Ross Engineering Co. v. United States

Madden, Judge, delivered the opinion of the court: This case is before ns on the issue whether, under the facts as proved, the plaintiff has legal standing to recover under the War Contract Hardship Claims Act, commonly known as the Lucas Act. The Lucas Act, Act of August 7, 1946, C. 864 § 1-6, as amended June 25, 1948, C. 646 § 37, 62 Stat. 992, 41 U. S. C. 106 note, provides that a contractor or subcontractor who furnished work, supplies or services during the war period to a department or agency of the Government which had power to give relief to contractors under the First War Powers Act, and who asked for such relief, and who suffered a loss in his performance of his contract, which loss was not compensated by profits on other Government contracts during the period, may be compensated by the contracting department for his losses, and if not compensated, may sue in this court for compensation for losses incurred without fault or negligence on his part in the performance of his contract or subcontract. The plaintiff had a contract, during the war period, tu construct for the Navy Department an Armed Guard School at Camp Bradford in Virginia. The Navy Department had the power to give relief to contractors under the First War Powers Act. The plaintiff lost money on certain phases of the performance of its contract. It requested relief for those losses under the First War Powers Act. It was given no' relief by the Navy. After the enactment of the Lucas Act the plaintiff took the steps prescribed by that Act to qualify itself to sue in this court, and thereafter did bring this suit. For reasons of economy the hearing held before our commissioner was limited to the taking of evidence bearing on — 30 — the causes of the plaintiff’s losses, with particular reference to whether they were due to the plaintiff’s fault or negligence in the performance of the contract. The fault or negligence question has been argued before the court, and also the question whether losses resulting from bad weather are compensable under the Lucas Act. The Government asserts fault or negligence, within the meaning of the Lucas Act, against the plaintiff in relation to the plaintiff’s losses in two situations, each of which involved a mistake in the plaintiff’s bid. In the first situation, the person who computed that part of the bid relating to some road work, mistook a marking of square yards on a drawing for square feet, hence he estimated only one-ninth as much road to be built as actually had to be built. Before the contract was made, the mistake was called to the plaintiff’s attention, but the plaintiff thought it could make up for the loss by its profit on other parts of the contract, so it stood by its bid. It lost heavily, of course, on the building of the roads. In our recent case of Spicer v. United States, 127 C. Cls. 428, decided February 2, 1954, we dealt with the question of an unduly low bid as fault or negligence within the meaning of the Lucas Act. We concluded that it was not such fault or negligence; that the Government having, after the completion of the contract, generously decided to compensate the contractor for his losses, was still only paying for the value which it had received, and which it would have had to pay for in the contract price if the bid had not been unduly low. We adhere to the views expressed in the Spicer case. The other low bid situation in the instant case had to do with so-called collateral equipment. This was furniture, office machines, tables, bunks, fans, etc. The contract said that the contractor should furnish and install the collateral equipment; that he should include a cash allowance of $130,000 for furnishing the equipment; and that if it cost more than that to furnish it, he would be compensated for the additional cost. The plaintiff, in making its bid, misread the contract to mean that the $130,000 was for both the furnishing and installing of the equipment, and that if it cost more than that to furnish and install it, the plaintiff would be — 31 — compensated for the additional cost. It therefore did not include anything in its bid for installing the equipment, which work cost it a considerable sum. We conclude, as we have concluded with regard to the road situation, that the mistake in bidding was not fault or negligence which barred recovery under the Lucas Act. The plaintiff’s work was delayed by an excessive number of rainy days. To make up for the lost time, it worked its employees overtime and paid a large amount of premium pay for the overtime work. It thereby suffered a loss. The Government says that a loss due to bad weather does not come within the reason of the Lucas Act, since contractors in peace time as well as wartime have bad luck with weather, and suffer losses therefrom. The Government does not, of course, urge fault or negligence in connection with the weather. We see nothing in the Lucas Act which authorizes us to limit the kinds of losses for which Congress granted compensation to losses peculiar to wartime. It would be difficult to administer the Act by such a test. The Government says that the plaintiff has not satisfactorily proved that the overtime employment was caused by excessive rain. If it was not, it would seem that the loss was still recoverable under the Lucas Act unless it was found to be due to some fault or negligence of the plaintiff. We have not so found. The Government says that the plaintiff had legal claims which it waived, and hence it has no rights under the Lucas Act. The plaintiff, in a case reported in 118 C. Cls. 527, sued the Government for breach of contract, claiming as damages the losses incurred on account of the collateral equipment situation and the excessive overtime resulting from delays caused by excessive rain. The court held that the plaintiff’s asserted construction of the contract provision relating to collateral equipment was wrong, and that it had received all that it was entitled to under the contract in that regard. We held that because the plaintiff had not taken an appeal from the refusal of the contracting officer to grant an extension of time on account of excessive rains, it could not assert that refusal here as a breach of contract. — 32 — The Government says that as to the mistakes in the bid relating to the roads and the collateral equipment, the plaintiff had a legal right to withdraw its bid, because of the mistake known to the Government when the bid was accepted; that the plaintiff chose not to take advantage of this right and thereby waived its legal claim. It says that as to the rainy weather, the plaintiff had a right to an extension of time, assuming that the rains were excessive, as the plaintiff says they were, and it would have received the extension if' it had made its appeal. The Government reminds us that,, in ordinary litigation, one cannot waive his legal rights and. seek equitable relief instead. It may be useful to look again at the Lucas Act, the statute-here applicable. It says that a war contractor who suffered losses not due to his fault or negligence, in the performance-of his contract, and who, during the prescribed period, requested relief from those losses under the First War Powers. Act, shall be compensated for those losses if he takes certain steps prescribed by the Act. Thus briefly stated, the Act-seems plain and simple. An effort by the Executive to put a gloss on the statute by Executive Order 9876, which would, have had the effect of disqualifying many claimants who-seemed to have rights .under the statute, was held invalid by this court in Howard, Industries v. United States, 113 C. Cls. 231. In Fogarty v. United States, 340 U. S. 8, the Supreme-Court held that the request, to the contracting agency for relief must be a request for extra-legal relief, the kind contemplated by the First War Powers Act, and not a claim of a contractual right. We think that the statute, and the obviously sound rule of the Fogarty decision, should be our text. The plaintiff was a war contractor. It suffered losses in the performance of its contract. It requested First War Powers Act relief in haeo verba. After the enactment of the Lucas Act it took the prescribed steps to reach this court.. We are now asked to put a gloss upon the statute which will deny the plaintiff what the statute gives it. We are asked to-say that although the contractor requested First War Powers. Act relief, he may not have Lucas Act relief if, at any stage-of the proceeding he had, or possibly had, a legal claim which, he did not pursue. — 33 — Suppose a contractor was building an installation for the Army. He encountered an unforeseen condition, as to which, under the contract, he was entitled to an equitable adjustment under Article 4. He was so busy getting the job done that, instead of calling the attention of the contracting officer to the condition before it was disturbed, he proceeded at large expense, to cope with it. His right under the contract to compensation for the extra work having been lost, he requested relief under the First War Powers Act. Can there be any doubt of the power of the contracting agency to give him that relief, if it thought it wise to do so ? And if the agency did not give him relief, and if he suffered a loss on the contract, can there be doubt as to his right to make use of the Lucas Act? We have no urge to invent reasons for denying to claimants what the statute gives them, when we can think of no reason why the Congress would have desired that its Act be read more narrowly than it was written. The Government confronts the plaintiff with what is, in substance, the doctrine of clean hands, with regard to the •overtime and the rainy weather. In 1945 a subcontractor of ■the plaintiff, the MBS Company, brought a suit against the plaintiff in a United States District Court in Virginia, for money alleged to be due it under its subcontract and for work •done by it outside the scope of the contract. The plaintiff filed a counterclaim in that suit, asserting that.due to the negligence of MBS in failing to promptly complete the ■drainage and road work which MBS had contracted to perr form, the plaintiff had been delayed and as a result had been obliged to use an excessive amount of overtime work. Thus, by its counterclaim, the plaintiff was attempting to recoup ■against MBS the loss relating to overtime which, loss is one •of the losses which it seeks to recover under the Lucas Act. The jury found against the plaintiff on its counterclaim, so we have no problem of the plaintiff’s being twice compensated for the same loss. But the Government says that the testimony of the plaintiff’s president in the District Court suit was so inconsistent with his testimony in the instant suit that it would be immoral to allow the plaintiff to have the benefit of his testimony in the instant suit. — 34 — In the District Court suit the plaintiff was claiming that the subcontractor did not properly perform its work on the surface drainage system and the roads, and that the plaintiff was damaged by that failure. The lack of drainage could not, of course, have affected the plaintiff’s work if there had not been rains. But with rains, even excessive rains, the question of whether the work could get forward, of how long it would be after a rain before the site was fit to work on, would depend upon the drainage and the roads. There would be, in almost any imaginable case, room for an honest difference of opinion as to how much the effect of the rains would be minimized by adequate drainage of the surface. It seems to us that it was not unnatural for the plaintiff’s president, in that case, to put the emphasis on the lack of drainage rather than on the excessiveness of the rainfall. He was asked if there was not “a considerable volume of rain” during the period in question. He did not deny it. He said there was some rain which made the performance more difficult than it would have been if there had been adequate drainage at the proper time. The jury in the District Court case must have concluded that MBS had not been delinquent in its obligations with regard to providing drainage. In the instant case the witness emphasized the amount of rain as the cause of the delay and the use of overtime. He was not questioned as to the effect of lack of adequate drainage. The physical fact of the number of days of rain, and of the time lost as a result of the rain is not open to dispute. We see in the facts which we have recited no reason for, in effect, forfeiting the plaintiff’s right. The plaintiff has a right to recover, if, in further proceedings, it makes the necessary proof of loss. It is so ordered. Whitaker, Judge; Littleton, Judge; and Jones, Chief Judge, concur. FINDINGS OF FACT The court, having considered the evidence, the report of Commissioner Currell Yance, and the briefs and argument of counsel, makes findings of fact as follows: — 35 — 1. Plaintiff is a corporation organized and existing under the laws of the State of Delaware, with its principal office and place of business in Washington, District of Columbia. It is engaged in the general construction business. 2. This suit is brought under the provisions of Public Law 657, 79th Congress, as amended by Public Law 773, 80th Congress, known as the Lucas Act. 3. By stipulation of the parties, with the approval of the commissioner of this court, the testimony and findings have been limited to the issues of law and fact relating to the right of plaintiff to recover. 4. During the period between September 16, 1940, and August 14, 1945, plaintiff performed a number of contracts for the United States in connection with the prosecution of the war. By stipulation of the parties it has been agreed that plaintiff would limit its claims and proof in this case to recovery under contract NOy-6049. This contract was entered into on May 14,1943 between plaintiff and the United States represented by the Navy Department, for a consideration of $2,837,337, and provided for the construction of an Armed Guard School at Camp Bradford, Princess Anne County, Virginia. 5. Plaintiff has heretofore litigated in this court a claim for legal recovery under said contract NOy-6049. Said suit was determined adversely to plaintiff, and its petition was dismissed. It is case No. 46804 reported at 118 C. Cls. 527. It has been stipulated by the parties that the record and proof in cause No. 46804 may be used in the instant case. 6. On October 17, 1944, plaintiff filed a claim for the alleged losses involved herein, contending that defendant had breached the contract. However, plaintiff went on to say: In addition to our claim that we are legally entitled to recover the amounts claimed on the above items by virtue of the law and facts set forth herein, we wish to invite your attention to Executive Order No. 9001 issued by the President December 27,1941. Under this Executive Order the Navy Department is given the power and authority to adjust claims on war contracts where a loss has been suffered by the contractor in the performance of the contract work. The loss incurred by the Ross — 36 — Engineering Company on this contract, due to the items mentioned in this claim as well as in other claims now pending before the Bureau of Yards and Docks, is sufficiently large to bring this contract within the purview of Executive Order 9001. We therefore request that consideration be given to this claim on that Executive Order. It will be noted that this Executive Order gives the Navy Department the power to make adjustment in such a case, irrespective of a legal liability on the part of the Government. Plaintiff on October 27,1944, and on November 1,1944, again requested consideration of its claims under Executive Order 3001. 7. Plaintiff filed a claim for loss under the Lucas Act on February 5, 1947. On March 8, 1948, the War Contracts Eelief Board denied plaintiff’s claim. Plaintiff filed its petition in this Court on September 3,1948. 8. The plaintiff is an established construction firm and has performed satisfactorily a large volume of work for the defendant, under various contracts. ROAD ERROR LOSS 9. The plaintiff was selected to bid on the job about 10 days prior to the opening of bids, and the bid was necessarily prepared in a hurry. The other two bidders were given three weeks to prepare their bids. A normal bid time would have been 80 days. The plaintiff’s quantity takeoff for the blacktop on the roads showed a figure of approximately 60,000, followed by a square symbol. In calculating the price for this blacktop, one of plaintiff’s men erroneously assumed that the 60,000 represented square feet, and therefore, divided by nine to get a square yard figure. This resulted in the erroneous assumption that there was approximately 6,800 square yards of road material required on the job. The estimate upon which the bid was based, therefore, showed a figure of 6,800 square yards of macadamized road at $2.75 a square yard and 6,800 square yards of grade for roads at $0.25 a square yard. The plans actually called for 61,000 square yards of road materials. Plaintiff’s unit price was correct. When defendant’s officer reviewed plaintiff’s figures before the award, he discovered the error and called it to the attention of plain — 37 — tiff’s representative. Plaintiff’s representative, notwithstanding, agreed to let the bid figure remain, as he believed that plaintiff could make up for the error in other ways in the performance of the work. Plaintiff furnished and defendant received the benefit of 61,000 square yards of blacktop and grade for the roads under the contract, notwithstanding that its bid was based on furnishing 6,800 square yards of blacktop and grade. DELAYS CAUSED BY UNUSUAL WEATHER 10. During the contract period of 100 days, plaintiff encountered some excessive rainfall. Plaintiff complained verbally on several occasions to defendant’s officer in charge and requested an extension of time on account of excessive rain. Plaintiff was advised by the defendant’s officer in charge that the project must be completed within the 100 days provided by the contract, and that if plaintiff could not complete the job in that time it might be necessary to take the work away from it and make other provision for the completion of the project. However, plaintiff did not during the construction period, notify the contracting officer in writing of the cause of the delay. 11. On January 3, 1944, after all work had been completed, the defendant gave to the plaintiff an extension of 15 days in the contract time because of unusually severe weather. 12. Plaintiff employed a considerable amount of overtime labor throughout the job. For the period from the beginning of the job through the week ending July 13, and for the period beginning with the week ending August 24, and continuing to the end of the job, the hours of overtime worked and the premium pay therefor were abnormal, due to the fact that the plaintiff was not granted an extension of the time of performance of the contract. 13. By letter of August 3, 1944, to the Bureau of Yards and Docks, Navy Department, plaintiff asserted claims in connection with the collateral equipment and the time extension for unusually severe weather. Upon denial of these claims by the Bureau of. Yards and Docks plaintiff appealed to the Secretary of the Navy, and his authorized representa — 38 — tive affirmed said denial on the ground of lack of jurisdiction. 14. The drainage and road work were performed by a joint venturer, known as MBS Contracting Co; Subsequent to the performance of the work, said MBS Contracting Co. filed a suit in the District Court for the Southern District of Virginia under the Miller Act, to recover certain sums claimed in connection with its work on the contract. Plaintiff filed a counterclaim, contending that the overtime involved, for which claim is made herein, was caused by MBS Contracting Company’s negligence in performing its work under the contract, and plaintiff’s president, a witness, testified in said suit in support of said counterclaim. It appears that the Court rejected the claims of plaintiff embodied in said counterclaim and testimony. It is apparent that the excessive rain which delayed plaintiff had a like effect upon the work of MBS Contracting Co. LOSSES due TO COLLATERAL EQUIPMENT 15. The contract provided in part as follows: Article 2. Specifications and drawings— * * * In case of difference between drawings and specifications, the specifications shall govern. In any case of discrepancy in the figures, drawings, or specifications, the matter shall be immediately submitted to the contracting officer, without whose decision said discrepancy shah not be adjusted by the contractor, save only at his own risk and expense. * * * Specifications CE-01 and CE-02 provided as follows: COLLATERAL EQUIPMENT. CE-01. General Requirements. — The work consists of furnishing, delivering, uncrating, distribution or erection of collateral equipment indicated or which in general will include office furniture, office machines, lockers, cabinets, Auditorium seating, Classroom seating, Lounge furniture, Mess Hall tables, cinema screens, stage curtains, double bunks, beds, barbershop chairs, back-bars, fans, bulletin boards, blackboards, lathes, drill presses and shop machines. CE-02. Cash allowances. — The contractor shall include in the contract price a cash allowance of one hundred thirty thousand dollars ($130,000.00) for furnishing collateral equipment for the project. If the cost of furnishing the collateral equipment is different from the — 39 — sum allowed the contract sum will be adjusted in conformity therewith. The contractor declares that the contract sum includes such sums for expenses and profit on account of cash allowance as he deems proper. No demand for expenses or profit other than those included in the contract sum shall be allowed. 16» Prior to the execution of the contract a conference was had between representatives of the plaintiff and the defendant at which time plaintiff was advised that it was defendant’s position that the $130,000 covered only the purchase price of the collateral equipment. Plaintiff took no exception at the time to that interpretation and thereafter signed the contract without reservation or exception thereto. 17. Work started on the contract on or about May 10,1943, pursuant to a letter of intent. About nine days thereafter defendant delivered to the plaintiff full specifications and drawings listing the collateral equipment to be installed. Prior to this time plaintiff had no information as to the exact nature and quantities of the collateral equipment other than the general description set out in the specifications quoted in Finding 15, and certain indications on the drawings as to the location and placement of said articles of collateral equipment. 18. Plaintiff first undertook to procure the collateral equipment through brokers or jobbers, dividing the complete list into some four parts, and endeavoring to purchase each of said parts from one of said jobbers or brokers. The defendant objected to this manner of purchase and required plaintiff to make all purchases direct from the manufacturers on competitive bids. This procedure resulted in a very substantial saving in the cost of the collateral equipment. Defendant’s requirement that such procedure be followed was reasonable and proper. 19. The cost of the collateral equipment purchased under the above procedure was $176,640.98 or $46,640.98 in excess of the allowance stated in specification CE-02. On November 27,1943, plaintiff filed a written claim with the defendant in the sum of $147,938.23, which included a sum for labor and other expenses to the plaintiff in the delivery, uncrating, distribution, and erection of all the collateral equipment, amounting, as shown, to $176,640.98. — 40 — 20. Under the contract, provision was made for a board to decide on changes, composed of two representatives of the defendant and one of the plaintiff. This board met and considered plaintiff’s claim in connection with collateral equipment, and decided that as to the collateral equipment represented by the excess of $46,640.98 over the amount mentioned in specification CE-02, plaintiff should receive an increase in the contract price for its labor and other expenses, but that as to the collateral equipment represented by the original $130,000, no increase in contract price was allowed. This decision was signed by all three members of the board on changes, including plaintiff’s representative. Thereafter a change order was issued embodying the decision of the board, and such change order was accepted in writing by the plaintiff without exception. 21. Plaintiff kept no cost records segregating its costs in connection with the delivery, uncrating, distribution, and erection of collateral equipment. The amount allowed the plaintiff on the excess collateral equipment was 20 percent of the purchase price for labor, plus other expenses based thereon. 22. Plaintiff incurred labor costs and other expenses in the delivery, uncrating, distribution and erection of the original $130,000 worth of collateral equipment. 23. Plaintiff complains that a great part of the collateral equipment was machinery requiring skilled labor to install, and millwork requiring skilled labor to erect after delivery at the site. Plaintiff, however, offers no separate figures for additional cost incurred by reason of these circumstances. 24. No action' has been taken with respect to said contract under the Eenegotiation Act, the Contract Settlement Act of 1944, or similar legislation; no relief has been granted to the Eoss Engineering Company, Inc., under Section 201 of the First War Powers Act of 1941, or otherwise; no losses under the aforesaid contract have affected' the computation of the" amount of the excessive profits determined in any renegotiation or audit; no relief is proposed to be granted by any other department or agency of the United States under Public Law No. 657, approved August 21, 1946 (60 Stat. 902). — 41 — CONCLUSION OF LAW Upon, tbe foregoing findings of fact,, which are made a part of the judgment herein, the court concludes that as a matter of law the plaintiff has a right to recover if, in further proceedings, it makes the necessary proof of loss. The case is remanded to a commissioner of the court for such further proceedings as may be necessary, in the light of this conclusion.