Petition — Washington Metropolitan Area Transit Authority v. General Railway Signal Co.

Supreme Court brief1981

Ask Donna

What actually matters in this document.

Text

| Office -Supreme Court, U.

80-1525 FILED

MAR 9 196m

_ ALEXANDER L. STEV

——CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY,

Petitioner,

GENERAL RAILWAY SIGNAL COMPANY,

A SUBSIDIARY OF GENERAL SIGNAL INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

LEONARD PETKOFF

600 Fifth Street, N.W.

Washington, D.C. 20001

Telephone: (202) 637-1465

Attorney for Petitioner

Washington Metropolitan

Area Transit Authority

WILSON - EPES PRINTING Co.. INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

Question 1

May the District Court, while purportedly conducting

a Wunderlich Act type judicial review, under a contract

containing a standard disputes clause, recharacterize the

dispute as an implied breach of contract and remand the

matter to the administrative review process for a de novo

hearing in order for the Court to fashion a breach of

contract remedy, thus requiring Petitioner to defend the

interest issue in two distinct forums without reviewing

the initial administrative decision under the contractually

mandated Wunderlich Act principles? Concomitantly, may

the courts below refuse to follow the applicable decisions

on issues previously decided by this Court?

Question 2

May the District Court, in its application of the law

of the District of Columbia to contract claims against

Petitioner, refuse to apply the applicable District of

Columbia statute of limitations where the WMATA Com-

pact, a Federal statute, mandates uniform application

of the laws of the District of Columbia?

Question 3

May the Court’ of Appeals decide an issue in conflict

with the decision of the state (or equivalent) court of

last resort? *

* The parties to this petition are: Petitioner, Washington Metro-

politan Area Transit Authority, a body corporate and politic, cre-

ated pursuant to the Act of November 6, 1966, Pub. L. 89-774, 80

Stat. 1324, as amended (“the WMATA Compact”), as an agency

and instrumentality of the State of Maryland, the District of Co-

lumbia, and the Commonwealth of Virginia; Respondent, General

Railway Signal Company, a subsidiary of General Signal Inc., a

corporation organized and existing under the laws of the State of

Delaware and having its principal place of business in Rochester,

New York.

(i)

TABLE OF CONTENTS

Page

QGUBSTIONS PRESENTED ...........:..22..2..2222.--.-cceccesoncseese i

po hy SS eee iii

TABLE OF AUTHORITIES ......0000000000000 sential iv

iis bhohnioes -acemininapoconenisnsoiconr sees 2

JURISDICTION .................... Saeiesingaledinantnaietsnamoe ideesiececareintaeks 3

I i ainsi a aipodetestesineckicnaieeoncssisiamtiesians 3

STATEMENT OF THE CASE o00000oooooececececeece cee 3

REASONS FOR GRANTING THE WRIT .................. 11

A. Granting This Writ Will Resolve a Conflict

Between Long-Standing Precedents of This

Court and the Recent Ruling of The Court of

Appeals for the District of Columbia Circuit. 11

B. Judicial Economy Mandates Reversal of the

EE IID CO 13

C. The WMATA Compact Mandates That the

Court of Appeals for the District of Columbia

Apply the Law Thereof ......000000000000 oe. 18

ER tlie SSE NCR pce ee 22

(iii)

PRECEDING PAGE WAS BLANK

TABLE OF AUTHORITIES

Cases Page

Crown Coat Front Company v. United States, 386

U.S. 503, 87 S.Ct. 1177, 18 L.Ed.2d 256 (1967).. 15, 20

Egan V. City of Aurora, Ill., 365 U.S. 515, 81 8.Ct.

684, 5 L.Ed.2d 741, on remand 291 F.2d 706

I i ea le eee ce id, 12

Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.

Ct. 817, 82 L.Ed. 1188 (1988) |. ......................... 21

Giant Food, Inc. Vv. Jack L. Bender, et al., 399 A.2d

a cencraeee 20, 21

Kihlberg v. United States, 97 U.S. (7 Otto) 398,

. ee ke a. | en eiRNeenna nec menCn 14

Lake County Estates, Inc. v. Tahoe Regional Plan-

ning Agency, 440 U.S. 391, 99 S.Ct. 1171, 59

eRe IO CRPTUD | eciciepescrsseetewentetextimtaestnrrupenioce 18

Ripley v. United States, 223 U.S. 695, 56 L.Ed. 614

RINE spss jccnsstclbiacesiaeccidgnlbensdmaanblibas cabepemnemmimataerianene 14

United States v. Anthony Grace & Sons, Inc., 384

U.S. 424, 86 S.Ct. 1539, 16 L.Ed.2d 662 (1966).. 12

United States v. Callahan Walker Company, 317

U.S. 56, 63 S.Ct. 118, 87 L.Ed. 49 (1942) ........... 12, 14

United States v. Carlo Bianchi & Company, 373

U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963) .. 12, 18,

14, 15, 16, 18, 22

United States v. Utah Construction and Mining

Company, 384 U.S. 394, 86 S.Ct. 1545, 16 L.Ed.

Tee IY hsounnjbnsenee beteeciassinen 8, 12, 18, 15, 20

Wells and Wells, Inc. v. United States, 269 F.2d

Oe ie i ID spicpcrtcrcctdorenincicinsremeeanieneens 18

John H. Wilson, Inc. v. Granite Groves, Civil Ac-

tion No. 78-1498, December 22, 1978 ................. 9

Board of Contract Appeals

Granite Construction Company, Eng BCA No.

N, FE Oy Te FRG GO nic cnncncecvecnesacvesenccctnteones 6

Statutes

United States Code, as amended:

Contract Disputes Act of 1978, 41 U.S.C. § 601

OE Oiig Be Cs I yesh ees cnecinenisinesccanaectemnadonsccnans 4,17

TABLE OF AUTHORITIES—Continued

Page

coal ME 2) IRR cet 3

Wunderlich Act, 41 U.S.C. §§ 321-822... 11,14

Washington Metropolitan Area Transit Authority

Compact, the Act of November 6, 1966, Public

Law 89-774, 80 Stat. 1824, as amended by the

Act of July 18, 1972, Public Law 92-349; the

Act of October 21, 1972, Public Law 92-517;

and the Act of June 4, 1976, Public Law 94-

WMI = ideal oniileeie et eeg eo i, 18, 20, 21

Code of the District of Columbia, as amended:

District of Columbia Self-Government and Gov-

ernmental Reorganization Act, Title 1, § 431... 20

Statute of Limitations, Title 12, § 301 11,18

Interest on Judgment for Liquidated Debt, Title

pS ee ee RS AR Aah NEE 10, 20

Interest on Judgment for Damages in Contract or

7G seen oe 8, 10, 18, 20

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

No.

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY,

Petitioner,

Vv.

GENERAL RAILWAY SIGNAL COMPANY,

A SUBSIDIARY OF GENERAL SIGNAL INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner, Washington Metropolitan Area Transit Au-

thority (WMATA), respectfully prays that a writ of

certiorari issue to review the judgment and opinion of

the United States Court of Appeals for the District of

Columbia Circuit, entered in this proceeding on Decem-

ber 10, 1980, affirming a judgment and opinion entered

by the United States District Court for the District of

Columbia.

A motion for rehearing en bane was denied by the

Court of Appeals on January 8, 1981.

OPINIONS BELOW

The opinion of the Court of Appeals of which Petitioner

seeks review is as yet unreported; a copy is appended as

Appendix A. The order of the Court of Appeals denying

Petitioner’s request for a rehearing en bane is unre-

ported; a copy is appended as Appendix B. The Memo-

randum Opinion and Order of the District Court ordering

a trial de novo on entitlement to interest for delay in

issuing a final decision is unreported; a copy is appended

as Appendix D. The order of the District Court ordering

the payment of breach of contract interest damages pur-

suant to Title 15, § 109, of the District of Columbia Code

is unreported; a copy is appended as Appendix C. The

Opinion and Findings of Fact of the Corps of Engineers

Board of Contract Appeals on the initial administrative

hearing which was approved and adopted by Petitioner’s

General Manager is reported at 76-2 BCA { 12,223; a

copy is appended as Appendix E. The opinion of the

Board of Contract Appeals for the second administrative

hearing which was modified by Petitioner’s General Man-

ager is reported at 79-1 BCA { 13,622; a copy, as modi-

fied, is appended as Appendix F.'

1 Chapter V of WMATA’s Procurement Policies and Procedures,

entitled “Contract Claims and Disputes,” adopted July 7, 1967, and

revised March 21, 1968, and October 2, 1969, provides: “c. Appoint-

ment. The General Manager is hereby designated and appointed as

the duly authorized representative of the Board of Directors of the

Washington Metropolitan Area Transit Authority to hear, consider

and decide [emphasis added] as fully and finally as the Board of

Directors might do, appeals to the Board of Directors under con-

tracts which contain the ‘Disputes’ clause hereinabove set forth.”

By Resolution of the WMATA Board of Directors dated June 3,

1971, it was resolved “by the Board of Directors of the Washington

Metropolitan Area Transit Authority that the Corps of Engineers

Board of Contract Appeals is hereby designated as the authorized

representative of this Board to hear, consider and recommend

[emphasis added] to the General Manager of the Authority final

JURISDICTION

The judgment of the Court of Appeals was entered on

December 10, 1980 (App. A). A petition for rehearing

en bane was denied on January 8, 1981 (App. B). This

petition is filed within ninety days of both dates. This

Court is therefore vested with jurisdiction to review the

judgment in question upon issuance of a writ of cer-

tiorari, pursuant to 28 U.S.C. § 1254(1).

STATUTES

Washington Metropolitan Area Transit Authority Com-

pact, the Act of November 6, 1966, Public Law 89-774,

80 Stat. 1824, as amended by the Act of July 13, 1972,

Public Law 92-349; the Act of October 21, 1972, Publie

Law 92-517; and the Act of June 4, 1976, Public Law

94-306. Partial text at Appendix I.

Code of the District of Columbia, as amended:

Title 12, § 301, at Appendix J; Title 15, §$ 108 and

109, at Appendix K.

Wunderlich Act, 41 U.S.C. §§ 321-322; at Appendix L.

STATEMENT OF THE CASE

Jurisdiction in the United States District Court for the

District of Columbia is statutory pursuant to § 81,

WMATA Compact (App. I).

On February 23, 1971, Petitioner awarded WMATA

Contract No. 1Z4206 to Respondent for modification of

the Washington Terminal Company’s signal facilities at

Union Station in Washington, D.C., in order that said

decisions on appeals arising under the Disputes clause of Author-

ity contracts and the General Manager is authorized and directed

to reimburse the Corps of Engineers for all costs in rendering such

services.” (App. X)

facilities could be used by the Washington metropolitan

area metrorail system.

During contract performance, three disputes arose be-

tween the parties concerning alleged extra work required

by Petitioner. The latter considered the work to be within

the terms of Respondent’s contract and not to constitute

a change so as to entitle the Respondent to additional

compensation.

The disputes article of the instant contract, substan-

tially identical to that of U.S. Standard Form 23-A,

Construction Contract (App. H), established a two-tiered

administrative review procedure comparable to the dis-

putes procedure under Federal Government contracts prior

to the implementation of the Contract Disputes Act of

1978, 41 U.S.C. § 601 et seq., 92 Stat. 2383, which is not

applicable to Petitioner, a state agency. Pursuant to this

procedure, disputes arising under the contract and not

resolved by agreement between the parties are initially

decided by Petitioner’s Contracting Officer, whose decision

is final and conclusive unless a written appeal, addressed

to Petitioner’s Board of Directors, is filed within thirty

days thereafter (App. H). In the instant case, formal

claims for additional compensation in each of the three

disputed areas were submitted to Petitioner’s Contract-

ing Officer. The latter denied each claim in a formal

written final decision and finding of fact. The final deci-

sion for the Wye interlocking claim was issued on Au-

gust 2, 1974, and that for double circuitry on March 24,

1975.2, Respondent timely appealed each such denial.

The second tier of administrative review pursuant

to the contract disputes clause involves the review of

the Contracting Officer’s final decision by WMATA’s

2 Formal claims had been made on Dec. 13, 1973, and Aug. 20,

1973, respectively. The third claim was resolved adversely to Re-

spondent and is not at issue here.

Board of Directors or its duly authorized representative.

WMATA’s General Manager has been designated to de-

cide, as fully and finally as the WMATA Board of Di-

rectors might do, contractor appeals to the Board of

Directors. The WMATA Board of Directors also pro-

vided for these appeals to be heard and considered ini-

tially by the Corps of Engineers Board of Contract Ap-

peals, an independent Federal Government agency au-

thorized to recommend to WMATA’s General Manager

decisions on appeals arising under the disputes clause

of WMATA contracts.

By an administrative decision Cated August 30, 1976,

the Board of Contract Appeals recommended allowance

of two of Respondent’s three appeals for stipulated quan-

tum amounts, but denied payment of interest thereon

(App. E). In its complaints to the Board of Contract

Appeals in these appeals, Respondent had not presented

a claim for interest or alleged any factual or legal basis

therefor (App. M, N). By letter dated January 5, 1976,

counsel for Respondent had informed WMATA’s trial

counsel that, at the commencement of the Board of Con-

tract Appeals hearing on January 12, 1976, Respondent

would request that its complaints be amended to include

claims for interest. This was never done. (App. U)

As a unilateral addendum to a pretrial stipulation on

the quantum of an equitable adjustment in each admin-

istrative appeal, Respondent voiced its claim for interest

in the respective amounts of $5,348 and $32,507, com-

puted on the basis of 1 percent per month for a period

of 24 months, this period represented a purported delay

in the negotiation of equitable adjustments. Petitioner

did not admit or agree to the payment of interest at

any time.

In the administrative post-hearing brief, Respondent

first raised the interest issue and claimed interest as a

component of the equitable adjustment at the legal rate

applied under substantive contract law. Respondent re-

quested the Board of Contract Appeals to re-examine its

prior decision in Granite Construction Company (Eng

BCA No. 3561, 76-1 BCA { 11,748), which also involved

an interest issue, on the basis that precedent cases, in-

cluding United States Government contracts, denying in-

terest were grounded in principles of sovereign immunity,

a bar not applicable to Petitioner’s contracts (App. O).

Respondent offered no proof of any kind with respect to

entitlement to interest during the initial administrative

hearing. (App. P, Q and R)

In its recommended decision, the award of interest was

denied by the Board of Contract Appeals because it de-

clined to “allow a percentage for interest where we find

a constructive change has been made even though there

has not been shown that any interest cost was occasioned

by the change” (App. E). The Board reaffirmed its view

that the Granite appeal was correctly decided. Peti-

tioner’s General Manager accepted the recommendation

of the Board of Contract Appeals and adopted its ad-

visory opinion in his final decision dated September 21,

1976 (App. E).

Respondent filed its complaint in the United States

District Court for the District of Columbia on April 14,

1977, alleging that it was entitled to interest as an

“equitable adjustment of the contract price” (App. S,

1717 and 27). Jurisdiction in contract actions against

Petitioner is conferred on that court by the WMATA

Compact, § 81 (App. I).

Petitioner then moved, on May 19, 1977, for summary

judgment, contending that an equitable adjustment pre-

sents a wholly factual issue and that its General Man-

ager’s decision thereon was final and conclusive unless

otherwise determined by a court of competent jurisdiction

to be unsupported by substantial evidence, arbitrary,

capricious, or so grossly erroneous as to imply bad faith,

or was otherwise legally incorrect.

Respondent replied, seeking either a de novo hearing

for an equitable adjustment, to include interest on bor-

rowings, or a supplemental profit allowance, or, in the

alternative, an interest award in the amount of 24

percent.

During oral argument before the District Court on

July 13, 1977, Respondent’s counsel admitted that Re-

spondent’s claim before that court was for a Wunderlich

review of the action by Petitioner’s General Manager

dated September 21, 1976, as follows:

THE COURT: What is the extent of the review

before this Court?

MR. EGGERS: We agree, Your Honor, that un-

der the Disputes clauses that the standard review is

in essence the Wunderlich standard and that is that

factual issues as determined by the Board are bind-

ing in the absence of the standard that the contract

States which is in essence the findings were contrary

to the record, fraudulent, capricious and arbitrary.

The issues of law, Your Honor, are in no way

binding and we believe that the issue that is before

this Court is whether the Board has applied funda-

mentally the correct law as to the interest. ( App. G)

In its August 5, 1977 Memorandum Opinion and Order,

the District Court, instead of reviewing the record pur-

suant to Wunderlich Act principles, concluded that: “Im-

plicit here is a charge that WMATA breached the con-

tract by extensively delaying resolution of plaintiff’s

claim” (App. D). This, notwithstanding that Respond-

ent’s complaint before the District Court did not allege

that WMATA breached its contract but rather that the

Board of Contract Appeals’ denial of interest on its

claims was “wrongful.” The court then Stated that if the

Board of Contract Appeals, upon remand, found that Pe-

titioner’s Contracting Officer had unreasonably delayed

processing Respondent’s claim, then the latter might re-

cover interest resulting from the delay in payment, pur-

suant to Title 15, $109, D.C. Code (App. K). This

statute authorizes the recovery of interest on a judg-

ment solely for damages for breach of contract or tort.

The District Court, sua sponte, had thus effectively re-

characterized Petitioner’s request for judicial review,

pursuant to Wunderlich Act standards, as an implie?

breach of contract claim.*

The parties filed cross motions and oppositions there-

to for reconsideration of the court’s order. Your Pe-

titioner’s motion reasserted its position that the court,

under the terms of the contract between the parties,

could not order a de novo hearing pursuant to the settled

decisions of this Court, and that a claim originally al-

leged under the contract could not, upon an adverse de-

cision, be recharacterized as a breach of contract in

order to obtain a retrial of the same factual issue. The

Respondent contended that:

“The contractual claim for extra work is initially

litigated before the Board [of Contract Appeals!)

under the disputes clause. It is equally true, how-

ever, that the nature of this claim is such that the

average person would consider it to be a claim for

3“. |. where the administrative agency has made relevant factual

findings in the course of refusing relief which the contract author-

izes it to give, the finality of these findings, if sufficiently supported,

cannot be avoided in a court action for the same relief by labeling

the refusal of an equitable adjustment as a breach of contract or

by asserting that the primary issue involved is a question of law.”

United States v. Utah Constructing and Mining Company, 334 U.S.

394, 419-420, 86 S. Ct. 1545, 16 L.Ed.2d 642, 659 (1966).

* Petitioner's Motion for Reconsideration, Aug. 11, 1977; Re-

spondent’s Cross Motion for Reconsideration, Aug. 18, 1977; Peti-

tioner’s Opposition to Respondent’s Cross Motion for Reconsidera-

tion, Aug. 25, 1977; Respondent’s Reply Memorandum, Sep. 2, 1977

(App. W); Petitioner's Response to Respondent’s Reply Memoran-

dum, Sep. 9, 1977.

a breach of contract litigated in an administrative

form.” (App.W)

Upon remand and a further administrative hearing,

the Board of Contract Appeals made several findings of

fact in regard to the issuance of the Contracting Of-

ficer’s final decision and concluded its advisory opinion

with:

“However, it is quite clear in the present case that

the time taken for consideration of the claim at the

Resident Engineer and the Contracting Officer level,

while not unusual, especially in view of appellant’s

lack of assertive action pressing for an early de-

cision, was much too long when all of the circum-

stances are considered. For that reason the ques-

tion posed by the District Court must be answered

in the affirmative. There was too much delay in

processing the claims from which the appeals arose.”’

(App. F)

Petitioner’s General Manager adopted and approved

the findings of fact arrived at by the Board of Contract

Appeals. However, the ultimate paragraph, quoted above,

was not approved, as it was considered to be inconsis-

tent with local law. The General Manager’s decision

cited a recent District Court case, John H. Wilson, Inc.

v. Granite Groves, Civil Action No. 78-1498, December

22, 1978 (App. V), where, in the absence of a refusal

by the Contracting Officer to issue a final decision and in

consideration of other pertinent circumstances, delays of

21 months and 16 months, respectively, for issuance of

Contracting Officer’s final decisions did not render the

administrative process so untimely as to support an ac-

tion for breach of contract based solely on such delay.

The matter once again came before the District Court

on the parties’ cross motions for summary judgment. Pe-

titioner argued, in part, that, had this matter been al-

leged as a breach of contract by Respondent, the former

would have responsively pleaded the statute of limitations

as a bar to the action (App. T).

In an opinion filed November 13, 1979 (App. D), the

District Court determined that the administrative decision

of the General Manager was not supported by substan-

tial evidence and that the delay in the issuance of the

Contracting Officer’s final decisions was unreasonable.

The court reiterated its conclusion that this case involved

an implied action for breach of contract and that the

applicable statute for implementing an award of interest

was Title 15, § 109, D.C. Code. Furthermore, it was

decided that interest would be awarded from the date

Respondent first requested payment on its claims until

Petitioner made payment, plus additional interest, in the

statutory amount, on the sum of the foregoing, from the

time of the equitable adjustments, i.e., January 17, 1977,

until final payment of interest is made.

The court specifically rejected Petitioner’s statute of

limitations defense as being without merit because the

“Court has characterized this action as an implied breach

of contract action for purposes of fashioning appropriate

relief’ (App. C) and that the statute of limitations did

not commence to run until final action by the Board of

Contract Appeals had been concluded and, therefore, the

breach of contract fashioned by the District Court was

not untimely.

Thereafter, your Petitioner, on December 5, 1979, ap-

pealed this action to the United States Court of Appeals

for the District of Columbia Circuit. That Court, in

affirming the District Court’s actions, extended the scope

of the District Court’s ruling by citing, in addition to

Title 15, § 109 of the D.C. Code, also § 108, Prejudgment

Interest on Liquidated Claims. If Respondent’s claim is

for a liquidated debt, it necessarily arose under the con-

tract and thus does not amount to a breach of contract.

The District Court was limited to a Wunderlich Act

type review of the record of the initial administrative

hearing. However if the claim was for breach of con-

tract, then Title 12, § 301, D.C. Code (App. J) should

have been applied by the court to bar this claim.

REASONS FOR GR: NTING THIS PETITION

FOR WRIT OF CERTIORARI

A. Granting This Writ Will Resolve a Conflict Between

Long-Standing Precedents of This Court and the Re-

cent Ruling of the Court of Appeals for the District

of Columbia Circuit.

The procedure utilized by the District Court and sanc-

tioned by the Court of Appeals for the District of Co

lumbia Circuit has overruled well-established and effective

precedents of this Court favoring a single administrative

resolution of disputes arising under public contracts, fol-

lowed thereafter by limited judicial review pursuant to

Wunderlich act principles. This Court, in exercising its

Supervisory responsibilities over the United States Courts

of Appeals (Article III, § 1, United States Constitution),

has traditionally considered conflicts between its rulings

5 The District Court acknowledged that its review of the dispute

before it was limited by contract to principles and standards iden-

tical to those set forth in the Wunderlich Act, 41 U.S.C. §§ 321-822

(App. L). The language and principles of this Act are incorporated

into the disputes article of the instant contract and provide that

the administrative decision was final and conclusive unless it was

determined to be unsupported by substantial evidence, arbitrary,

capricious, or so grossly erroneous as to imply bad faith. However,

the final resolution of all questions of law is reserved for the court

solely upon the basis of the (initial) administrative record. In

order to avoid these constraints on its judicial review authority,

the District Court recharacterized the factual issue, as to the quan-

tum of an equitable adjustment, before the Board of Contract

Appeals to an action for implied breach of contract before the

District Court. This matter was then remanded to the administra-

tive tribunal for a de novo hearing as to whether Petitioner un-

reasonably delayed issuance of said final decisions.

and those of the Courts of Appeals as a valid basis for

granting writs of certiorari. Egan v. City of Aurora,

Ill., 365 U.S. 515, 81 S.Ct. 684, 5 L.Ed.2d 741, on re-

mand 291 F.2d 706 (1961).

The instant conflict is between the method utilized by

the District Court in avoiding judicial review, which was

sanctioned by the United States Court of Appeals for the

District of Columbia Circuit in the case at bar, and this

Court’s prior rulings, particularly in United States v.

Carlo Bianchi & Company, 373 U.S. 709, 83 S.Ct. 1409,

10 L.Ed.2d 652 (1963), as well as United States v. An-

thony Grace & Sons, Inc., 384 U.S. 424, 86 S.Ct. 1539,

16 L.Ed.2d 662 (1966), and United States v. Utah Con-

struction and Mining Company, 384 U.S. 394, 86 S.Ct.

1545, 16 L.Ed.2d 642 (1966). Bianchi stands for the

proposition that appellate review of an administrative

proceeding pursuant to the standard disputes article is

limited to consideration of the administrative record and

a de novo hearing on the matter is barred.

The District Court refused to follow the unequivocal

mandate of this Court in this line of cases and, instead

of reviewing the administrative record under Wunder-

lich Act principles (App. L), as provided for by the con-

tract disputes article (App. H), completely recharacter-

ized the action as a de novo breach of contract for the

contracting officer’s failure timely to issue a final deci-

sion, a matter not raised by the evidence during the ad-

ministrative hearing, and ruled that the denial of inter-

est as part of the equitable adjustment by the Board of

Contract Appeals presented a question of law. Cf. Utah

Construction and Mining, supra, at 419-20. This Court

has long held that the determination of an equitable ad-

justment under a Government contract presents a factual

issue. United States v. Callahan Walker Company, 317

U.S. 56, 61, 63 S.Ct. 118, 87 L.Ed. 49, 53 (1942).

In view of the affirmation by the Court of Appeals of

the District Court’s action in this case, it can reasonably

be anticipated that the District Court will continue to

permit de novo consideration of such matters in lieu of

limited judicial review under the contractually mandated

Wunderlich Act principles. The failure of the courts

below to follow this Court’s mandate as expressed in

Bianchi and Utah has created a contractual crisis for

Petitioner inasmuch as the remaining United States Dis-

trict Courts having jurisdiction over its contracts (Mary-

land and the Eastern District of Virginia) have to date

not followed the rationale utilized by the District of

Columbia court in the case at bar. If this trend is per-

mitted to continue, it will challenge United States v.

Carlo Bianchi & Co., supra, which previously resolved

this very issue. Cf. Wells and Wells, Inc. v. United

States, 269 F.2d 412 (C.A. 8, 1959). For the present,

however, Petitioner is confronted with venue shopping

by its contractors seeking to avoid the contractually

mandated Wunderlich type review of administrative

hearings. Any contractor who has been less than success-

ful in an administrative appeal would weleome the oppor-

tunity for a de novo hearing in order to recast its case

and utilize evidence that it has intentionally or other-

wise omitted.

The failure of the courts below to abide by these time-

honored decisions of this Court has injected confusion

into what has been a settled area of the law and war-

rants this Court’s examination of this matter as an exer-

cise of its supervisory powers. This can best be accom-

plished by granting a writ of certiorari.

B. Judicial Economy Mandates Reversal of the Decision

Below.

The District Court’s treatment of the case at bar ac-

corded Respondent two separate opportunities to litigate

its claim for interest, first in the administrative proceed-

ing provided for in the contract (initial hearing), and

thereafter by the de novo hearing on the District Court’s

remand. Respondent proffered no evidence in the initia!

hearing to support its claim for interest as a component

of an equitable adjustment or on the basis of unreason-

able delay in the issuance of the Contracting Officer’s

final decisions.

This Court, intent on encouraging judicial economy,

has long favored limited review of an administrative de-

termination. Historically, administrative findings were

final and conclusive, absent a finding of fraud, bad faith,

or implicit fraud, as far back as Kihlberg v. United

States, 97 U.S. (7 Otto) 398, 24 L.Ed. 1106 (1878) and

Ripley v. United States, 223 U.S. 695, 56 L.Ed. 614

(1912), and, more recently, United States v. Callahan

Walker Company, supra, and United States v. Carlo

Bianchi and Company, supra. Upon the enactment of

the Wunderlich Act, 41 U.S.C. §§ 321-322 (App. L), it

was established that the criteria for judicial review of

administrative decisions would be that the “decision shall

be final and conclusive unless the same is fraudulent or

capricious or arbitrary or so grossly erroneous as neces-

sarily to imply bad faith or is not supported by substan-

tial evidence” and it was also provided that “[n]o Gov-

ernment contract shall contain a provision making final

on a question of law the decision of any administrative

official, representative or Board.” These provisions are

contained in the disputes articles of all Federal Govern-

ment construction contracts. Petitioner utilizes the sub-

stantially identical disputes clause in its construction

contracts (App. H). Consequently, the Wunderlich Act

review criteria are binding upon the parties contractually

if not by statute. This Court has held:

“The disputes clause is a clear, unambiguous pro-

vision applicable at all times and binding on all

parties to the contract. No court is justified in dis-

regarding its letter or spirit.” Crown Coat Front

Co. v. United States, 386 U.S. 508, 512, 87 S.Ct.

1177, 18 L.Ed.2d 256, 264 (1967).

In Utah, supra, this Court, discussing United States v.

Carlo Bianchi and Company, said:

“This is no more than our decision in Carlo Bianchi

requires. We there held that administrative findings

in the course of adjudicating claims within the dis-

putes clause were not to be retried in the Court of

Claims but were to be reviewed by that court on the

administrative record. This result, which was re-

quired both by the contract of the parties and by

the Wunderlich Act, avoids ‘a needless duplication

of evidentiary findings and a heavy additional bur-

den in the time and expense required to bring liti-

gation to an end,’ 378 U.S., at 717, and it encourages

the parties to make a complete disclosure at the

administrative level, rather than holding evidence

back for subsequent litigation. H. R. Rep. No. 1380,

83d Cong., 2d Sess., 5 (1954). These same reasons

support the finality, in a suit for delay damages, of

all valid and appropriate administrative findings

already made in the course of resolving a dispute

‘arising under’ the contract.”

This Court, in an effort to promote judicial economy,

stated in Bianchi:

“Moreover, the standards of review adopted in the

Wunderlich Act—‘arbitrary,’ ‘capricious,’ and ‘not

Supported by substantial evidence’—have frequently

been used by Congress and have consistently been

associated with a review limited to the administra-

tive record. [Footnote omitted.] The term ‘substan-

tial evidence’ in particular has become a term of art

to describe the basis on which an administrative

record is to be judged by a reviewing court. This

standard goes to the reasonableness of what the

agency did on the basis of the evidence before it,

for a decision may be supported by substantial evi-

dence even though it could be refuted by other evi-

dence that was not presented to the decision-making

body.” (Bianchi, supra, at 715; emphasis in original. )

As in Bianchi, Respondent was accorded a full adver-

sary hearing in the administrative proceeding, including

the right to advance evidence on any theory for the

recovery of interest, with an opportunity for judicial re-

view thereafter; hence the retrial of the same matter

ordered by the District Court was contrary to time-

honored precedents of this Court. The District Court, in

its effort to fashion a remedy, allowed Respondent a

second evidentiary bite at the interest apple, thereby

requiring Petitioner twice to defend against the identical

claim.

Notwithstanding the existence of evidence that re-

flected delay in the issuance of the two final decisions in

this action, Respondent, having omitted to bring same

forward during the initial administrative hearing, was

prohibited from relitigating the case, under the rule in

Bianchi. Upon receiving an adverse decision, Respondent

should not later be permitted to contend that Petitioner

was unreasonable in denying interest inasmuch as the

initial record before the Board of Contract Appeals was

completely devoid of evidence supportive of that conten-

tion. Thus, the District Court erred in ordering and,

thereafter, relying on the second administrative hearing

in deciding this case.

Your Petitioner is now positioned as the Federal Gov-

ernment was during the debate leading to the Wunder-

lich Act with the exception that by virtue of its Compact,

its administrative appeals are to the District Court and

not to the Court of Claims.

“Tt would not be possible to justify the retention of

the finality clauses in Government contracts unless

the hearing procedures were conducted in such a

way as to require each party to present openly its

side of the controversy and afford an opportunity of

rebuttal.” H. R. Rep. No. 1380, 83d Cong., 2d Sess.,

5; cited in Bianchi, supra, at 717.

Without the certainty that your Petitioner will be

required to defend against claims under its contracts

only once, no purpose is served in attempting to maintain

its current administrative disputes procedure, including

the administrative adversary trial proceeding which is

identical to that mandated in the disputes procedure of

Federal Government contracts prior to the Contract Dis-

putes Act of 1978.

The consequences of the decision complained of extend

to the District Courts having jurisdiction over Peti-

tioner’s cases, as these would also become unduly bur-

dened. Petitioner currently has 350 docketed cases in

varying stages of the administrative process. There are

an additional 300 claims expected to be appealed admin-

istratively by July 1982. If these cases are now subjected

to de novo hearings upon judicial review, or if the par-

ties are granted an opportunity to supplement the ad-

ministrative record, the three affected District Courts

and the two Courts of Appeals will be inundated with

this complicated construction litigation in lieu of the

relatively simple limited Wunderlich type judicial review.

Not only does the established WMATA claims resolu-

tion procedure concern a substantial number of cases,

but these cases generally involve multiple time-consuming

issues. The complexity of these contract issues and the

requirement expeditiously to decide the detailed engineer-

ing and construction disputes have been facilitated by the

expertise of administrative judges who specialize in such

matters. If the instant decision stands, the long term

impact on the affected District Courts will be substantial,

as these cases will proceed to the District Court for de

novo trial in lieu of a judicially limited review of speci-

fied errors in the administrative proceeding. Thus this

Court’s decision in United States v. Carlo Bianchi &

Company, supra, will be rendered inutile.

C. The WMATA Compact Mandates That the Court of

Appeals for the District of Columbia Apply the Law

Thereof.

This Court has in recent years acknowledged that is-

sues concerning the interpretation and application of in-

terstate compacts are federal questions, only finally re-

solvable by this Court. Lake County Estates, Inc. v. Ta-

hoe Regional Planning Agency, 440 U.S. 391, 99 S.Ct.

1171, 59 L.Ed.2d 401 (1979). Thus when the Court of

Appeals failed to heed the clear Congressional mandate

to apply the District of Columbia statute of limitations

(App. J) to this action, it created an issue resolvable

only by this Court.

The District Court, having received the findings of

fact after the second Board of Contract Appeals hearing,

determined that Petitioner had breached its contract with

Respondent by delaying issuance of its final decisions on

two claims thereunder. The trial court then awarded

Respondent interest for breach of contract pursuant to

Title 15, § 109, District of Columbia Code (App. K) from

the dates of initial notice of the respective claims (Au-

gust 20, 1973, for the claim designated “double cir-

cuitry,” [App. N], and December 13, 1973, for that des-

ignated “Wye interlocking,” [App. M]). In so doing,

the District Court relied on the WMATA Compact, § 80

(App. I), which provides in part that Petitioner shall be

liable for its torts and contracts in accordance with the

laws of the applicable signatory. Petitioner timely raised

as a defense the District of Columbia statute of limita-

tions (Title 12, § 301, D.C. Code; App. J), which is

three years, noting that the claims arose on August 20,

1973, and December 13, 1973, respectively, whereas suit

in the District Court was filed more than three years

thereafter on April 14, 1977. The District Court held

that the District of Columbia statute of limitations as to

contract matters was inapposite (App. C).

The refusal of the District Court to apply the District

of Columbia statute of limitations (App. J) was erro-

neous inasmuch as § 80 of the WMATA Compact (App.

I) requires the application of the appropriate law of the

District of Columbia, Maryland, or Virginia to Peti-

tioner’s contract claims. District of Columbia law was

recognized by the District Court as the controlling law in

this action; hence the statute of limitations was appli-

cable. On this point the District Court stated:

“Defendent [WMATA] argues that this Court has

sua sponte characterized this action as one based on

an implied breach of contract and in so doing has

deprived defendant of the opportunity to put for-

ward a defense based on the statute of limitations.

This argument fails to realize, however, that the

Court has characterized this action as an implied

breach of contract action for purposes of fashioning

appropriate relief. Moreover, in an action properly

before an appeals body, ‘the statute of limitations

thereon cannot commence to run until final board

action occurs.’ Conn v. United States, 366 F.2d 1019,

1021 (1966). This contract dispute, concerning the

right of plaintiff to full compensation for the cost

of labor and materials expended to complete changes

and extra work that defendant WMATA ordered,

was properly before the Board. The statute was

therefore tolled during the period of the Board’s

deliberations and this action, commenced on April

14, 1977, is accordingly timely.” (Opinion, C.A. 77-

0657, Nov. 13, 1979; App. D)

The District of Columbia statute of limitations spe-

cifically provides that the three-year bar is applicable to

breaches of contract, express or implied. It was therefore

incomprehensible for the District Court in “fashioning

appropriate relief” to award interest for an implied

breach of contract pursuant to one District of Columbia

statute and totally to ignore the applicable District of

Columbia statute barring such a claim. Breach of con-

tract actions are not properly brought before a board

of contract appeals for administrative resolution be-

cause breaches differ from disputes arising under the

contract in that there is no remedy-granting clause

available which would provide a basis for their relief.

Apparently, the District Court did not comprehend that

an action for breach of contract due to an unreasonable

delay in issuing a final decision was immediately re-

dressable in court. Utah, supra. The statute of limita-

tions is tolled only as to disputes arising under the

contract. Crown Coat Front Company v. United States,

supra, 386 U.S. at 521-22. Where there is no administra-

tive remedy to be exhausted, as in the case of a separate

and distinct breach of contract, the statute of limitations

is not tolled.

The Court of Appeals also declined to apply the rule of

law in Giant Food, Inc. v. Jack L. Bender, 399 A.2d

1293, 1805 (1979), wherein the Court of Appeals for the

District of Columbia stated:

“Section 15-109 is inconsistent with Section 15-108

to the extent that it authorizes interest only on the

judgment from the date of judgment, rather than

on the principal amount due from the date due until

the date paid.

At first blush the applicability of this case appears to

be governed by the District of Columbia Self-Govern-

ment and Reorganization Act, Title I § 431 D.C. Code,

as amended; however, the issue in the instant case is the

proper application of WMATA Compact § 80 (App. I),

a federal statute. The law of the District of Columbia,

as declared by its highest court, with respect to the in-

consistency between Title 15, §§ 108 and 109 of the D.C.

Code, has been decided. The plain language of the

WMATA Compact mandated the application of Giant

Food, supra, to WMATA. (See Erie Railroad Company

v. Tompkins, 304 U.S. 64, 58 Sup.Ct. 817, 82 L.Ed. 1188

(1938).

If the claims here were in fact liquidated,* as inferred

by the Court of Appeals (App. A), then it was necessar-

ily a claim cognizable under the Changes article, a rem-

edy-granting clause (App. H). Acordingly, the District

Court’s review should have been limited to Wunderlich

Act principles, and any entitlement to interest had to be

resolved solely on the basis of the original administrative

record where Respondent presented no evidence on this

issue.

If the District Court was correct in concluding that

the matter before it was a breach of contract action for

delay in the issuance of the final decisions in this case,

then the District of Columbia statute of limitations was

applicable and Respondent’s recovery should have been

denied. Prior to the filing of its complaint before the

District Court on April 14, 1977, Respondent had never

claimed entitlement to interest for such delay. Thus the

claims which arose more than three years prior to that

date (viz., August 30, 1973, and December 13, 1973,

respectively) should have been denied as untimely.

® It should be noted that neither the District Court nor the Court

of Appeals acknowledges that WMATA is entitled to any time for

the administrative resolution of these claims, given that the Dis-

trict Court dates the award of interest from the date the claims

were first asserted. The administrative disputes procedure for

which the parties contracted necessitates some reasonable amount

of time for consideration of the claim, issuance of a final decision

when warranted, and thirty additional days for the taking of an

appeal. The award of interest during this period illustrates a

complete misunderstanding of Government contracting principles

and procedures.

CONCLUSION

If the decision complained of is permitted to stand,

Petitioner’s ten-year system of resolving contract dis-

putes upon Wunderlich Act principles on a uniform basis

in all three of its political jurisdictions will suffer dra-

matically. The prospect of additional litigation in the

already crowded courts is inapposite to the aims and

standards of justice in the federal judiciary in the

greater Washington metropolitan area. The necessity for

two fact-finding trials on Petitioner’s contract claims has

seriously impaired the administrative resolution of dis-

putes and will ultimately result in the litigation of all

construction claims in the District Courts in the first in-

stance. This increased burden on the affected District

Courts and Courts of Appeals, for judges and support

facilities to handle the de novo case loads, are highly detri-

mental consequences that may be anticipated as a result of

the decisions below. Conservation of judicial resources is

therefore a meaningful consideration in this matter.

The egregious aspect of this case is the refusal of the

District Court and the Court of Appeals to follow United

States v. Carlo Bianchi & Company, supra. That case

considered and resolved the identical issue. There, this

Court said that the legislative history of the Wunderlich

Act “leaves little doubt that the review intended was one

confined to the administrative record.” Bianchi at 716.

This matter is most worthy of detailed inquiry by this

Court in the exercise of its supervisory authority, and it is

for this and the additional reasons advanced herein that

this petition for a writ of certiorari should be granted.

Respectfully submitted,