Allied Materials & Eq. Co. v. United States

Decision Date25 January 1978
Docket NumberNo. 342-75.,342-75.
Citation569 F.2d 562
PartiesALLIED MATERIALS & EQUIPMENT CO., INC. v. The UNITED STATES.
CourtU.S. Claims Court

Charles E. Raley, Washington, D.C., attorney of record for plaintiff; Israel & Raley, Washington, D.C., of counsel.

Robert M. Hollis, Washington, D.C., with whom was Asst. Atty. Gen. Barbara Allen Babcock, Washington, D.C., for defendant.

Before NICHOLS, Judge, Presiding, and KASHIWA and BENNETT, Judges.

ON PLAINTIFF'S MOTION FOR REHEARING EN BANC

PER CURIAM:

In an order of September 30, 1977, the court denied defendant's motion and plaintiff's cross-motion for summary judgment, and remanded the case to the Trial Division. Plaintiff has now moved for a rehearing en banc of its cross-motion for summary judgment. Defendant has filed a brief in opposition.

Briefly, this action was brought to recover anticipatory profits and more on the ground that defendant breached a contract under which plaintiff was to supply cylinder assemblies to the Army. The alleged breach was accomplished by defendant's sale to a competitor of certain tooling equipment which was contractually obligated for use by plaintiff in performing the contract. Oral argument was heard on June 6, 1977, after which the aforementioned order was issued, remanding the case for further development of certain issues by the trial judge. In particular, we instructed the trial judge to determine whether defendant's sale of the production equipment had effected a cardinal change in the contract, within the meaning of such precedents as, e. g., Edward R. Marden Corp. v. United States, 194 Ct.Cl. 799, 442 F.2d 364 (1971) and Air-A-Plane Corp. v. United States, 408 F.2d 1030, 187 Ct.Cl. 269 (1969). If the trial judge found that there was a cardinal change, thus providing this court with jurisdiction, he was then to determine whether the government was dealing in bad faith prior to and in effecting the termination for convenience.

Both parties have questioned the propriety of framing the issue as whether the sale of equipment was a cardinal change. The court's instructions to the trial judge were not inadvertent, and our position will be further explained in response to each party's contentions.

It is defendant's position that the cardinal change doctrine applies only when a plaintiff seeks extra costs incurred because of a deviation from contract terms, but which are not recoverable under the contract. Defendant states that the cardinal change principle is "obviously irrelevant where plaintiff is instead seeking anticipated profits and lost revenues." Inherent in this statement, however, is the fallacious assumption that the cardinal change concept's applicability is dictated by the nature of damages sought by a plaintiff. This is simply not so. Under established case law, a cardinal change is a breach. It occurs when the government effects an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for. By definition, then a cardinal change is so profound that it is not redressable under the contract, and thus renders the government in breach. See, e.g., Edward R. Marden Corp. v. United States, supra, 442 F.2d at 369, 194 Ct.Cl. at 808; Air-A-Plane Corp. v. United States, supra, 408 F.2d at 1033, 187 Ct.Cl. at 275-76; Keco Industries, Inc. v. United States, 364 F.2d 838, 847-48, 176 Ct.Cl. 983, 998-99 (1966), cert. denied, 386 U.S. 958, 87 S.Ct. 1087, 18 L.Ed.2d 105 (1967); Aragona Construction Co. v. United States, 165 Ct.Cl. 382, 390-91 (1964). In Marden, supra, we specifically stated that the purpose of the cardinal change doctrine is "to provide a breach remedy for contractors who are directed by the government to perform work which is not within the general scope of the contract." We have certainly never intimated, however, that the contractor is limited to a suit for extra costs incurred in performing duties fundamentally outside of the scope of the contract, and we have never held that the applicability of this doctrine is in any way dependent on the nature of damages sought by the contractor. Although the typical case, thus far, has featured a plaintiff who undertook to perform despite the alteration of contractual obligations, this does not preclude a suit by a contractor who, for one reason or another, has not completed the contract. Undoubtedly, the cautious contractor might often proceed under the revised contract because of doubt whether he could invoke the cardinal change doctrine. But if he has been prevented from performing, as in any breach case, the award of anticipatory profits is an appropriate remedy. See Carchia v. United States, 485 F.2d 622, 625, 202 Ct.Cl. 723, 729 (1973); General Builders Supply Co. v. United States, 409 F.2d 246, 251, 187 Ct.Cl. 477, 485-86 (1969); J. D. Hedin Construction Co. v. United States, 408 F.2d 424, 431-32, 187 Ct.Cl. 45, 58-59 (1969).

Conversely, it would seem at least moderately obvious that the failure to furnish property the government promised to furnish would sometimes be remediable under the contract and therefore would...

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  • Am. Apparel, Inc. v. United States
    • United States
    • U.S. Claims Court
    • November 30, 2012
    ...from those originally bargained for.'" AT & T Commc'ns, Inc. v. Wiltel, 1 F.3d at 1205 (quoting Allied Materials & Equip. Co. v. United States, 215 Ct. Cl. 406, 409, 569 F.2d 562, 563-64 (1978)); see also Krygoski Constr. Co. v. United States, 94 F.3d at 1543. "Just as the cardinal change d......
  • Amelco Electric v. City of Thousand Oaks
    • United States
    • California Supreme Court
    • February 4, 2002
    ...the contractor to perform duties materially different from those originally bargained for." (Allied Materials & Eq. Co. v. United States (1978) 215 Ct.Cl. 406, 569 F.2d 562, 563-564.) Of course, all federal cases applying the federal cardinal change doctrine involve a public entity as the c......
  • Rda Constr. Corp. v. United States, 11-555 C
    • United States
    • U.S. Claims Court
    • July 27, 2017
    ...that it is not redressable under the contract, and thus renders the government in breach.Allied Materials & Equip. Co. v. United States, 569 F.2d 562, 563-64 (Ct. Cl. 1978) (emphasis added). As with other breach of contract claims, the cardinal change doctrine has a causation requirement. S......
  • Ian, Evan & Alexander Corp. v. United States
    • United States
    • U.S. Claims Court
    • February 23, 2018
    ...originally bargained for.'" AT & T Commc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205 (quoting Allied Materials & Equip. Co. v. United States, 215 Ct. Cl. 406, 409, 569 F.2d 562, 563-64 (1978)); see also Krygoski Constr. Co. v. United States, 94 F.3d at 1543. "Just as the cardinal change doctri......
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1 books & journal articles
  • Is There a Doctrine in the House?
    • United States
    • ABA General Library The Construction Lawyer No. 40-3, July 2020
    • July 1, 2020
    ...Cardinal Change Doctrine in Federal Contracts Law , 9 A.L.R. Fed. 2d 565 (2006). 61. Allied Materials & Equip. Co., Inc. v. United States, 569 F.2d 562, 564 (Ct. Cl. 1978). 62. Air-A-Plane Corp. v. Unites States, 408 F.2d 1030, 1033 (Ct .Cl. 1969). 63. Becho, Inc. v. United States, 47 Fed. ......

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