Anthony Grace & Sons, Inc. v. United States

• Decision Date: 14 May 1965
• Docket Number: No. 133-61.,133-61.
• Citation: 170 Ct. Cl. 688,345 F.2d 808
• Parties: ANTHONY GRACE & SONS, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

170 Ct. Cl. 688, 345 F.2d 808 (1965)

ANTHONY GRACE & SONS, INC. v. The UNITED STATES.

No. 133-61.

United States Court of Claims.

May 14, 1965.

David Fromson, Garden City, N. Y., for plaintiff.

David Orlikoff, Washington, D. C., with whom was Asst. Atty. Gen. John W. Douglas, for defendant. Mary J. Turner, Washington, D. C., was on the brief.

Before COWEN, Chief judge, and LARAMORE, DURFEE, DAVIS and COLLINS, Judges.

COWEN, Chief Judge.

In this action plaintiff seeks to recover its bid deposit and damages it allegedly incurred as a result of cancellation by defendant of commitments made by the Department of the Air Force to plaintiff for the construction of a military housing project under the Capehart Act.¹ The case is before the court on defendant's motion for summary judgment on the grounds that plaintiff has failed to exhaust its administrative remedies and has failed to state a claim for which relief may be granted.

This motion was referred to Trial Commissioner Richard Arens, under Rule 54(b), for his opinion and recommendations for a conclusion of law. Commissioner Arens has submitted an opinion and recommendations. The defendant sought review of both, and the case was set for argument. The plaintiff submitted on the briefs but the defendant presented oral argument.

I

The first issue is whether the plaintiff failed to exhaust its administrative remedies because its appeal to the Board of Contract Appeals from the cancellation (and the refusal to return its deposit) was untimely (as the Board held). Commissioner Arens' opinion concludes that the appeal was not untimely and the Board erred in dismissing it on that ground. The court agrees (with slight modifications) with that portion of the Commissioner's opinion (set forth in Part III, infra) and adopts it, as so modified, as the basis for rejecting the defendant's argument that plaintiff is barred from suing in this court because it failed properly to exhaust its administrative remedy.

The second issue is whether, in any event, plaintiff states a cause of action. Defendant contends that, irrespective of the issue of exhaustion of administrative remedies, plaintiff may not maintain its action because under the terms of the letter of acceptability plaintiff could not refuse to "close" a Capehart contract over a disagreement on the administrative determinations of appropriate minimum wages for the housing project, and that such determinations are not subject to judicial review.

Plaintiff has pleaded in its petition that defendant "unilaterally altered the scope of work provisions" and issued "wage schedules in direct contravention of its contractual obligations," and that defendant's action made it impossible for plaintiff to continue in its efforts to perform under the contract. Plaintiff further contends that its interpretation of the plans and specifications is correct "in light of the interpretation given such plans and specifications by custom and usage in the trade."

Thus, the parties are in disagreement over the nature of the issue presented and, of course, the Armed Services Board of Contract Appeals, having reached its decision solely on the matter of the timeliness of plaintiff's appeal, did not consider any other issue.

The Trial Commissioner recommended that the decision on defendant's contention that plaintiff fails to state a cause of action should be resolved only after trial. In the Trial Commissioner's view, the issues are not now precisely framed; evidence as to the conduct of the parties may shed some light on the issues, and there are unresolved issues of fact.

Even where a motion for summary judgment meets the technical requirements for the granting of the motion, the court may in its discretion deny the motion. See Ct.Cl.R. 64; Fed.R.Civ. P. 56; Williams v. Howard Johnson's Inc. of Washington, 323 F.2d 102 (4th Cir. 1963); S. J. Groves & Sons Co. v. Ohio Turnpike Commission, 315 F.2d 235 (6th Cir. 1963). Denial of the motion is appropriate when the legal issues are of particular significance, or particularly complex, or where the legal issues can be intelligently resolved only upon a fully developed record. See Kennedy v. Silas Mason Co., 334 U.S. 249, 68 S.Ct. 1031, 92 L.Ed. 1347 (1948); Pacific American Fisheries, Inc. v. Mullaney, 191 F.2d 137 (9th Cir. 1951). We believe this to be a proper case for the exercise of that discretion.²

II

Having determined that the Armed Services Board of Contract Appeals improperly refused to consider plaintiff's appeal on its merits (Part III hereof), we must consider whether we should suspend action in this court and direct the plaintiff to return the case to the Board, or whether we should deny defendant's motion and remand the litigation to our Trial Commissioner.

It is an accepted principle that where the administrative remedy is inadequate, a party will no longer be required to exhaust that remedy as a prerequisite to maintaining an action in court. Davis, Administrative Law, § 189 (1951).³ This court has entertained an action without requiring further recourse to the contractual administrative procedures where the contracting officer has refused to render a decision as required by the contract or has delayed his decision excessively. Maxan Dress Corp. v. United States, 115 F.Supp. 439, 126 Ct.Cl. 434 (1953); United States Casualty Co. v. United States, 67 F.Supp. 950, 107 Ct.Cl. 46 (1946). The same rule has been applied where the head of the agency similarly erred. Southeastern Oil Florida, Inc. v. United States, 115 F. Supp. 198, 127 Ct.Cl. 480 (1953); Heid Bros., Inc. v. United States, 69 Ct.Cl. 704 (1930); Cape Ann Granite Co., Inc. v. United States, 100 Ct.Cl. 53, cert. denied, 321 U.S. 790, 64 S.Ct. 785, 88 L.Ed. 1080; Cf. Hele v. United States, 100 Ct.Cl. 289 (1943) and 103 Ct.Cl. 472 (1945).

In Southeastern Oil Florida, supra, the plaintiff had contracted to transport government gasoline. The contracting officer determined that the plaintiff was responsible for the contamination of some of the gasoline and withheld moneys due under the contract. The contractor pursued his remedies under the contract and appealed to the Secretary of the Navy. For 2 years the appeal was not acted upon, and the contractor filed suit. This court commented, 127 Ct.Cl. 480, 484:

"Defendant argues that because plaintiff\'s appeal to the head of the department is still pending, this court has no jurisdiction of plaintiff\'s claim. It is true that a contractor must exhaust the administrative remedies provided in the contract before it is entitled to bring suit in this court. United States v. Blair, 321 U.S. 730, 735, 64 S.Ct. 820, 822, 88 L.Ed. 1039; United States v. Joseph A. Holpuch Co., 328 U.S. 234, 240, 66 S.Ct. 1000, 1003, 90 L.Ed. 1192. These cases also set forth the exception to this rule, however, which is that a contractor is not prevented from suing in this court where the administrative appeal procedure provided in its contract is, in fact, inadequate or unavailable. In the Blair case, the Supreme Court recognized that (p. 736 of 321 U.S., p. 823 of 64 S. Ct.):

"`If it were shown that the appeal procedure provided in the contract was in fact inadequate * * * we would have a quite different case.\'

"Likewise, in the Holpuch decision, the Supreme Court stated that (p. 240 of 328 U.S., p. 1003 of 66 S.Ct.):

"`And in the absence of some clear evidence that the appeal procedure is inadequate or unavailable, that procedure must be pursued and exhausted before a contractor can be heard to complain in a court.\'

"In this case, the plaintiff having appealed to the head of the department, and the head of the department having failed for more than two years to indicate whether he would or would not take jurisdiction of the appeal, the plaintiff was justified in regarding the administrative appeal procedure as inadequate and in filing its suit in this court. Having filed its suit, it was not required to abandon that suit and resume the administrative procedure.

We must now query whether the decision in United States v. Carlo Bianchi & Co., Inc., 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963) alters the rule announced in the cases cited above. Since the Bianchi case was handed down, this court has decided that the failure of the contracting officer to perform his adjudicatory functions permits an action to be maintained in this court without any further administrative proceedings, C. J. Langenfelder & Sons, Inc. v. United States, Ct.Cl., 341 F.2d 600, February 19, 1965, H. B. Zachry Co. v. United States, Ct.Cl., 344 F.2d 352, April 16, 1965.⁴ We believe that if a contracting officer's failure to act allows immediate recourse to the courts, it follows a fortiorari that a similar lack of action by a contract appeals board should also permit such immediate resort to the courts.

The decisions in Langenfelder and Zachry, supra, dictate that in the case before us, we retain the case for trial in this court.

We believe that this result is in accord with the Supreme Court's decision in the Bianchi case, supra. Justice Harlan, speaking for the majority in that case, made the following observation on the sanctions to be imposed by this court when confronted with an unacceptable administrative record. (373 U.S. 709, 717-718, 83 S.Ct. 1409, 1415):

"* * * Second, in situations where the court believed that the existing record did not warrant such a course, but that the departmental determination could not be sustained under the standards laid down by Congress, we see no reason why the court could not stay its own proceedings pending some further action before the agency involved. Cf. Pennsylvania R. Co. v. United States, 363 U.S. 202 80 S.Ct. 1131, 4 L.Ed.2d 1165. Such a stay would certainly be justified where the department had failed to make adequate provision for a record that could be subjected to judicial scrutiny, for it was clearly part of the legislative purpose to achieve uniformity in

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