Kaminer Construction Corp. v. United States

• Decision Date: 19 December 1973
• Docket Number: No. 289-72.,289-72.
• Citation: 488 F.2d 980
• Parties: KAMINER CONSTRUCTION CORPORATION v. The UNITED STATES
• Court: U.S. Claims Court

488 F.2d 980 (1973)

KAMINER CONSTRUCTION CORPORATION v. The UNITED STATES

No. 289-72.

United States Court of Claims.

December 19, 1973.

Robert B. Ansley, Jr., Atlanta, Ga., attorney of record, for plaintiff.

Francis H. Clabaugh, Washington, D.C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.

Before COWEN, Chief Judge, KASHIWA and BENNETT, Judges.

ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

BENNETT, Judge.

The case before the court arises from a decision adverse to plaintiff by the Corps of Engineers Board of Contract Appeals.¹ Plaintiff, Kaminer Construction Corporation, a corporation organized under the laws of the State of Georgia, seeks relief under sections 1 and 2 of the Wunderlich Act.² For the reasons hereinafter set out, we conclude that the decision of the board in this case was correct, that plaintiff's motion for summary judgment must be denied and that defendant's cross-motion for summary judgment must be granted.

On September 26, 1963, plaintiff entered into a contract³ with the United States Government for construction work at the Marshall Space Flight Center, Huntsville, Alabama. The contract called for, among other things, the erection of a structural steel tower, approximately 154 feet high, and two attached derricks with capacities of 50 and 75 tons. The instant action concerns the collapse of the 50-ton derrick during tests conducted by the Government 9 months after the derrick was accepted by the Government.

Plaintiff subcontracted the erection of the structural steel tower and the two stiff-leg derricks to Industrial Steel Erection Company (now Mississippi Valley Erection Company, Inc). The Steel tower and two derricks were completed and inspected by December 1964. Tests of the derricks were conducted by the Government from December 22, 1964 until January 5, 1965. These tests proved successful and the tower and derricks were accepted by the Government on January 5, 1965. General provision 10(f) of the contract mandated that:

* * * acceptance by the Government shall be made as promptly as practicable after completion and inspection of all work required by this contract. Acceptance shall be final and conclusive except as regards latent defects, fraud, or such gross mistakes as may amount to fraud, or as regards the Government\'s rights under any warranty or guarantee.

The tower and derricks operated satisfactorily for the next 9 months. On October 6, 1965, however, as a result of the collapse of a similar derrick, the Government conducted new road tests on the two derricks. These tests were conducted without plaintiff or its subcontractor being notified. Only representatives of American Hoist & Derrick Company, the supplier of the materials and equipment for the stiff-leg derricks, were notified and were present at the October 6 tests.

The 75-ton derrick successfully completed its load test. When the 50-ton derrick raised a load of 50 tons to a height of 20 feet, however, the stress on the derrick became so great that the eight 1 1/4-inch high-strength stud bolts, which had been inserted into 1 3/8-inch holes⁴ in the sill plate and which connected the east-west stiff leg of the derrick to the sill plate of the structural steel tower, pulled loose from their threaded holes in the sill plate. The east-west stiff leg supporting the 50-ton derrick quickly ripped loose from its moorings, went up and out and hit the sway bracing on the tower. The derrick then toppled from its perch and fell to the bottom of the tower structure crushing the north side of the hoist house. In addition to the damage to the derrick, the collapse caused injuries to individuals and extensive damage to the steel tower and adjacent structures.

At a meeting held with plaintiff and its subcontractor on October 8, 1965, all parties agreed that the derrick collapse occurred as a result of the placing of the undersized bolts in the sill plate.

On October 13, 1965, plaintiff was directed by the contracting officer to make the necessary repairs to the tower, derrick and adjacent structures at no additional cost to the Government. The contracting officer concluded that the derrick collapse was covered by section 11, Derricks, paragraph 11-28, Warranty, of the original contract.⁵ Plaintiff performed the repair work under protest, reserving its rights under the contract to an equitable adjustment for performing extra work. Plaintiff's total costs for the extra work amounted to $93,977.82.

Once the repair work was completed, plaintiff submitted a claim for the repair work to the contracting officer contending that the tower and derrick had been finally accepted by the Government and that the Government had received the complete performance which it was entitled to under the contract prior to the time of the derrick collapse. It followed from these assertions that the repair work constituted a change entitling plaintiff to an equitable adjustment.

The contracting officer issued his decision denying plaintiff's claim on December 30, 1966. In the decision, the contracting officer indicated (1) that plaintiff had no right to be notified of the subsequent testing; (2) that the sill plate connection would have been adequate if 1 3/8-inch bolts had been placed into the 1 3/8-inch threaded holes in the sill plate; (3) that the Government had no responsibility to inspect the integrity of every bolt on the tower and the derrick and that, even if it did, a reasonable Government inspection would not have revealed the bolting deficiency; (4) that the bolts which failed were covered under section 11, Derricks, of the contract; (5) that the bolts were "equipment" within the meaning of contract paragraph 11-28, Warranty; (6) that the failure was not due to any procedure or manner of installation workmanship; and (7) that even if the section 11-28 warranty provision was not applicable, the existence of the improperly sized bolts was a latent defect which could not have been discovered by a reasonable Government inspection. Plaintiff filed its timely appeal to the contracting officer's decision on January 13, 1967.

At the first trial before the Corps of Engineers BCA, plaintiff and the Government stipulated as follows:

1. The use of 1 1/4-inch bolts in 1 3/8-inch holes caused the failure.

2. The contract required installation of high strength bolts per AISC requirements; and these high strength bolts were, under the contract terms and construction customs, subject to inspection by only a calibrated torque wrench; or during installation they may also be inspected by observing the "turn-of-nut" method.

3. If either method of inspection had been used on the failure joint, use of incorrect bolts would have been discovered as bolts would have stripped out.

4. No inspection by torquing or turn-of-the-nut method of these bolts on the failure joint(s) was conducted by the Government.

5. Final acceptance occurred prior to the failure.

6. Any monetary adjustment, if found due, will be the subject of negotiation by the parties upon remand; this hearing being limited to liability.

The board in its first decision found that the bolts were not part of the "equipment" furnished under section 11, Derricks, of the contract and consequently were not covered by the section 11-28 warranty. Construing the stipulation, the board determined that "the undersized bolts were not a latent defect within the meaning of General Provision 10(f)." (Emphasis supplied.) Kaminer Constr. Corp., ENG BCA 2833, 68-2 BCA ¶ 7321, p. 34,050.

In reaching its decision adverse to plaintiff, however, the board decided the case on an issue which had not been tried by the parties. The board found:

* * * that the accumulative effect of the mistakes attributed to the appellant such as (a) inserting the wrong sized bolts, (b) failing to tighten the bolts as required, and (c) failing to maintain an adequate contractor inspection system is such as to legally amount to "such gross mistakes as may amount to fraud." We therefore find that the final inspection and acceptance on 5 January 1965 was not final and conclusive so as to extinguish the Government\'s right to require correction of the nonspecification work. 68-2 BCA at 34,052.

Plaintiff immediately filed a motion for reconsideration arguing that the decision was (1) not supported by substantial evidence, (2) was violative of the stipulations of the parties, (3) included factual matters not litigated by the parties, and (4) was contrary to the law and facts adduced at trial.

The board granted the motion for reconsideration on March 19, 1969. The board order recognized an apparent injustice dealt to plaintiff by the first board decision:

Appellant has moved that we reconsider our decision of 17 October 1968. We have reviewed that decision and are of the opinion that it is correct on the basis of the record we had before us. In our review of the matter, however, it has come to our attention that, because of the way the case developed, the parties have not really tried the issue upon which our decision was based. We have come to the conclusion that fairness dictates that the record be reopened so that they may do so.

Accordingly, it is ordered:

That the appeal be restored to our docket and the record reopened. Kaminer Constr. Corp., ENG BCA 2833, Order on Motion for Reconsideration, March 19, 1969.

Thereafter, on May 5, 1969, the board issued a notice of hearing to commence on July 15, 1969. The notice stated in pertinent part:

The current status of the case is as follows:

(1) Evidence will be received on all issues — "gross mistake," "latent defect" and "warranty";

(2) Previous stipulations by the parties will be disregarded; and

(3) Testimony adduced and exhibits introduced at the earlier hearing are to be considered part of the record.

If you consider that any other matter requires clarification, please so indicate at this time so that there will be no

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