PATTON WRECKING & DEM. CO. v. Tennessee Valley Auth., GC70-54.
| Decision Date | 16 March 1971 |
| Docket Number | No. GC70-54.,GC70-54. |
| Citation | 324 F. Supp. 143 |
| Parties | PATTON WRECKING AND DEMOLITION CO., Inc., and Patton Bros., Inc., a joint venture, and Arkmiss Diving Company, Inc., Plaintiffs, v. TENNESSEE VALLEY AUTHORITY, Defendant. |
| Court | U.S. District Court — Northern District of Mississippi |
Clayton J. Swank, III, J. Murray Akers, Greenville, Miss., for plaintiffs.
Robert H. Marquis, Thomas A. Pedersen, Charles W. Van Beke, Melvin L. Harper, Tennessee Valley Authority, Knoxville, Tenn., for defendant.
This is an action under the Declaratory Judgment Act (28 U.S.C.A. § 2201) against the Tennessee Valley Authority (hereinafter referred to as "TVA") for a declaratory judgment determining the rights and liabilities of the parties under a contract for underwater repairs to the stilling basin at Kentucky Dam, located at Gilbertsville, Kentucky, and to recover damages from TVA for anticipatory breach of the contract.
On April 10, 1969, a contract was awarded by TVA to plaintiffs, Patton Wrecking and Demolition Co., Inc. and Patton Bros., Inc., a joint venture (hereinafter referred to as "Patton"). The original contract estimated that Patton would provide services for chipping and cleaning eroded concrete surfaces amounting to 2,700 sq. ft. at the rate of $40.00 per sq. ft., or a total contract price of $108,000.00, and for drilling and setting steel anchors and placing concrete aggregate and intrusion grout aggregating 2,700 cu. ft. at the rate of $33.00 per cu. ft., for a total contract price of $89,100.00. Thus, the entire contract amounted to $197,000.00. The contract contains a provision that the quantities contained therein are estimates and might be exceeded by sixty percent (60%). The contract does not, however, make a provision for a decrease in quantities.
On July 23, 1969, an additional $3,800.00 was added to the contract for certain services which were to be required and were beyond contract requirements. The total amount of the contract was adjusted to $200,900.00.
On August 7, 1969, another change of contract was issued providing for the elimination of the requirement of chipping eroded concrete surfaces and leaving the only service to be performed that of cleaning eroded concrete surfaces together with drilling and setting steel anchors and placing concrete aggregate and intrusion grout. The total amount of the contract was then adjusted to the present value of the contract, $179,300.00 (estimated).
On or about June 2, 1969, Patton began repair to the Stilling Basin at Kentucky Dam and continued to do so until December 19, 1969, at which time work was suspended until the spring of 1970 as a result of high water and extreme cold weather conditions. It was at this point that the dispute between the parties arose.
Up until December 19, 1969, Patton cleaned 1,581.5 sq. ft. of eroded concrete surface and poured 839.7 cu. ft. of concrete aggregate and intrusion grout. Accepting as true the facts as alleged by Patton, upon a thorough inspection by Patton and TVA, it was determined that there remained to be performed under the contract approximately 175 sq. ft. of eroded concrete surface to be cleaned, and approximately 175 cu. ft. of concrete aggregate and intrusion grout to be poured under the contract.
Patton claims that TVA has anticipatorily breached the contract in that the amount of work available at the job site to be performed under the contract is approximately fifty-one percent (51%) less than that represented in the invitation to bid and provided for in the contract entered into pursuant to the bid of Patton. Patton estimates that the failure of TVA to furnish the quantity of work set forth in the contract has caused Patton to suffer damages in the sum of $85,806.90. Patton seeks to recover from TVA the sum of $85,806.90 and a declaratory judgment terminating the contract and discharging Patton from all liability in regard thereto.
On August 17, 1970, TVA filed a motion to dismiss Patton's action on the ground that the Court lacks jurisdiction to entertain it. TVA alleges that Patton has failed to exhaust the administrative remedies available to him under the contract. In the same motion TVA moves to dismiss the action as to Arkmiss Diving Company, Inc., (Arkmiss) because the complaint fails to state a claim upon which relief can be granted. In the alternative, TVA seeks a summary judgment on the ground that the pleadings, together with the affidavit of L. W. Marks, which has been filed with the motion, show that there is no genuine issue as to any material fact and that TVA is entitled to judgment as a matter of law.
It is conceded that the action must be dismissed as to Arkmiss, there being no privity of contract between Arkmiss and TVA. Arkmiss does not bottom its demand against TVA on the contract between Patton and TVA. The motion to dismiss the action as to Arkmiss will be sustained.
In consideration of the motion to dismiss the material allegations of the complaint are to be taken as admitted. The complaint should not be dismissed unless it appears that Patton can prove "no set of facts in support of his claim which would entitle him to relief."1 A summary judgment is proper only when the pleadings, admissions, affidavits, etc., show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.2
The administrative remedies to which TVA alludes are the remedies set forth in the "disputes clause" of the contract. This clause is set out in full in the footnote.3 The motion of TVA to dismiss the action, or, in the alternative to grant TVA a summary judgment is bottomed on the contention that Patton's claim that TVA anticipatorily breached the contract, constitutes a dispute which is governed by the "disputes clause" of the contract and must be submitted to the Contracting Officer for his decision and processed administratively before Patton has standing to seek relief in court.
There is no substantial disagreement between counsel as to the governing principles of law.4
The question, therefore, turns largely upon the interpretation of the "disputes clause" and whether the clause encompasses a dispute such as exists between the parties as shown by the record in this action. The only affidavit submitted to the court in connection with the motion for a summary judgment is the affidavit of the Contracting Officer which is to the effect that Patton has never submitted to him, as the Contracting Officer, for his decision, the disputes shown to exist in the complaint filed by Patton.
The question for the court's determination is whether the alleged anticipatory breach of the contract by TVA constitutes a dispute which the parties have contracted to submit to the Contracting Officer, for his decision. If this question is answered in the affirmative the action is premature and should be dismissed.5
In United States v. Utah Construction and Mining Company, 384 U.S. 394, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966) the Supreme Court was concerned with a suit for breach of contract originating in the Court of Claims. The contract contained a "disputes clause" which provided "that `all disputes concerning questions of fact arising under this contract' shall be decided by the contracting officer subject to written appeal to the head of the department, `whose decision shall be final and conclusive upon the parties thereto.'"6 The court rejected the government's contention that the disputes clause authorized and compelled administrative action with respect to all disputes between the parties in the course of completing the contract. The court said:
"Thus the settled construction of the disputes clause excludes breach of contract claims from its coverage, whether for purposes of granting relief or for purposes of making binding findings of fact that would be reviewable under Wunderlich Act standards rather than de novo. * * *"7
And, in answer to the government's argument that the same considerations which initially led to providing an administrative remedy in those situations arising from changes in the drawings and/or specifications of the contract, changed conditions, delays, etc., also support the broader reading of the disputes clauses permitting and requiring administrative fact finding to all disputes arising between the contracting parties, the court said:
"* * * But the coverage of the disputes clause is a matter susceptible of contractual determination, United States v. Moorman, 338 U.S. 457, 70 S.Ct. 288, 94 L.Ed. 256, subject to the limitations on finality imposed by the Wunderlich Act, and one would have expected modification of the disputes clause to encompass breach of contract disputes if the restrictive interpretation of Article 15 was thought unduly to hinder government contracting. * * *"8
The case of Bethlehem Steel Corporation v. Grace Line, Inc., 135 U.S.App.D. C. 81, 416 F.2d 1096 (1969) involved a government contract which contained a "disputes clause" covering any dispute arising under the contract which is not disposed of by agreement of the parties to the contract. In rejecting the contention that the subject matter of the dispute came within the coverage of the disputes clause, the court said:
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Patton Wrecking & Dem. Co. v. Tennessee Valley Auth.
...contracting officer under the contract's dispute clause.1 The district court in an opinion reported as Patton Wrecking and Demolition Co., Inc. v. TVA, 324 F.Supp. 143 (N.D., Miss.1971) sustained Patton's complaint against TVA's motion to dismiss and motion for summary judgment. The distric......
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