alleged interference itself. The court said Tetra Tech therefore had to prove such an act for both claims.

The court noted that, at the pleading stage, it had found that Tetra Tech had not alleged an independently wrongful act but had allowed the claims to proceed because factual questions remained about whether the Navy contracts were terminable at will. After the evidence was developed, the court concluded that the contracts’ at-will nature had been established.

The court held that Tetra Tech could not use its opposition to summary judgment to re-argue the missing independently wrongful-act element. The court also explained that, even apart from that pleading problem, Tetra Tech had not shown a genuine dispute of material fact requiring a trial.

Tetra Tech proposed that defendants’ evaluation of its data amounted to negligent or fraudulent misrepresentation. The court rejected that theory because Tetra Tech itself alleged that the government had already decided on a predetermined course of action. On that account, the government could not have relied on defendants’ alleged misrepresentations, and those misrepresentations could not have been a substantial factor in causing the claimed harm. The court also found that Tetra Tech had introduced this factual and legal theory only at summary judgment, not in its complaint.

Tetra Tech also suggested that defendants may have violated the False Claims Act by failing to submit a statement about organizational conflicts of interest. The court said Tetra Tech had not provided evidence connecting that alleged violation to interference with the Navy contracts. The court expressly noted that the alleged violation was only Tetra Tech’s characterization of defendants’ conduct and had not been established.

Rulings

Judge James Donato granted summary judgment for defendants on Tetra Tech’s remaining claims. The court did not reach defendants’ other summary-judgment arguments, including the statute-of-limitations argument. The court denied Tetra Tech’s request under Federal Rule of Civil Procedure 56(d) to defer the ruling to allow additional discovery, finding that the case had been litigated for several years and that Tetra Tech had not identified evidence that was unavailable during the discovery period. The court stated that it would enter judgment and close the case.