Southwest Engineering Company v. United States

• Decision Date: 01 March 1965
• Docket Number: No. 17795.,17795.
• Citation: 341 F.2d 998
• Parties: SOUTHWEST ENGINEERING COMPANY, a Missouri Corporation, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

341 F.2d 998 (1965)

SOUTHWEST ENGINEERING COMPANY, a Missouri Corporation, Appellant, v. UNITED STATES of America, Appellee.

No. 17795.

United States Court of Appeals Eighth Circuit.

March 1, 1965.

John C. Crow, of Lincoln, Haseltine, Keet, Forehand & Springer, Springfield, Mo., made argument for the appellant and filed brief with Horace S. Haseltine, of Lincoln, Haseltine, Keet, Forehand & Springer, Springfield, Mo.

William A. Kitchen, Asst. U. S. Atty., Kansas City, Mo., made argument for the appellee and filed brief with F. Russell Millin, U. S. Atty., Kansas City, Mo.

Before VAN OOSTERHOUT, BLACKMUN and MEHAFFY, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

Plaintiff Southwest Engineering Company, hereinafter called Southwest, has appealed from summary judgment dismissing its complaint against the United States for recovery of $8,300 withheld as liquidated damages for delay in performance on four construction contracts entered into between Southwest and the United States.

This appeal is before us upon an agreed statement of the record. Four contracts entered into between Southwest and the Government called for the construction by Southwest of three V. O. R. radio facilities at Readsville, Blackwater, and Maryland Heights, Missouri, and for a high intensity approach light lane at Lambert Field, Missouri. Each of the contracts fixed a completion date and provided for liquidated damages on a per diem basis for each day's delay beyond the agreed completion date. The agreed liquidated damage on the Lambert Field project was $100 per day, and $50 per day on each of the other projects. Each contract contained the general provisions set forth in Standard Form 23-A (March 1953) prescribed by the General Services Administration, including, among others, a provision that plaintiff was not to be charged with delays "due to unforeseeable causes beyond the control and without the fault or negligence of the Contractor, including, but not restricted to, acts of God, or of the public enemy, acts of the Government, in either its sovereign or contractual capacity, acts of another contractor in the performance of a contract with the Government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather, or delays of subcontractors or suppliers due to such causes." Within ten days from the beginning of any such delay, plaintiff was to notify the contracting officer in writing of the causes of delay. The contracting officer was to ascertain the facts and extent of the delay, and extend the time for completing the work when "in his judgment the findings of fact justify such an extension." His findings of fact were to be final, subject only to appeal to the "head of the department."

The Blackwater project was completed 97 days late. Plaintiff requested time extensions, alleging the delay resulted from causes for which it was not responsible, including acts and omissions of defendant. Administrative appeals resulted in extensions by the C.A.A. because of delays by the Government, and, later on, a remission of an additional $4,200 liquidated damages by the Comptroller General under the authority of 41 U.S.C. § 256a, because of late delivery of Government-furnished material. This left $550 (11 days) withheld as liquidated damages on the Blackwater project.

The Readsville project was completed 84 days late. Administrative appeals resulted in a three-days extension, leaving liquidated damages for 81 days totalling $4,050.

The Maryland Heights project was completed 48 days late. On administrative appeal, a fourteen-days extension was allowed resulting in liquidated damages of $1,700 for 34 days delay.

The Lambert Field project was completed 54 days late, 34 days extension was granted, leaving $2,000 as liquidated damages for 20 days delay.

The parties stipulated "although each project was not completed until after the date prescribed in its contract, defendant suffered no actual damage on any project." The Government withheld the liquidated damages for delays provided in the contracts after giving credit for the extensions of time administratively allowed. This suit by Southwest is for recovery of the $8,300 so withheld as liquidated damages. The Government counterclaimed for the liquidated damages here involved. Plaintiff by reply admitted the projects were not completed within the time limits as administratively extended but denied the Government was entitled to liquidated damages because the Government caused and contributed to the delays and because the Government suffered no actual damages.

The trial court determined that the Government was entitled to liquidated damages in the amount claimed, offset such damages which equaled the amount of payments withheld, sustained the motion for summary judgment, and dismissed the complaint.

Southwest as a basis for reversal urges the trial court's decision was induced by two erroneous views of the law, either of which requires reversal. The points relied upon for reversal are thus stated:

1. "The court erred in awarding the Government liquidated damages because the Government, in order to enforce a contract provision for liquidated damages for delay, must not cause or contribute to such delay, and if the Government does cause or contribute to such delay, it cannot assess liquidated damages."

2. "The court erred in awarding the Government liquidated damages because a contract provision for liquidated damages is clearly a penalty and not enforceable where the party seeking to enforce it formally admits he sustained no actual damage."

At the outset, we observe that the contracts here involved were entered into pursuant to federal law by an authorized federal agency. Federal law controls in the construction and determination of rights under federal contracts. Priebe & Sons, Inc. v. United States, 332 U.S. 407, 411, 68 S.Ct. 123, 92 L.Ed. 32; Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838; United States v. Le Roy Dyal Co., 3 Cir., 186 F.2d 460, 461.

In the Priebe case, the Supreme Court states:

"It is customary, where Congress has not adopted a different standard, to apply to the construction of government contracts the principles of general contract law. United States v. Standard Rice Co., 323 U.S. 106, 111, 65 S.Ct. 145, 147, 89 L.Ed. 104 and cases cited. That has been done in other cases where the Court has considered the enforceability of `liquidated damages\' provisions in government contracts." 332 U.S. 407, 411, 68 S.Ct. 123, 125.

Southwest's first point, to the effect that the Government is not entitled to liquidated damages because it caused or contributed to the delay, is without merit. It is true that in the administratively appeals a finding was made that some of the delay was caused by the Government and that some other delays were excusable. No damages were withheld for excusable delays as administratively determined. In rejecting a similar contention, the Supreme Court in Robinson v. United States, 261 U.S. 486, 488, 43 S.Ct. 420, 421, 67 L.Ed. 760, states:

"The fact that the government\'s action caused some of the delay presents no legal ground for denying it compensation for loss suffered wholly through the fault of the contractor. Since the contractor agreed to pay at a specified rate for each day\'s delay not caused by the government, it was clearly the intention that it should pay for some days\' delay at that rate, even if it were relieved from paying for other days, because of the government\'s action. * *"

See Wells and Wells, Inc. v. United States, 8 Cir., 269 F.2d 412, 415; Union Paving Co. v. United States, 115 F.Supp. 179, 126 Ct.Cl. 478.

United States v. United Eng'r & Contracting Co., 234 U.S. 236, 34 S.Ct. 843, 58 L.Ed. 1294, relied upon heavily by Southwest, is clearly distinguishable as pointed out by the Supreme Court in Robinson, where it said:

"The case is wholly unlike United States v. United Engineering Co., 234 U.S. 236 34 Sup.Ct. 843, 58 L. Ed. 1294 upon which claimant relies. The question there was one of construction. The lower court found, as a fact that, but for the government\'s action, the work would have been completed within the contract period, and this court construed the provision for liquidated damages as not applicable to such case. Here the question is not properly one of construction." 261 U.S. 486, 489, 43 S.Ct. 420, 421.

The trial court found upon review of the administrative record that the findings there made with respect to excusable delays were supported by substantial evidence and were entitled to be upheld upon the basis of the teaching of United States v. Carlo Bianchi & Co., 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652. We agree.

Southwest's second point in substance is that the parties' stipulation that the Government suffered no actual damage bars any recovery of liquidated damages. Such stipulation was made. It relates to the situation as it existed at the time of the completion of the work. The stipulation does not go to the extent of agreeing that the parties at the time of contracting did not reasonably contemplate that damages would flow from a delay in performance.

The contracts...