Petition for Writ of Certiorari — United States v. William Green Construction Co.

FEB 25 1974

JR.,CLE

IN THE

Supreme Court of the United States

OcrToBER TERM, 1973

No 73-1314

WILLIAM GREEN CoNnstTrRucTION Co., INc.

and

Unirep States FIDELITY AND GUARANTY CoMPANY,

Petitioners,

V.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF CLAIMS

MICHAEL J. MALLEY

1250 Connecticut Ave., N.W.

Washington, D.C. 20036

Of Counsel:

Stantey C. Morris, JR.

JaMEs V. DoLAN

Vireinta M. Donpy

Srepror & JoHNSON

1250 Connecticut Avenue, N.W.

Washington, D.C. 20036

Parss or Byron S. ApaMs Parrrina, Inc., Wasumrerom, D. C.

>

INDEX i

Page

2

DUCT STITT LTTE TTT TLC ELC CE TTT Ee 2

ING 5s sive ws tected ees eedawesennene 2

cde cae ws ce Cadena eee ieeeiena as 3

Se ee oe is ow ee ewaes 4

Reasons for granting the writ ..................005- 13

L Tae Lower Covurt’s Hotpine THat THERE Js aN

ApEQUATE ADMINISTRATIVE REMEDY Is ConrTRARY

ae is cog awa Geee ae ee ele 13

IL ApequaTe ADMINISTRATIVE REMEDIES WERE Not

AVAILABLE TO THE CONTRACTOR, SO THAT THE CouRT

or Ctamms SHovuLpD Have Treatep Tuts CasE AS A

1 BREACH OF CONTRACT CASE ...........ecececeee 14

™ VL Tae Government’s ANNOUNCEMENT THAT IT

Woutp Rervuse To Make Procress PayMENTs Was

an ANTICIPATORY BREACH OF CONTRACT .......... 16

IV. Tae Measure or Damaces ror Breacu or Con-

Tract SHOULD INCLUDE COMPENSATION FOR PRov-

ABLE, F'ORESEEABLE CONSEQUENTIAL DamacEs, Con-

TRARY TO THE Court or Ciarms’ HoLpine ........ 17

ee eae oe eee cea ea Nn 19

hock cwihiaercuunidecenenen de edek nen en la

SEE Wis Sivas dag eewanees ews ound bimeyeeneaks 17a

ESAS ie Rene yr ae er aE aye 3la

CITATIONS

Cases :

Brooklyn d& Queens Mfg. Co. v. United States, 97 Ct.Cl.

EEE cae oadavcubiaweanabacdeondwdeawn 14

Canal Co. v. Gordon, 73 Wall. 561 (1867) ............ 14

li Index Continued

Page

Myerle v. United States, 33 Ct.Cl. 1 (1897) .......... 18

Nager Electric Co. v. United States, 184 Ct.Cl. 390, 396

EE EE ob haa ie kha eRe tebe keenkes 13

Overstreet v. United States, 55 Ci.Cl. 154 (1920) .... 17

Pilcher, Livingston & Wallace, Inc., 70-1 BCA {8331

NE ND oi 4 ye iues de xuin VA 664 ds ¥opede 14

Pigeon v. United States, 27 Ct.Cl. 167 (1892) .......... 14

Ramsey v. United States, 121 Ct.Cl. 426 (1951)...... 18

Roehm v. Horst, 178 U.S. 1 (1900) ................. 17

SG&E Contr. Inc. v. United States, 406 U.S. 1 (1972) .. 13

Sanders Assoc. Inc. v. United States, 191 Ct.Cl. 157, 423

EE SPE valécacucbeedecsseecsbenseeecens 14

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

Ec cdn cue sVnn teense inh ss beeesheneuses 14

United States v. Purcell Envelope Co., 249 U.S. 313

I ihes seid cuhunkesd as Nwenbadseievesndanes 17

United States v. Utah Constr. & Mining Co., 384 US.

SEE Sircd cagua bebe tek wees sae eeweaseumeed 9,14

Universal Ecsco Corp. v. U.S., 181 Ct.Cl. 10, 385 F.2d

os rr rrr eee are 15

Valley Constr., 64 BCA 7 4071 (ASBCA 1964) ...... 14

Whitbeck v. United States, 77 Ct.Cl. 309 (1933) ...... 17

William Green Constr. Co., 68-1 BCA { 6883 (GSBCA

BE 55s. douches cdbesdeaaaus encewiacedenees 9, 12, 14

William Green Constr. Co., 71-2 BCA J 9116 (GSBCA

BEE dic akeusee Kucesionscubanesvesrs su nbenerst

MISCELLANEOUS:

4 Covbin, Conbracta, § S60 .....0.cccccccscccscccccess 17

Wunderlich Act, 68 Stat. 81, 41 U.S.C. §§ 321-322..... 3

IN THE

Supreme Court of the United States

OcToBER TERM, 1973

No.

WILLIAM GREEN ConstruUCTION Co., INC.

and

Untrep States FIDELITY AND GUARANTY COMPANY,

Petitioners,

v.

UnITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF CLAIMS

William Green Construction Company, Inc., (here-

after referred to as ‘“‘Green’’) and United States

Fidelity and Guaranty Company (hereafter referred

to as “USF&G’’) cross-petition for a writ of cer-

tiorari to review the judgment of the United States

Court of Claims in this case. This cross-petition is

conditional upon the granting of the petition for writ

of certiorari filed by the Government in this case on

January 26, 1974 (No. 73-1153). Green and USF&G

2

have filed a brief in opposition to that petition, and

in the event that petition is denied, they shall seek

dismissal of this petition.

OPINION BELOW

The opinion of the Court of Claims is reported at

477 ¥'.2d 930. The Court of Claims’ Order denying

the motions of the parties for reconsideration is un-

reported. For convenient reference, petitioners’ com-

plaint is attached to this cross-petition (App. I,

infra, pp. 1a-16a).

JURISDICTION

The opinion of the Court of Claims was entered

on May 11, 1973, and the respective motions for re-

consideration were denied on September 28, 1973. On

January 3, 1974, the Chief Justice extended the time

within which to file a cross-petition for a writ of

certiorari to February 25, 1974. The jurisdiction of

this Court is invoked under 28 U.S.C. 1255.

QUESTIONS PRESENTED

The questions presented are:

1. Whether, in view of Green’s administrative

appeal from the termination of the Howard University

contract and the Board of Contract Appeals’ dismissal

of the breach of contract portion of that appeal, the

Court of Claims erred in requiring Green to return to

the Board of Contract Appeals for exhaustion of ad-

ministrative remedies.

2. Whether a breach of the payments clause by

the Government is cognizable under the disputes

clause of the contract thereby requiring all issues of

3

{ability and damage to be determined administra-

tively ?

3. Whether a termination for convenience clause

or concept can be employed to exculpate the Govern-

ment from the full extent of the damages it has

wrongly imposed where the contractor (1) was not

in default and (2) where the Government desires or

needs completion of the contracted-for facilities ?

(4) Whether the damages alleged in the Peti-

tion are, as a matter of law, nonrecoverable, notwith-

sanding that such damages are provable and not-

withstanding that the Government had actual knowl-

edge that such damages would be the inevitable result

of its wrongful acts and, in spite of that knowledge,

arbitrarily proceeded with such wrongful action?

(5) Whether the Government’s general right of

set-off entitles the Government to set-off nonmeri-

torious claims arising out of the Government’s own

wrongful conduct, without responsibility for the con-

sequences of the unjustified set-off?

STATUTE INVOLVED

The Wunderlich Act, 68 Stat. 81, 41 U.S.C. §§ 321-

322, provides as follows:

§ 321. Limitation on pleading contract-provisions

relating to finality; standards of review.

No provision of any contract entered into by the

United States, ries | to the finality or conclusive-

ness of any decision of the head of any department

or agency or his duly authorized representative or

board in a dispute involving a question arising

under such contract, shall be pleaded in any suit

now filed or to be filed as limiting judicial review

4

of any such decision to cases where fraud by such

official or his said representative or board is 4l-

leged: Provided, however, That any such decision

shall be final and conclusive unless the same js

fradulent [sic] or capricious or arbitrary or so

grossly erroneous as necessarily to imply bad faith,

or is not supported by substantial evidence.

§ 322. Contract-provisions making decisions final

on questions of law.

No Government contract shall contain a pro-

vision making final on a question of law the decision

any administrative official, representative, or

oard.

STATEMENT

Petitioners in this action seek damages for losses

directly caused by the Government’s breach of con-

tracts entered into with Green. USF&G was the

surety on the performance and payment bonds on

two of these contracts.

The facts pertinent to the issues are set forth in

the petition initiating this action and, of course,

those facts must be accepted as true for purposes of

a motion to dismiss which the Government filed in

the Court of Claims and on which that Court ren-

dered its opinion in this case. Briefly stated, the facts

are: In November 1964, the Government and Green

entered into a contract in the amount of $1,899,138

for the construction of a women’s residence hall at

Howard University in Washington, D. C. (hereafter

referred to as the ‘‘Howard contract’’). At approxi-

mately the same time, these parties also entered into

a contract in the amount of $2,340,583 for the con-

struction of a United States Post Office and Federal

5

Office Building in Portsmouth, New Hampshire

(hereafter the ‘‘FOB contract’’). Subsequently, these

ies signed a third contract in the amount of

$8,556,150 for the construction of the National Train-

ing School for Boys in Morgantown, West Virginia

(hereafter the ‘‘Training School contract’). USF&G

was the surety on the Howard University and FOB

contracts.

After award of the contract and for 16 months

thereafter, Green attempted to perform the Howard

contract but was unable to make substantial progress

because the plans and specifications for the cast-in-

place architectural concrete (CPAC) work, which

was critical to performance of the contract, were

defective and impossible to perform. Green made

repeated requests of the Government during this time

for changes in the plans and specifications to permit

the work to proceed, but these requests were rejected

even though the Government had a duty under law

to make the changes necessary to permit the work

to proceed if they were defective. The Government

disagreed that its plans and specifications were de-

fective, and by letter of April 14, 1966, its contracting

dficer advised Green that its right to proceed with

the Howard University contract was thereby termi-

nated for default on the ground that Green had failed

to proceed in accordance with that contract. Green

had been able to complete only 13.5% of the contract

work during the preceeding 16 months. Green filed

a timely appeal from the default termination with

the General Services Board of Contract Appeals

(@SBCA).

The Government almost immediately advised

Green that it was going to set-off all of its contin-

6

gent claims for damages, liquidated and unliquidated,

arising from the Howard termination, against prog-

ress payments earned by petitioner Green on the

FOB and Training School contracts. This was a sut-

prising position for the Government to take and ob-

viously one with far reaching implications because:

1. The Government was already secure from any

potential loss on Howard. It was holding contract

balances of about $1,640,000 and a performance bond

of $1,899,138 with USF&G as surety, providing total

security of $3,539,138 to assure completion of the

Howard contract, if it could be performed at all in

accordance with the plans and specifications.

2. Green did not have the capital resources to

continue performing contracts of the magnitude of

FOB ($2,340,583) and Training School ($8,556,150)

without the benefit of unimpaired progress payments.

It already had contracted for all the materials, equip-

ment and labor necessary to perform the $12,795,871

in work represented by the Howard, FOB and Train-

ing School contracts, and those obligations which

were in the millions of dollars had to be satisfied

regardless of whether the Government paid Green.

Moreover, the major part of Green’s business was

involved with these three contracts and the lack of

progress payments on FOB and Training School con-

tracts meant the destruction of Green’s business be-

cause of the very large contractual commitments that

it had made with materialmen and subcontractors for

the performance of work required by the contracts

with the Government.

3. The FOB and Training School contracts were

being satisfactorily performed by Green and it was

7

inconceivable that the Government (i) would know-

ingly commit an act damaging to its own interest by

causing an unnecessary default of the FOB and

Training School contracts with their attendant de-

lays and added costs, and (ii) would knowingly com-

mit an act that meant the destruction of Green’s

business.

Urgent meetings were held with the Government

in an attempt to resolve the matter. During these

meetings Green and USF&G advised the Government

that the default termination had been improper; and

that if the Government pursued its indicated inten-

tion to set off the excess completion costs and liqui-

dated damages under the Howard University con-

tract against Green’s FOB and Training School con-

tracts, this action would make it financially impos-

sible for Green to proceed with completion of these

other contracts. Green and USF&G specifically stated

to the Government that the inevitable result of any

such set-off would be the forced abandonment of the

FOB and Training School contracts and the destruc-

tion of Green’s entire business.

In light of the above facts, Green and USF&G

requested the Government to isolate the Howard

University dispute and agree not to set off its con-

tingent damage claims, liquidated and unliquidated,

or excess completion costs against Green’s other

federal contracts. Green advised the Government that

as long as there were no set-offs of Howard Univer-

sity claims against proceeds earned under the other

contracts, it was willing and able to complete satis-

factorily those contracts.

Although an agreement to isolate the Howard Uni-

versity dispute would not have prejudiced the Gov-

8

ernment because of the security afforded by the

Howard contract balances and USF&G’s perform-

ance bond, and despite the Government’s full knowl-

edge of the inevitable consequences of a decision to

set off the Howard University claims, the Govern-

ment nevertheless refused to agree not to set-off the

disputed claims. The Government likewise refused

petitioners’ request to withdraw the Howard Uni-

versity termination notice and to modify the How-

ard University contract specifications, or interpreta-

tion thereof, in order to eliminate the elements of

impossibility and the underlying dispute. As a result

of the Government’s action, Green was compelled to

abandon the FOB and Training School contracts and

was forced out of business.

Green promptly amended its Howard default

termination appeal pending before the GSBCA to

include claims for damages incurred for breach of

the FOB contract and for those arising from the

destruction of its business. The Government subse-

quently filed with the GSBCA a motion to dismiss

the amended appeal for lack of jurisdiction on the

ground that it was a claim for “‘breach of contract”

and ‘‘unliquidated damages’’ and, as such, was “not

redressable under any clause of the contract.” By

decision dated February 20, 1968, the Board of Con-

tract Appeals granted the Government’s Motion in

part by dismissing that part of Green’s claim for

the damages which are the subject of the petition

before this Court. The Board held that ‘‘we have no

jurisdiction over that part of the appellants’ claim

which is for unliquidated damages for breach of con-

tract as that is a so-called ‘pure’ breach of contract

claim, ie. a claim not reuzessable under a specific

9

contract provision. See U.S. v. Utah Construction and

Mining Company, 384 U.S. 394; Dean Construction

Co., Inc., GSBCA-1050, 65-2 BCA para. 4888.’’ Wm.

Green Constr. Co., 68-1 BCA 16883.

The Howard, FOB and Training School contracts

were eventually completed by others than Green. The

assuming contractor on Howard also found the struc-

ture impossible to build in accordance with the speci-

fications and the Government then made the changes

necessary to allow completion, which it should have

done as a matter of law years before. Confronted

with evidence of the most compelling kind, the Gov-

ernment on October 8, 1971, entered into a stipula-

tion in which it admitted:

‘1, That the contractor was not in default at

the time it received notice of the termination

and the Government concedes the termination

for default was erroneously made by the Con-

tracting Officer. The appeal, therefore, should be

granted as defined by the prior decisions of the

Board in this ease.”’

On the basis of the Government’s admission of

liability, the Board granted the appeal on October

13, 1971, and set aside the wrongful default termina-

tion of the Howard University contract. Wm. Green

Constr. Co., 71-2 BCA 19117. The Board’s order

stated in part:

“The Board treats the Stipulation, in part, as

the Government’s admission that the contractor

was not in default, within the meaning of the

Default clause of the contract, at the time the

contract was terminated for default. Accordingly,

the Board finds that the appellant’s right to pro-

ceed under the contract was improperly termi-

nated for default.’’

10

Accordingly, the Board remanded the appeal to

the contracting officer to determine Green’s entitle-

ment (i.e., equitable adjustment) for unreimbursed

costs incurred in performing the Howard University

contract. Recognizing the Board’s earlier dismissal

of Green’s claim for damages which are the subject

of the present petition, both the Government’s stipv-

lation and the Board’s order provided:

‘“‘That any equitable adjustment under the con-

tract shall not be prejudicial to appellant’s right

to proceed in the Court of Claims for additional

— not the subject of such equitable adjust-

ment.

At issue here is the question of the Government’s

responsibility for direct, natural, and foreseeable

damages which the GSBCA held to be nonredressable

under any specific contract clause, but which, none-

theless, are the direct and proximate result of the

Government’s breach of the Howard University con-

tract and its anticipatory breach of the FOB and

Training School contracts. This case is unique in that

the result of the Government’s wrongful termination

of the Howard University contract coupled with its

intransigence on the set-off question, was precisely

as forewarned by Green and USF&G when they ex-

pressly advised the Government that the impending

set-offs would render completion by Green of the

FOB and Training School contracts financially im-

possible and that, therefore, Green would have no

choice but to abandon work on those projects and

cease business.

The direct, natural and foreseeable result of the

Government’s wrongful actions was to cause Green

substantial losses. First, as a result of Green’s forced

11

abandonment of the FOB contract the Government

required USF'&G, as surety for that contract, to com-

plete performance and pay all valid and outstanding

daims for labor and materials under that contract.

The costs and losses thus incurred by USF &G totaled

$870,969.59, for which Green, under its indemnity

agreement, is liable to USF&G in the full amount.

Second, by reason of the forced abandonment of the

FOB and Training School contracts and the wrong-

ful termination of the Howard University contract,

which contracts represented more than one half of

Green’s total business, Green was deprived of the

cash flow necessary to continue its business, its capi-

tal and credit were destroyed and it was forced to

discontinue its business as a general contractor. This

resulted in rendering Green unable to complete three

other contracts which it was then in the process of

performing. USF&G, as surety for those contracts,

was required to complete performance and to pay all

valid and outstanding claims for labor and materials

under those contracts. The costs and losses incurred

by USF&G on those contracts amounted to $948,-

153.44, for which Green under its indemnity agree-

ment is liable to USF &G in the full amount. Finally,

as a direct and provable result of the Government’s

breaches of contract, Green lost the full value of its

business, which had a net worth of $890,334.26."

As a result of the foregoing events, Green and

USF&G filed their action in this case alleging breach

of the Howard University contract (Count I) and

anticipatory breach of the FOB contract (Count II).

Saaeieniaeemeel

*The petitioners made no claim for anticipatory profits, and the

Court of Claims erred on that fact in its opinion.

12

The Government filed a motion to dismiss in the

Court of Claims, alleging among others, a failure by

Green to exhaust its administrative remedies. This is

a direct contradiction of the position the Govern-

ment took on the same issues before the GSBCA,

where it moved to dismiss these same issues because

they involved a breach of contract and were not cog-

nizable administratively under any provision of the

contract. Thus, this case is in the posture of the

Government’s taking contradictory positions in differ-

ent forums for its own advantage to the prejudice

of the petitioners and being permitted to succeed

with it. Before the Administrative Board, which has

no jurisdiction over breach of contract issues, the

Government said the issues are breach of contract

claims not cognizable under the contract and the

Board has no jurisdiction of the issues.’ The GSBCA

agreed and dismissed petitioners’ claims which are

the subject of the present action. Wm. Green Constr.

Co., 68-1 BCA 16883. In the Court of Claims, which

has no de novo jurisdiction of claims cognizable un-

der the contract, the Government contended the issues

were cognizable administratively under the contract

and that Green was required to exhaust administra-

tive remedies. In its opinion, the Court of Claims

agreed and remanded the case back to the GSBCA.

2The Government was most specific in its motion to dismiss

before the GSBCA:

‘¢ ##* (T]he Board does not have jurisdiction over all factual

disputes, but only over those that have some reasonable bear-

ing on a claim which is redressable under a specific contract

provision * * *. [W]e submit that Appellant’s claim is not

redressable under any clause of the contract.’’ (Emphasis

added.)

13

REASONS FOR GRANTING THE WRIT

The Government has filed a petition for a writ of

certiorari, No. 73-1153, to review the decision of the

Court of Claims in this case. Green and USF&G have

fled an opposition to the Government’s position.

However, this petition is filed to request review of

the entire decision, including those issues decided

adversely to Green and USF&G, in the event this

Court should grant the Government’s petition.

L The Lower Court’s Holding That There Is An Adequate

Administrative Remedy Is Contrary To Established Law.

In S&E Contractors, Inc. v. United States, 406

U.S. 1 (1972), this Court held that ‘‘a citizen has

the right to expect fair dealing from his Government

** * and this entails in the present context treating

the Government as a unit rather than separate enti-

ties.’? 406 U.S. at 10. The question of whether Green

had exhausted its administrative remedies is one that

the Government could have raised at the administra-

tive level. Since it chose not to do so, but chose in-

stead to take the position before the administrative

tribunal that the claims were breaches of contract

not redressable administratively, the Government

should not be allowed to raise an exhaustion of ad-

ministrative remedies issue in the Court of Claims

and the Court of Claims should not have remanded

the case to the GSBCA. In doing so, the Court of

Claims not only ignored the teaching of S&E Con-

tractors, Inc., supra, but struck across its own hold-

ing in Nager Electric Company v. United States, 184

Ct.Cl. 390, 396 F.2d 977 (1968), which estopped the

Government from claiming a failure to exhaust ad-

ministrative remedies because the parties had char-

acterized the claim before the Administrative Board

14

as a ‘“‘breach’”’ claim. This is exactly what occurred

before the GSBCA in the present case. Wm. Green

Constr. Co., 68-1 BCA 16883. The unavailability and

inadequacy of any administrative remedy was estab-

lished by the GSBCA’s decision and that satisfies

the holding of this Court in United States v. An-

thony Grace and Sons, 384 U.S. 424 (1966).

In treating the Howard and FOB contracts as tied

together for purposes of set-off, and thus inextricably

tying the wrongfulness of the Howard termination

to the refusal to make progress payments under

FOB, the Government should not be allowed now to

change its position under any view of the case.

IL Adequate Administrative Remedies Were Not Available To

The Contractor, So That The Court Of Claims Should Have

Treated This Case As A Breach Of Contract Case.

When the Government breaches the payments

clause of the contract, the contractor’s traditional

and judicially recognized remedy has been to abandon

the contract and sue for damages.* This is exactly

what Green did. Moreover, it is well understood law

that the ‘‘disputes clause’’ does not extend to breach

of contract claims ‘‘not redressable under other spe-

cific contract provisions.’”’ United States v. Utah

Constr. & Mining Co., 384 U.S. 394 (1966). There is

no contract provision providing a remedy for the

Government’s repudiation of its payment obligation.

This was specifically recognized by the Court of

Claims in Sanders Assoc. v. United States, 191 Ct.Cl.

3 Canal Company v. Gordon, 73 Wall. 561 (1867); Pigeon v.

United States, 27 Ct.Cl. 167 (1892) ; Brooklyn & Queens Mfg. Co.

v. United States, 97 Ct.Cl. 532 (1942); Valley Contractors, 4

BCA 7 4071 (ASBCA 1964) ; Pilcher, Livingston & Wallace, Inc.,

70-1 BCA J 8331 (ASBCA 1970).

15

7, 423 F.2d 291 (1970), where it held that a breach

‘the payments clause fell within the Utah excep-

pn as not redressable under other provisions of the

ntract. Furthermore, that Court in Universal Ecsco

orp. V. United States, 181 Ct.Cl. 10, 385 F.2d 421

967) allowed a contractor to prosecute a claim for

each of the progress payment clause and rejected

e Government’s contention that the claim was bar-

d by failure to exhaust administrative remedies.

By remanding the case to the GSBCA, the Court

' Claims for the first time subordinated a breach of

e payments clause to the disputes clause of the

mtract. That result creates an open invitation for

@ economic ruin of contractors and exposes them

duress of the utmost kind, for the common law

ght of contractors to abandon the work is now lost

id there is no other meaningful restraint upon an

use of bureaucratic power. This arises because the

sputes clause provides that ‘‘Pending final decision

a dispute hereunder, the contractor shall proceed

ligently with the performance of the contract and

accordance with the contracting officer’s decision.”

wus, if the Government arbitrarily refuses to pay a

ntractor, the contractor is obligated under the dis-

tes clause to proceed with the work regardless of

lat the Government has done, receiving only the

bious right to resort to administrative procedures

collect his money, which usually takes years. To

bject a breach of the payments provision to the

ministrative procedures of the disputes clause will

destructive not only of contractors but of the Gov-

ment’s procurement processes, because few con-

ctors have the resources to perform work without

y or only partial pay and the endurance to engage

16

in a prolonged contest with the Government to collect

it, and those which do would avoid doing business with

the Government under such conditions or would con-

tract with it only at exorbitant prices.

In an effort to provide some adjustment for the

injustices sustained by the petitioners, the Court of

Claims applied a termination for convenience con-

cept to this case, and remanded it to the GSBCA

for a convenience termination. But Green plainly

was not in default and just as plainly the Govern-

ment needed the completion of the contracted-for fa-

cilities. This raises for serious consideration by this

Court the applicability for a termination for con-

venience clause in situations where (i) a contractor

is not in default and (ii) the Government desires

and needs the completion of the contracted for fa-

cilities. It would open the door to great mischief, if

the Government can, under the guise of a termina-

tion for convenience clause, breach at will contracts

that are not in default for facilities that it needs and

which are completed subsequently by others.

IIL The Government's Announcement That It Would Refuse To

Make Progress Payments Was An Anticipatory Breach Of

Contract.

The Court of Claims rejected Count II (App.

15a) which is based upon anticipatory breach of

the FOB contract, as ‘‘a choice of phrasing to

camouflage the irrefutable fact that the only detri-

ment which came, or could come, to plaintiffs would

be through a wrongful default-termination.’’ The fact

is that Green abandoned the FOB contract thereby

terminating it as a viable agreement. The Court of

Claims disregards the established law to achieve its

| —

17

holding. The rule regarding anticipatory breaches of

contract is firmly established and ‘‘a definite and

unconditional repudiation of the contract by a party

thereto, communicated to the others, is a breach of

contract, creating an immediate right of action and

other legal effects, even though it takes place long

before the time prescribed for the promised perform-

ance and before conditions specified in performance

have occurred.”’ 4 Corbin, Contracts §959 at 852-53.

In United States v. Purcell Envelope Co., 249 U.S.

313, 320 (1919) this Court held that this doctrine

applies fully to anticipatory repudiation of a con-

tract by the Government. In that case, the Court,

iting Roehm v. Horst, 178 U.S. 1 (1900), stated: ‘It

s there decided that the positive refusal to perform

s contract is a breach of it, though the time for per-

formance has not yet arrived, and that liability for

he breach at once occurs.’’ Jd at 320. Moreover, the

Jourt of Claims has held that a Government refusal

o make further progress payments constitutes an

nticipatory breach creating an immediate cause of

ction. Overstreet v. United States, 55 Ct.Cl. 154

1920); Whitback v. United States, 77 Ct.Cl. 309

1933). The Court of Claims erred, therefore, in fail-

ng to apply the applicable law of anticipatory

reach of contract.

¥. The Measure Of Damages For Breach Of Contract Should

Include Compensation for Provable, Foreseeable Conse-

quential Damages, Contrary To The Court of Claims’ Holding

The Court of Claims summarily dismissed all

laims for consequential damages of Count I, holding

lat they were ‘‘too remote and consequential.’’ This

ding contravenes the established common law as