Hageny v. United States

• Decision Date: 25 January 1978
• Docket Number: No. 12-73.,12-73.
• Parties: Fred HAGENY v. The UNITED STATES.
• Court: U.S. Claims Court

570 F.2d 924

Fred HAGENY v. The UNITED STATES.

No. 12-73.

United States Court of Claims.

January 25, 1978.

Earl A. Charlton, Milwaukee, Wis., attorney of record, for plaintiff; Charlton, Gronowski, Welcenbach & Stanich, Milwaukee, Wis., of counsel.

Ray Goddard, Washington, D.C., with whom was Asst. Atty. Gen., Barbara Allen Babcock, Washington, D.C., for defendant.

Before COWEN, Senior Judge, and NICHOLS and BENNETT, Judges.

OPINION

PER CURIAM:

This case comes before the court on defendant's exceptions to the recommended decision of Trial Judge Thomas J. Lydon, filed March 14, 1977, pursuant to rule 134(h), having been submitted to the court on oral argument of counsel and the briefs of the parties. Upon consideration thereof, since the court agrees with the trial judge's recommended decision, as hereinafter set forth,^* it hereby affirms and adopts the decision as the basis for its judgment in this case.^** It is, therefore, concluded that defendant is entitled to recover on its first counterclaim the sum of $3,488.84 and judgment is entered for defendant against plaintiff in that amount. Defendant is not entitled to recover on its second counterclaim and special plea in fraud and they are hereby dismissed. Further, implementing the court's judgment order of January 9, 1976, entered in this case, it is concluded that plaintiff is not entitled to recover on the claims asserted in his petition and the petition is hereby dismissed.

OPINION OF TRIAL JUDGE

LYDON, Trial Judge:

Plaintiff, Fred Hageny, filed a petition in this court seeking to recover damages attributable to the suspension of a contract he had with the Forest Service, Department of Agriculture. Under this contract, plaintiff purchased the right to cut and remove some 1,390,500 board feet of timber from designated trees in the Eagle River Ranger District, Nicolet National Forest, Vilas County, Wisconsin. The suspension of plaintiff's right to continue work on the contract was based on his alleged "unauthorized tree marking" during the course of contract performance.

In its amended answer to the petition, defendant asserted two counterclaims and a special plea in fraud. Under its first counterclaim, defendant sought to recover $3,488.84, based on a provision in the contract, because of plaintiff's unauthorized cutting and removal of 278 trees during contract performance. This figure represented the double stumpage value of the 278 trees. Under its second counterclaim, defendant sought to recover $556,000 ($2,000 × 278 trees) and double damages of $6,977.68 ($3,488.84 × 2) on the authority of the False Claims Act, 31 U.S.C. §§ 231-35. In support of its second counterclaim, defendant alleged that "Fred Hageny and divers other persons, combined and conspired to defraud the Government of the United States by illegally marking and/or cutting and removing 278 trees and attempted to perpetrate 278 separate frauds and false claims knowing the same to be false, fictitious and fraudulent." In its special plea in fraud, defendant asked the court to declare the claims advanced by plaintiff in his petition as forfeited to the United States, pursuant to the provisions of 28 U.S.C. § 2514 because plaintiff "has practiced, or attempted to practice, fraud against the United States in the presentation * * * of its claims in its petition."

By order dated January 9, 1976, on a Rule To Show Cause, the court concluded, as a matter of law, that plaintiff was not entitled to recover on his petition. Defendant's two counterclaims were remanded to the trial judge for trial and subsequent findings of fact, conclusions of law, and opinion thereon. Dismissal of plaintiff's petition was deferred, pursuant to Rule 102(d), until final action was taken on the counterclaims. With the denial of recovery to plaintiff on the claims advanced in his petition, and the dismissal herein of said petition, defendant's special plea in fraud seeking forfeiture of said claims is rendered moot. Accordingly, defendant's special plea in fraud is no longer considered viable and is herein dismissed.

Consideration of defendant's first and second counterclaims has been largely a factual inquiry. Resolution of the questions presented by these counterclaims has been governed in large part by defendant's ability, or inability, to meet the burden of proof cast upon it by the nature of the counterclaims it pleaded. On the trial record, it has been concluded that defendant, by a preponderance of the evidence, met its burden of establishing a right to recover from plaintiff the sum of $3,488.84 under its first counterclaim. On the other hand, defendant has failed to meet its burden of establishing, by clear and convincing evidence, that plaintiff violated the False Claims Act, supra, so as to justify recovery under its second counterclaim. The reasons for these conclusions are hereinafter set forth in this opinion.

I

In 1969, and for some time prior thereto, plaintiff, operating in an individual capacity, had been in the business of logging timber.¹ He had logged timber under six different contracts with the Forest Service prior to November 1969. Four of these contracts were clear-cut timber sale contracts and the other two contracts were selective-cut timber sale contracts. Under a clear-cut timber sale contract, a contractor purchases the right to cut and remove all the timber located within the sale area. Under a selective-cut timber sale contract, a contractor purchases the right to cut and remove only selected and designated timber within the sale area. On this record, it is concluded that plaintiff satisfactorily performed all timber sale contracts he had with the Forest Service prior to November 1969.

The Nicolet National Forest was managed and protected by the Forest Service, Department of Agriculture. The Forest itself was divided into Ranger Districts. Each District was supervised by a Forest Ranger. At all times material herein, Gary H. Keppen (Keppen) was the Forest Ranger in charge of the Eagle River Ranger District, which District was located in the northeast section of Wisconsin. Keppen's duties included, inter alia, the preparation of Information For Bids (IFB) relative to sale of Forest timber and the administration of timber sale contracts.

Sometime in 1968, an area of roughly 483 acres in the Eagle Lake Ranger District was designated by the Forest Service as the site for a prospective timber sale. This sale area was broken down into four Payment Units. The perimeter of the sale area and the perimeters of the Payment Units were identified by blue paint markings on perimeter trees. This timber sale was known to all concerned as the Kentuck Lake Sale. It was to be a selective-cut timber sale.

In order to obtain information necessary for the preparation of an IFB on the Kentuck Lake Sale, Keppen cruised the sale area. Thereafter, he took a crew of Forest Service employees into the sale area and marked those trees which were to be cut by the successful bidder. Appropriate data was taken relative to each marked tree which subsequently was translated into meaningful information on the IFB on which bidders would act. The trees selected to be cut and removed from the sale area were marked by the Forest Service crew with a special orange paint in two places, i.e., at eye level (roughly diameter breast high (DBH)) and at the stump. This orange paint was manufactured especially for the Forest Service by the Nelson Paint Company, Iron Mountain, Michigan, and was not available for sale to the general public. The paint contained certain tracer elements which would surface when the paint was subjected to analysis tests. Characteristically, this paint had a dull orange appearance. Use of this special orange paint enabled the Forest Service to verify whether or not trees marked for cutting and removal in the Nicolet National Forest had been properly marked by Forest Service personnel or improperly marked by other persons. The Forest Service had been plagued by improper tree marking in the Nicolet National Forest and use of this special orange paint was one attempt to combat this problem.

The IFB on the Kentuck Lake Sale produced two bids. Since plaintiff's bid was the high one, he was awarded a contract on November 25, 1969, wherein for a total price of $31,426.50 he was given the right to cut designated trees, i.e., trees "marked with orange paint at DBH and on the stump" within the confines of the sale area.² Under the contract, plaintiff was to pay the Forest Service the purchase price applicable to each Payment Unit prior to cutting and removing the designated trees on said Unit. When all the designated trees were cut and removed from that Payment Unit and the logging work thereon was approved by the Forest Ranger, the next Payment Unit would become available to the contractor, and upon payment of the purchase price applicable thereto he would commence cutting and removing designated trees from this Payment Unit. The contract work sequence was as follows: Payment Unit No. 1 (Purchase Price — $10,727.50, comprising about 170 acres); Payment Unit No. 4 (Purchase Price — $4,428.00, comprising about 67 acres); Payment Unit No. 2 (Purchase Price — $9,411.50, comprising about 148 acres); Payment Unit No. 3 (Purchase Price — $6.859.50, comprising about 85 acres).

Around the first of July 1970, plaintiff paid the Forest Service the purchase price applicable to Payment Unit No. 1 and commenced logging in said area. After completing logging activities in Payment Unit No. 1, plaintiff so advised Keppen. Keppen thereafter went about inspecting the logging operations in this Unit. Before giving his approval as to contract performance in this Unit, Keppen was alert to insure that all marked trees were cut; that any unmarked trees that were cut were recorded in a scale book Keppen maintained together with appropriate data which would enable determination at a later time of the value of said trees;...