Opposition Brief — American Aloe Corp. v. Aloe Creme Laboratories, Inc.

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AMERICAN. F RE & Casal ty COMPAN) \ an tie

ANDZ UNITED States ‘OF J SATERIC A :

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Qi PETITION FOR A WRIT OF fewrior art, TO°THE UNITED

0 ~ STATES COURT OF APPEALS'FOR THE BIPTH CIRCCIT @

) BRIEF-FOR THE UNITED states IN OPPOSITION - -

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| OPINIONS BELOW, Pas }

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Tae opinion of the court of appeals. (Pét. App. AG-

AID) is. reported at 423 i. 2d G80. The district ecurt -

did-not write au opinion. ‘ . ;

eee eee JURISDICTION .

The ’ judg 1 ment of the: out HY appeals was entered °° :

a mi i ebruary 19, 1970 (1 et. AG). Petitions for

rdhearing and for rehearing on -bance were ian 3

April. 13, L970 (Pet. App. AIG). /Phe. ‘ptition: for, 5

writ of cortiorari Was: filed’ on July i, 18 NTO.- Phe junis= . B.

C pee X &

— of this Court. is LSC ;

2

QUESTION PRESENTED —

Whether the courts below properly dismissed peti-

tioner’s counterclainr and rejected:its defense to. the

vovernment's claim for unpatd withholding taxes.

| . STATEMENT

Petitioner, a subeontr: wtor on a government con-

struction job, brought suit in January 1965 against -

the prime’ contractor and its surety uader the,Miller.

Act. (40 U.S.C..270a et seq.) for labor and materials

firnished. (R, 144; Pet, 9; Pet. App. AG-AT.)' The

eagernment intervened to assert a dlaim against peti-

tioner for unpaid withholding taxes (R. 359-366). In

its amended answer to the government’s complaint in

intervention, petitioner alleged, by way of defense

(estoppel) and setoff and counterclaim, that the im-

“preper preparation by the government of plans sand

specifications for the job had required it to spend sums

for labor which would not have been required: if the

plans and spec ‘ifications had been correct (R. 640-642:

Appendix, infra, pp. T-9). . |

Following dismissal on the government’s motion of

‘Hetitioner’ s alleged setoff and counterclaim, the dis-

trict court granted summary judgment for the gov=

ernment on its'tax claim (Pet. App: A4-A5). The court

of appeals affirmed, holding that there was no dispute as

to the withholding taxes. due the government and that

—— references refer to the record filed with the court of

hems, which has been forwarded to this Court ‘in’ connection

with the separate petition for certiorari filed by the prime con-

tractor in Fryd Construction Corp. and Travelers Indemnity Ca.

me s/f Plumbing and Heating Co. No. 193, this Ter ni,

3

the counterclaim did not ‘constitute ‘i proper. deferise

hecause petitioner was not privy to the contract he~

tween the government and the prime coritiactor and

thus could not have brought an original suit against ~~

the government (Pet. App. A15). |

A _ARGUMENT ; ar,

The decision ‘below 3 is, correct and there issno con-

flict of decisions or any other respon. _ for further

review. >

~ Petitioner argues that (a) the court of + pir as

passed on an important question under ‘the Federal

Tort Claims Act’ (28 U.S.C. 2671 «Ff se q.) Which has:

net been, but should be, se tyled ‘by this Court, VIZ.

whether the Act peimits a subcontractor on a govern-

ment job to assert tort Claims against the government

in connection with the perforthance of ‘the job (Pet.

8-12) and that (1) the decision be rh: is in conflict

with decisions of other courts of appeals (Pet. 13-14).

We submit that the question whether—or how—subeon-

tractors may.assert tort claims against the government

was neither presented to nor considered by the court be-

low and that there is consequently no occasion for this

Court to pass on the question sought to he presented by,

- petitioner. + |

: Rule 8(a) of the Federal Rules of Civil iisidinin

provides that a pleading Which sets forthe a counter-

claim shall state the basis of the court's * jurisdiction

unless thecourt already has jurisdiction and the claim

needs ho new grounds of jurisdiction to support it.

* Petitioncr’s amended answer (Appendix, infra, pp.

7-9), in which its counterclaim is set forth, neither

4

makes any statement as to the sourceof the court’s ju-

risdiction over the counterclaim nor mentions the Fed-

eval Tort Claims Act. Nor. did petitioner rely on the

Federal Tort Claims Act in the: court of appeals. It

was, ther efore, proper for the court of appeals to as-

sie, as it.evidently did, that petitioner relied on the

Miller Act (40 U.S.C. 270b (b)), the jurisdictional

hasis of the main: action in which the government had

inte rvened. Accordingly, the court of appeals did not

consider any ajuestion under the Tort Claims Act or

cite any eases decided under that Act. Its statement’

that, petitioner “could not have brought an original.

suit against the: United States * = =” (Pet. App.

A15) ts properly understood,-in context, to mean only

that petitioner had no contract elaim against the goy-

ernment under the Miller Aet—a proposition whieh’

petitioner now _aecepts. (Pet. 8-9). Accordingly, no

question undér the Tort Claims Act is properly before

— Court. | : |

. Morecver, petitioner may not now present to this:

Court, as it : seeks to do (Pet. 3), any question. as to the.

propriety of its setoff and counterclaim, whether

_ founded in contract or tort: In its petition to the court

of appeals for rehearing, petitioner’s sole point with

respect to the summary judgment eranted the govern-

ment was that the court of ‘appeals mistakenly as-

suined that petitioner was relying on.its counterclaim

when, in fact, it was relying only on the defense of

estoppel and had not appealed from the dismisal of

its counterclaim (Appendix, infra, pp. 11-12). Having

abandoned its Counterclaim in the court of appeals,

petitioner may not resurrect it in this Court.

5

.

. |

3., In any event the counterclaim was “properly dis-

missed, even tf treated as predicated on the Federal

Tort Claims Act, since such a claim was barred by the

statute of limitations when first asserted in petitioner's

amended answer in March 1968 (R. 639-647). Peti-

tioner’s claim against the government had already

acerued, if at all, by the time its main action against

the pr ime contractor was instituted on January 4, 1965,

(R. 1-44): This ‘is evident ftom, the fact that peti-

tioner’s complaint ag ainst the: prime contractor, like -

its ¢laim against the governme nt, is predicated ol

work required hecause “of the existence of ** * une ,

disclosed interferences and obstructions” (Pet. 6: Pet

App. A7; Appendix, infra, pp. 8-9). Accordingly, the

two-year statute of limitations provided in the Federal

Tort Claims Act (28 U.S.C. 2401 (b)) liad already

run when petitioner first asserted its counterclaim in

March 1968.* Petitioner ¢ ‘alot avoid the limitations

‘bar on the? theo ‘v that it-merely ; seeks recoupment

(Bull v. United States, 295 U.S. 247), since the Pov-

ernment’ s tax claim i is obviously different i in character

and origin from petitioner” s claim.

. Although the statute of limitations i Is not ore a ground of.

the government’ Ss motion to dismiss, that defense may be raised

by the government if a .% to the counterclaim becomes neces-

sary. Rule 12, Fed. R. Civ. P

6.-

pret CONCLUSION

‘The petition for a writ of certiorati should be

denied.

Respeetfully submitted.

Erwin N ’. GRISWOLD,

Solicitor General.

___Jorxsin M. Watrers,

oo neinas Assistant Attorney General.

- WILLIAM {Massar,

~ Ricarp HALBERSTEIN,

Se | . Attorneys.

Avcust 1970.. :

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APPENDIX

GP Sette

“In tHE U.S. Dist. Court 8 AND FOR THE SOUTHERN

District OF FLoripa, Miami DIVISION No. 65-153—

CIV-EC

UNITED States. OF AMERICA FOR THE USE AND BENEFIT

oF T/N PLUMBING & HEATING Co., PLATNTIFF

| Pe ee

Fryp CoxsrrectioN Corroration,,A Fora

CORPORATION, ET AL, DEFENDANTS

AMERICAN Fire & Castanty ComMPANy, A FLORIDA:

CORPORATION,” INTERVENOR

Ee “AME NDED ANSWER

Comes Now the Use Plaintiff, T/N Pinadiaes Heat-

ing Co., by and through its unde ‘signed attorney, and

for its Answer to that Complaint in Intervention filed |

“A the United Statesof America:

» Denies each allegation: of Paragraphs I through

va IN and X and demands strict proof thereof

2. Admits the allegations of Paragraph VIII.

3. Says that the ‘said Intervenor is estopped to as- |

sert its claim herein forthat said Intervenor did pre-

pare improper plans and specific: ations for the drain-.

age structures contract as. deseribed in Use Plaintiff's

complaint herein; and that as a direct and proximate

result of the Intervenor’ s said act, obstructions were

‘inéorrectly shown or not shown at all, which obstruc-

is me as

4a

x

8

‘

tions occasioned those costs incurred by the Use Plain-

tiff for-which the Intervenor seeks’ recovery.

‘Wherefore, sion SE answe red same, _Use ‘Plaintiff

prays: | 7 7

A. That said Complaint in hidsvcntion be dis-

-missed with prejudice to the Intervenor.

B. Should the. Court assume jurisdic tion, trial: by

jury may be had upen all ‘issues so triable..:

- SET-OFF AND COUNTERCLAIM . ’ |

Comes Now the Use Plaintiff;, T/N Plumbing &.

_Heating Co., by and through its undersigned’ attor ney,

‘and files its Set- Off and Counterclaim as to the United

States of Americ a, one of the Intervenors herein, and

alleges: .

1. That the said Inter venor ie sued the Use Plain-

tiff_ by its Complaint ‘in. Intervention for withholding~

taxes i in the sum of $23,320.98.

2. That the said Intervenor y lepeapesty prepared

plans and specifications for use by the Use’ Plaintiff in

the performance of that. contract which is the subject

matter of the Use Plaintiff's Complaint herein.

3. That as a direct result of said i improper prepara-

tion, obstructions were either not shown or incorrectly

shown upon said plans so that the Use Plaintiff was

required -to expend substantial sums for lavor, which

sums would not otherwise been ineurred byt for the

aforesaid acts of the Intervenor:

4. That the. Use Plaintiff has not been paid for the |

labor for which it paid for the overcoming of said

_ obstructions.

~ . . m .

¢ ‘ 9 d

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5. That as a direct sonal of the Intervenor’ Ss said

acts, Use Plaintiff is entitled to set-off against the’

claims of the’ Intervenor for all labor costs incurred

by the Use Plaintiff,

Wherefore, Use Plaintiff, T/N Plumbing & Heat-.

‘ing (&., sues the Intervenor, United States of:

Niece, and demands judgment. for compensatory

damages in a sum in excess of $10, 000.00, togéther

With interest thereon, and Use Plaintiff demands tri a

by jury upon any issues go triable... ~~

-Hucu 8. Guicksteiy,

Attorney for Use Plaintiff.

Iy THE UNIT ED Sraves Court oF > APPEAIS

‘Err Court

~ UNIrep STATES OF Aiwa FOR THE USE AND ‘BENEFIT

OF T/NewPiumBiInc & HeEatine | Co., - PLAINTIFF-

APPELLANT

we

v] Ss.

F’RyD CONSTRUCTION CORPORATION, A FOORIDA

CORPORATION, ET AL, DEFENDANTS-APPELLEES

AMERICAN Fire & Castuanry Company, A Frorma

/

CORPORATION, AND Unttep STATES OF Awmnica, IN-

_TERVEN ORS-A PPELLEES : : ’

NO. 27437—PETITION FOR REHEARING AS TO.

_ INTERVENORS

To the Nonwatis Jnidges of the United States Court —

. of Appeals for the Fifth Circuit:

United States ‘of America ‘for thé use and: benefit

of -T/N Plumbing & Heating Co., the sheila < oeil

~~

10

~ dant shove named, presents this, its Petition for a re-

hearing as to the Intervenors-Appellees, American’

Mire & Casualty Company and United States of

oe ica, and in.‘support thereof: respectfully shows:

~The Court erred in resolving genuine issues of .

ve upon. the foliowing issues With respeeMto the In-

tervenor, American Fire & Casualty Company :

A.W hether the Intervendr had the right to-step

into the shoes of the Plait? ,

> Whether. the vets of the: Fiterve mor made it im *

possible for the Plaintiff to pay its mate ‘ialme n. |

C. Whether any attorneys foes were eapeeame yy in-

curred by the Intervenot. :

I. Whether the Plaintiff was entitled to a jury trial

Upon the issue of the. reason ableness wof ‘the Tuter-

~Venor’s attorneys’ fe OS,

In this regard; this Tonorable C out resolved 1 ISSUCS |

oof Fact as the: lower Court had done. Phe maxim

liability of the Intervenor was $26,456.00. As showa

n Plaintiffs Brief (p. 52), the Defendant. General

; Contes ‘tor was holding more than enough to “inde mM-. .

hify the surety completely. The Plaintitt i is ¢ nititled to

have a. jury: determine whether its Surety Was entitled

to Ree 3 into the shoes of the Plaintiff—not to complete

4h® contract but to pay the materialmen with funds

“heiine withheld. by the Defendant General Contractor.

Why ntust the Plaintiff in this case be precluded, on

the record below from showing to a jury that the sur-.

ety was not entitled to push the Plaintiff aside, colleet

money’ from the Defendant General Contrac ‘tor, dis-

tribute it to the mater®ilmen. and be paid attor ney’s

11

fees equal to approximately. one-third of: its total lia

bility on the ‘payment bond? This Court’s decision

concludes as a matter of law that the record shows

without, contradiction the absolute right of the surety

here to shove the Plaintiff aside. The Plaintiff submits:

that, the. record shows clear, and competent evidence

that its materi almen were ¢o- operating with the Plain-

‘Uiff in receiving theia-money ‘until the surety came

into the. picture and refused to ‘step out. From that

time forw ard, between the acts of the surety and the

_ tax ‘collecting arm of the Government, the Plaintiff

has heen helplessly. ‘aught in a ‘morass. of confusion.

_-» Only the Plaintiff tried to create some order by having

_— lower Court resolv e—once and for all—whether the

surety or the gover nment or. the Plaintiff was entitled

to funds being held. ‘bys. the general contractor. The

surety refused to take the first step toward resolving |

the priority but lay .baek while the Plaintiff pursued

its action below, then claimed successfully the right to

all of its claim anda substantial sum for its attorneys.

This Court overlooked the law of Florida that the

surety’s attorney ‘must prove the’ ‘reasonableness of

his fees to a juty. Sork v. United Benefit Life Insar-

ance Company, Fla. App. 1964, 161 ‘So. 2d 4, 56;

was v. Goldman, Fla. App: 1967, 196. So. 2d 184.

. The Court erred in considering that the Plaintiff

Was iene upon its. Counterclaim against the Gove ern-

‘ment, when in fact the Plaintiff was relying only upon.

the defensée.of estoppel raised in its Amended Answer.

‘The Plaintiff would show that- it: never ‘requested

that its Counterclaim be i me lnded in the record on ap-

‘12

‘peale The Plamtiff’s Counterclain was dismissed: and

the Plaintiff did net appeal such rulinre. 7

The Plaintiff's Brief:never mentioned the Counter...”

“¢lainvor seto! It dealt solely aed exclusive ly with Its

Ame nded. An: wer Which raised the defense of estop-

pol, The Point Which. diseteses this tration epperrs on

pave 60 of t! l¢ Brief and states: |

¢

“The Court dej ‘prived T)N of its right to trial by

jury upon the issue of apne vaised by T/ N's:

*. Amended Answer to. the Government's com-

‘plaint for taxes. |

The Governme at’ has confused this record by add

ing the Counterclaim. ‘Now, the P): iintiff must he- pe-

“halized

— As argued in the Ph Uniti ft” Brief, the Pl: alntiff was

| ae to be heard upon its defouse of estoppelef PX.

. Continental Casualty C om puny, De, N. Y. 1962, 210

", Supp. 433, 436.

The: (iove rnment had led this Court inte error,

- Hue H S. GLICKSTELY,

iii y for Appellant-Plaaliff.

\

y

» . . U.S. GOVERNMENT PRINTING OFFICE 14°0

.. ’

again—for the Governme nt Dusadventures,