Petition for Writ of Certiorari — Advance Building Maintenance Co. v. United States

86-204

Supreme Court, U.S.

FILED

No. A-927 AUG & 1986

JOSEPH F. SPANIOL, JR.

IN THE CLERK

Supreme Court of the United States

OcToBER TERM, 1986

ADVANCE BUILDING MAINTENANCE COMPANY,

UNITED STATES OF AMERICA.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF THE UNITED

STATES FROM THE UNITED STATES COURT

OF APPEALS FOR THE FEDERAL CIRCUIT

SAM ZALMAN GDANSKI, Esq.

Attorney for Petitioner

39 Lawrence Place

Spring Valley, New York 10977

(914) 425-3300

QUESTIONS PRESENTED

Whether the decision of the

Court of Appeals in the Federal Circuit

denying the iiveat of the Appellant vio-

lates the due process provisions of the

Constitution by virtue of its failure to

recognized that current Commercial Law

permits excusal from a contract where it

is impracticable as the contract price

because a failure to recognize said

concept will have the effect of bank-

rupting the contractor and giving undue

enrichment and unjustment to the

Government.

ee 1

EE ee 2

Cn 3

re 4

a 5

Reasons For Granting Writ.............. 13

Es Seas yh koe 4 dass oss e040 6 6 15

Appendix A

Order of the United States Court of

Appeals for the Federal Circuit...... 16

Order of the Court for the Federal

Circuit denying the rehearing of

the Court of Appeals for the

CC EE 18

Order from the Supreme Court extending

the time to file Petition for Writ

of Certiorari of the United States

Supreme Court until August 9,

TABLE OF CASES

PAGE

Clarke Enterprises, ASBCA No. 24306,

82-1 BCA Par. 15,627 (Jan. 29, 1982)...... 14

United States v. Hamilton Enterprises,

Inc., 711 F.2d 1038 (CAFC 1963)........... 15

lv

STATUTUES

PAGE

Amendment V, United States

ene a Oe aes 4

RESTATEMENTS

Page

RESTATEMENT (SECOND) OF CONTRACTS,

Section 261 commend d (1979)......... 13

IN THE SUPREME COURT OF THE UNITED STATES

Term, 1986

No.

ADVANCE BUILDING MAINTENANCE COMPANY,

v.

UNITED STATES OF AMERICA

PETITION FOR WRIT OF CERTIORARI TO

THE SUPREME COURT OF THE UNITED STATES

To the Honorable, the Chief Justice and

Associate Justices of the Supreme Court of the

United States:

ADVANCE BUILDING MAINTENANCE COMPANY ,

the petitioner herein, prays that a writ

of certiorari issue to review the judg-

ment of the United States Court of

Appeals for the Federal Circuit of

April 30, 1986, of which rehearing was

denied on May 8, 1986.

OPINIONS BELOW

The order of the United States

Court of Appeals for the Federal Circuit

of March 12, 1986 is printed in Appendix

A hereto, infra, page 16. The order

denying rehearing is printed in Appendix

A hereto, infra, pagelg , dated May 8,

1986.

JURISDICTION

The judgment of the United

States Court of Appeals For the Federal

Circuit (Appendix A, infra, page 16) was

entered on March 12, 1986. The petition

for rehearing was denied on May 8, 1986

(Appendix A, infra, pagel8). The

jurisdiction of the Supreme Court is

invoked under Title 28 of the USCA Sec.

LZ33.

QUESTIONS PRESENTED

Whether the decision by the Court

of Appeals for the Federal Circuit deny-

ing the appeal of the Appellant violates

the due process provisions of the Consti-

tution by virtue of its failure to

recognize that current Commercial Law

permits excusal from a contract where it

is impracticable at the contract price

because a failure to recognize said

concept will have the effect of bankrupt-

ing the contractor and giving undue en-

richment and unjustment to the Govern-

ment.

|

4

CONSTI* *TION AND STATUTORY

PROVISIONS INVOLVED

This case involves the fourth

section of the Fifth Amendment to the

Constitution of the United States, which

provides as follows:

No person shall be held to

answer for a capital, or otherwise

infamous crime, unless on a presentment

or indictment of a Grand Jury, except in

cases arising in the land or naval forces

or in the Militia, when in actual service

in time of War or public danger; nor

shall any person be subject for the same

offense to be twice put in jeopardy of

life or limb; nor shall be compelled in

any criminal case to be a witness against

himself, nor be deprived of life, liberty

or property, without due process of law;

nor shall private property be taken for

public use, without just compensation.

a ee ee Oe

STATEMENT OF THE CASE

Wrongful and intentional acts are

the basis of this action brought by

Advance Building Maintenance Company.

The decision of the Armed Services Board

of Contract Appeals 27183 and 28219 were

reviewed by the Court of Appeals for the

Federal Circuit. The contract F03602-82-

C-0003 was awarded by the Base Contract-

ing Division at Little Rock Air Force

Base, Arkansas. This was the first such

mess services attendant contract that the

Appellant ever obtained and, thereafter,

ceased performance due to the fact that

it was losing more than Twenty Thousand

and 00/100 ($20,000.00) Dollars a month.

The Appellant's contention was that its

default was excused based on the theories

of mistake in bid, commercial impracti-

cability, overreaching and unconscion-

ability. The Board awarded the Govern-

ment Four Hundred Five Thousand Five

6

Hundred Seventy Four and 79/100

$475,574.79) Dollars in excess reprocure-

ment costs.

THE FACTS

The Contracting Officer in

originally evaluating the Appeliant's

bid believed that it was too low and

suspected a mistake in bid. In fact, its

own food services officer, who was the

technical representative who prepared

the Government's estimate felt that the

Appellant's bid was too low. The

Contracting Officer requested several

verifications from the Appellant but

never disclosed the Government's own

dollar estimate of the job. This was

particularly and specifically important

because this is the first time a new

format was to be utilized by the

Government and any other information

furnished the contractor would be

meaningless.

The Appellant provided food

services and it became apparent that it

was in a position of continually losing

Twenty Five Thousand and 00/100

($25,000.00) Dollars and was forced to

cancel the job. The Government there-

fter terminated the contract for default

and reprocured the services from another

contractor. The Government then attempt-

ed to assess the contractor but not only

with the first year's difference in

price, but also the excess reprocurement

costs for the second and third year

which is totally unconscionable. Since

these are option years, it would have

been obvious that the Government should

have been prevented from awarding an

option follow on contract where it was

calculated to have the effect of putting

a contractor out of business.

SUMMARY OF ARGUMENTS

Prior to bid award, the Govern-

ment withheld material information from

Appellant in the form of the Government's

own dollar estimate of the cost.

According to Case Law as established by

both the Board of Contract Appeals and

the U.S. Court of Appeals, such cost

estimates have been found to be so

material that by not disclosing them

under certain circumstances, the Govern-

ment failed to take sufficient verifica-

tion action and violated procurement

regulations. The Board had concluded

that the Government's estimate was

immaterial. The Board is incorrect in

its conclusion and failed to apply the

appropriate Case Law which clearly

supports the Appellant's contention that

the Government acted improperly in its

verification of bid procedure. Next,

the Government's action in withholding

its estimate and awarding Appellant a

contract that it felt was a very low

price, constituted overreaching and

resulted in an unconscionable contract.

Third, even if the Government had not

1 0

withheld the material information, the

contract as awarded to the Appellant was

unconscionable. The below graph as

evidenced the Appellant's $38,921.00

bid is sufficiently and appreciably out-

side the mainstream of prior contractors

or subsequent contractors. To hold a

contractor to this dollar amount and

assess the excess reprocurement costs

will bankrupt him.

Contractor Contract Amount Per Month

Chesapeake FY1980 $ 50,826.36

Chesapeake FY1981 54,955.62

Chesapeake Oct.-Dec.

1981 | 75,024.00

Advance Building Main-

tenance Company* FY1982 38 , 921.00

Moore's Cafeteria

Remainder FY1982

(May-Sept. ) 55,000.00

Moore's Cafeteria

FY1983 53,833.33

Ma ee ania V gene ated WE é

PPT RIES FA RIE ae se

Contractor Contract Amount Per Month

Hamilton Enter-

prises FY 1984 $ 70,877.25

*First AFSCAG contract, additional work added.

The information supplied in this chart

has been plotted graphically for illustration

purpose as follows:

12

Fiscal! Year

LYO_ /93/ [782 995 p97 346

T i rf i ]

7

om.

72

fe ben

68i~

bat

b4-

REASONS FOR GRANTING WRIT

The right under the due process

clause of the United States Constitution

requires a fair hearing and not take away

a contractor's property without just

compensation. According to the Restate-

ment (Second) of Contracts, Section 261

comment d (1979), the standard for

commercial impracticability is satisfied

where performance was impracticable at

the contract price, "because (of the)

extreme and unreasonable difficulty,

expense .. . or loss to one of the

parties involved.'"' The Board recognized

the validity of the accounting analysis

performed by Arthur Andersen & Co. for

Appellant. In its decision, the Board

noted that the Appellant had established

that its loss on the instant contract

was $118,000.00. The Board also found

that the Appellant incurred an overall

business loss of $57,034.00 for fiscal

14

year 1982. Although the Board did not

feel it necessary, Arthur Andersen & Co.,

the accountants, who rendered testimony,

also analyzed the potential loss that

Appellant would have incurred had it

continued to perform until October l,

1982, the first year only which would

have been $191,251.00 resulting in an

overall business loss for that year of

$130,247.00. This does not even consider

the imposition of punishment for the

second and third year. To require and

neglect to recognize the rules of modern

day courts in recognizing commercial

impracticability even by objective

standards just because this is a

Government contract, violates the

contractor's constitutional safeguards.

Recognized Case Law before the Court of

Appeals for the Federal Circuit and

Government Contract Law in the Clarke

Case, ASBCA No. 24306, 82-1 BCA Par.15627

il al ae a A

15

(Jan. 29, 1982) and the Hamilton Case,

U.S. v. Hamilton Enterprises, Inc.,

711 F2d 1038 (Ct. App. Fed. Cir. 1983)

have recognized that where the Government

fails to provide the contractor with the

requisite specific important information

which in this case was a dollar amount

is unfair for the Government then to

require the contractor to perform at his

own bankruptcy. ‘

CONCLUSION

For the for. ‘oing reasons this

Petition for Writ of Certiorari should

be granted.

ey For Appellant

APPENDIX

1 6

APPENDIX A

Note: This opinion will not be published in a

printed volume because it does not add

Significantly to the body of law and is not of

widespread legal interest. It is a public

record. It is not citable as precedent. The

decision will appear in tables published

periodically.

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

ADVANCE BUILDING MAINTENANCE COMPANY,

Appellant , Appeal No.

" 85-2505

THE UNITED STATES,

Appellee.

NY NY NY NY NY NY NY NY NY

DECIDED: March 12, 1986

Before MARKEY, Chief Judge, FRIEDMAN, Circuit

Judge, and RE, Chief Judge, United States Court

of International Trade.*/

PER CURIAM.

The decision of the Armed Services Board of

Contract Appeals (Board) ASBCA Nos. 27183 and

28219, denying the appeals by the appellant

from decisions of the contracting officer, is

affirmed on the basis of the opinion of the

Board, reported at 85-2 B.C.A. (CCH) Par. 18,706

(1985).

*/ Sitting by designation pursuant to 28 U.S.C.

Sec. 291(a).

1g

United States Court of Appeals for the Federal

Circuit, 717 Madison Place, N.W., Washington,

D.C. 20439

Francis X. Gindhart

Clerk Date: May 8, 1986

Appeal No. 85-2505, Advance Building Maintenance

Company v. U.S.

Dear Mr. Gdanski:

Your recently submitted paper cannot

be filed for the following reason(s):

( ) Your entry of appearance was not filed. CAFC

Rule 7

( ) You are not admitted to the bar of this

Court. CAFC Rule 6

(X) This paper is out of time. FRAP 40

( ) Additional copies are needed. FRAP 27(d)

(X) Other The mandate issued in this appeal

April 8, 1986; therefore, this Court no

longer has jurisdiction in this case.

This paper is:

(X) Returned to you herewith.

( ) Retained pending correction of the noted

discrepancy.

If you have any questions or need assistance,

please contact the Clerk's Office.

Very truly yours,

Francis X. Gindhart

By:

Elizabeth J. Carroll

Deputy Clerk

*Motion For Rehearing En Banc

SUPREME COURT OF THE UNITED STATES

No. A-927

ADVANCE BUILDING MAINTENANCE COMPANY,

Applicant ,

UNITED STATES.

ORDER EXTENDING TIME TO FILE PETITION FOR

WRIT OF CERTIORARI

UPON CONSIDERATION of the application

of counsel for the applicant,

IT IS ORDERED that the time for filing

a petition for a writ of certiorari in the above-

entitled cause be, and the same is hereby,

extended to and including August 9, 1986.

/s/ Warren E. Burger

Chief Justice of the United States

Dated this 3rd

day of June, 1986.