Flippin Materials Company v. United States

• Decision Date: 05 April 1963
• Docket Number: No. 8-57.,8-57.
• Citation: 160 Ct. Cl. 357,312 F.2d 408
• Parties: FLIPPIN MATERIALS COMPANY, a Joint Venture Composed of Brown and Root, Inc., a Corporation, et al. v. The UNITED STATES.
• Court: U.S. Claims Court

160 Ct. Cl. 357, 312 F.2d 408 (1963)

FLIPPIN MATERIALS COMPANY, a Joint Venture Composed of Brown and Root, Inc., a Corporation, et al. v. The UNITED STATES.

No. 8-57.

United States Court of Claims.

January 11, 1963.

Rehearing Denied April 5, 1963.

COPYRIGHT MATERIAL OMITTED

John W. Gaskins, Washington, D. C., for plaintiff. Paul E. McNulty and King & King, Washington, D. C., were on the briefs.

Edward L. Metzler, Washington, D. C., with whom was Acting Asst. Atty. Gen., Joseph D. Guilfoyle, for defendant.

DAVIS, Judge.

The plaintiff is a joint venture — comprising the same nine large construction enterprises which were building the Bull Shoals Dam for the Government in Arkansas (see Ozark Dam Constructors v. United States, Ct.Cl., decided April 7, 1961, 288 F.2d 913) — which was formed for the sole purpose of contracting with the Government to manufacture sand and crushed rock (called "aggregate") from limestone found in a government-owned mountain (Lee Mountain) near the Bull Shoals area and to deliver this aggregate to the dam site for use in the concrete required for the Bull Shoals Dam. The work was to be done at specified unit prices per ton of material, and estimated quantities were set forth in the contract. The main issue before us arises out of the plaintiff's claim that the defendant misrepresented the nature of the material embedded in Lee Mountain, with the result that plaintiff was forced to do much additional work to find and extract usable crushed rock for the aggregate to be deposited at Bull Shoals. Defendant denies any misrepresentation and asserts that plaintiff possessed all the requisite information or had it readily available.

Commissioner Bennett has filed a comprehensive report of 52 pages, dealing with all the factual aspects of plaintiff's claim. The parties have elaborately challenged major portions of those findings, and each repulses the assaults made by the other. We have been favored by a massive amount of argumentation.¹ However, we are fortunately spared from delving into these voluminous attacks in depth on the 79 detailed findings; for us the primary issue can be adequately resolved on the basis of a relatively narrow segment of the evidence. Accordingly, we do not pass upon the various challenges to the findings which are irrelevant to our disposition of the case; instead we accept arguendo the Commissioner's findings on those points, making it clear that we have reviewed only those challenged findings which are critical to our decision (as indicated in this opinion).

Under its contract plaintiff was to dig into Lee Mountain, extract large amounts of rock, crush the rock and form aggregate, and transport the aggregate to Bull Shoals. For coarse aggregate plaintiff was to be paid $2.41 a ton, and the estimate was that 2,700,000 tons would be extracted. For fine aggregate the ton price was $2.54, and the estimate was 1,100,000 tons. Plaintiff was also to be paid $.30 per cubic yard for waste material stripped or scalped from above or around the rock formations; it is agreed, however, that the price of $.30 is less than the actual unit cost of such removal, and was inserted by the defendant in the contract in order to keep waste material to a minimum.²

A major consideration in bidding on quarrying work of this kind is the nature of the material underlying the surface of the quarrying area. Limestone is a good source of rock for aggregate, and it was known to be there. But limestone is also a soluble rock commonly possessing cavities as a result of the chemical action of water upon the stone in past eras. If these cavities are empty or filled (partially or wholly) with sand, the job is a normal one since sand does not hinder the breaking up of limestone for the aggregate which is the end-product of the quarrying; but if these limestone cavities are filled with clay, unusable for aggregate and contaminating the rock, there is much additional material to be stripped or scalped, and then wasted, in the course of finding and separating rock untainted by clay.

Plaintiff found much more clay-contaminated rock than (it now says) it expected or was led to expect, and was therefore required to remove much more waste material.³ It also says that because of the clay it was forced to change from an operation at the side of the mountain to a more difficult and expensive one at the crest. Its claim is that it did not know and was not told of the probable extent and areas of the clay in Lee Mountain, but that defendant did have the information (from its pre-contract test borings) which it failed to reveal to the plaintiff, as it should have. The result, plaintiff charges, is that it expended over $600,000 in extra removal of waste materials for which it has not received recompense. The short of our decision rejecting the claim is that, assuming that plaintiff was in fact as innocent as it says of the nature and scope of the clay pockets in the mountain, still the Government's information was available to it and under its contract it was bound to seek that information or to be treated as if it had.

Before the contract was executed, the defendant drilled 33 holes in the mountain to ascertain the character of the underlying material. The defendant then supplied the plaintiff drawings of the profiles (or logs) of these borings, which showed cavities in the limestone formation by solid black markings; there was no statement, however, whether the cavities were open or wholly or partially filled by clay. The actual cores of the borings were retained and were available to, and inspected by, plaintiff. Although defendant vigorously attacks the findings on this aspect of the case, we accept for the purposes of our decision (without deciding or independently finding) the Commissioner's conclusion that, on the basis of these contract drawings and core-borings (which it admittedly examined) as well as the other facts of which it was aware, plaintiff did not know or have reason to know that such a large part of the subsurface material in Lee Mountain was contaminated with clay (see findings 10, 11, 12, 13, 19, 20, 21, 25, 45 and 51).⁴

Our problem centers on the fact that the defendant also had field logs, recording the actual findings of the inspectors and geologists, which contained considerably more information than was shown on the contract drawings; from these field logs it is indisputable that it could readily be ascertained that a great many of the cavities shown in the contract drawings were clay-filled. The Commissioner has found as fact, and on a review of the evidence we affirmatively agree, that it was customary to make such field logs; that this was known to plaintiff, composed as it was of businesses experienced in heavy construction; that the field logs were kept at the Corps of Engineers' field office where the actual boring-cores were on display and inspected by plaintiff's representatives; that had plaintiff asked to see these logs they would have been permitted to do so (although defendant would have disclaimed any responsibility for plaintiff's reliance on the contents of the logs); and that the field logs, which distinguished between open cavities and those containing clay, revealed that very large parts of the cavities encountered in the borings and shown on the contract drawings were filled to some extent with clay.

Was plaintiff bound to ask for these field logs located in the nearby Government field office? At a pre-bid conference, plaintiff was informed in writing that "results of explorations and tests, including core from some of the borings, are available at the Bull Shoals sub-office, Mountain Home, Arkansas." Section SC-12 of the contract specifications similarly provided that the "results of all borings and tests, including samples of core, which have been made by the Government, of the materials contemplated for use under these specifications are available at the Bull Shoals sub-office, Mountain Home, Arkansas, for examination by the bidders."⁵ The contract also contained the usual warning and exculpatory provisions requiring the contractor to investigate conditions for itself (including the "character, quality and quantity of surface and sub-surface materials to be encountered") and providing that "any failure by the contractor to acquaint itself with all the available information concerning these conditions will not relieve it from responsibility for estimating properly the difficulty or cost of successfully performing the work" (see finding 6). Significantly, the contract contained no clause relating to changed sub-surface conditions.

We have concluded that this general phrase "results of all borings and tests, including samples of core" — appearing in the specifications — covered the field logs, and therefore that plaintiff is charged with notice of the information appearing in those documents. Plaintiff knew, as we have found (finding 17), that it was customary to make field logs. From the experience of the joint venturers with the Norfolk and Bull Shoals projects, the plaintiff also knew that the Little Rock District Engineer Office had previously made such logs available and had described them as "logs of these explorations", "logs of the core borings", "records of the drilling, "logs of individual test holes", or "logs of borings." These terms are very close to the somewhat broader phrase used in the present contract, and it is natural to read the new phrase as having at least the coverage of the old. The contract drawings, or contract logs as they have sometimes been called, were already furnished to plaintiff, and therefore could not have been the "results of all borings and tests" which were to be made available on request. The actual physical cores were certainly within that designation, but they could not have been the only materials meant to be covered since the specification expressly declared that they were included within the wider term ...