Opposition Brief — United States v. Woodcrest Construction Co.

Office-Supreme Court, U.S.

———— . eT)

AUG 2 51969

Supreme Court of the Auitpd State

Iy THE

|

JOHN F. DAV!

Ocroser TreRM, 1969 S, CLERK

401

NO, ---0-=--o-0

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i

i Unrrep States or AMERICA,

Petitioner,

—_—V.—

the

De-

gals Woopcrest Construction Company, Inc.

iC, and Tae Home Inpemniry CoMPaNy,

i Respondents.

eee OSNIOTom

Pa

BRIEF IN OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI TO THE UNITED STATES

COURT OF CLAIMS

SOO

M. Cart Levine, Morcunas & Foreman

Attorneys for

Woodcrest Construction Company,

Inc. and The Home Indemnity Com-

pany

Apert Foreman, Esq.

Of Counsel

——SS eee

INDEX

CrraTIons

PAGE

Cases:

Chesapeake & Potomac Telephone Co. v. United States,

981 U. S. 385 10

Farnsworth & Chambers Co., Inc. v. United States, 170

Court of Claims 30 8

Flippin Materials Company, et al. v. United States, 160

Court of Claims 357 8

Morrison-Knudsen Company, Ine. v. United States,

170 Court of Claims 712 7

United Contractors v. United States, 177 Court of

Claims 151, 368 Fed. 2d 585 6

United States v. Anthony Grace & Sons, Ine., 384 U. 8S.

424 6, 8-9

United States v. Carlo Bianchi & Co., 373 U. S. 709 .. 6,8

United States v. Esnault-Pelterie, 303 U. = Saae 10

United States v. Wells, 283 U. S. 102 10

Universal Camera Corp. v. National Labor Relations

Board, 340 U. S. 474 3, 4, 5, 8, 11

Statute and Rule:

Wunderlich Act, Act of May 11, 1954, ¢. 199, 68 Stat.

81, 41 U. S. C. 321 10

Rules of the United States Supreme Court, Rule 19. §

In THE

Supreme Court of the United States

Ocroser TERM, 1969

Unirep States oF AMERICA,

Petitioner,

—_—V.—

Woopcrest Construction Company, Inc.

and Tue Home Inpemnity CoMPANY,

Respondents.

—_<>—

BRIEF IN OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI TO THE UNITED STATES

COURT OF CLAIMS

The Rasic Fact Is Undisputed: the Government in Its

Invitation to Bid, Distributed to Respondent and All

Other Bidders Boring Information Which Was False

The Government admitted that the boring information,

which it distributed to respondent and all other bidders

on this project, did not disclose the presence of sub-sur-

face water (although the Government’s borings did find

such water), and, on the contrary, represented that there

was no sub-surface water encountered at the site.

The Government admits this misrepresentation, but, it

argues, respondent should not have been misled by the

false information given to it, because respondent shoula

/

have ignored this false information and relied on its oy,

knowledge as to what the conditions were at the site, not

based on direct information as to what was exactly on the

site, but rather that respondent should have presumed,

from work it had performed in other areas in Florida

that the information was false. On this argument, the

Board of Contract Appeals held that the contractor should

have ignored the direct misrepresentations made by the

Government and substituted its own guesswork. This uw.

warranted finding, in and of itself, justified the Court of

Claims in setting aside the findings of the Board of Cop.

tract Appeals.

Whether the inspection made by Woodcrest was a hasty

or a slow inspection, actually plays no part in the deter.

mination of this case. What the Government is arguing

is that Woodcrest substitute its guesswork (for it never

did work at the base itself) as to what the sub-surface con.

ditions might be, against the Government’s direct repre-

sentations as to what the Government purportedly found,

by borings actually taken at the site by the Government

The purpose of a site inspection is, basically, not to go

below the ground where direct representations have been

made as to what the sub-surface conditions are, but rather

to see the conditions as they exist at the site for the pur.

pose of determining methods of access, egress, storage of

materials, placement of equipment, ete. The only time a

contractor could possibly be charged with knowledge sv-

perior to the Government's as contained in the direct rep-

resentations of the boring sheets, would be if the contrac.

tor was actually working at the exact location where the

borings were taken and, therefore, had direct knowledge

that what the Government represented was false.

Bearing in mind that the Government advertises for com-

‘tive bids, and awards its contracts to the lowest re-

ible bidder, and issues boring information so as to

avoid the possibility of the contractors adding a substan-

tial amount of money to their bids because they are not

familiar with the sub-surface conditions, a contractor is

certainly never justified in substituting its own guesswork

against & direct representation made by the Government.

It is respectfully submitted that the Court of Claims in

no way misinterpreted or misapplied Universal Camera

Corp. v. National Labor Relations Board, 340 U.S. 474.

Mr. Justice Frankfurter’s opinion, and particularly the

footnotes which he cites in connection therewith, are most

significant. The Government's position taken here, that

the Court of Claims should have ignored completely re-

spondent’s arguments and proof and consider only the

Government’s argument, was held untenable by Mr. Jus-

tice Frankfurter, when he stated at 481 and 482:

“They reported that under a ‘prevalent’ interpretation

of the ‘substantial evidence’ rule ‘if what is called “sub-

stantial evidence” is found anywhere in the record to

support conclusions of fact, the courts are said to be

obliged to sustain the decision without reference to

how heavily the countervailing evidence may pre-

ponderate—unless indeed the stage of arbitrary de-

cision is reached. Under this interpretation, the courts

need to read only one side of the case and, if they find

any evidence there, the administrative action is to be

sustained and the record to the contrary is to be

ignored.’ Their view led them to recommend that Con-

gress enact principles of review applicable to all

agencies not excepted by unique characteristics. One

I

4

of these principles was expressed by the formula that

judicial review could extend to ‘findings, inferences, or

conclusions of fact unsupported upon the whole

by substantial evidence.’ So far as the *history of this

movement for enlarged review reveals, the phrase

‘upon the whole record’ makes its first appearance jp

this recommendation of the minority of the Attorney

General’s Committee. This evidence of the close re.

lationship between the phrase and the criticism out of

which it arose is important, for the substance of this

formula for judicial review found its way into the stat.

ute books when Congress with unquestioning—we

might even say uncritical—unanimity enacted the Ad.

ministrative Procedure Act.”

After holding that the same standard of review and

proof was applicable to review of the Labor Board deter.

minations under the Taft-Hartley Act, to determinations

of other Boards under the Administrative Procedure Act,

Mr. Justice Frankfurter stated at 487 and 488:

“Whether or not it was ever permissible for courts to

determine the substantiality of evidence supporting a

Labor Board decision merely on the basis of evidence

which in and of itself justified it, without taking into

account contradictory evidence or evidence from which

conflicting inferences could be drawn, the new legisla-

tion “definitely precludes such a theory of review and

bars its practice. The substantiality of evidence must

take into account whatever in the record fairly detracts

from its weight. This is clearly the significance of the

requirement in both statutes that courts consider the

whole record.”

ae

And again at 488:

“Congress has merely made it clear that a reviewing

court is not barred from setting aside a Board deci-

sion when it cannot conscientiously find that the evi-

dence supporting that decision is substantial, when

viewed in the light that the record in its entirety fur-

nishes, including the body of evidence opposed to the

Board’s view.”

And again at 490:

“We conclude, therefore, that the Administrative Pro-

cedure Act and the Taft-Hartley Act direct that courts

must now assume more responsibility for the reason-

ableness and fairness of Labor Board decisions than

must be influenced by a feeling that they are not to

abdicate the conventional judicial function. Congress

has imposed on them responsibility for assuring that

the Board keeps within reasonable grounds. That re-

sponsibility is not less real because it is limited to

enforcing the requirement that evidence appear sub-

stantial when viewed, on the record as a whole, by

courts invested with the authority and enjoying the

prestige of the Courts of Appeals. The Board’s find-

ings are entitled to respect; but they must nonetheless

be set aside when the record before a Court of Appeals

clearly precludes the Board’s decision from being justi-

fied by a fair estimate of the worth of the testimony

of witnesses or its informed judgment on matters

within its special competence or both.”

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The cases of United States v. Carlo Bianchi € Co., 373

U.S. 709, and United States v. Anthony Grace & Sons, Inc,,

384 U.S. 424, in no way change this situation.

The Court of Claims is absolutely consistent here with

its decision in United Contractors v. United States, 177

Court of Claims 151, 368 Fed. 2d 585, where it stated:

167: “Nor can we accept the Board’s alternative

conclusion that plaintiff must have anticipated water

because it had ‘previous construction experience in the

area’, and, ‘if water was found in the quantity which

appellant [plaintiff] alleges, it must have been present

in prior, recent construction.’ * * * ”

168: “We hold, therefore, that plaintiff did not

expect or have reasonable cause to anticipate, from

information either within or without the confines of its

agreement, that it would encounter underground con.

ditions like those experienced. ‘The very purpose of

Article 4 is to prevent bidders from adding high con.

tingency factors to protect themselves against unusual

conditions discovered while excavating, for obviously

no one can ever know with certainty what will be found

during subsurface operations. The artich- is thus éx.

pressly designed to take at least some of the gamble

out of subsurface operations.’ Kaiser Industries Corp.

v. United States, supra, 169 Ct. Cl. at 323, 340 F. 2d

at 329. Its object is to persuade contractors to cal-

culate bids on the basis of the description contained in

the specifications, plans, and drawings (including the

borings). That rationale is served by allowing United

to recover an equitable adjustment because it had to

deal with unanticipated amounts of subsurface water.”

7

3 To the same effect, the Court of Claims held in Morrison-

’ Knudsen Company, Inc. v. The United States, 170 Court of

Claims 712:

h “The plaintiff, in submitting its bid and in entering

1 into the contract, had a right to rely upon the positive

representations that were made by the defendant re-

garding the sub-surface conditions that purportedly

had been encountered in drilling holes 260 and 261.

Levering & Garrigues Co. v. United States, 73 Ct. Cl.

566, 574 (1932). Such positive representations

amounted to a warranty (Atlantic Dredging Co. v.

United States, 53 Ct. Cl. 490, 502 (1918), aff’d 253

U.S. 1), and established a predicate for a possible ac-

eon wo Ft @&

t tion for breach of contract when it was later dis-

; covered by the plaintiff that the defendant’s repre-

; sentations concerning sub-surface conditions at the

: two points were untrue (Frank P. Ragonese et al. v.

United States, 128 Ct. Cl. 156, 163 (1954), 120 F. Supp.

; 768). It was not incumbent upon the plaintiff, prior

to submitting its bid and entering into the contract,

to conduct its own investigation in order to ascertain

the truth or falsity of the defendant’s positive asser-

tions regarding subsurface conditions encountered in

j drilling holes 260 and 261, even though the contract

contained a general condition stating that ‘The Con-

tractor further acknowledges that he has satisfied him-

self as to the character, quality and quantity of sur-

face and sub-surface materials to be encountered

insofar as this information is reasonably ascertain-

able from an inspection of the site, including all ex-

ploratory work done by the Government,’ and also

contained a technical provision stating that ‘the Gov-

8

ernment does not guarantee that materials other than

those disclosed by the explorations [i.e., the test bor.

ings] will not be encountered.’ Hollerbach v. Uniteg

States, 233 U.S. 165, 172 (1914); Flippin Materials

Co. v. United States, 160 Ct. Cl. 357, 365 (1963), 319

F. 2d 408. A significant factor in this connection was

the circumstance that the physical conditions dealt

with in the defendant’s untrue representations were

hidden in the subsurface, and the plaintiff could not

determine the truth or falsity of the representations

by mere observation. Atlantic Dredging Co. v. United

States, supra, at p. 502.”

To the same effect:

Flippin Materials Company, et al. v. United States,

160 Court of Claims 357;

Farnsworth & Chambers Co., Inc. v. The United

States, 170 Court of Claims 30.

The rule as laid down ‘and applied by the Court of

Claims in the instant case is in no way inconsistent or

contrary to the rules which it has applied in numerous

previous cases above cited, and the decision is in direet

compliance with the standards as enunciated by this Court

in Universal Camera Corp. v. National Labor Relations

Board, 340 U.S. 474, supra and does not justify any further

review by this Court.

The exact situation that has occurred in the instant case

was contemplated by this Court in the case of United States

v. Carlo Bianchi € Co., 373 U.S. 709, supra and quoted by

Mr. Justice White in the case of United States v. Anthony

9

Grace & Sons, 384 U.S. 424, supra wherein Mr. Justice

white stated:

qt dbae~

“This question was anticipated in Bianchi, supra, where

we considered what a reviewing court should do when

the administrative record is defective, or inadequate

or reveals the commission of a prejudicial error. Two

suggestions were given:

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‘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 ad-

ministrative action. Second, in situations where the

court believed that the existing record did not war-

rant such a course, but that the departmental de-

, termination could not be sustained under the stand-

ards laid down by Congress, we see no reason why

l 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.

902.”

In the present case, the Court of Claims has followed

exactly the standards as set forth by this Court.

The Present Case Presents No Issue for Review by

This Court Pursuant to Rule 19 of the

Supreme Court Rules

oe

As pointed out above, the Court of Claims, in its deter-

mination of the present case, is absolutely consistent with

its prior determinations in comparable cases. There is no

conflict or inconsistency with prior rulings.

be

10

In effect, what the Government is asking this Court to

do is review the Findings of Fact as made by the Court of

Claims, with which the Government is dissatisfied. This

Court has consistently taken the position that it will not

review the Findings of Fact.

In the case of United States v. Wells, 283 U.S. 102, this

Court stated at page 120:

“The findings of fact of the Court of Claims are

to be treated like the verdict of a jury. We cannot

add to them, or modify them, but the absence of the

finding of an ultimate fact does not require a reversal

of the judgment if the circumstantial facts as found

are such that the ultimate fact follows from them as

necessary inference.”

To the same effect, see U. S. v. Esnault-Pelterie, 303

US. 26.

As stated by this Court in Chesapeake & Potomac Tele-

phone Co. v. United States, 281 U.S. 385, at 388:

“It seems to us that the dissent of two of the Judges

of the Court below is directed rather to the findings

than to the statement of the law upon the findings as

they stand. These are not open to question before us.”

Pursuant to the policy and rules of law established by

this Court, that it will not review Findings of Fact by the

Cou:t of Claims, the Government’s argument for certiorari

is without basis or foundation.

The Wunderlich Act imposes on the Court of Claims the

duty to examine into the factual situation. Mr. Justice

Frankfurter made this abundantly clear in Universal

1l

Camera Corp. v. National Labor Relations Board, 340 US.

474, supra and the same is true under the Administrative

Procedure Act.

Merely because the Government disagrees with the Find-

ings of Fact as established by the Court of Claims, is no

pasis for a review by this Court.

CONCLUSION

It is respectfully submitted that the Petition for a

Writ of Certiorari should be denied.

Respectfully submitted,

M. Cart Levine, Morcutas & ForEMAN

Attorneys for Woodcrest Construction

Company, Inc. and The Home

Indemnity Company

Apert Foreman, Esq.

Of Counsel