Holt-Fairchild Co. v. United States

Howell, Judge, delivered the opinion of the court; This suit is brought under the War Contract Hardship Claims Act, known as the Lucas Act, 60 Stat. 902, as amended by 62 Stat. 869, 992, 41 U. S. C. § 106 note, to recover the net loss alleged to have been sustained by plaintiff without fault or negligence on its part in the performance of Government contracts between September 16, 1940, and August 14, 1945. By stipulation of the parties, the net loss incurred by plaintiff on all of its Government contracts between September 16, 1940, and August 14,1945, was $43,857.69. The defendant contends that paragraphs 204 and 307 of Executive Order 9786,11F. R. 11553, bar plaintiff’s recovery. The defendant also contends-that, in any event, plaintiff’s recovery is limited to not more than $17,885.76 on the ground that, except as to this amount, plaintiff failed to file a proper “written request for relief” within the meaning of Section 3 of the Lucas Act. The facts are not in dispute. Plaintiff entered into several contracts with the Federal Public Housing Authority, National Housing Agency, on May 20,1942, for the fabrication and field erection of about 400 demountable housing units in [85] Connecticut. By letter of September 19, 1942, the plaintiff was notified by the Housing Authority to proceed to fabricate and complete field erection of all housing units under the two contracts pertaining to the Manchester, Connecticut housing project. Later, by letter of February 18,1943, the Housing Authority notified the plaintiff to proceed similarly under the contracts relating to the East Hartford, Connecticut project. Due to the delay in receiving the orders to begin performance under the field erection contracts, plaintiff incurred additional expenses in the form of higher labor and materials costs due to the manpower shortage, materials scarcities, and the circumstance that part of the work had to be done in winter weather. In addition, plaintiff incurred higher labor costs in the form of overtime wages because of the mandatory 48-hour week required by Executive Order 9301, 8 F. B,. 1825, which was issued on February 9, 1943. Plaintiff completed work on the Manchester project in March 1943 and on the East Hartford project in August 1943, and the losses incurred by plaintiff in performing its contracts were not due to fault or negligence on its part. Subsequent to the passage of the Lucas Act, plaintiff’s claim for losses was filed with the Housing Authority within the statutory period, and the claim was denied. Thereupon, plaintiff filed a timely petition in this court. At the outset, we should state that the contentions of the defendant which relate to paragraphs 204 and 307 of Executive Order 9786, 11 F. R. 11553, have been fully considered and rejected in some of our previous decisions, e. g., Howard Industries v. United States, 113 C. Cl. 231; American Construction Co. v. United States, 123 C. Cls. 408, cert. den. 345 U. S. 922;1 and upon reconsideration of these arguments, we find no reason for departing from our previous holdings. With respect to defendant’s contention that plaintiff failed to file a proper written request for relief with the Housing Authority within the meaning of the Lucas Act, plaintiff relies on 10 different letters sent by it to the Housing Authority which it claims were proper written requests for relief. [86] Two of these letters relate to a loss of $17,885.76 which represents overtime wages plaintiff had to pay because of the mandatory 48-hour week required by Executive Order 9301, 8 F. R. 1825, and as to this, defendant concedes that a valid written request was filed. As to the eight other letters relied upon, plaintiff must show that one of them constituted a proper “written request for relief” under Section 8 of the Lucas Act which provides in part that: Claims for losses * * * shall be limited to losses with respect to which a written request for relief was filed with such department or agency on or before August 14,1945, * * *. Although no particular form of request is required, the written request “must be sufficient to apprise the agency that it was being asked to grant extra-legal relief under the First War Powers Act for losses sustained in the performance of war contracts.” Fogarty v. United States, 340 U. S. 8, 13. Insofar as this record reveals, the net losses, over and above the amount of $17,885.76, suffered by the plaintiff as a result of performing the field erection contracts, arose by virtue of the excess costs resulting from the Housing Authority’s delay in giving the notices to proceed. Because of the delay, plaintiff had to hire workers at wage rates which were higher than those prevailing when the contract was signed, and the work was required to be done in winter weather under which labor efficiency was much lower and labor costs were thus much higher. In addition, plaintiff had to buy lumber at higher prices than those prevailing at the time the contract was signed, and it was required to incur additional costs in the form of trucking taxes and increased surety bond premiums. Plaintiff’s contracts, however, did not provide for any equitable adjustment in price because of increased costs resulting from such delays. The contracts provided only for the granting of extensions of time where delays were caused through no fault of the plaintiff (finding 18). The letter of September 26, 1944 from the Commissioner of the Housing Authority to the plaintiff shows, moreover, pp. 6-12, that the Housing Authority was on notice that plaintiff did not have a valid claim under the terms of its contracts for the [87] losses caused by the delays (finding 20). In addition, these delays were not the result of unreasonable or arbitrary action on the part of the Housing Authority (finding 19) so as to constitute a breach of contract. Fuller v. United States, 108 C. Cls. 70; Parish v. United States, 120 C. Cl. 100, 124-126. It therefore appears that plaintiff had no legal remedy either under the terms of its contracts or for breach of contract whereby it could secure monetary relief for increased costs caused by such delays. Cf. Evans v. United States, 200 F. 2d 201, 205, 207-208 (C. A. 8). The only remedy available would have been an amendment to its contracts without consideration under Section 201 of the First War Powers Act. The eight other letters referred to above which are relied upon by the plaintiff are the letters of August 19, August 21, September 14, September 26, October 21, and December 6, 1943, July 3, 1944, and December 29, 1942.2 The nature of these letters and quotations therefrom are set forth in our findings, and it is unnecessary to restate them here in detail. The letters of August 19 and 21, 1943, however, give detailed descriptions of the extra costs incurred by plaintiff on the Manchester and East Hartford projects, respectively, which were due, among other things, to the delays in beginning the work. The requests for reimbursement in these two letters and in the other six letters, insofar as they relate to the losses caused by the delays, are requests concerning which, as shown above, the plaintiff had no legal remedy either under the terms of the contracts or for breach of contract. In its brief, defendant points out that some of plaintiff’s requests for relief included claims for reimbursement for costs' which had been considered by plaintiff and the contracting agency as claims cognizable under the contracts. It is true that certain admittedly contract claims were included in these letters and plaintiff received change orders granting monetary relief as a matter of right for portions of the amounts claimed. Although plaintiff continued, after acceptance of the change orders, to ask for the balance not [88] granted by the orders, tbe record fails to indicate that those change orders did not reimburse plaintiff for the actual excess costs attributable to those items. We have accordingly concluded that the net loss of $43,857.69 stipulated by the parties as the net loss on the contracts is all attributable to excess costs not reimbursable under plaintiff’s contracts and therefore recoverable under the Lucas Act (finding 16).3 Accordingly, viewing these letters as a whole and the nature of the claims presented therein with respect to the delays, we conclude that they constituted requests for extra-legal relief, and that they were sufficient to apprise the Housing Authority that it was being asked to grant extra-legal relief for the losses sustained by plaintiff in its war contracts. Fogarty v. United States, 340 U. S. 8, 13. It is our conclusion, therefore, that plaintiff is equitably entitled to the amount of $43,857.69 in settlement of its claim. An order will be entered, pursuant to Section 6 of the Lucas Act, directing the Federal Public Housing Authority, National Housing Agency, or its successor agency to settle such claim in accordance with the findings of this court, in the amount of $43,857.69. Littleton, Judge; and Jones, Chief Judge, concur. Footnotes [1] See also Cowhig v. National Military Establishment, 109 F. Supp. 519, 521 (D. C. 1953) ; Stephens-Brown, Inc. v. United States, 81 F. Supp. 969, 971 (Mo. 1949) ; McGann Mfg. Co. v. United States, 98 F. Supp. 225, 229 (Pa. 1951). [2] These letters, respectively, are exhibits 81, 82, 83, 84, 91, 96, 109, and letter No. 4, attached to exhibit 122. Plaintiff, in its brief, abandoned its reliance on exhibit 38, the letter of December 24, 1942. [3] The above discussion points up tbe distinction between actual net loss of performance of contracts, and allowable net loss under tbe Lucas Act. If tbe record bad shown that certain excess costs were actually attributable to contract items and thus could have been recovered under the terms of tbe contract, tbe amount of such costs would have to be deducted from tbe actual net loss to determine tbe amount of such net loss allowable under tbe Lucas Act. Evans v. United States, supra; Fogarty v. United States, supra.