Opposition Brief — Harbert/Lummus Agrifuels Projects v. United States, 119 S. Ct. 1111 (1999) (No. 98-697)

No. 98-697

CLERK

In the Supreme Court of the Gii —~——!

OCTOBER TERM, 1998

HARBERT/LUMMUS AGRIFUELS PROJECTS, ET AL..,

PETITIONERS

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

SETH P. WAXMAN

Solicitor General

Counsel of Record

FRANK W. HUNGER

Assistant Attorney General

DAVID M. COHEN

MARK A. MELNICK

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTION PRESENTED

Whether the court of appeals correctly reversed the

trial court’s judgment in favor of petitioners, based

upon a breach of an oral contract by the United States,

because no lawful contract existed.

(I)

TABLE OF CONTENTS

Page

Opinions below l

Jurisdiction 1

Statement 2

Argument 7

Conclusion 14

TABLE OF AUTHORITIES

Cases:

Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970) ............ 13

American Gen. Leasing, Inc. v. United States, 587

F.2d 54 (Ct. Cl. 1978) 9

AT&T v. United States, 124 F.3d 1471 (1997),

withdrawn, 136 F.3d 793 (Fed. Cir. 1998) ........c.cccccecceseesee 12

Becton Dickinson & Co. v. C.R. Bard, Inc., 922 F.2d

PT NaI UD Seittienictialistatiin cbiisassditsisndetedeastererdimaninesa 12

Blake Constr. Co. v. United States, 296 F.2d 393

|) FERRED Ay aie naee neem 11

CACTI, Inc. v. Stone, 990 F.2d 1233 (Fed. Cir.

1993) . 4

City of El Centro v. United States, 922 F.2d 816

(Fed. Cir. 1990), cert. denied, 501 U.S. 1230

(1991) .... seulaaib ents tidadeamiiiniisss>Ubiteentenetabenuatiisiinsalin

Clark v. United States, 95 U.S. 589 (1877) coocccccccccececceeeeeee 11

Correlated Dev. Corp. v. United Statcs, 556 F.2d

FE BPR REET Site RRO Ole Aa )

Doe v. United States, 100 F.3d 1576 (Fed. Cir.

PUT sibs cestsehetn tusapniaisdiientainbtinebitapaitieassetabiais Wihtlerteatsbicctind seni 9

EWG Assocs. v. United States, 231 Ct. Cl. 1028

SPIE aaah dapvhishsivindinteidbsstchahniadieaa aoabeatbatedins 12

Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380

(1947) BA ee 8,9

Heckler v. Community Health Servs., 467 U.S.

51 (1984) , i)

(IIT)

IV

Cases—Continued:

Hercules, Inc. v. United States, 516 U.S. 417

Housing Corp. of America v. United States, 468

F.2d 922 (Ct. Cl. 1972)

Inter-Island Trans. Line, Inc. v. Government

of the Virgin Islands, 539 F.2d 322 (3d Cir. 1976) ...

PacOrd, Inc. v. United States, 139 F.3d 1320 (9th

ye: PRR

eeeeeee

Sutton v. United States, 256 U.S. 575 (1921) .............

Taylor v. Freeland & Kronz, 503 U.S. 638 (1992) ....

Total Med. Management, Inc. v. United States, 104

F.3d 1314 (Fed. Cir.), cert. denied, 118 S. Ct. 156

Trauma Serv. Group v. United States, 104 F.3d

1321 (Fred. Cit. 1997) ....ccocceccscesees

United States v. Beebe, 180 U.S. 343 (1901) oe

United States v. California, 332 U.S. 19 (1947) ........

United States v. Stewart, 311 U.S. 60 (1940) ..............

Utah Power & Light Co. v. United States, 243 U.S.

BUD CRIED srinsnnesecnininteiniesaciensinininincensiceeastanenaiahianieiitiaiis

Western Pa. Horological Inst., Inc. v. United

— States, 146 Ct. Ch. 540 (1969) nnn nncccscsccsonssesoscesssesseces

Statutes, regulations and rules:

Biomass Energy and Alcohol Fuels Act of 1980,

a I eitiissisniniinticnetesniincmnienilininsssinisini

Contract Disputes Act, 41 U.S.C. G11 oo ceccceteeeeeeeee

48 C.F.R. (1986):

Section 901.602-3 (19995) .........

eeeoeee

weeeee

seeeeee

weeere

Re ee TN is icccntsintvichcenne toiissanterereiatsanneuiinie cies

Section 901.603-71(D) .......ssseseesseseeneereees

Section 901.603-71(C) .........:...0.-.csccssscceeeee

Fed. Cl. R. App. G ...

Miscellanous:

DOE Order No. 5700.5 (Jan. 12, 1981)

Page

Jn the Supreme Court of the United States

OCTOBER TERM, 1998

No. 98-697

HARBERT/LUMMUS AGRIFUELS PROJECTS, ET AL.,

PETITIONERS

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 62-74)

is reported at 142 F.3d 1429. The opinion of the United

States Court of Federal Claims (Pet. App. 1-61) is

reported at 36 Fed. Cl. 494.

JURISDICTION

The judgment of the court of appeals was entered on

April 21, 1998. A petition for rehearing was denied on

July 27, 1998 (Pet. App. 75). The petition for a writ of

certiorari was filed on October 26, 1998 (a Monday).

The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

(1)

2

STATEMENT

1. In 1985, pursuant to the Biomass Energy and

Alcohol Fuels Act of 1980, 42 U.S.C. 8801 et seq., the

United States Department of Energy (DOE) contracted

with Agrifuels Refining Corp. (Agrifuels) and various

lending banks for DOE to provide a 90% guarantee of

the construction financing of an ethanol plant that

would be owned by Agrifuels. Agrifuels separately

contracted with petitioners for the latter to construct

the plant. Pet. App. 3-5.

The construction payment schedule, which was in-

cluded in both DOE’s loan servicing agreement with

Agrifuels and in Agrifuels’ separate construction con-

tract with petitioners, provided for disbursement of

progress payments over 21 months. Pet. App. 6-7.

When construction progressed more quickly than the

21-month disbursement schedule, petitioners requested

a modification of the schedule to reflect their actual

performance. Agrifuels forwarded to DOE different

forms of the request, which was ultimately denied. Jd.

at 23-28, 35.

In January 1987, prior to completion of plant con-

struction, Agrifuels’ parent corporations declared

Chapter 11 bankruptcy, which constituted a default

under Agrifuels’ guarantee agreement with DOE and

the financing banks. Pet. App. 28-29. Instead of imme-

diately exercising their default rights, DOE and the

banks executed monthly waivers. Jd. at 29. However,

concerns arose about the viability of the project and a

need to restructure financing. Jbid. At a meeting of

the various parties held on February 24, 1987, the Vice

President of Harbert International, Inc., stated that he

wanted the requested disbursement modification

approved. Jd. at 29-30.

3

Daniel Beckman, DOE’s Deputy Director of the

Office of Alcohol Fuels, who did not have contracting

authority, responded that DOE was committed to

funding the project to completion, and if the contractor

completed the project, all of the payments would work

out. The trial court found that the DOE contracting

officer, Thomas Keefe, was present when that state-

ment was made and did not question it. Pet. App. 30-

31. Although finding Keefe present, the trial court did

not find that Keefe actually heard the Deputy Direc-

tor’s statement at the meeting. Keefe was deceased by

the time of trial, and had not previously provided any

testimony. Jd. at 28.

The parties continued to meet to discuss possible new

arrangements for financing in light of Agrifuels’ de-

fault. Pet. App. 32-40. On April 9, 1987, during one of

these meetings, DOE informed the parties that the

Secretary of Energy would not proceed with the guar-

antees of any more disbursements because the project

was not viable. Jd. at 39-40. Subsequently, DOE for-

mally declared Agrifuels in default and assumed control

of the plant pursuant to its rights under the guarantee

agreement. Jd. at 42-43.

DOE eventually paid approximately $70 million in

guarantees upon the previous disbursements. DOE

ultimately sold the plant for scrap for approximately $3

million. Pet. Apo. 43.

2. Nearly six years later, in 1993, petitioners filed

suit against the United States in the United States

Court of Federal Claims, essentially asserting two

claims.

First, petitioners claimed that in 1985, at the time of

the closing of the various written contracts related to

the project, negotiators for petitioners and DOE en-

tered into a separate oral contract. Petitioners claimed

4

that DOE promised that if the joint venture performed

its construction contract with Agrifuels on an acceler-

ated schedule, DOE would approve an amendment to

the payment schedule of the construction contract,

allowing Agrifuels to disburse DOE-guaranteed funds

to petitioners on that accelerated basis. Because DOE

never approved such a modification of the payment

schedule, at the time DOE withdrew its guarantee

petitioners had been paid far less by Agrifuels for their

performance of the construction contract than they

would have been paid had DOE allowed accelerated

payment. Pet. App. 44.

Second, petitioners alleged that, in February 1987,

after Agrifuels defaulted under its guarantee agree-

ment with DOE, Keefe orally promised petitioners that

DOE would continue guaranteeing disbursement of

funds for the project until completion, inducing peti-

tioners to remain on the jok longer than they would

have otherwise. Pet. App. 44.

3. After a trial, the Court of Federal Claims rejected

petitioners’ claim that an oral contract was formed

requiring DOE to approve an accelerated payment

schedule. Pet. App. 44-49. However, the court found

that at the February 24, 1987 meeting, Beckman made

an oral offer to petitioners that DOE would continue to

guarantee future funding of the project through

completion, notwithstanding Agrifuels’ default, if

petitioners would not follow through on a threat to

abandon the project. Jd. at 30-31, 45-55.

The trial court found that this oral statement by

Beckman constituted a formal offer to petitioners to

enter into a unilateral contract with DOE, and that such

a contract was formed when petitioners performed by

remaining on the job. Pet. App. 49-55. The trial court

did not find that Beckman possessed authority to bind

5

the government to this oral promise. Jd. at 14 n.27, 55-

57. Instead, it found that Keefe, who was present but

remained silent when Beckman made the statement,

possessed the authority to enter into such an oral con-

tract with petitioners, and his silence amounted to a

ratification of Beckman’s statement.’ Jd. at 31, 49, 55-

57. The trial court then held that in April 1987, when

the Secretary of Energy decided that no new additional

loan disbursements would be guaranteed by DOE, he in

effect repudiated the oral contract, obligating the

government to pay up to the amount of its guarantee

for the additional work that petitioners had performed

after February 24 in reliance upon the promise. /d. at

52, 55, 60.

In a subsequent decision dated December 19, 1996,

the trial court elaborated upon the nature of the con-

tract that it had found. Pet. App. 156. After ruling that

the government was liable to petitioners for $2,870,768,

the trial court emphasized that “[wJhat [it] has found in

the present facts is an express oral contract entered

into by an executive agency for the procurement of

plaintiff's construction services.” Id. at 160. The trial

court therefore ruled that the pre-judgment interest

provisions of the Contract Disputes Act (CDA),

41 U.S.C. 611, applied. Pet. App. 160. The court issued

judgment for petitioners in the amount of $2,870,768,

plus interest from February 4, 1993.

! Petitioners imply that the trial court found that Keefe af-

firmatively stated his consent to the agreement by quoting the

trial court's statement that Keefe had “acquiesced.” Pet. 5. How-

ever, the trial court's findings do not include any affirmative act or

statement by Keefe. Instead, the court based its conclusion that

Keefe “acquiesced” on the mere fact that he was present and did

not question Beckman's statement. Pet. App. 31, 49, 56 n.67.

6

4. The government appealed the trial court’s judg-

ment for petitioners that there was a unilateral contract

obliging DOE to continue to guarantee disbursements

until petitioners completed the project. Petitioners

cross-appealed the trial court’s rejection of their

allegation that an earlier contract was also formed

committing the government to approve any request for

modification of the payment disbursement schedule.

5. The court of appeals reversed the trial court’s

judgment in favor of petitioners. Pet. App. 62. The

court of appeals ruled that the trial court erred in

holding that Keefe was authorized to bind DOE to the

oral contract because Keefe’s delegation of authority

required that all actions taken by him be accompanied

by a prior written approval.’ Jd. at 67-70. No evidence

of such written approval was presented to the trial

court. Jd. at 68-69.

The court of appeals further held that even if Keefe

had been delegated authority to bind DOE to an oral

contract, he did not ratify such an oral contract in the

2 On November 15, 1986, Keefe was delegated “the authority,

with respect to actions valued at $50 million or less, to approve,

execute, enter into, modify, administer, closeout, terminate and

take any other necessary and appropriate action (collectively,

‘Actions’) with respect to Financial Incentive awards.” Pet. App.

68, 111-112. Citing DOE Order No. 5700.5 (Jan. 12, 1981), the dele-

gation defines “Financial Incentives” as the authorized financial

incentive programs of DOE, “including direct loans, loan guaran-

tees, purchase agreements, price supports, guaranteed market

agreements and any others which may evolve.” The delegation

proceeds to state, “[hlowever, a separate prior written approval of

any such action must be given by or concurred in by Keefe to

accompany the action.” The delegation also states that its exercise

“shall be governed by the rules and regulations of [DOE] and

policies and procedures prescribed by the Secretary or his

delegate(s).” Pet. App. 111-113.

7

circumstances presented here. There was no finding

that Keefe actually heard Beckman make the offer that

supposedly led to the unilateral oral contract. In the

absence of a finding that the authorized official had

knowledge of the unauthorized act, he could not be

found to have ratified it. The mere finding by the trial

court that Keefe was present when Beckman made the

oral offer is not a finding that Keefe heard the offer.

Pet. App. 70-7]. The court of appeals also held that

ratification requires a demonstrated acceptance of the

contract, and mere silence is not a demonstrated

acceptance. Jd. at 71-72. Finally, the court of appeals

noted that the same delegation of authority requiring

Keefe to memorialize his actions in writing required

that any ratification by him be memorialized in writing,

and no such memorialization existed. Jd. at 72.

In an aspect of its decision not challenged before this

Court, the court of appeals rejected petitioners’ cross

appeal of the trial court’s holding that there was no

earlier contract binding DOE to approve a requested

modification of the disbursement schedule. Pet. App.

72-73.

ARGUMENT

The decision of the court of appeals is correct, is

consistent with this Court’s decisions, and does not

conflict with any decision of any other court of appeals.

Accordingly, further review is not warranted.

1. The court of appeals’ decision turns initially upon

whether the contracting officer, Keefe, possessed the

authority to enter into the express, oral, unilateral

contract found by the trial court. Applying the long

established principle that the government is not bound

by the acts of its agents beyond the scope of their

authority (Pet. App. 67), the court of appeals analyzed

8

the delegation of authority issued to Keefe and cor-

rectly concluded that it did not permit him to enter into

a contract that was not accompanied by a prior written

approval.

The terms of that delegation permit no other con-

clusion. After specifying the acts Keefe may take on

behalf of DOE, his delegation expressly requires that “a

separate prior written approval of any such action must

be given by or concurred in by Mr. Keefe to accompany

the action.” Pet. App. 68, 111-112. The court of appeals

correctly noted that Keefe was not authorized to act on

behalf of DOE in disregard of this requirement.

“(A]nyone entering into an arrangement with the

Government takes the risk of having accurately ascer-

tained that he who purports to act for the Government

stays within the bounds of his authority.” Federal Crop

Ins. Corp. v. Merrill, 332 U.S. 380, 383 (1947); Sutton v.

United States, 256 U.S. 575, 579 (1921)(those purporting

to contract with a government agent “must be held to

have had notice of the limitations upon his authority”).’

3 Petitioners suggest that they did not bear this obligation by

citing a DOE regulation requiring contracting officers, upon their

discovery that work is being performed pursuant to an unauthor-

ized commitment, to inform contractors that they are performing

at their own risk. Pet. 13 n.3. (Petitioners incorrectly cite

48 C.F.R. 901.602-3 (1995) as the regulation in effect at the appro-

priate time. In fact, the regulation then in effect was 48 C.F.R.

901.603-71(b)(1986)). This requirement does not relieve a contract-

ing party of its burden to confirm that the agent with whom it is

dealing is authorized to bind the government. Moreover, petition-

ers ignore the fact that, here, the trial court did not find that the

contracting officer, Keefe, ever became aware that petitioners

continued performing after February 24 in reliance upon any

unauthorized DOE promise.

Indeed, when considered in its entirety, the cited regulation re-

emphasizes the principle that contracts entered into by unauthor-

9

Here, as the court of appeals stated, “[i]t appears evi-

dent that, if [petitioners] had examined [Keefe’s] dele-

gation of authority, [they] could not have reasonably

believed [they] had entered into a binding contract with

the government in the absence of the required written

approval by [Keefe].” Pet. App. 70.

The court of appeals’ holding accords with nearly 100

years of precedent in this Court, as well as that of the

court of appedats and its predecessor, the United States

Court of Claims, recognizing that the government is not

bound by the acts of agents beyond the scope of their

authority.’

Because the court of appeals correctly applied the

binding precedent of this Court, petitioners’ suggestion

(Pet. 14-15) that its decision conflicts with the decision

in PacOrd, Inc. v. United States, 139 F.3d 1320 (9th Cir.

ized personnel are not binding, 48 C.F.R. 901.603-71(a) (1986), and

also dictates elaborate requirements that must be met before a

non-binding unauthorized agreement may be ratified by DOE. 48

C.F.R. 901.603-71(c) (1986). The record in this case does not con-

tain evidence that those procedures were followed here.

* See, e.g., Heckler v. Community Health Servs., 467 U.S. 51, 63

(1984); Federal Crop Ins. Corp., 332 U.S. at 384; United States v.

California, 332 U.S. 19, 40 (1947); United States v. Stewart, 311

U.S. 60, 70 (1940); Sutton, 256 U.S. at 579-580; Utah Power & Light

Co. v. United States, 243 U.S. 389, 409 (1917); Trawma Serv. Group

v. United States, 104 F.3d 1321, 1327 (Fed. Cir. 1997); Total Med.

Management, Inc. v. United States, 104 F.3d 1314, 1321 (Fed. Cir.),

cert. denied, 118 S. Ct. 156 (1997); Doe v. United States, 100 F.3d

1576, 1584 (Fed. Cir. 1996); CACI, Inc. v. Stone, 990 F.2d 1233,

1236 (Fed. Cir. 1993); City of El Centro v. United States, 922 F.2d

816, 820 (Fed. Cir. 1990), cert. denied, 501 U.S. 1230 (1991); Ameri-

can Gen. Leasing, Inc. v. United States, 587 F.2d 54, 57-58 (Ct. Cl.

1978); Correlated Dev. Corp. v. United States, 556 F.2d 515, 525

(Ct, Cl. 1977); Housing Corp. of America v. United States, 468 F.2d

922, 925 (Ct. Cl. 1972); Western Pa. Horological Inst., Inc. v.

United States, 146 Ct. Cl. 540, 546 (1959).

10

1998), is irrelevant. In fact, however, PacOrd does not

conflict with the decision in this case.

PacOrd held that a government regulation specifi-

cally requiring express procurement contracts to be in

writing does not bar the government’s entry into an

oral, implied-in-fact contract. The PacOrd court recog-

nized that an issue separate from the one it decided was

whether the government agent purporting to bind the

government possessed the requisite authority to enter

into the contract, 1389 F.3d at 1322-1323, and accord-

ingly the decision in PacOrd distinguished cases, such

as this one, where the alleged contract would have been

outside the agent’s delegated authority. Jd. at 1323.°

Indeed, the PacOrd court specifically noted that in

those cases “the government was not contractually

bound because the government agent had no contract-

ing authority or exceeded what authority he had.”

Ibid.*

Petitioners also ignore the fact that in this case it was

not Keefe who was found to have formed a contract.

Instead, the trial court found that Keefe ratified

through his silence a contract otherwise offered by the

oral representations of an unauthorized DOE official,

Beckman. Pet. App. 14 n.27, 31, 49-57. The court of ap-

peals correctly held that even if Keefe had been author-

ized to enter into the oral contract found by the trial

court, the trial court did not find that Keefe was actu-

ally aware of Beckman’s representations, which is a

5 Additionally, for the reasons stated in the PacOrd dissent,

that decision is inconsistent with the precedent of this Court.

6 Moreover, PacOrd stressed that its holding was limited to

implied-in-fact contracts. It is thus distinguishable from this case

where the purported contract found by the trial court was express.

Pet. App. 160.

eee ee ee

11

necessary element of ratification. United States v.

Beebe, 180 U.S. 348, 354 (1901). Pet. App. 70-71. That

fact-specific determination does not warrant this

Court’s review.

2. Petitioners also argue that even if the alleged oral

contract was unauthorized, they were entitled to re-

cover the value of services they allegedly provided to

the government on a quantum merwit basis. Pet. 11-14.

Petitioners suggest that the court of appeals’ decision

therefore conflicts with Clark v. United States, 95 U.S.

539 (1877), which allowed quantum meruit recovery.’

The court of appeals’ decision does not address any

quantum meruit claim because petitioners never made

a timely alternative claim for quantum meruit recov-

ery, nor do they suggest that they did. Before the trial

court, other than one cryptic reference made in closing

argument, petitioners chose to stand upon the claim for

breach of contract damages resulting from the breach of

an allegedly authorized contract. Neither petitioners’

complaint, pre-trial motions, nor pre-trial statement of

facts and law under Appendix G of the Rules of the

United States Court of Federal Claims related or re-

ferred to a quantum meruit claim, even after the gov-

ernment clearly put into issue whether the alleged con-

tract was authorized. Instead, petitioners sought only

breach of contract damages measured by the portion of

7 Petitioners also claim that the decision of the Federal Circuit

conflicts with Inter-Island Transport Line, Inc. v. Government of

the Virgin Islands, 539 F.2d 322, 328-329 (3d Cir. 1976), and Blake

Construction Co. v. United States, 296 F.2d 393, 396 (D.C. Cir.

1961). In those cases, the circuit court allowed quantum meruit

recovery where plaintiff conferred some value on defendant under

a contract made without authority. Our argument regarding the

suggested conflict with Clark applies to the alleged conflict with

these cases as well.

12

the contract price with Agrifuels that they did not

receive, and claim they would have received had the

government not breached the alleged contract. Pet.

App. 157-159. Accordingly, the government was never

put on notice of an alternative quantum meruit claim so

that it could address what, if any, applicability a

quantum meruit claim might have to this case, or

submit evidence of the value to the government, if any,

of services the government might have received from

petitioners.®

Similarly, on appeal, petitioners did not argue that

the trial court’s judgment in their favor should be

affirmed on the basis of any quantum meruit theory, or

that if the court of appeals were to reverse that

judgment the case should be remanded for additional

proceedings based upon a quantum meruit claim.’ In-

8 Whether the United States Court of Federal Claims even

possesses jurisdiction to award quantum meruit recovery for the

value of any performance conferred upon the government in

association with a completely unauthorized contract is currently a

pending issue before the court of appeals en bane. AT&T v. United

States, 124 F.3d 1471, 1479-1480 (1997), withdrawn, 136 F.3d 793

(Fed. Cir. 1998) (order granting suggestion for rehearing en banc).

Among other things, the government has contended in that appeal

that quantum meruit is an implied-in-law recovery, EWG Assocs.

v. United States, 231 Ct. Cl. 1028, 1030 (1982), and that it is outside

of the jurisdiction of the Court of Federal Claims to award.

Hercules, Inc. v. United States, 516 U.S. 417, 423 (1996). Clark

never analyzed the jurisdiction of the lower court over a quantum

meruit claim.

® The only reference petitioners made to a quantum merwit

theory appeared in their reply brief in support of their cross ap-

peal. Petitioners thus waived in the court of appeals their argu-

ment regarding quantum meruit. See Becton Dickison, & Co. v.

C.R. Bard, Inc., 922 F.2d 792, 800 (Fed. Cir. 1990) (“[AJn issue not

raised by an appellant in its opening brief * * * is waived.”).

13

stead, petitioners chose to defend the judgment solely

on the breach of contract theory.

Accordingly, petitioners failed to assert a claim for

quantum meruit recovery before both the trial court

and the court of appeals. This Court does not ordinarily

consider issues that were neither raised before nor

considered by the lower courts. See Taylor v. Freeland

& Kronz, 503 U.S. 638, 646 (1992); Adickes v. S.H. Kress

& Co., 398 U.S. 144, 147 n.2 (1970).

Petitioners’ failure to advance a quantum meruit

claim below is not merely academic. The value to the

government of any services the government may have

received from petitioners’ performance subsequent to

Beckman’s representation would present a question

clearly distinct from the breach of contract damages

actually sought by petitioners before the trial court.

Those damages were derived from petitioners’ contract

price with Agrifuels for the construction work per-

formed by petitioners after Beckman’s representation,

and petitioners’ costs incurred in starting up the plant.

Pet. App. 157-159.

Clearly, petitioners’ contract price with Agrifuels,

and their plant startup costs, do not dictate the value of

their actions to the government, which only obtained

value from the plant as collateral for its guarantees. As

previously noted, after assuming control of the plant

the government paid approximately $70 million in guar-

antees. However, the government only received ap-

proximately $3 million from its sale of the plant to offset

its expenditure. Pet. App. 43. Any value to the govern-

ment of petitioners’ construction work between Febru-

ary 24 and April 7, 1987, is, at most, a fraction of that $3

million received in its sale. Additionally, petitioners’

startup costs in serving Agrifuels did not necessarily

14

contribute anything in value to the $3 million the

government received from its sale of the plant as scrap.

As noted, petitioners’ failure timely to assert a quan-

tum meruit claim denied the government any opportu-

nity at trial to present evidence of the amount of value

it actually may have received. Having failed upon the

sole claim for breach of contract damages that they

advanced below, petitioners should not be permitted to

pursue an entirely new claim, requiring the presenta-

tion of different evidence than the claim that was tried,

for the first time before this Court.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

SETH P. WAXMAN

Solicitor General

FRANK W. HUNGER

Assistant Attorney General

DAVID M. COHEN

MARK A. MELNICK

Attorneys

JANUARY 1999

See