Jennie-O Foods, Inc. v. United States, 236-76.

• Decision Date: 14 June 1978
• Docket Number: No. 236-76.,236-76.
• Citation: 580 F.2d 400
• Parties: JENNIE-O FOODS, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

580 F.2d 400

JENNIE-O FOODS, INC. v. The UNITED STATES.

No. 236-76.

United States Court of Claims.

June 14, 1978.

COPYRIGHT MATERIAL OMITTED

Robert M. Wattson, Minneapolis, Minn., for plaintiff.

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

Before COWEN, Senior Judge, and DAVIS and KUNZIG, Judges.

OPINION

PER CURIAM:

This case comes before the court on plaintiff's request for review by the court of the recommended decision of Trial Judge Robert J. Yock, filed October 4, 1977, pursuant to Rule 166(c), on plaintiff's motion and defendant's cross-motion for summary judgment, having been submitted to the court on the briefs and oral argument of counsel. 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 plaintiff is not entitled to recover. Accordingly, plaintiff's motion for summary judgment is denied, defendant's cross-motion for summary judgment is granted and plaintiff's petition is dismissed.

OPINION OF TRIAL JUDGE^*

YOCK, Trial Judge:

This contract action involves an appeal from a decision of the Department of Agriculture Board of Contract Appeals (hereinafter the Board).¹ That decision affirmed the contracting officer's assessment of $33,835.10 in liquidated damages after plaintiff failed to make timely deliveries of a large number of processed turkeys in accordance with three supply contracts executed under a U.S. Department of Agriculture commodity support and domestic food consumption program. On cross-motions for summary judgment, the parties seek review of the Board's decision in accordance with the standards of the Wunderlich Act, 41 U.S.C. §§ 321, 322 (1970).

Plaintiff argues that the Board decision was unsupported by substantial evidence and was incorrect as a matter of law in that (1) delays in shipments were beyond its control and without its fault or negligence, thus entitling it to an excusable delay, and (2) the contract's liquidated damage provision for late delivery was unenforceable because it constituted a penalty. Plaintiff waived oral hearing before the Board which decided the case based on the written documents and briefs presented by the parties.

For the reasons outlined herein, the Board's decision is affirmed.

Facts

In July 1972, the U.S. Department of Agriculture (hereinafter USDA) issued Announcement PY-58 as a proposal for the purchase of turkeys. This announcement was in furtherance of the Government's purchase program pursuant to authority contained in section 32 of the Act of August 24, 1935, as amended (7 U.S.C. § 612c) designed in part to remove surplus turkeys from the market and in part to supply food to schools, hospitals and similar public institutions. The turkeys were to be purchased in one of three forms: individually packed, ready-to-cook whole turkeys called Commodity A; bulk-packed ready-to-cook whole turkeys, Commodity B; and cooked cut up and deboned turkey rolls, Commodity C. Purchase units were 70,000 pounds of ready-to-cook turkey; Commodity C was measured according to the yield from 70,000 pounds of whole turkey prior to cutting and deboning. Two delivery units of 35,000 pounds each equalled one purchase unit. PY-58 indicated that the Government would periodically issue invitations to offer that would specify the time for receipt of offers, times for making awards, delivery destinations, and shipping periods.

USDA issued invitations on a weekly basis between the July 1972 announcement and December 6, 1972, when buying was temporarily suspended, resuming again in March 1973. Plaintiff, a Minnesota poultry processor, responded to these weekly invitations, eventually entering into 13 separate supply contracts with USDA during the July 1972 through December 6, 1972 timeframe. During the same time period, USDA also contracted with three other Minnesota turkey processors.

Only three of plaintiff's contracts are at issue in this appeal. On August 23, 1972, USDA accepted plaintiff's offer of August 21, 1972, made in response to USDA Invitation No. 5, for eight purchase units of Commodity C turkeys (Contract No. 12-25-3-4098). On September 27, 1972, USDA accepted plaintiff's September 25 offer made in response to USDA Invitation No. 10, for five purchase units of Commodity A birds and six of Commodity C (Contract No. 12-25-3-4227). On October 4, 1972, USDA agreed to plaintiff's October 2, 1972, offer made in response to USDA Invitation No. 11, for four purchase units of Commodity A turkeys (Contract No. 12-25-3-4248). Any Commodity C purchase was authorized an extension of the specified shipping period by 21 days. Although the contracts required Grade A turkeys, it did authorize the delivery of up to 30 percent Grade B birds at a discount of 3 cents per pound.

Article 38(c) of the Consumer and Marketing Service (C&MS) Purchase Document No. 1, Revision No. 1, of August 1969, which made up part of the contracts involved provided:

Except for defaults of subcontractors, Contractor shall not be liable to USDA for damages sustained by reason of delay in performance or for any excess costs incurred by USDA in procuring elsewhere if the failure to perform arises out of causes beyond the control and without the fault or negligence of Contractor. * * * If the failure to perform is caused by default of a subcontractor and the default arises out of causes beyond the control of both the Contractor and subcontractor and without the fault or negligence of either of them, Contractor shall not be liable for damages sustained by USDA for such delay or for excess costs incurred by USDA in procuring elsewhere unless the supplies to be furnished by the subcontractor were obtainable by Contractor from other sources in sufficient time to permit Contractor to meet the required time of shipment or delivery.

Article 3(c) provides the appropriate definition:

"Causes" as used in the phrase "causes beyond the control and without the fault or negligence" includes, but is not restricted to, acts of God or of the public enemy, acts of the Government (including priority or allocation orders), fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather; however, in every case the failure to perform must be beyond the control and without the fault or negligence of the party to the contract seeking excuse from liability.

Finally, portions of Article 5 are pertinent to the resolution of the excusable delay issue:

* * * Special care should be exercised in the preparation of offers. Offerers must make their own estimates of the facilities and difficulties attending the performance of the proposed contract, including local conditions, uncertainty of weather, availability of materials and containers, and all other contingencies. * * *

Plaintiff specified in each of the three offers that its shipping points would be its plants located in Willmar, Litchfield, or Melrose, Minnesota. But, as plaintiff conceded, only the Litchfield plant had the physical capacity to process the Commodity A individually packed whole turkeys while only the Willmar plant was properly equipped to process the Commodity C turkey rolls. Melrose was unequipped to perform any of the contract work.

Plaintiff was unable to achieve timely performance under any of the three contracts. Contract 4098 required shipment by October 21, 1972. On that date, plaintiff had delivered only 75 percent of the contract goods, final shipment not being completed until November 17, 1972. Under contract 4227, delivery of the Commodity A birds was required by November 15, the Commodity C birds by December 5, 1972. No shipments were made by either date and final delivery did not occur until March 1, 1973. Contract 4248 dictated delivery by November 15. Again, no shipments were made by November 15, with delivery finally being achieved on January 10, 1973. Despite the delays, complete performance under all three contracts was eventually achieved.

Although the parties agree that plaintiff had initially subcontracted for sufficient supplies to fulfill its contractual commitments, plaintiff contends its problems in delivery arose once it began experiencing difficulties obtaining a sufficient supply of healthy turkeys from its chosen suppliers. Its two major suppliers were experiencing disease problems, which in some cases delayed delivery to plaintiff for processing, and in other cases resulted in considerable undergrading or condemnation at the time of processing. Plaintiff indicates this disease problem manifested itself to a serious extent by October 1, 1972. Consequently on October 16, 1972, plaintiff sent a telegram to the contracting officer requesting an unspecified time delay in delivery without liquidated damages to be assessed on contract 4098. The contracting officer responded by telegram dated October 20, 1972, by requesting documentation from a qualified source (veterinarian or poultry grader) as to the extent of the disease problem and the effect on plaintiff's operation. On November 7, 1972, plaintiff in turn responded by requesting a delay in delivery on contracts 4248 and 4227 (in addition apparently to 4098), of 6 weeks to December 29, 1972, without assessment of liquidated damages. Plaintiff indicated in its letter that the disease problem was a matter beyond its control which resulted in delivery delays and in processed birds being "improper in weight, high in condemnation and low in grade." In support of this request, plaintiff attached two letters from its principal suppliers which referred to the diseases of cholera and avian influenza in their turkey flocks with consequent disruption of delivery schedules and a high percentage of undergraded birds being delivered to plaintiff. Both letters were dated October 24,...