Morrison-Knudsen Company v. United States

• Decision Date: 14 May 1965
• Docket Number: No. 229-60.,229-60.
• Citation: 170 Ct. Cl. 712,345 F.2d 535
• Parties: MORRISON-KNUDSEN COMPANY, Inc. v. The UNITED STATES.
• Court: U.S. Claims Court

170 Ct. Cl. 712, 345 F.2d 535 (1965)

MORRISON-KNUDSEN COMPANY, Inc. v. The UNITED STATES.

No. 229-60.

United States Court of Claims.

Decided May 14, 1965.

Donald McL. Davidson, Seattle, Wash., for plaintiff. W. H. Ferguson and Ferguson & Burdell, Seattle, Wash., were on the brief.

Edwin J. Reis, Washington, D. C., with whom was Asst. Atty. Gen., John W. Douglas, for defendant.

Before LARAMORE, Acting Chief Judge, DURFEE, DAVIS and COLLINS, Judges, and WHITAKER, Senior Judge.

PER CURIAM:

Under the order of reference and the order of the court dated April 12, 1963, this case was referred to Trial Commissioner Mastin G. White with directions to make findings of fact and recommendation for a conclusion of law. The commissioner has done so in an opinion and report filed on April 2, 1964. Exceptions to the commissioner's report and briefs were filed by the parties and the case was submitted to the court on oral argument of counsel. Since the court is in agreement with the findings, opinion and recommended conclusion of law of the trial commissioner, as hereinafter set forth, it hereby adopts the same as the basis for its judgment in this case. Therefore, plaintiff is entitled to recover and judgment is entered for plaintiff in the sum of $1,609. Plaintiff's motion to strike defendant's brief and for costs is denied.

OPINION OF COMMISSIONER

Breach of Contract

The plaintiff was the successful bidder on, and subsequently performed, a large construction contract at the Ladd Air Force Base in Alaska. The contract, involving both unit-price items and fixed-cost items, was entered into between the plaintiff and the defendant on October 14, 1953. It was administered for the defendant by the Corps of Engineers, United States Army.

One of the unit-price items, designated as Item No. 1, related to structural excavation and covered an estimated quantity of 35,500 cubic yards of such excavation. Approximately 30 percent of this structural excavation was to be done at two sites, which are involved in the present action. The excavation at one of these sites was to be done in preparation for the installation of works designated as Increments L-3 and L-4; and the excavation at the other site was for works designated as Increments L-5 and L-6. The two sites were located approximately 1,750 feet apart. The excavation at each site was to be about 25 feet deep, 130 feet long, and 30 feet wide at the widest point.

The plaintiff contends — and the evidence shows — that in connection with the issuance on July 29, 1953, of the invitation for bids on the proposed contract, the defendant made to prospective bidders, including the plaintiff, misrepresentations concerning the subsurface conditions that had been encountered in previously drilling two 30-foot test borings at the respective excavation sites which are involved in the present litigation. The misrepresentations related to the purported absence of permafrost within the 30-foot depth of each of the two test borings.

The Ladd Air Force Base is located on the flood plain of the Tanana River in the vicinity of Fairbanks, Alaska. The ground in this area, down to a depth of approximately 400 feet from the surface, consists of alluvial or stream-laid deposits in the form of strata that are made up of silt, sand, or gravel, or mixtures of these materials.

Another geographical and geological feature of great significance from the standpoint of the present litigation is that the Ladd Air Force Base is located within the discontinuous permafrost zone. Permafrost is ground that is permanently frozen (i. e., its temperature has been below zero degrees centigrade for 2 years or more). There are three permafrost zones — the continuous permafrost zone, the discontinuous permafrost zone, and the sporadic permafrost zone. In the continuous permafrost zone, permafrost underlies the surface of the ground everywhere; and there is certainty that anyone drilling or excavating below the surface to a substantial depth at any point will encounter permafrost. In the discontinuous permafrost zone, permafrost underlies the surface of the ground at most places but not everywhere; and there is better than a 50 percent probability that anyone drilling or excavating below the surface to a substantial depth at any point, without previous subsurface exploration, will encounter permafrost. In the sporadic permafrost zone, permafrost underlies the surface of the ground in some places but not in most places; and there is less than a 50 percent chance that anyone drilling or excavating below the surface to a substantial depth at any point, without previous subsurface exploration, will encounter permafrost.

Permafrost, when encountered in the vicinity of the Ladd Air Force Base, is sometimes in the form of a stratum and sometimes in the form of a pocket.¹ It is much more difficult and expensive to excavate than the unfrozen alluvial soils of the area.

Permafrost is to be distinguished from seasonal frost, which is ground that is frozen at and somewhat below the surface in the cold-weather months, but does not remain permanently frozen.

In connection with the invitation for bids leading up to the contract that is involved in this case, the defendant furnished to prospective bidders, including the plaintiff, written data in the form of profile drawings and related legends that purported to show the results of 33 test borings that had been accomplished by the defendant for the purpose of ascertaining subsurface conditions at the Ladd Air Force Base. The two test borings with which we are primarily concerned were designated as drill holes 260 and 261.

The written data relative to drill hole 260 furnished by the defendant to the plaintiff and other prospective bidders indicated (among other things) that this hole had been drilled on February 2, 1953; that it had been drilled at a point on the southeastern edge of the prospective excavation limits for L-3 and L-4; that it had gone to a depth of 30 feet from the surface of the ground; and that the ground was unfrozen throughout the 30-foot depth of the hole (i. e., that no seasonal frost or permafrost was encountered).

The written data relative to drill hole 261 furnished by the defendant to prospective bidders indicated (among other things) that this hole had been drilled on February 10, 1953; that it had been located within the limits, and at the east end, of the prospective excavation for L-5 and L-6; that it had gone to a depth of 30 feet; and that the ground was unfrozen throughout the 30-foot depth of the hole.

The representations by the defendant to prospective bidders that only unfrozen ground had been encountered within the respective 30-foot depths of drill holes 260 and 261 were untrue. Actually, in drilling hole 260, permafrost had been encountered at a depth of 12 feet below the surface of the ground, and the permafrost extended from the 12-foot level down to the bottom of the hole at a depth of 30 feet. Similarly, in drilling hole 261, the defendant had encountered permafrost at a depth of 7 feet below the surface of the ground, and the permafrost had extended down to the bottom of this hole at a depth of 30 feet.²

The work of excavating at the site of Increments L-3 and L-4 was begun on June 3, 1954, and such work was begun at the site of Increments L-5 and L-6 on June 5, 1954. Several days later, as the excavation work was in progress, permafrost was encountered at each of the two sites.³ The permafrost in the excavation for L-5 and L-6 was encountered at an average depth of about 7 feet below the surface of the ground; and, as it was later discovered, the permafrost extended to the bottom of this excavation. The permafrost in the excavation for L-3 and L-4 was encountered at an average depth of about 10 feet below the surface of the ground; and it, too, extended downward to the bottom of the excavation.

When permafrost was first encountered in excavating at the two sites mentioned in the preceding paragraph, an effort was made to cope with the permafrost by using the equipment that was then working in each excavation, i. e., a bulldozer and ripper and a dragline. An attempt was made to rip the permafrost, assemble the broken pieces with a bulldozer, and then remove this material with a dragline. Progress was so slow, however, that it was necessary to shift to the process of blasting the permafrost. Preparations for the blasting were begun on June 10, 1954. This involved the assembling of additional equipment, such as drills, compressors, trucks, and powder magazines, and also additional manpower. The preparations had been completed by June 14, 1954, and blasting was begun on that date. Thereafter, blasting was used exclusively as the means of breaking up the permafrost in the two excavations, until a point some 2 or 3 feet above the bottom of each excavation was reached. The holes for the blasting were drilled in the permafrost to a depth of 5 or 6 feet; and then, after each "shot" in an excavation, a bulldozer and a dragline were moved to the site for the purpose of assembling and removing the pieces of permafrost broken by the blast. Because of the proximity of an aircraft runway to each excavation, the defendant regulated the timing of, and the amount of powder used in, the various "shots," so as to avoid interference with air traffic. This caused delay in connection with the excavation of the permafrost. The last 2 or 3 feet of permafrost in each excavation was ripped loose and then removed, instead of being blasted.

A total of approximately 5,964 cubic yards of permafrost was removed from the two excavations with which we are concerned. The reasonable extra cost of removing the permafrost, over and above the reasonable cost of removing an equivalent quantity of unfrozen ground at the two sites, amounted to approximately $4.20 per cubic yard, and thus totaled approximately $25,049.

The plaintiff, in submitting its bid and in...