CJ Langenfelder & Son, Inc. v. United States

• Decision Date: 11 June 1965
• Docket Number: No. 291-63.,291-63.
• Citation: 341 F.2d 600
• Parties: C. J. LANGENFELDER & SON, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

341 F.2d 600 (1965)

C. J. LANGENFELDER & SON, INC. v. The UNITED STATES.

No. 291-63.

United States Court of Claims.

February 19, 1965.

Rehearing Denied June 11, 1965.

COPYRIGHT MATERIAL OMITTED

J. Roy Thompson, Jr., Washington, D. C., for plaintiff. Howard H. Conaway, Baltimore, Md., Thompson, McGrail & O'Donnell, Washington, D. C., and Frank, Bernstein, Gutberlet & Conaway, Baltimore, Md., of counsel.

John R. Franklin, Washington, D. C., with whom was Asst. Atty. Gen., John W. Douglas, for defendant.

Before COWEN, Chief Judge, REED, Justice (Ret.), sitting by designation, DURFEE, DAVIS, and COLLINS, Judges.

DAVIS, Judge.

In December 1958, plaintiff entered into a contract with the Federal Aviation Agency to do grading, drainage, and paving work at Dulles (then called Washington) International Airport. Part of its task under the contract was the installation of approximately 26,000 feet of subsurface pipeline. The specifications outlined the requirements for normal trench excavation and backfill operations in connection with the pipeline installation and provided for compensation at the contract unit price, which was $3.93 per cubic yard. There were also specific provisions dealing with unstable soil encountered in the excavation. Since such soil was unsuitable for use as backfill, it was to be removed to the depth determined by the defendant and replaced with approved backfill. The specifications included special provisions dealing with compensation for the removal of unstable soil ($6.00 per cubic yard), and the present controversy revolves around their meaning.¹

In the course of trench excavation, the contractor did meet unstable soil and was authorized by the Aviation Agency to remove and replace it. After carrying out these directions, plaintiff filed a request for additional compensation of $6.00 per cubic yard for all this work. In August 1961, the contracting officer determined that plaintiff was entitled to the additional payment only for the removal and replacement of unstable soil below the excavation depths shown on the contract drawings; unstable materials found within the indicated depths were to be paid for at the normal rate of $3.93 per cubic yard. Following the procedures then in effect, the plaintiff appealed this decision to the Administrator of the Federal Aviation Agency; after a hearing before a member of the Agency's Contract Appeals Panel, the Administrator overruled the contracting officer, on June 20, 1962, and accepted plaintiff's position. Shortly thereafter, plaintiff submitted a documented claim to the contracting officer for $160,964, based on the Administrator's direction to compensate the contractor "in the light of this decision."

The contracting officer took no action. The parties held a meeting in May 1963, at which the plaintiff was informed that its claim had not been determined for over nine months because the contracting officer was uncertain as to the proper interpretation of the Administrator's decision. At that meeting, the General Counsel of the Federal Aviation Agency requested an attorney in his office to prepare a memorandum discussing the Administrator's decision. The memorandum was subsequently filed, on June 28, 1963, "on behalf of the contracting officer", with the Contract Appeals Panel of the Agency as a request for a "supplemental decision" by the Administrator. Despite its euphemistic characterization, the true gist of this application was that the Administrator's original decision was wrong. Plaintiff squarely opposed consideration of this request for a reopening, but on September 30, 1963, the Administrator granted it, and referred the case back to the Contract Appeals Panel for a full rehearing.² In October 1963, plaintiff filed its petition in this court, contending that the Administrator's decision of June 1962 was final and conclusive, and that the Agency's rules in effect at the time of that ruling precluded the grant of a rehearing over one year later at defendant's request. The contractor also asserted that the contracting officer's refusal to effectuate the Administrator's original decision was arbitrary and capricious, and sought reimbursement of the $160,964 previously claimed from the Agency. The defendant has moved to dismiss the petition on the ground that plaintiff failed to exhaust its administrative remedies; in the alternative, defendant requests the court to suspend proceedings to permit the formulation of an adequate administrative record by the Agency. Plaintiff has moved for a summary judgment of liability.

A. Defendant's motion to dismiss. Disposition of the defendant's motion to dismiss turns on the Federal Aviation Agency's authority to reconsider its initial decision favoring the contractor. If the Agency had power to order a rehearing of this case as it did, plaintiff has failed to exhaust its administrative remedies. Under the rules at the time of the Administrator's original decision,³ motions for rehearing could be based only on new evidence and were required to be filed within a reasonable time after receipt of the Administrator's decision. 41 C.F.R. § 2-60.20 (1960).⁴ Plaintiff offers a number of arguments to prove that, under this provision, the Agency had no power to grant the contracting officer's motion for a rehearing, but we can stop with the regulation's requirement that such motions be made within a reasonable time. Cf. Dayley v. United States, Ct. Cl., No. 268-63, decided Jan. 22, 1965. The request for a "supplemental decision" — which was nothing but an application for reconsideration of the initial holding and was treated as such by the Administrator — was presented over a year after the decision of June 20, 1962. This was far too belated. In the circumstances here, a year was much more than a "reasonable period" to defer the finality of the Administrator's ruling. A number of statutes, as well as administrative regulations, limit the time within which a party may petition an administrative agency for rehearing or reconsideration to thirty days following the final decision. See, e. g., Communications Act Amendments, § 15, 66 Stat. 711, 720, 47 U.S.C. § 405; Natural Gas Act, § 19, 52 Stat. 821, 831, 15 U.S.C. § 717r(a). The revised Federal Aviation Agency regulation on motions to reconsider includes such a provision, but permits an extension beyond the thirty-day limit if good cause can be shown. 41 C.F.R. § 2-60.210-4 (1963). The Federal Maritime Board Rules of Practice and Procedure, 46 C.F.R. § 201.264 (1953), contain a similar time-extension clause. These provisions help to delimit what constitutes a reasonable time within which to ask for rehearing.⁵ Thirty, or perhaps sixty, days is the order of magnitude — unless a special need for a longer period is shown. There is no real suggestion that the rehearing in this case could not have been sought much earlier; the essence of the application was simply that the original decision was incorrect. It is particularly difficult to prove good cause for delay much beyond thirty days where the controversy, as here, deals only with past events which have been definitively ascertained at the original hearing and where the basic issue is one of law. The defendant has not even attempted to show that more than a reasonably short period was required to gather information sufficient to present the legal point embodied in the motion for rehearing. As the case comes to us, there is no adequate excuse for the long delay. Accordingly, we must hold that the regulations did not permit the Agency to make the motion after so much time had elapsed, and they did not give the Administrator authority to grant it. The Agency could not delay payment of a claim approved in substance by its Administrator and then perform a complete turnabout one year later by granting the Government's untimely motion for reconsideration, thus reopening the settled question of liability in the guise of an impermissible rehearing.

What remains is a refusal by the contracting officer to take action on a claim filed by the plaintiff on the basis of a final determination by the Administrator in its favor. We have held that when the contracting officer unreasonably delays action on a contractor's claim, or refuses entirely to take action, the exhaustion requirement will be excused and the contractor may bring suit directly in this court. Oliver-Finnie Co. v. United States, 279 F.2d 498, 503, 150 Ct.Cl. 189, 196-197 (1960); Cape Ann Granite Co. v. United States, 100 Ct.Cl. 53, 71 (1943), cert. denied, 321 U.S. 790, 64 S.Ct. 785, 88 L.Ed. 1080 (1944); James McHugh Sons, Inc. v. United States, 99 Ct.Cl. 414, 431 (1943). Although those decisions involved claims on which no contract appeals board (or the head of a department) had acted, their reasoning is fully applicable here. In any event, a petition by plaintiff to the Administrator expressly requesting that he direct the contracting officer to make a determination under the decision of June 1962 would surely have been futile, since the Administrator himself had ordered that the entire matter be reconsidered. This was tantamount to a ruling that the contracting officer need not follow the earlier decision. Obviously, no relief would come through a further effort to have the head of the Agency compel his subordinate to abide by that holding. The contractor had, in substance, already exhausted his appeal. If the case be viewed more formalistically, then it falls, we think, within the rule recognized by the Supreme Court that a failure to exhaust administrative remedies will be excused where such procedures are unavailable or inadequate. United States v. Joseph A. Holpuch Co., 328 U.S. 234, 239-240, 66 S.Ct. 1000, 90 L.Ed. 1192 (1946).

Plaintiff cannot be faulted for failing to exhaust any administrative remedies under the contract. The suit is properly in this court, and the defendant's motion to dismiss must be denied.

B. Defendant's motion for...