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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1999

## Text

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withdrawn, 136 F.3d 793 (Fed.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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386003_1090%3A2. Public record. Not legal advice.