Morrison-Knudsen Company v. United States
| Decision Date | 14 June 1968 |
| Docket Number | No. 239-61.,239-61. |
| Citation | 397 F.2d 826 |
| Parties | MORRISON-KNUDSEN COMPANY, Inc. v. The UNITED STATES. |
| Court | U.S. Claims Court |
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John A. McWhorter, Washington, D. C., for plaintiff. John W. Gaskins, Washington, D. C., attorney of record. King & King, Washington, D. C., of counsel.
Edward J. Friedlander, Washington, D. C., with whom was Asst. Atty. Gen. Edwin L. Weisl, Jr., for defendant. Edwin J. Reis, Washington, D. C., of counsel.
Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS, SKELTON and NICHOLS, Judges.
This case was referred to then Trial Commissioner Herbert N. Maletz (now a Judge of the United States Customs Court) with directions to make recommendation for conclusions of law under the order of reference and Rule 57(a). The commissioner has done so in an opinion and report filed on June 20, 1967, wherein facts necessary to the opinion and recommended conclusions are stated. Defendant filed exceptions to the commissioner's recommended conclusions, except as to those conclusions relating to the finished tolerances of the subgrade of the road,* and the case has been submitted for review by the court on the briefs of the parties and oral argument of counsel.
With respect to the first claim (based on the relocation of the borrow pits), the court stresses, as did the commissioner, the inclusion in this contract of the mandatory standard Changes article with its broad and general reach. We have repeatedly indicated that, where that (or a comparable) clause is contained in a contract, the court will construe the agreement, to the extent it is fairly possible to do so, so as not to eliminate the standard article or deprive it of most of its ordinary coverage. United Contractors v. United States, 368 F.2d 585, 598, 177 Ct.Cl. 151, 165-166 (1966); Thompson Ramo Wooldridge, Inc. v. United States, 361 F.2d 222, 228, 175 Ct. Cl. 527, 536 (1966); Farnsworth & Chambers Co. v. United States, 346 F.2d 577, 580-581, 171 Ct.Cl. 30, 35 (1965); Jack Stone Co. v. United States, 344 F.2d 370, 374-375, 170 Ct.Cl. 281, 288 (1965); Kaiser Industries Corp. v. United States, 340 F.2d 322, 329-330, 169 Ct.Cl. 310, 323-324 (1965); Fehlhaber Corp. v. United States, 151 F.Supp. 817, 825, 138 Ct.Cl. 571, 584 (1957), cert. denied, 355 U.S. 877, 78 S.Ct. 141, 2 L.Ed.2d 108; Loftis v. United States, 76 F.Supp. 816, 825-826, 110 Ct.Cl. 551, 627-629 (1948); Pfotzer v. United States, 77 F.Supp. 390, 399, 400, 111 Ct.Cl. 184, 226, cert. denied, 335 U.S. 885, 69 S.Ct. 237, 93 L.Ed. 424 (1948). The defendant says that here it attempted to cast the whole risk of borrow pit location on the contractor, but if that was its purpose it should have sought permission to delete the mandatory Changes article or to substitute a more limited form of the clause. So long as the Changes article in its normal form is included in a contract, the court is justified in reading the specifications, if reasonably possible, to harmonize and not conflict with that standard clause. That is what the commissioner has done in this case, and we think correctly so.
Since the court is in agreement with the opinion and recommended conclusions of the trial commissioner, with minor modifications, it hereby adopts the same, as modified and as supplemented by the preceding paragraph, as the basis for its judgment in this case, as hereinafter set forth.
As to the claim based on relocation of borrow pits (treated as Claim I in the opinion), plaintiff is entitled to an equitable adjustment under the Changes clause (on its own behalf and on behalf of its subcontractor) for all the increased costs resulting from the changes in question, which amount (to prevent double recovery) is to be reduced by $16,097 for the compensation plaintiff has already received for the overrun in overhaul. Judgment to this extent is entered for plaintiff with the amount of recovery to be determined in the first instance (if the parties do not agree) by the Board of Contract Appeals of the Department of the Interior.
As to the claim related (in part) to deletion of selected borrow surface course (treated as Claim II, Item 1 in the opinion), plaintiff is entitled to an equitable adjustment under the Changes clause (on its own behalf and on behalf of its subcontractor Edwards) for the additional costs resulting from the directions of the commission which required use of oversized materials in constructing the top 12 inches of the subgrade. Judgment to this extent is entered for plaintiff and in the absence of agreement by the parties, the amount of recovery will be determined in the first instance by the Board of Contract Appeals of the Department of the Interior.
As to the aspect of plaintiff's claim which is treated as Claim II, Item 2 in the opinion, it is concluded that plaintiff is not entitled to recover and the petition relating to recovery therefor is dismissed.
As to the claim for increased costs resulting from shut-down for the winter of 1954-55 (treated as Claim III in the opinion), plaintiff is entitled to recover for the salary paid to the project superintendent during the shut-down period (plus payroll taxes and insurance thereon), the labor and equipment costs it incurred in demobilizing its equipment spread at the end of the 1954 season and remobilizing it at the start of the 1955 construction season, and the ownership expense of maintaining in storage during the shut-down period the specific items of equipment required to complete the project. Judgment to this extent is entered for plaintiff with the amount of recovery to be determined pursuant to Rule 47(c).
As to those two portions or aspects of plaintiff's claims treated as Claim I and Claim II, Item 1 in the opinion, proceedings are suspended for a period of 90 days from the date hereof in order that the case may be returned to the Board of Contract Appeals for the Department of the Interior for determination in the first instance of the amount of recovery (if the parties do not agree thereon). Plaintiff is to comply with appropriate provisions of the General Order of April 1, 1968, implementing Rule 100 in advising the court of the status of such proceedings.
Commissioner Maletz' opinion, with minor modifications by the court, is as follows:
OPINION OF COMMISSIONER
MALETZ, Commissioner:
This is a suit on a contract between plaintiff and the Alaska Road Commission of the Department of the Interior (hereafter referred to as the commission) for the grading, drainage and related construction work required to improve a 45-mile segment of an existing roadway which extended from Valdez to Fairbanks in the then Territory of Alaska. The 45-mile segment, otherwise identified as section G of the Richardson Highway, extended from milepost 35.9 to milepost 82.1 and was located about 250 miles from Anchorage. The consideration for performance of the work was $2,083,853, based upon unit prices for estimated quantities of the various types of required construction work.
The contract was signed in April 1953 and was completed in the spring of 1955 within the contractual time limit as extended. It called for the construction of highway improvements from excavated and borrow material1 and the placing of a subgrade. Suitable material was to be conserved for constructing the top portion of the subgrade and no rocks or hard lumps that could not readily be broken up into pieces not over six inches in diameter were to be placed in the upper 12-inch layer. Originally the contract also called for placing on top of the subgrade a selected borrow surface course consisting of a six-inch thick layer of finer material not greater than one and one-half inches in diameter.2 However, in April 1954, about a year after the contract was signed, the selected borrow surface course was deleted by the commission and all preparatory work incident thereto ordered halted because of serious overruns in probable costs.
Under the contract, the contractor was not to be paid directly for preparing the subgrade or the selected borrow surface course. These items, instead, were subsidiary obligations of the contractor who was paid on the basis of the number of units of service or material actually employed by the contractor on the job. This is illustrated by the following excerpts from the contract schedule showing the estimated quantities of major items of work to be performed, their identifying numbers, the unit prices bid thereon by plaintiff, and the estimated cost of each item:
Estimated Unit bid Amount
Item No. quantity Description price bid
24(2)-1 ______ 227,000 Cu. Yds., Unclassified Excavation, $1.40 $317,800.00
Unit A
24(2)-2 ______ 441,000 Cu. Yds., Unclassified Excavation, .70 308,700.00
Unit B
24(2)-3 ______ 103,000 Cu. Yds., Unclassified Excavation, 1.00 103,000.00
Unit C
26(1) 3 ______ 742,000 Excavation for Borrow __________ .73 541,660.00
28(2) 4 ______ 345,000 Cu. Yd., Mi. Special Overhaul of .27 93,150.00
Borrow (1000' free haul)
100(1) ______ 175,000 Cu. Yds., Selected Borrow Surface 1.20 210,000.00
Course
310(1) ______ 11,500 Cu. Yds., Loose Riprap __________ 9.00 103,500.00
Three claims are involved in the present action. In the first claim plaintiff seeks review of a decision by the Interior Department Board of Contract Appeals (IBCA-50) denying (in major part) its request for an equitable adjustment under the Changed Conditions or Changes clause of the contract arising as a result of the relocation of borrow pits. As to this claim, plaintiff contends that during performance of the work it and its subcontractor encountered subsurface and/or latent conditions in borrow...
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