Edward R. Marden Corporation v. United States

• Decision Date: 14 May 1971
• Docket Number: No. 154-70.,154-70.
• Citation: 442 F.2d 364
• Parties: EDWARD R. MARDEN CORPORATION v. The UNITED STATES.
• Court: U.S. Claims Court

442 F.2d 364 (1971)

EDWARD R. MARDEN CORPORATION v. The UNITED STATES.

No. 154-70.

United States Court of Claims.

May 14, 1971.

David V. Anthony, Washington, D. C., for plaintiff; Gilbert A. Cuneo, Washington, D. C., attorney of record. Maurice F. Ellison, Harvey G. Sherzer, and Sellers, Conner & Cuneo, Washington, D. C., of counsel.

Edward M. Jerum, Washington, D. C., with whom was Asst. Atty. Gen. L. Patrick Gray, III, for defendant.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS, SKELTON and NICHOLS, Judges.

ON DEFENDANT'S REQUEST FOR REVIEW OF COMMISSIONER'S ORDER

COLLINS, Judge.

This Government contract case is presently in its "Utah"¹ stage. A judicial determination on the merits of this case is being held in abeyance while plaintiff and defendant go through the ritual of asserting and denying, respectively, plaintiff's entitlement to a de novo trial in this court. The case is before the court on defendant's request for review of the trial commissioner's order granting plaintiff's motion for a de novo trial of the issues relating to Count II of plaintiff's petition.

The background facts summarized solely for present purposes, are as follows: Plaintiff was the successful bidder on a Navy contract to demolish an existing hangar, erect a new TACAN building, construct new and alter existing lean-tos, and construct a new aircraft maintenance hangar at the Naval Air Station, South Weymouth, Massachusetts. The contract was of the fixed-price variety and was in the amount of approximately $2,000,000. The present litigation arises from the construction of the hangar.

According to contract specifications, the new hangar was to be framed with 12 precast concrete arches, each weighing over 100 tons. Each arch was to be hinged to two reinforced concrete buttresses which would rest on concrete footings and be joined by a steel tie rod.

During the erection of the fourth arch the entire structure collapsed, causing the death of two men, serious injury to others, and substantial damage to equipment and work already completed. The parties are in apparent agreement that the collapse was immediately caused by the fact that plaintiff erected and released the arches to rest on the buttresses before the tie rods had been installed and without shoring the buttresses to relieve the horizontal pressure exerted by the arches.

The contracting officer determined that the structure collapsed due to faulty construction methods on the plaintiff's part and that plaintiff remained responsible for furnishing a completed hangar satisfying contract requirements. Plaintiff took a timely appeal from the contracting officer's final decision to the Armed Services Board of Contract Appeals (hereinafter board).

In its opinion, the board summarized the four grounds upon which plaintiff argued that it should be relieved of responsibility for the collapse:

(1) The contract did not indicate that the weight of the arches had to be restrained either by tie rods or by temporary vertical support until the tie rods were installed.

(2) Appellant was misled, on what has become the critical point of the erection procedure, i.e., the timing of the tie rod installation, by Dr. Traum, who was one of the design engineers.

(3) When the design engineers approved certain of appellant\'s proposed erection procedures, such approval reasonably included approval of the critical point referred to above.

(4) The Government was negligent in not using field tests for assigning safe bearing values to the soils.

Edward R. Marden Corp., 69-2 BCA ¶ 7878, at 36,617 (ASBCA 1969). In a lengthy opinion the board rejected all of plaintiff's contentions and held that plaintiff "has not established any valid ground for being relieved of its normal builder's risk liability for damage to the building occuring sic before its completion and final acceptance." Id. at 36,646. The board's decision was founded on the standard Permits and Responsibilities clause which contains the normal rule as to "builder's risk":

* * * The Contractor shall also be responsible for all materials delivered and work performed until completion and acceptance of the entire construction work, except for any completed unit of construction thereof which theretofore may have been accepted.

Plaintiff's petition in this court is in two counts. Count I seeks review of the board's decision on the usual grounds. It is a claim for an equitable adjustment under the Changes clause grounded on the theory that the contract specifications for construction of the hangar were defective. Count I alleges that the design of the hangar was both new and unusual; that the specifications did not state that the tie rods were structural supporting members of the hangar or that they were to be installed at any particular point in construction; that plaintiff's erection procedure was approved in advance by the Government; and that the Government's designer, when called to examine outward movement of the buttresses supporting the first erected arch, informed plaintiff that the movement was expected and that there was no cause for concern. It is also alleged that following the collapse plaintiff, under protest, cleaned up the debris and reconstructed the hangar as directed by the Government.

Count II is a claim for breach of contract. It incorporates by reference all of the basic factual allegations of Count I and further alleges that the collapse of the partially constructed hangar was the result of the Government's failure to advise plaintiff of the Government's "superior knowledge that the steel tie rods were structural members and that their installation prior to erection of the arches was essential to safe construction." The theory of Count II, failure of defendant to disclose "superior knowledge," is known to this court as an acceptable basis for an action for breach of contract. See, e.g., Helene Curtis Indus., Inc. v. United States, 312 F.2d 774, 160 Ct.Cl. 437 (1963).

Plaintiff's motion for a trial de novo on Count II, on the ground that the claim stated therein "is not redressable under or adjustable by any clause of the contract," was granted by our trial commissioner. We are asked by the defendant to review the commissioner's order.

As we view this case, in its present posture, there are two issues which must be resolved: (1) whether the claim in plaintiff's Count II is redressable under the Permits and Responsibilities clause; and (2) assuming the answer to the first question is negative, whether plaintiff's motion for a trial de novo on Count II must be denied on the basis of L. W. Foster Sportswear Co. v. United States, 405 F.2d 1285, 186 Ct.Cl. 499 (1969).

I

It is a familiar principle in the law of Government contracts that, to the extent complete relief is available under a specific provision of the contract, a controversy is regarded as being within the standard Disputes clause,²i. e., as arising "under the contract." Such a controversy is susceptible of initial administrative resolution under the Disputes clause, and the administrative decision is subject to judicial review under the standards of the Wunderlich Act, 41 U.S.C. §§ 321, 322 (1964). Judicial review is strictly limited to the record established in the administrative proceedings. United States v. Carlo Bianchi & Co., 373 U.S. 709, 714, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963). A corollary principle is that, to the extent complete relief is not made available under a specific contract provision, a controversy is not subject to administrative determination via the Disputes clause and may be tried de novo in the proper court. Len Co. & Assoc. v. United States, 385 F.2d 438, 442, 181 Ct.Cl. 29, 36 (1967). The Government contends in this case that the claim plaintiff asserts in Count II is redressable under the Permits and Responsibilities clause.

Our primary guide in resolving this issue is the Supreme Court's decision in United States v. Utah Constr. & Mining Co., supra note 1. In Utah the Government argued that "the disputes clause is not limited to those disputes arising under other provisions of the contract — Articles 3, 4 and 9 in this case — that contemplate equitable adjustment in price and time upon the occurrence of the specified contingencies." 384 U.S. at 404, 86 S.Ct. at 1551. The Court did not accept this view, however:

We must reject the government position, as did all the judges in the Court of Claims. The power of the administrative tribunal to make final and conclusive findings on factual issues rests on the contract, more specifically on the disputes clause contained in Article 15. * * * And the short of the matter is that when the parties signed this contract in 1953, neither could have understood that the disputes clause extended to breach of contract claims not redressable under other clauses of the contract.6 * * *

6 When the contract makes provision for equitable adjustment of particular claims, such claims may be regarded as converted from breach of contract claims to claims for relief under the contract. * * * Emphasis supplied.

Id. The Court continued:

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. * * * In fact the contracting departments have not rejected the narrower judicial reading of the disputes clause nor attempted any wholesale revision of its language to cover all factual disputes. Instead they have acted to create alternative administrative remedies for some breach of contract claims and to disestablish others by fashioning additional specific adjustment provisions contemplating relief under the contract in specified situations not reached by such provisions as Articles 3, 4 and 9. Emphasis supplied.

Id. at 412-413, 86 S.Ct. at 1555.

It is clear from Utah that ...