United States v. PETER KIEWIT SONS'CO.

• Decision Date: 01 June 1965
• Docket Number: No. 17869.,17869.
• Citation: 345 F.2d 879
• Parties: UNITED STATES of America, Appellant, v. PETER KIEWIT SONS' CO., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

345 F.2d 879 (1965)

UNITED STATES of America, Appellant, v. PETER KIEWIT SONS' CO., Appellee.

No. 17869.

United States Court of Appeals Eighth Circuit.

June 1, 1965.

Robert J. Vollen, Atty., Dept. of Justice, Washington, D. C., made argument for appellant and filed brief with John W. Douglas, Asst. Atty. Gen., Morton Hollander and David L. Rose, Attys., Dept. of Justice, and Theodore L. Richling, U. S. Atty., Washington, D. C.

James A. Buckley, of Fraser, Stryker, Marshall & Beach, Omaha, Neb., made argument for appellee and filed brief with Hird Stryker, Jr., of Fraser, Stryker, Marshall & Beach, Omaha, Neb.

Before VOGEL, MATTHES and MEHAFFY, Circuit Judges.

VOGEL, Circuit Judge.

The United States of America, appellant, and Peter Kiewit Sons' Company, appellee, entered into a contract whereby Kiewit leased to the United States various pieces of equipment, together with operating personnel. Among the equipment so leased was a Euclid enddump truck No. 271 driven by an employee of Kiewit who had been furnished with the equipment to the United States. On October 14, 1959, while the dump truck was being used by the Corps of Engineers at the Hebgen Dam earthquake area in Montana, an accident occurred whereby the dump truck toppled into the Madison River, causing it to be damaged to the extent of $5,374.58, being the amount Kiewit allegedly expended to repair the truck and place it in a condition comparable to that in which it had been immediately prior to the accident.

The contract between the parties contained the following provision:

"Article 5. Contractor\'s responsibility. The contractor shall, be responsible that his employees strictly comply with all Federal, State, and municipal laws that may apply to operations under the contract; and it is understood and agreed that the contractor assumes full responsibility for the safety of his employees, plant, and materials and for any damage or injury done by or to them from any source or cause, except damage caused to plant or equipment by acts of the Government, its officers, agents or employees, in which event such damages will be the responsibility of the Government in accordance with applicable Federal laws." (Emphasis supplied.)

As well as the standard "disputes clause" found in most government contracts:

"Article 8. Disputes.

"(a) Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary. The decision of the Secretary or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer\'s decision.

"(b) This `Disputes\' clause does not preclude consideration of law questions in connection with decisions provided for in paragraph (a) above: Provided, That nothing in this contract shall be construed as making final the decision of any administrative official, representative, or board on a question of law." (Emphasis supplied.)

On December 28, 1959, Kiewit served notice on the Contracting Officer of the accident to the Euclid truck, identifying it as "plant item 19-271" and of its intent to make a claim for damages to the truck. The claim was based on the theory that a government employee, a "dump-man" who had been directing the truck dumping, was guilty of negligence and that the driver was free from fault for the accident. On December 19, 1960, the damages to the truck having been ascertained, Kiewit again wrote, making specific claim for the cost of repairing the truck and asserting liability of the government not only on the basis of negligence on the part of a government employee, the dump-man, but this time asserting that the driver also was a government employee under the "loaned servant" doctrine, although carried on Kiewit's payroll, thus attempting to hold the government responsible for any acts of the driver.

On March 20, 1961, the Contracting Officer rendered a decision denying Kiewit's claim. He specifically found that the driver of the truck was hired and paid by Kiewit and was "under the general supervision of your Kiewit's superintendent and not under the direct control of the Government" and found that he was not an employee of the government but an employee of Kiewit's. The Contracting Officer further found that the accident was caused by the negligence of the driver and not by a government employee and concluded, therefore, that the damage was not caused by an act of the government or its agents or employees and that while the contract was in the nature of a bailment for hire, the government as bailee was not liable for damages resulting from the negligence or contributory negligence of the bailor, his servants or agents.

The Contracting Officer's letter of March 20, 1961, concluded as follows:

"CONCLUSION

"This is the final decision of the Contracting Officer. Decisions on disputed questions of fact and on other questions that are subject to the procedure of the Disputes Clause may be appealed in accordance with the provisions of the Disputes Clause. If you decide to make such an appeal from this decision, written notice thereof (in quint) must be mailed or otherwise furnished to the Contracting Officer within 30 days from the date you receive this decision. Such notice should indicate that an appeal is intended and should reference this decision and identify the contract by number. The Corps of Engineers Board of Contract Appeals is the authorized representative of the Head of the Department for hearing and determining such disputes. A copy of the rules of the Corps of Engineers Board of Contract Appeals is attached hereto."

On April 13, 1961, well within the 30 days referred to, supra, Kiewit wrote the Contracting Officer and, referring to this particular claim, stated:

"You are hereby notified pursuant to Title 28, Section 2675(b) of the United States Code (Annotated), that the undersigned contractor has elected to withdraw this claim from further consideration by the Corps of Engineers, Department of the Army, and to proceed against the United States pursuant to the provisions of the Federal Tort Claims Act."

Thereupon, Kiewit commenced the instant action under the Federal Tort Claims Act, 28 U.S.C.A. § 1346, for $5,374.58 plus costs. The answer, amounting to a general denial, was interposed by the United States. Thereafter the matter was tried in the United States District Court for the District of Nebraska. The District Court found in behalf of Kiewit, entering judgment in Kiewit's behalf in the amount of $5,332.68 plus costs and disbursements. The United States appealed from such judgment.

The District Court, in effect, held that the decision of the Contracting Officer was not conclusive and that Kiewit was not required to exhaust the remedies prescribed by the contract because it found that Kiewit's claim "while having its source in contract, sounded in tort". It did not hold that the claim was not a dispute arising under the contract involving a question of fact, but held that Kiewit was free "to treat the claim either as one sounding in tort or contract", and could thus sue under the Federal Tort Claims Act, 28 U.S.C.A. § 1346, as amended. After holding that the claim came within the purview of the Federal Tort Claims Act, the District Court found that the driver of the truck, although he received his orders from Kiewit's supervisors and was hired and could be fired by Kiewit, was nevertheless subject to the jurisdiction and control of the government at the time of the accident and concluded that he was an employee of the United States under the "loaned-servant" doctrine so that his negligence was imputed to the government. While recognizing that disputes under the contract involving questions of fact must be presented to the Contracting Officer under Article 8 and adherence had to the provisions therein for appeal and that such decision was final and conclusive unless fraudulent, capricious or arbitrary, 41 U.S.C.A. § 321, the District Court nevertheless stated:

"It is the opinion of the court, however, that the claim here involved, while having its source in contract, sounds in tort. See Keifer & Keifer v. Reconstruction Finance Corporation, 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784; United States v. Huff, 5 Cir., 165 F.2d 720, 1 A.L.R. 2d 854. The guilty party thus being a tort-feasor, the suit can properly be maintained under the Federal Tort Claims Act, 28 U.S.C.A. 1346, and was properly removed from the consideration of the Corps of Engineers through notification pursuant to 28 U.S.C.A. 2675(b)."

We believe the District Court to have been in error. 28 U.S.C.A. § 2675(b) is not applicable to the situation with which we are here concerned. That section of the Federal Tort Claims Act concerns only the withdrawal of tort claims of $2500 or less which have been presented for administrative adjustment to the head of a federal agency or his designee under the provisions of the Act, 28 U.S. C.A. § 2672, and is not concerned with claims in excess of that...