United States v. Bissett-Berman Corporation

• Decision Date: 07 June 1973
• Docket Number: No. 71-1658.,71-1658.
• Citation: 481 F.2d 764
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. BISSETT-BERMAN CORPORATION, Pike Corporation of America, Western Offshore Drilling and Exploration Company and M/V NESCO I, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

481 F.2d 764 (1973)

UNITED STATES of America, Plaintiff-Appellant, v. BISSETT-BERMAN CORPORATION, Pike Corporation of America, Western Offshore Drilling and Exploration Company and M/V NESCO I, Defendants-Appellees.

No. 71-1658.

United States Court of Appeals, Ninth Circuit.

June 7, 1973.

John F. Meadows (argued), Admiralty and Shipping Section, Dept. of Justice, San Francisco, Cal., Robert L. Meyer, U. S. Atty., Clarke A. Knicely, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff-appellant.

Gerald N. Gordon (argued), of Paul & Gordon, Lawrence D. Bradley, Jr. (argued), B. H. Dorman, Jr., of Lillick, McHose, Wheat, Adams & Charles, Los Angeles, Cal., for defendants-appellees.

Before DUNIWAY and TRASK, Circuit Judges, and TALBOT SMITH,^* District Judge.

TRASK, Circuit Judge:

Summary judgments were entered against the United States and in favor of the defendant, Bissett-Berman Corporation, and others in actions filed by the United States as plaintiff, under 28 U. S.C. § 1345, to recover damages for breach of contract to make certain marine installations. The United States appeals from those summary judgments for the defendants. We affirm.

On June 11, 1964, the Navy Electronics Laboratory (NEL) invited a proposal for the design, fabrication, installation at sea, and operational testing in situ of what was described as a "Deep-Moored Vertical Hydrophone Array with Radio Telemetry Line." The invitation contemplated a proposal to award two contracts to the same contractor. First, a research and development contract covering the design, fabrication and interim testing of the array; and second, a time and material contract covering the installation and checkout at installation sites.

Bissett-Berman Corporation (BBC) was awarded both contracts. The manufacturing contract was completed and after dockside checkout was approved, BBC proceeded with the installation of the system at sea at a point approximately 18 miles off Point Arena, California. For this purpose BBC chartered a ship, the M/V Nesco I from Western Offshore Drilling & Exploration Company (WODECO), a division of Pike Corporation of America. The system was installed on or about April 27, 1967. In place it consisted of surface marker buoys to which was attached a polypropylene line leading to a subsurface buoy some 1,000 feet below the surface. From that point an armored cable descended 5,000 feet more to the bottom. Although anchored at the bottom, the cable thereafter extended 7,000 feet along the bottom to a point at which it was again anchored. It then was brought to the surface where it attached to the transmission buoy. The hydrophone array was attached to the descending cable. Thus, on the surface the marker buoys and the transmission buoy were 7,000 feet apart although connected by a continuous line and cable beneath the surface.

Approximately 30 days after initial installation the transmission buoy broke loose and the cable to which it was attached dropped to the floor of the ocean. This buoy was recovered, repaired, and BBC was instructed by the United States to reinstall the system. The plan was to recover the system by locating the two marker buoys, which established the other end of the system, and by pulling these on the ship and thereafter the cable to which they were attached. This procedure would result in the recovery of the hydrophone array and the rest of the cable to which the transmission buoy had been attached at the opposite end of the installation. The transmission buoy would then be reattached to its end of the system and the apparatus replaced in the sea.

The marker buoys on the surface were located and pulled aboard. Because it was difficult to haul in the line, Mr. Wyborny, the BBC employee in charge of the operation, instructed the captain by hand signal to back the ship so as to create slack in the line. Too much slack was created quickly however permitting the polypropylene line to become entangled in the propellers. During an attempt to splice the line around the tangle, it parted and all was lost beneath the surface.

As a result of the loss of the hydrophone array, the United States filed this action asserting several claims against BBC. The first was for breach of the contracts claiming damages; second, for breach of warranty that the system was free from defects and conformed to specifications; third, for the amount of insurance coverage procured by BBC to protect and indemnify BBC against liability for loss or damage to government property in BBC's possession or control; fourth, for gross negligence tantamount to willful misconduct or bad faith on the part of BBC's representatives in their handling of government property.¹ The total amount sought was $742,561.50.

In addition, and in the same action below, the United States asserted several claims in separate causes of action against Pike, owner of Nesco I, and WODECO, operator of Nesco I, in personam and against Nesco I in rem. The first cause of action was for damage caused by the negligent navigation of the vessel resulting in the fouling of the polypropylene line and the loss of the array; the second was for damage caused by negligence of the crew.

Finally, the United States added a fifth and sixth cause of action against BBC sounding in contract, asserting that to the extent that BBC had failed to provide in its subcontracts with the divers, (fifth cause of action), and with the vessel and its owners, (sixth cause of action), for liability of the subcontractors to the government and had by subcontract relieved the subcontractors of liability for loss and destruction of the array, BBC was liable to the United States. In support of this theory, the United States relied upon a paragraph of the Pike and WODECO subcontract which provided that BBC personnel aboard the ship would be in complete charge of the installation thus making the Pike and WODECO personnel on the ship "borrowed servants" of BBC and exonerating them from direct liability according to the government's theory.

Under Rule 56(c) Fed.R.Civ.P. a summary judgment shall be rendered forthwith,

"if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

The affidavits shall be made on personal knowledge,

"shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Rule 56(e).

Thus, the district court does not try issues of fact. Its function is to determine whether an issue of fact exists which might be material to the determination of an issue in the case. On review it is our function to determine "whether there is any genuine issue of material fact underlying the adjudication, and, if not, whether the substantive law was correctly applied." 6 Moore's Federal Practice (2d ed.) ¶ 56.27 1 at 2973; Vickery v. Fisher Governor Co., 417 F.2d 466 (9th Cir. 1969).

The issue upon which the district court decided the case in favor of BBC was that all of the claims asserted by the United States against BBC in the first four causes of the First Amended Complaint were barred by a Stipulation of Settlement executed between the parties on December 22, 1969.

After the loss of the array and before the action was filed in the district court, the contracting officer of the government directed BBC to pay certain sums to it as damages for the loss of the array and announced that the government was not obligated to pay the balances due under the contract. BBC appealed both decisions to the Armed Services Board of Contract Appeals (ASBCA). The pleadings in those cases raised the same legal issues as are set out in the first four causes of action of the government's complaint in this litigation.² During the course of preparation for the trial of those appeals and following the pretrial hearing, attorneys for the government instituted negotiations looking toward a settlement of the two cases which had been consolidated. After a number of conversations and meetings concerning the settlement an agreement was reached and a stipulation prepared, but a representative of the government³ refused to approve it and took it to Washington for further review and consideration. Almost two months later negotiations were resumed, a Stipulation of Settlement was prepared by the government and signed by the parties. It carried the caption of the ASBCA action, identified the two cases on appeal and was filed in the case.⁴

On December 29, 1969, an Order of Dismissal with Prejudice was entered in the cases based upon the Stipulation of Settlement which had been filed. The order carried the caption of the two cases and showed the appearance of Murray H. Marker, Esq., Counsel, Navy Purchasing Office and Martin L. Glass, Esq., Assistant Counsel, appearing for the government, and Gerald N. Gordon, Esq., appearing for the appellant. It was signed by Joseph B. Kennedy, Jr., for the Board and bore the signed concurrences of four other members.⁵

The government contends that the stipulation is a nullity because there was no meeting of the minds and because the attorney who signed had no authority to do so. As to the meeting of the minds, the language of the stipulation appeared perfectly clear to the trial court and appears entirely so to us. The later discovery by the government of its unilateral mistake that a payment had been made so that the government should have reduced its settlement figure accordingly does not prevent a contract under the facts of this case.⁶ Heifetz Metal Crafts, Inc. v. Peter Kiewit Sons' Co., 264 F.2d 435 (8th Cir. 1959); Bowser, Inc. v. Hamilton Glass Co., 207 F.2d 341 (7th Cir. 1953); United States v. Jones, 176 F.2d 278, 285 (9th Cir. 1949). There was no showing of mutual mistake or of fraud on the part of BBC.

As...