Opposition Brief — Adler Construction Co. v. United States

:

INDEX

Pio 4

TER es eS eR ]

EER ae as are See oan ]

EEO RAT l

re eas anne 2 '

ee Lande acakdeesncanecuennas 8

re ae ile a mie bwines 11 .

CITATIONS

Cases: | :

Aircraft Associates & Mfg. Co. v. United

States, 174 Ct. Cl. 886, 357 F. 2d 373__ _ ___- 9 :

Barnette v. Wells Fargo Nevada Nat. Bank, 270

of Qa eee a Se SA S :

Gallen v. Lloyd-Thomas Co., 264 F. 2d 821__- ~~ 8

Grymes v. Sanders, 93 U.S. 55. -------------- 8 ;

H.L.C. & Associates Constr. Co. v. United

States, 176 Ct. Cl. 285, 367 F. 2d 586__.___- )

Lewis v. Lowry, 322 F. 2d 453, certiorari

EE OP oc dncncnaseeatue 8

Lichter v. Goss, 232 F. 2d 715._.-..-.-.------- S |

Robertson v. Franks Bros. Cv., 182 U.ts. 17__2 g

United States v. William Cramp & Sons, Inc.,

iy EA ES ep np ea 9,10

Vann v. United States, 420 F. 2d 968_______- 9

Watts Construction Co. v. United States, 161

Rls Os is OE Es BE DO inncnancenaavoenan G

Winn-Senter Construction Co. v. United

States, 110 Ct. Cl. 34, 75 F. Supp. 255_--___- 10

(I)

410-274—70——-1

Statutes:

28 U.S.C. 1491

Miscellaneous:

5 Williston, Contracts, Rev. Ed. §§ 1580, 1594,

Ue ee

Gu the Supreme Court of the Gnited States

OcToBER TERM, 1970

No. 829

ADLER CONSTRUCTION COMPANY, PETITIONER

a ‘sae

THE UNITED StaTEs

ON PETITION FOR A WRIT OF CERTIORARI TO THE. UNITED

STATES COURT OF CLAIMS

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW .

“The opinion of the Court of Claims (Pet. App.

A-1—A-8) is reported at 423 F. 2d 1362.

ee JURISDICTION

The judgment of the Court of Claims was entered

on April 17, 1970, and a motion for rehearing was

denied on July 15, 1970. The petition for a writ of

certiorari was filed on October 9, 1970. The jurisdie-

tion of this Court is invoked under 28 U.S.C. 1255(1).

QUESTION PRESENTED

Whether a release signed by a government contrac-

tor bars him from presenting certain claims against

the United ean

(1)

2

STATEMENT

This is a suit based on certain claims arising out of

a 1952 government contract for construction of a dam.

The Court of Claims found that these claims were

barred by a valid release petitioner had signed.

A. THE EVIDENCE

In August 1952 the. Bureau of Reclamation issued

an invitation for bids on the construction of the earth-

filled Pactola Dam in South Dakota’ Congress ap-

proved the project for immediate construction in

order to make available a much needed water supply

for an air base (Pet. App. A-20—A-21). Since the

work was of ‘fa highly urgent’ nature,” it was im-

portant that construction begin before the onset of

winter weather in 1952; otherwise a full season’s delay

would result, Id.

Prior to bidding, Adler thoroughly explored the

entire project: t-site (Pet. App. A-10). He then sub-

mitted a bid of $3,761,115, some 23 per cent under

the second low bid of $4,878,476 (Pet. App. A-11).

The invitation to bid specified that a bidder would

not have any right to secure relief ‘ton the plea of

error in the bid’’ or of negligence in making the bid

(Pet. App. A-10).

On September 30, 1952, the bids were opened. The

Board considering the bids believed that ‘‘the low

hidder could not complete the work at his bid prices

without considerable strain on his financial resources”

(Pet. App. A-11). However, it recommended accep-

tance because “he is known as a conscientious and skill-

3

ful contractor, and unquestionably would prosecute

the work vigorously and in full compliance with the

terms of the specifications” (Pet. App. A-11—A-12).

Later that day, when Adler learned of the disparity

in his bid, he expressed shock, but because of his in-,

volvement in litigation, he did not confer with gov-

ernment representatives until October 7, 1952 (Pet.

App. A-12). At that time, he told the government

officials that “he may have made a mistake” and wrote

to the Chief Engineer, requesting that the awarding

‘of the contract be delayed (Pet. App. A-12—A-13),

On October 11, the Chief Engineer informed him that

the Government would “withhold making the award

a reasonable length of time,” but that it was necessary

to start the project as soon as possible (Pet. App.

A-13),

On October 14, the Bureau of Reclamation awarded

the contract to Adler, at which time Bureau officials

_ advised him to submit an affidavit explaining his errors,

which would be transmitted to the Comptroller General

for advice as to bid revision, award to the next low bid-

der, or contract readvertising (Pet. App. A-14). Adler

was told that any correction would have to be effec-

tuated by the Comptroller General because the Bureau's

officials lacked such authority (Pet. App. A-14—A-15).

The contracting officer forwarded the statement to the

Commissioner of the Bureau of Reclamation along with

the recommendation that the Comptroller General be

asked to permit an appropriate reformation of the

contract (Pet. App. A-16). The Bureau. accepted the

D>

Dat matt whe SRN nln FA ED SRY AN ett AR

recommendation, which was forwarded to the Comp-

troller General for a decision (Pet. App. A-16).’

On November 14 the Comptroller General deter-

mined that “[ujnder all the cireumstances, this Office

will not be required to object to the correction of the

bid’? (Pet. App. A-20—A-21) and three days lates

Adler met with Bureau of Reclamation representatives

in Denver to reform the contraet.?

The Bureau was apparently concerned that Adler's

corrected prices for certain items were more than the

government's prebid estimates or the bids of other

contractors regarding the same items (Pet. App. A=

17). Consequently, the Bureauy representatives in-

formed Adler they would not allow corrections that

exceeded these amounts. They also emphasized that no

further delay would be permitted, that Adler would

have to sign the contract documents immediately, and

that a notice to proceed would be issued that day (Vet.

App. A-17). Adler then signed an amendatory Agree-

ment * which increased the contract price by $485,265,

an amount $136,240 less than the increase of $621,005

Adler had sought (Pet. App. A-19).' In a letter to

the Senate Judiciary Committee in 1960, when peti-

' Adler was not advised of these favorable recommendations by

the contractiny officer and the Bureau (Pet. App. A-16—A-17).

*A text of the Comptroller's decision was not yet available

(Pet. App. A-17).

“= At thé same time he signed the basic contract (Pet. App.

A-20).

‘From the contract, as amended, Adler could have e: xpec ‘ted

to earn a profit of $557,696 (according to the government's in-

terpretation), or S271,083 (according to Adler's interpretation)

(Pet. App. A-21).

ee

5 |

tioner had a private bill for relief pending, the Under-

secretary of the Interior stated that the proposal’

embodied in the amendatory agreement “in good con-

science * * * should never have been made”’ because,

even if the full increase had been allowed, the gov-

ernment would have ‘had the advantage of an ex-

ceedingly low bid’’ (Pet. App. A-23—A-24).

| After the signing of the agreement, Adler com-

menced work, with an initial completion date of June

25, 1955 (Pet. App. A-24). However, as work pro-

gressed, he encountered subsurface or latent condi-

tions at the site of the main dam foundation mater-

ially different from those shown in the drawings and

specifications, which made excavation and refill work

much more difficult and costly (Pet. App. A-25—A-

34). At the urging of the Bureau of Reclamation (Pet.

App. A-46), Adler continued working during the

winter of 1955-1956 under severe weather conditions

in order to minimize delays (Pet. App. A-49).

Early in July, 1956, the parties held a conference

to determine how far the contract completion date

should be extended ® and to agree upon extra costs of

performance. The Bureau of Reclamation, which had

originally proposed an extension to April 27, 1956,

agreed to extend the time to August 15, 1956. The Bu-

reau also agreed with Adler to allow him $43,314 for 11

specified items of «changed conditions. At the con-

clusion of the conference, Adler signed a letter con-

firming this agreement. The letter stated that ‘‘the

* Adler had requested such an extension in mid-1955 (Pet.

App. A-44, A-45).

6

payment by the Bureau of Reclamation of the sum

of $43,314.39 * * * for extras and changes * * * will

be accepted as settlement in full of all claims for

additional compensation under the contract arising

out of work performed to date,’’ and that ‘‘no new

claims for additional compensation will be made on

the basis of anything occurring prior to July 6, 1956”’

(Pet. App. A-51—A-52).

On August 15, 1956, the project was substantially

completed (Pet. App. A-54). As contemplated by the

basie contract,’ Adler on November 20, 1956, executed

a release which provided that in consideration of the

payment by the United States to him of the amount

then due under the contract, $213,562.60, he ** releases

and forever discharges the United States of and

from all manner of debts, dues, sums or sums of»

money, accounts, claims and demands whatsoever, in

law or in equity, under or by virtue of the said con-

tract, except contract items and quantities as listed

on the reverse side hereof’* (Pet. App. A-54—A-55;

Def. Exh. 30). On the reverse side of this release

Adler listed 13 exceptions totalling $198,633.20 (Pet.

App. A-55).

*The basic contract provided that upon completion of the

project “the amount due the contractor under this contract

will be paid upon the presentation of a properly executed

and duly certified voucher therefore, after the contractor’ shall

have furnished the Government with a release, if required, of

all claims against the Government arising under and by virtue of

this contract, other than such claims, if any, as may be

specifically excepted by the contractor from the operation of

the release in stated amounts to be set forth therein” (Def.

Exh. 1, Art. 16; Pet. App. A-55).

t— +

7

Following his signing of this release and his receiv-

ing the $213,562, Adler administratively asserted

claims for extra payment. On the basis of the claims

that he had excepted from the November 20, 1957, re-

lease, Adler received $14,089 additional compensation

(Pet. App. A-63) ; he was not, however, given’ any-

thing on claims not excepted from that release (Pet.

App. A-62—A-64).

B. THE COURT OF CLAIMS DECISION

This proceeding began in 1960 by a Congressional

reference to the Court of Claims. In July 1964, the

Court of Claims held that it could not aecept jurisdic-

tion as a Congressional reference ease, but that it had

jurisdiction under 28 U.S.C. 1491. Petitioner’s prin-

cipal claims related to the government’s failure fully

to correct the mistakes in Adler’s bid, unanticipated

subsurface conditions, excavation overruns, disputed

excavation classification, work acceleration, and col-

lateral matters (Pet. App. A-9). He sought recovery

in excess of $800,000.

The Court of Claims, adopting the trial commis-

sioner’s decision, ruled that Adler was not entitled

to recover (Pet. App. A-1—A-64). It held that “none

of the claims constituting the present action were ex-

cepted from” the release Adler signed on November

20, 1956, in which he released the United States from

all claims arising out of the contract, with 13 specified

exceptions (Pet. App. A-3). The court concluded that

the release was valid, notwithstanding Adler’s claim

that he had been economically coerced into signing

sto

POON Ls ee eaten NN Oe Ral CART | ome Bree “ Lt OS A TER crate, oo olen 4

it. The court stated: “[N]o conceivable economic coer-

cion could invalidate a release where, as here, there is

no evidence that plaintiff was restricted in the scope of

his exceptions to the release” (Pet. App. A-4).

ARGUMENT

1. The release of November 20, 1956, was in ae-

cordance with the contract of November 17, 1952,

which stated that upon completion and acceptance

of the work, the amount due the contractor will be

paid upon presentation of a voucher “after the con-

tractor shall have furnished the Government with a

release, if required, of all claims against the Govern-

ment arising under and by virtue of this contract,

other than such claims, if any, as may be specifically

excepted by the contractor from the operation of

the release” (Def. Exh. 1, Art. 16; Pet. App. A-55).

Adler challenges the contract on the ground that

it was obtained through duress and the government’s

taking advantage of his mistaken bid. However, where

a party desires to rescind a contract upon grounds

such as duress or mistake, he must assert his right

to rescind without delay, and he waives his right to

rescission by electing to perform under the contract.

See, e.g.. Grymes v. Sanders, 93 U.S, 55, 62; Barnette

v. Wells Fargo Nevada Nat. Bank, 270 U.S. 488;

Lichter vy. Goss, 232 F. 2d 715 (CAM 7); Lewis v.

Lowry, 322 F. 2d 453 (C.A. 4), certiorari denied, 368

U.S. 977; Gallen vy. Lloyd-Thomas Co., 264 F. 2d 821

(C.A. 8); 5 Williston, Contracts, Rev. Ed., §§ 1580,

1594, 1626. Adler, having elected to perform under

9

the basie contract and receive payment under it, is

hound by its terms—including the requirement that

he execute a release upon completion of the work.

2. A release such as Adler signed in November 1956

hars the assertion of any claim not specifically ex-

cepted therefrom. E.g., United States v. William Cramp

ad} Sons, Inc., 206 U.S. 118: H. L. C. & Associates

Coustr. Co. v. United States, 176 Ct. Cl. 285, 367 F. 2d

586 ; Watts Construction Co. v. United States, 161 Ct. Cl.

801, 355 F. 2d 573. See also Vann ¥. United States,

420 F. 2d 968, 972 (Ct. Cl.). While the release itself

may he avoided if it was obtained by duress, e.g.,

Aircraft Associates & Mfy. Co. v. United States, 174

Ct. Cl. 886, 357 F. 2d 373,° ample evidence supports

the finding of the Court of Claims that the release was

hot so obtained. When Adler signed it. he was free to

except any claims he wished, and he listed 13 excep-

tions totalling $198,633.20 (Pet. App. A-55).

Adler contends that he did not list his present

claims among the exceptions because. he thought he

Was barred from doing so by the earlier release, dated

July 6, 1956 (Pet. 18).* But the difficulty with this con-

tention is that the claims petitioner did except also

related to work performed prior to July 6, 1956, the

date of the first release (Pet. App. A-52). This is

simply further support for the Court of Claims’ find-

‘See also Robertson v. Frank Bros, Co. 132 U.S. 17, 23.

*'This release was a letter providing that all pending claims

arising up to July 6, 1956, were withdrawn and “no new claims

for additional compensation will be made on the basis of any-

thing oceurring prior to July 6, 1956" (Pet. App. A-51—A-52).

ome MPEG

<P Ry rn Pe

ee a ee

POOLE POEM

10

ing that the government, by presenting the second re-

lease to petitioner with the opportunity for him to

note exceptions, waived the first release (Pet. App.

A-3).°

Thus, there is no justification for Adler’s failure to

list the claims involved here along with the 13 excep-

tions to the November release.” As the Court of Claims

found, Adler was exercising “his own free choice’’ in

listing 13—and only 13—exceptions to the release (Pet.

App. A-4). Adler signed the November release free

*The government by its subsequent conduct can waive pro-

visions of a release which are in its favor. See Winn-Senter

Construction Co, v. United States, 110 Ct. Cl. 34, 65-66, 75 F.

Supp. 255, 260.

© Adler contends that at the time of the signing of the Novem-

ber release he lacked certain relevant information which the

government had, such as a revised drawing of the main dam

foundation and knowledge that the Bureau had recommended

to the Comptroller General full correction for Adler’s mistaken

bid (Pet. 13). The Court of Claims properly answered that his

lack of this information does not excuse his failure to state his

exceptions covering his present claims in general terms, which

would have preserved his right to pursue them (Pet. App. A-+).

11

from duress, and there can be no question of its

validity.”

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be denied.

Respectfully submitted.

ERWIN N. GRISWOLD,

Solicitor General.

WituiamM D, RucKELsHAUS,

Assistant Attorney General.

Rosert V. ZENER,

Rosert FE. Kopp,

Attorneys.

N OVEMBER 1970.

‘'Petitioner argues (Pet. 20-21) that recovery may be on a quan-

tim meruit. basis even if no recovery is permitted on the contract.

However, the November 20, 1965, release releases the United States

“from all manner of debts, dues, sums or sums of money, accounts

claims, and demands whatsoever, in law or equity, under or by

virtue he the said contract” except for the listed exceptions (Pet.

App. A-55). Such language bars a quantum meruit claim, which

uvises by virtue of the contract. See United States y. William

Cramp & Sons, Inc., supra, at 206 U.S. 127-128.

Petitioner also contends (Pet 13-14) ‘thet the Bureau of Recla-

mation, in allowing only partial correction of the bid instead

of full correction, acted contrary to a decision of the Comp-

troller General. The decision of the Comptroller General, however,

was simply that “[u]nder all the circumstances, this Office will

not be required to object” to full correction of the bid (Pet. App.

A-20—A-21).

U.S. GOVERNMENT PRINTING OFFICE: 1970