Washington Group International, Inc. v. The United States of America (In re Washington Group International, Inc., et al.)

Summarized by Joel Newell , Ballard Spahr, LLP
12 years 6 months ago

Citation:

Washington Group International, Inc. v. The United States of America (In re Washington Group International, Inc. et al.) BAP No. NV-12-1572-DKiCo

Tag(s):

Ruling:

In the unpublished ruling, the 9th Circuit BAP affirmed Hon. Gregg W. Zive’s application of the 9th Circuit precedent as set forth in In re Cal. Dep’t of Health Svcs. V. Jensen (In re Jensen), 995 F.2d 925 (9th Cir. 1993), denying Debtor’s motion to enjoin the subsequent litigation.

Procedural context:

Appeal from the Bankruptcy Court’s ruling denying the Debtor’s [Washington Group International, Inc. (“WGI”)] Motion to enjoin the post confirmation litigation commenced by United States of America. The BAP based its ruling on two limits (1) “fair contemplation” test as set forth in In re Jensen and (2) the limits provided in O’Loghlin v. County of Orange, 229 F.3d 871 (9th Cir. 2000).

Facts:

In May 2001 WGI and the majority of its subsidiaries filed Chapter 11. The Plan was confirmed in December 2001. In November 2004 The United States of America (“U.S.”) on behalf of United States Agency for International Development (“USAID”) filed suit against WGI and its affiliates under the (i) False Claims Act (ii) Foreign Assistance Act of 1961 and several common law claims. In a detailed analysis as to WGI’s contracts and work pursuant to certain USAID financed contracts. The U.S. discovered that WGI was utilizing non-USA materials, which U.S. asserted was in violation of the statutory requirement WGI agreed to comply with to obtain the contract. Additionally, the U.S. discovered that WGI had entered into unauthorized joint-ventures to complete the contracts, which the U.S. asserts was in violation of the statutory requirements. The issue arose whether the U.S. claim(s) were known and/or contemplated during the Chapter 11 case.

Judge(s):

Dunn, Kirscher, and Collins (Hon. Daniel P. Collins sitting by designation)

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