Utah Construction and Mining Company v. United States

• Decision Date: 12 March 1965
• Docket Number: No. 3-61.,3-61.
• Citation: 339 F.2d 606
• Parties: UTAH CONSTRUCTION AND MINING COMPANY v. The UNITED STATES.
• Court: U.S. Claims Court

339 F.2d 606 (1964)

UTAH CONSTRUCTION AND MINING COMPANY v. The UNITED STATES.

No. 3-61.

United States Court of Claims.

December 11, 1964.

Rehearing Denied March 12, 1965.

COPYRIGHT MATERIAL OMITTED

Gardiner Johnson, San Francisco, Cal., for plaintiff. Thomas E. Stanton, Jr., San Francisco, Cal., and Charles J. Heyler, of counsel.

Irving Jaffe, Washington, D. C., with whom was Asst. Atty. Gen. John W. Douglas, for defendant. James F. Merow, Washington, D. C., was on the briefs.

Before COWEN, Chief Judge, DURFEE, DAVIS, and COLLINS, Judges, and WHITAKER, Senior Judge.

WHITAKER, Senior Judge.

Plaintiff had a contract with the Atomic Energy Commission for the construction of an assembly and maintenance area at the National Reactor Testing Station in Jefferson and Butte Counties, Idaho. The contract was fully performed on January 7, 1955, several extensions of time having been granted on account of delays for which the contractor was not responsible. During the performance of the contract and after its completion, plaintiff made various claims for increased costs and for damages, some of which were claims arising under the contract and some for alleged breaches of contract by the defendant on account of delays and other causes.

The case was referred to Trial Commissioner C. Murray Bernhardt for the taking of testimony and for a report. On February 18, 1964, the commissioner issued an order defining the scope of the testimony to be taken with reference to the several claims, in the light of the Supreme Court's opinion in United States v. Carlo Bianchi & Co., 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963). The defendant now asks us to review this order.

Prior to United States v. Wunderlich, 342 U.S. 98, 72 S.Ct. 154, 96 L.Ed. 113 (1951), this court had held that in determining whether or not the action of the contracting officer or the head of the department was arbitrary or capricious or unsupported by substantial evidence or otherwise contrary to law, it was not confined to the evidence before the Board of Contract Appeals (which in most cases was the representative of the head of the department), but was entitled to receive evidence de novo. However, the Supreme Court in United States v. Wunderlich, supra, held that we were bound by the action of the contracting officer on claims arising under the contract unless his action was fraudulent; that is to say, unless it amounted to conscious wrongdoing. Following this decision, the Congress enacted what is known as the Wunderlich Act, being the Act of May 11, 1954, 68 Stat. 81. This act in substance provided that the decision of the head of a department or his duly authorized representative or board "in a dispute involving a question arising under such contract * * * shall be final and conclusive unless the same is fraudulent or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence."

Following the enactment of this statute, this court first held in Wagner Whirler and Derrick Corp. v. United States, 121 F.Supp. 664, 128 Ct.Cl. 382 (1954), that the Wunderlich Act was designed to restore the status quo ante the decision of the Supreme Court in United States v. Wunderlich, supra, but we did not decide in that case whether or not de novo evidence was admissible to determine whether the action of the board was arbitrary, etc. However, in Volentine and Littleton v. United States, 145 F.Supp. 952, 136 Ct.Cl. 638 (1956), we explicitly held that since the purpose of Congress was to restore the status quo ante and since the practice prior to the Wunderlich decision had been to receive evidence de novo, we would continue to do so. We reiterated this position in Carlo Bianchi & Co. v. United States, 169 F.Supp. 514, 144 Ct.Cl. 500 (1959), 157 Ct.Cl. 432 (1962); but the Supreme Court reversed and held that in the determination of this question we were confined to the evidence admitted before the board. United States v. Carlo Bianchi & Co., 373 U.S. 709, 83 S.Ct. 1409 (1963).

In cases where the administrative record was defective or inadequate, the Court had this to say:

"* * * First, there would undoubtedly be situations in which the court would be warranted, on the basis of the administrative record, in granting judgment for the contractor without the need for further administrative action. Second, in situations where the court believed that the existing record did not warrant such a course, but that the departmental determination could not be sustained under the standards laid down by Congress, we see no reason why the court could not stay its own proceedings pending some further action before the agency involved. Cf. Pennsylvania R. Co. v. United States, 363 U.S. 202, 80 S.Ct. 1131, 4 L.Ed.2d 1165. Such a stay would certainly be justified where the department had failed to make adequate provision for a record that could be subjected to judicial scrutiny, for it was clearly part of the legislative purpose to achieve uniformity in this respect. And in any case in which the department failed to remedy the particular substantive or procedural defect or inadequacy, the sanction of judgment for the contractor would always be available to the court." 373 U.S. 709, 717-718, 83 S.Ct. 1409, 1415.

Where the dispute "arises under the contract" the contracting officer and the head of the department have authority to decide questions of fact and the contract makes their decision thereon final and conclusive; but where the dispute involves an alleged breach of the contract, and the contractor seeks unliquidated damages therefor, neither the contracting officer nor the head of the department has jurisdiction to decide the dispute. Miller, Inc. v. United States, 77 F.Supp. 209, 111 Ct.Cl. 252 (1948); Langevin v. United States, 100 Ct.Cl. 15 (1943); Beuttas Trading as B-W Construction Co. v. United States, 60 F.Supp. 771, 101 Ct.Cl. 748 (1944); reversed in part on other grounds, United States v. Beuttas et al., 324 U.S. 768, 65 S.Ct. 1000, 89 L.Ed. 1354 (1944). If they undertake to do so — which they rarely do — neither their decision nor the findings of fact with reference thereto have any binding effect. This necessarily follows because they are without authority to decide the dispute. It goes without saying that a decision of any court or other agency on a matter concerning which it has no jurisdiction has no binding effect whatsoever. National Steamship Co. v. Tugman, 106 U.S. 118, 122, 1 S.Ct. 58, 27 L.Ed. 87 (1882); Coyle v. Skirvin, 124 F.2d 934, 937 (10th Cir. 1942), and cases there cited. See also Petition of Taffel, 49 F.Supp. 109, 111 (S.D.N.Y.1941).

Defendant contends that since the contract gives to the contracting officer and the head of the department authority to make findings of fact concerning all disputes, they have authority to make findings concerning a dispute over whether the contract had been breached. This contention cannot be sustained. The contract plainly limits their authority to make such findings to "disputes concerning questions of fact arising under this contract." This means a dispute over the rights of the parties given by the contract; it does not mean a dispute over a violation of the contract.

The Supreme Court's opinion in Bianchi, supra, restricting the evidence to be considered by this court to the record before the Appeals Board, is expressly limited to "matters within the scope of the disputes clause." At page 714 of 373 U.S., at page 1413 of 83 S.Ct. the Court said:

"Respondent has not argued in this Court that the underlying controversy in the present suit is beyond the scope of the "disputes" clause in the contract or that it is not governed by the quoted language in the Wunderlich Act. Thus the sole issue, as stated supra, p. 710 p. 1411, is whether the Court of Claims is limited to the administrative record with respect to that controversy or is free to take new evidence. * * *

"It is our conclusion that, apart from quesions of fraud, determination of the finality to be attached to a departmental decision on a question arising under a "disputes" clause must rest solely on consideration of the record before the department. This conclusion is based both on the language of the statute and on its legislative history."

Finally, in conclusion, the Court said:

"* * * We hold only that in its consideration of matters within the scope of the "disputes" clause in the present case, the Court of Claims is confined to review of the administrative record under the standards in the Wunderlich Act and may not receive new evidence. * * *" 373 U.S. 709, 718, 83 S.Ct. 1409, 1415.

The opinion of the Supreme Court was thus restricted to "matters within the scope of the disputes clause." An action for breach of contract is not within the scope of this clause.

However, it may be that the contracting officer and the head of the department may find a fact relevant to the settlement of a dispute arising under the contract, which fact may also be relevant on the question of the right of the plaintiff to recover for breach of contract. What effect is to be given to such a finding?

Let it be noted that no statute gives the contracting officer and the head of the department, or his representative, authority to decide the rights of the parties to a Government contract; their authority is derived solely from the contract between the parties. Langevin v. United States, supra, 100 Ct.Cl. at 30.

The contract in Article 15 provides that "all disputes concerning questions of fact arising under this contract shall be decided by the contracting officer subject to written appeal by the contractor within 30 days to the head of the department concerned or his duly authorized representative, whose decision shall be final and conclusive upon the parties thereto." (Emphasis added.) Thus, the board's authority is limited to disputes "concerning questions of fact arising under this contract." It...