Carchia v. United States

• Citation: 485 F.2d 622,202 Ct. Cl. 723
• Decision Date: 17 October 1973
• Docket Number: No. 242-67.,242-67.
• Parties: Michael CARCHIA, Jr., Receiver for Dorchester Equipment Co., Inc., and the Aetna Casualty and Surety Company, Intervenor, v. The UNITED STATES.
• Court: Court of Federal Claims

202 Ct. Cl. 723, 485 F.2d 622 (1973)

Michael CARCHIA, Jr., Receiver for Dorchester Equipment Co., Inc., and the Aetna Casualty and Surety Company, Intervenor, v. The UNITED STATES.

No. 242-67.

United States Court of Claims.

October 17, 1973.

COPYRIGHT MATERIAL OMITTED

Francis V. Matera, Boston, Mass., attorney of record, for plaintiff John W. Di Nicola and McCormack, Elcock, Cohen & Matera, Boston, Mass., of counsel.

Edward O. Proctor, Boston, Mass., attorney of record, for intervenor The Aetna Casualty and Surety Co., Ely, Bartlett, Brown & Proctor, Boston, Mass., of counsel.

Paul A. Zoss, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.

Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.

OPINION

DAVIS, Judge.

This is a contract case, brought by the plaintiff, receiver for Dorchester Equipment Co., Inc. (the company is sometimes called plaintiff), for breach of a construction contract between that firm and the United States, acting through the Post Office Department. The contract was in lump-sum form, subject to adjustment for unit prices for piling, pre-drilling for piling, and other such items. The price arrived at by competitive bidding was $265,000. The award was made on July 19, 1961, by the Post Office Department, Bureau of Facilities, Division of Real Estate. The work required the contractor to furnish all labor equipment and materials and perform work for demolition, removal of railroad trackage, canopies, etc., necessary to construct footings for a future canopy at Terminal Annex, South Postal Annex, United States Post Office, Boston, Massachusetts. The plans and specifications had been prepared by Pedersen and Tilney, architects of Boston. The work was to commence as soon as possible after receipt of notice to proceed and was to be completed in 150 calendar days after receipt of that notice. The completion date thus computed became December 27, 1961.

The plaintiff makes claim on account of extra work necessitated by changed conditions, for costs incurred by reason of unreasonable delays to the work, and for damages resulting from the alleged wrongful termination of the contract.

The intervenor, the Aetna Casualty and Surety Company, became the surety on the performance and payment bonds. By motion to intervene on the ground that representation of its interest is or may be inadequate, that it may be bound by the judgment, and that it has a pecuniary interest in the subject matter of the action, the intervenor has been permitted to be added as a party to this litigation and has participated in the proceedings. By arrangement with the Government, the surety completed the contract work.

The defendant filed a counterclaim against the plaintiff covering certain architect-engineer expenses and other expenses by reason of alleged defective work, in the sum of $5,739. The defendant also filed a contingent counterclaim against the intervenor for sums which the court might find were paid by the defendant to Aetna, but which should have been paid to the Dorchester Equipment Company. It originally asked judgment, also, over against Aetna for any amount awarded to the plaintiff, but that claim is no longer pursued.

The contractor's claims were the subject of an appeal to the Post Office Board of Contract Appeals which, after extended hearings, found that the "termination for default was premature", and remanded the matter to the contracting officer for settlement of the amount due Dorchester. When the parties were unable to agree on a settlement, additional hearings were held and a subsequent decision was entered which allowed the plaintiff $20,725.47 for extra work but held that the Board was without jurisdiction to determine liability for delay claims or standby time or the claim relating to termination for default. There is no evidence that the $20,725.47 was ever paid to the plaintiff or Dorchester Equipment. In this court, the parties agreed to a trial de novo which has been held.

As a result of the trial, the trial judge determined: "On the basis of the entire record it is concluded that the termination for default was improper and unwarranted and a breach of the contract since a great deal of the delay which was charged to the plaintiff was actually the fault of the defendant through its architect and in turn through its architect's subcontractor. Additional causes of delay are clearly not chargeable to the contractor since they were due to the encountering of a great many underground obstructions which interfered with the orderly progress of the work by not only the contractor but its pile-driving subcontractor. For such breach of contract the defendant must respond in damages for the breach."¹ Defendant does not challenge these conclusions, nor does it contest that the contractor performed additional work for which it should be compensated. It is therefore unnecessary to recite the facts showing that the trial judge is correct. (His findings on these points, which we adopt, present sufficient detail.) The issues which remain to be decided concern the amounts of recovery by the plaintiff (Part I, infra) and by the surety (Part II, infra), and the disposition of the Government's counterclaims (Part III, infra).

I

The trial judge found $63,602.30 now owing by defendant to plaintiff. The Government contests only one item (i. e. anticipated profits), but plaintiff asks us to add several additional sums. We reject all of these exceptions and confirm the amount arrived at by the trial judge.

A. Since this was an oldstyle contract which did not provide that a wrongful default termination was to be considered a convenience-termination, plaintiff was entitled to anticipated profits for work not yet performed at the time it received the improper notice of default termination. See General Builders Supply Co. v. United States, 409 F.2d 246, 251, 187 Ct.Cl. 477, 485-486 (1969); J. D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431-432, 187 Ct.Cl. 45, 58-59 (1969). The trial judge assessed this at $28,042.70, a sum derived from the costs incurred and the profit made by the company which completed the work on behalf of the surety. The Government argues that it was error to use that firm's profit-and-costs as a measure, and that the correct gauge of anticipated profits would take into account the relationship of the amount of work left undone by Dorchester Equipment to the contract's original fixed price. The latter amount was $265,000, and under our findings Dorchester performed $152,000 of this work, leaving $113,000 worth still to be performed; defendant would grant plaintiff 10% of this sum ($11,300) in anticipated profits.

We hold that the trier's method was acceptable. If Dorchester had not been wrongly terminated, it would have completed the contract and probably done the same work and incurred the same costs (including a very considerable amount of extras) as the company which actually finished the job. The completing firm's profit is therefore a reasonable basis for the award to plaintiff of the gain it lost through the Government's wrongful ending of the contract. As we point out below (Part II, B, infra), the completing firm's actual costs and outlays must be taken on this record as reasonable—and it is not far-fetched to infer that Dorchester would have had equivalent expenses and done about the same amount of work.

B. 1. In his brief, plaintiff specifies a number of work items, omitted by the trial judge, for which he says Dorchester should be further compensated.² We agree with defendant that, as to one instance, the trial judge did in fact cover the item and allow compensation, and, as to the others, plaintiff has made insufficient proof that it incurred the costs now claimed. On these items, there is plainly insufficient reason to overturn the trial judge's considered denial of compensation. Cf. Davis v. United States, 164 Ct.Cl. 612, 616-617 (1964).

2. A more important controversy concerns an unpaid judgment plaintiff says was obtained against Dorchester by Raymond International, Inc., the subcontractor for the foundation and pile-driving work.

It is agreed by everyone that the surety and Dorchester were made defendants in a Miller Act suit brought by Raymond in the United States District Court for the District of Massachusetts, covering the pile-driving work that firm had performed for the plaintiff, extra work required in the performance, as well as delay it encountered. A settlement was effected under which judgment was entered against the surety for $60,500, which has been paid, and judgment over was also entered in favor of the surety against Dorchester and its officers individually for the same amount (which has not been paid). The trial judge included this $60,500 in the surety's damages recoverable from defendant (see Part II, D, infra).

Plaintiff claims that there was another judgment (for $61,546.78), in another litigation, obtained by Raymond against Dorchester, which is still outstanding and unpaid. This second judgment, we are informed, was entered on Raymond's affidavit that it had expended this additional amount and on Dorchester's failure to respond.³ The trial judge, plaintiff insists, simply overlooked this extra judgment and therefore deprived plaintiff of a large sum in damages.

Defendant urges strenuously that plaintiff never made proper proof of this alleged judgment, and that it was for that reason that the trier took no account of it. The only relevant document accepted in evidence, before proof was closed, was a copy of an execution form referring to this judgment; no copy, let alone a certified copy, of the judgment itself was introduced. Defendant specifically objected, before the trial judge, that there was no record evidence of this second judgment.

In its exceptions to the trial judge's opinion and findings, plaintiff reproduces a copy of a "judgment on...