Morrison-Knudsen Company v. United States
| Decision Date | 14 May 1965 |
| Docket Number | No. 239-61.,239-61. |
| Citation | 170 Ct. Cl. 757,345 F.2d 833 |
| Parties | MORRISON-KNUDSEN COMPANY, Inc., a Corporation v. The UNITED STATES. |
| Court | U.S. Claims Court |
John W. Gaskins, Washington, D. C., for plaintiff. John A. McWhorter, Paul E. McNulty, and King & King, Washington, D. C., of counsel.
Irving Jaffe, Washington, D. C., with whom was Asst. Atty. Gen. John W. Douglas, for defendant. Thomas J. Lydon and Richard R. Molleur, Washington, D. C., were on the briefs.
Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS and COLLINS, Judges.
This is a suit upon a contract entered into by plaintiff and the Alaska Road Commission of the Department of the Interior, for the grading and drainage of a section of the Richardson Highway, in the State (then Territory) of Alaska. The contract was signed in April 1953, and performance was completed in the spring of 1955, within the term of the contract as extended.
The contract was in the estimated total amount of $2,083,853, and payments were predicated upon the number of units of service or material actually employed by the contractor on the job. The following are taken from the contract schedule of pay items as illustrative:
Pay names, with Unit
Estimated unit bid, price Bid Amount
Item Quantity written in words Price Bid
26(1) 742,000 Cu. Yds. Unclassified 0.73 541,660.00
Excavation for Borrow
at Seventy-three Cents
per cu. yd
27(2) 574,000 Sta. Yds. Overhaul 0.03 17,220.00
(1000' free haul), at
Three Cents per sta. yd
* * *
100(1) 175,000 Cu. Yds. Selected Borrow
Surface Course, at
One and 20/100 Dollars
per cu. yd. 1.20 210,000.00
The contract incorporated by reference Specifications F.P.-41, which to some extent varied the standard Changed Conditions clause and to a lesser extent, the standard Changes clause. The latter clause1 for the purposes of this opinion is treated as if atypical.
The claims set forth in the petition include the following:
1. A claim under the Changes or Changed Conditions clauses, arising as a result of the relocation of borrow pits.
This claim is not before us at this stage of the proceedings.
2. A claim for the increased cost of finishing the subgrade.
In this claim, plaintiff seeks an equitable adjustment under the Changes clause or damages for breach of contract. The claim arises out of and is directly related to the deletion from the contract of pay item 100(1), which called for the placement on the subgrade of a 6-inch layer of selected borrow surface course composed of fine material. Plaintiff contends that defendant compelled it to use borrow material containing rocks over 6 inches in diameter (unsuitable for use in the subgrade) by refusing to authorize payment for the overhaul of suitable material from more remote borrow pits and at the same time required plaintiff to complete the subgrade to lines and grades without reasonable tolerances and in such a manner that the subgrade would accommodate traffic moving at the rate of 50 miles per hour. Plaintiff says that its unit costs were substantially increased as a result of the deletion and the additional requirements imposed upon it by defendant.
3. Claim for increased costs resulting from the shutdown for the winter of 1954-1955.
Plaintiff alleges that, as a result of the disorganization of its operations and the difficulties caused by the relocation of the borrow pits (claim 1), plus the additional work defendant required plaintiff to perform in the construction of the subgrade (claim 2), the completion of the contract was delayed into the year 1955 to plaintiff's damage.
All of plaintiff's claims in issue here were presented to the contracting officer, and after his adverse decision, were appealed to the Interior Department Board of Contract Appeals, hereinafter referred to as "IBCA". The IBCA considered claim (1) as IBCA-50, and claims (2) and (3) as IBCA-36. Both board actions were consolidated for hearing and a combined decision was issued on May 27, 1957. In its decision, the board made detailed findings of fact (in narrative form) and also made important and crucial interpretations of the contract provisions. Some relief was granted plaintiff on claims (1) and (2). Notwithstanding its holding that it had no jurisdiction of the claim for delay incident to the shutdown in the winter, the board also made factual findings on that claim. In an opinion dated March 23, 1959, the IBCA reviewed in detail its previous decision, considered new arguments, and denied the motion for reconsideration.
During the course of pretrial proceedings in this court, the Trial Commissioner issued an order which provided in pertinent part as follows:
Defendant has asked us to review that portion of the Trial Commissioner's order which is quoted above.
The principal issue before us is raised in the review of paragraph 2(a) of the Commissioner's order. The contract appeals board made factual determinations on a claim as to which the board could have granted complete relief under the Changes clause of the contract. However, the predominant issue decided by the board was a question of law, e. g., the interpretation of the contract provisions. In these circumstances, is plaintiff entitled to a de novo trial on the board's factual determinations that are directly related to its decision on a question of law?
This question was reserved in the previous decisions of this court in WPC Enterprises, Incorporated v. United States, 163 Ct.Cl. 1, 323 F.2d 874 (1963), and Utah Construction Mining Co. v. United States, Ct.Cl., 339 F.2d 606, December 11, 1964, among others. In resolving the issue we are called upon to outline a judicial procedure which accords with the letter and spirit of the Wunderlich Act, 41 U.S.C. §§ 321, 322, and the decision of the Supreme Court in United States v. Carlo Bianchi & Co., Inc., 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed. 2d 652 (1963). We are mindful of the fact that there is no one solution of the problem and that it is impossible to announce a rule that can be applied uniformly and without exception in every case in which a related question may be presented. However, the situation now before us arises frequently, and we shall therefore undertake to state the procedure which should generally be followed in such cases in this court.
The terms "scope of trial" and "scope of review" have been used interchangeably and, although the two terms are related, it is essential to distinguish between them. The Wunderlich Act prescribes the scope of review on questions of fact in disputes that arise under the contract; it also sets forth the principles for review of issues of law. However, the act is silent on the scope of trial in the courts. In the Bianchi case, the Supreme Court has instructed us on at least one facet of the scope of trial, i. e., when an issue of fact has been administratively decided on a dispute arising under the contract and within the scope of the Disputes clause, a de novo trial may not be held on the facts thus determined. We believe that efficiency and economy dictate that a complete record be made before the administrative tribunal which, under the contract, is authorized to decide the particular dispute. As a practical matter, questions of law and fact cannot readily be segregated in preparing and presenting evidence at a hearing or trial. The disposition of claims, which the contract authorizes the appeals boards to decide, will be expedited if the parties make a complete record at a board...
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