United States v. Webber

• Decision Date: 22 June 1967
• Docket Number: Civ. A. No. 2815.
• Citation: 270 F. Supp. 286
• Parties: UNITED STATES of America, Plaintiff, v. Richard Anthony WEBBER and Robert J. DuHadaway, trading as R. & R. Engineering Company, and R. & R. Engineering Company, a corporation of the State of Delaware, Defendants.
• Court: U.S. District Court — District of Delaware

270 F. Supp. 286

UNITED STATES of America, Plaintiff, v. Richard Anthony WEBBER and Robert J. DuHadaway, trading as R. & R. Engineering Company, and R. & R. Engineering Company, a corporation of the State of Delaware, Defendants.

Civ. A. No. 2815.

United States District Court D. Delaware.

June 22, 1967.

Alexander Greenfeld, U. S. Atty., Wilmington, Del., and Stephen R. Felson, Dept. of Justice, Washington, D. C., for plaintiff.

Wanda Chocallo, Philadelphia, Pa., and Harold Leshem, Wilmington, Del., for Richard Anthony Webber and R. & R. Engineering Co.

Courtney H. Cummings, Jr., of Killoran & Van Brunt, Wilmington, Del., for Robert J. DuHadaway.

OPINION

LAYTON, District Judge.

The United States, as assignee of Swinerton & Walberg (Swinerton), brings this action to recover for breach of warranty of contracts awarded by Swinerton to R. & R. Engineering Company (R. & R.). The defendants are Richard Anthony Webber (Webber) and Robert J. DuHadaway (DuHadaway), trading as R. & R. Engineerign Company, a partnership, and R. & R. Engineering Company, a Delaware corporation. The United States has filed a motion for summary judgment. The defendant DuHadaway has filed a cross-motion for summary judgment.

This action is an outgrowth of Browne v. R. & R. Engineering Co., 164 F.Supp. 315 (D.Del.1958), rev'd in part, 264 F.2d 219 (3d Cir. 1959). In that case, Edmund V. Browne sought to recover compensation for services rendered to R. & R. in helping them secure government contracts (the same contracts which are the subject of the instant litigation) in connection with the construction of Atomic Energy Commission facilities in Colorado.

In Browne, after hearing testimony,¹ this Court found, inter alia, that Browne had in fact rendered services to R. & R. in this connection, and that his compensation from R. & R. had been contingent upon their obtaining a government contract. Such contract (actually a subcontract) was awarded to R. & R. by Swinerton & Walberg, the prime contractor for the AEC facilities. Adopting the defendant's contention, this Court determined that Browne could not enforce his fee arrangement with R. & R. for the reason that such contingent fee arrangement was illegal and unenforceable as against public policy by virtue of Executive Order 9001, 50 U.S.C. Appendix § 611 (1941).² Such contingent fee arrangement was similarly prohibited under the express terms of the Swinerton & Walberg contract with R. & R.

The Third Circuit Court of Appeals reversed in part finding the contract severable and holding that Browne could recover, in quantum meruit, for certain services rendered to R. & R. unconnected with the actual solicitation for the government contract. On remand, in an unreported opinion dated July 21, 1959, this Court found that Browne had previously received from R. & R. the value of those other services, and judgment was rendered for the defendant.

The rationale underlying Executive Order 9001 is twofold: (1) to prevent improper conduct in obtaining government contracts as well as (2) to prevent the government being overcharged by the addition of the commissions or contingent fees to the contract price. Browne v. R. & R. Engineering Co., 264 F.2d 219 (3d Cir. 1959); J. D. Streett & Co. v. United States, 256 F.2d 557 (8th Cir. 1958). Accordingly, the United States, as assignee under the contract between Swinerton and the defendants, now brings suit to recover from the individual defendants or R. & R. (Corporation) or both, that amount found due by this Court under the contingent fee agreement, but uncollectible by Browne because prohibited by public policy.³

The United States submits that all the necessary facts, which are undisputed, are now before the Court, and that it is entitled to judgment as a matter of law. The defendants resist on the basis that factual issues exist but it is of critical importance to note that none of them has filed any affidavits or introduced anything else into the record, as required by Rule 56, which demonstrate the existence of any factual issue.⁴

The government did not file affidavits in support of its motion for summary judgment. However, the contracts between R. & R. (Partnership and Corporation) and Swinerton and the United States were attached to the complaint. Moreover, in paragraphs 7 and 8 of the complaint, the plaintiff recited the suit of Browne v. R. & R. Engineering Co., C.A. No. 1873, filed in this Court, the findings of fact, conclusions of law and opinion of this Court, the appeal to the Circuit Court and its modifying opinion, 264 F.2d 219, as well as this Court's unreported decision pursuant thereto dated July 21, 1959, all matters of record in this Court.

No citation is needed for the proposition that under Rule 56, summary judgment can be granted only if there is no question of fact to be resolved. To determine whether any such factual issue exists, the Court may consider any of a number of kinds of material put before it. See 6 Moore's Federal Practice, § 56.11, p. 2143 et seq. In this case, the Court is asked to consider the contracts in question and the Swinerton assignment to the United States, certified copies of which have been made a part of the record, and in addition, to take judicial notice of the facts found in the Browne case.

Matter which is the subject of judicial notice may properly be used in the consideration of a motion for summary judgment. Ellis v. Cates, 178 F.2d 791 (4th Cir. 1949), cert. den. 339 U.S. 964, 70 S.Ct. 999, 94 L.Ed. 1373 (1950); Daley v. Sears, Roebuck & Co., 90 F.Supp. 562 (N.D.Ohio 1950); 6 Moore's Federal Practice, § 56.11 9, pp. 2207-08. In this Circuit, it is clear that a District Court may take judicial notice of the records of prior cases in its own court. United States v. City of Philadelphia, 140 F.2d 406, 408 (3d Cir. 1944); Hassenplug v. Victor Lynn Lines, 71 F.Supp. 70 (E.D. Pa.1947), aff'd 163 F.2d 828 (3d Cir. 1947). Cf. National Fire Ins. Co. v. Thompson, 281 U.S. 331, 336, 50 S.Ct. 288, 74 L.Ed. 881 (1929). Therefore, the record and opinions of the Browne case are properly to be considered by this Court on plaintiff's motion for summary judgment.

I. UNCONTRADICTED FACTS

It cannot be disputed, then, that in Browne, this Court necessarily and specifically found that a contingent fee agreement had been entered into by Browne and the R. & R. partnership, in connection with the procurement of Swinerton's contracts. 164 F.Supp. at 316; 264 F.2d at 221. It is clear, in addition, that the contingent contract was agreed to by R. & R. when it was a partnership and, thus, the individual defendants were parties thereto and liable thereunder for any warranty that was breached. R. & R. was not incorporated until April 23, 1956, which was several months after Browne began working with the R. & R. partners in the government contract bidding venture, and well after the contingent fee arrangement had been agreed to. 164 F.Supp. at 316; 264 F.2d at 221. It also cannot be disputed that the original contract between Swinerton and R. & R. was entered into while R. & R. was a partnership. It is dated April 4, 1956, several weeks before incorporation. Thus, it was R. & R., as a partnership, and the individuals comprising the partnership, that warranted to Swinerton that it had not entered into a contingent fee arrangement to secure the award of the contract; and it was R. & R., as a partnership, and the individuals comprising the partnership, that entered into the contingent fee arrangement with Browne. Finally, it is uncontroverted that after R. & R. was incorporated, the corporation assumed the duties and obligations of the contract, performed the work, and was fully paid by Swinerton.

All of the foregoing facts are clear from the record of the Browne case, its testimony and exhibits, and the reported opinions of two courts. It must again be emphasized that these facts have not been rebutted in any way by any of the defendants. The defendants, particularly Webber and R. & R. Corporation, seem to rely on the denials of their pleadings to create factual issues which would preclude the grant of summary judgment to the plaintiff. It is clear, however, that such denials alone are completely insufficient to put facts into controversy. Rule 56(e), Federal Rules of Civil Procedure.

To complete the record, the United States has placed in the record here a certified copy of the assignment to it of Swinerton's rights under its contracts with R. & R.⁵ The validity of the assignments has not been challenged by any of the defendants. Indeed, the United States had the express right under its (prime) contract with Swinerton (Article VII, Paragraph 4) to such assignment; this prime contract is also a part of the record here.

The undisputed facts before the Court thus clearly establish that there was a contingent fee arrangement between R. & R. (partnership) and Browne in breach of the warranty in the R. & R. (partnership) — Swinerton contract. The United States, as assignee to Swinerton's rights under the warranty, is entitled to enforce those rights against R. & R., both the corporation and the partnership.

II. LIABILITY OF THE PARTNERSHIP

Even though it was not a party to the Browne case, the facts found there (which are uncontroverted here) indicate that the partnership and the individual parties are liable under the contract warranty. The incorporation of a partnership cannot affect the rights and liabilities of the partnership under contracts made prior to incorporation, unless by a binding agreement among the parties. 18 C.J.S. Corporations § 143(2). Defendants have failed to introduce anything into the record to show that Swinerton agreed to release the partnership from its contingent liability; similarly, there is nothing to indicate such a release by Browne. Nevertheless, the defendant DuHadaway argues that, since the partnership was not a party to the Browne case, and the Court, therefore, did not find any...