Opposition Brief — A. J. Paretta Contracting Co. v. United States

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= Opinion below. ..-.......--.--.----------------+--------+-- 1

NE Se penye ean eae ae Tekan SEETe PRONE By tee pia om 1

| Questions presented - - ............-.-------.-------------- 2

_ Statute, executive order and contract provisions involved - - -_- 2

Brqentement._--. -.- ~~. 2528 os en nee n conn ene e ee 2

PMPUMIONE. . 22. 2 ee eee e nese eee enensencese 8

ND i aiknncuncecensccangapabsahisceseanscacenttone 14

BEPMPPOMOES . . . nn on nnn een ewww wn een ewe essence enncce 16

: CITATIONS

~ Cases:

= Crane Co. v. James McHugh Sons, Inc., 108 F. 2d 55__... 10

"Dustin Grain Co. v. McAllister, 296 Fed. 611__-.......-- 10

g Employees Group of Motor Freight Carriers v. National War

a Labor Board, 143 F.2d 145, certiorari denied, 323 U.S. 735 6

a Gregg v. von Phul, 1 Wall. 274_............-....----.-- 10

as United States v. Blair, 321 U. 8. 730_. ....--.----.------ 7

ss United States v. Callahan Walker Co., 317 U. 8. 56.__-_--- 14

3 United States v. Holpuch Co., 328 U. 8. 234_....._.---..- 7,14

so Walton Hotel Co., In re, 116 F. 2d 110__..-._--.---.---- 10

Statutes:

a Davis-Becon Act of March 3, 1931, as amended, c. 411, 46

. Stat. 1494; 49 Stat. 1011; 54 Stat. 399; 40 U.S. C. 276a_ 2, 3, 16

Stabilization Act of 1942, 56 Stat. 765; 50 U. 8. C. App.,

% UD, Wj Re Be on ole cde bien 6 5. tas 4

% PO BU ccctacauckdwn nse keh eeboeeennaonkeadean 12

~ Miscellaneous:

., Executive Order No. 9250, 7 F. R. 7871......----.-- 2, 4, 12, 17

(1)

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3 774905—48——1

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poy OPE CORN ee A ED

nthe Shareme Gout of he nied Snes

OcroBeR TERM, 1947

No. 482

A. J. Parerra Contractine Co., INC., PETITIONER

v.

THE Unrrep STATES

ON PETITION FOR A WRIT OF CERTIORARI TO THE COURT

OF CLAIMS

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the Court of Claims (R. 48-55)

is not yet reported. |

JURISDICTION

The judgment of the Court of Claims was

entered on October 6, 1947 (R. 55). The petition

for a writ of certiorari was filed on December 17,

1947. The jurisdiction of this Court is invoked

under Section 3 (b) of the Act of February 13,

1925, as amended.

QUESTIONS PRESENTED

1. Whether a contractor may recover from the

Government for increased wages paid to carpen-

(a)

Sesto shdiiniiieie asa okoee

2

ters who had refused to work for $1.25. an hour,

the thinimum eontract rate based on a detefmind-

tion by the Secretary of Labor of the prevailing

wage rates, where thé contractor was prohibited

from paying more than the-prevailing wage rate

because of wage stabilization orders, and where

the Secretary of Labor modified his determination

‘of the prevailing Wage rate for carpenters by in-

creasing it to $1.35 at the contractor’s request and

on the understanding that no claim against the

Government was to be made for additional com-

pensation on account of the increased labor costs.

2. Whether a contractor with the Government

who was required by one of the general conditions

of the contract to protect all work and material

from damage by cold, is relieved of that require-

ment as to piers erected under the contract, where

the only feasible method of protecting them from

frost action was by placing earth around them,

and where under the specifications relating to

excavating and grading the contractor need not

provide fill.

STATUTE, EXECUTIVE ORDER, AND CONTRACT

PROVISIONS INVOLVED

The pertinent provisions of the Davis-Bacon

Act, as amended, Executive Order No. 9250, and

Contract NY-30083 are set forth in the Appendix,

infra, pp. 16-18.

STATEMENT

Petitioner instituted this action in the Court of

Claims on April 2, 1945, to recover compensation

a

on three items of claim arising out of certain con-

tracts entered into between petitioner and the Na-

tional Housing Agency, Federal Publi¢ Housing

Authority (R. 1-25). Item II of the claim was

‘withdrawn, leaving only Items I and [II for deter-

mination by the court (R. 27).

Item I

Qn June 9, 1942, petitioner entered into con-

tract NY-30082 with the National Housing

Agency, Federal Public Housing Authority, for

the construction of housing at Massena, New York

(RB. 26). Article 17 of this contract, which em-

bodied the terms of the Davis-Bacon Act, as

amended, infra, pp. 16-17, required the contractor

to pay wages computed at rates not less than those

stated in the specifications, those rates being

based on a determination by the Secretary of

Labor that they were the prevailing wage rates

in the particular locality (R. 20, 27-28, 29).

For journeymen carpenters the minimum hourly

wage rate, as fixed by the specifications, was $1.25,

(R. 29). Petitioner’s subcontractor handling the

carpentry work on this contract consistently. paid

carpenters at the hourly rate of $1.35 instead of

$1.25, however, and when petitioner later took

over the carpentry work from the subcontractor it

continued to pay carpenters at the higher rate

(R. 30).

On December 2, 1942, petitioner entered into a

CR A

ee OE I LO ELE IMRT IO NALS ne a ee

4

second contract, NY-30083, for the construction

of additional housing at Massena, N. Y., with pro-

visions requiring the payment of minimum wages

identical with those in the first contract (R. 27-

29). In computing estimates for its bid on this

contract, petitioner used a wage rate of $1.25 per

hour for carpenters, petitioner having some hope

that carpenters would be released from other large

construction projects in such numbers that they

could be obtained at this rate for the work under

the second contract (R. 30). Carpenters began

work on this project on December 23, 1942, con-

tinuing to work intermittently until the latter

part of February 1943, all being paid by peti-

tioner at the hourly rate of $1.35 (R. 30).

Meanwhile, the President, on October 3, 1942,

acting under the authority of the Stabilization Act

of 1942 (56 Stat. 765; 50 U. S. C. App., Supp. V, -

961-971) had by Executive Order No. 9250 (7 F. R.

7871) ‘‘frozen’’ wages at the rates prevailing on

September 15, 1942, and prohibited any increase or

decrease in wages which was not approved by the

National War Labor Board. Thereafter, on

February 23, 1943, petitioner advised the car-

penters’ union that under Executive Order No.

9250 it could not pay more than $1.25 per hour

on Project NY-30083 (R. 31). Upon receiv-

ing this advice the carpenters refused to work at

that rate and stopped work on the project (R.

30-31).

cee

iieeb tke |

5

After some negotiation, petitioner’s president

and secretary conferred in May 1943, with an

- official of the Federal Public Housing Authority,

who advised that he would go with them to see

an official of the Wage Determination Section of

the Department of Labor and attempt to obtain

a modification of the wage rate quickly, if they

would agree that there would be no increased cost

to the Government by reason of such modifica-

tion (R. 34). This was in accord with the policy

of the Labor Department (R. 35). The alterna-

tive was to apply to the Wage Adjustment Board

for an increase in the wage rate, a procedure

which would have required a longer period of

time before a decision could have been obtained

(R. 34). Petitioner’s representatives led these

Government officials to believe they had agreed

that there would be no increase in the cost of the

project to the Government if the wage rate should

be increased, but they did not affirmatively commit

themselves to withhold claim for additional com-

pensation in such event. They knew, however,

that they had created this impression and did not

correct it. (R.34.) Asa result of this conference,

the Secretary of Labor modified his determina-

tion of August 10, 1942, by substituting $1.35 for

$1.25 as the prevailing wage rate per hour for

carpenters (R. 35). Petitioner was informed of

this modification by telegram of June 4, 1943 (R.

35). Thereupon petitioner employed carpenters

6

at $1.35 per hour apd progeeded with the werk

ynder the contract, in the course of which it paid

$3,662.30 more for the wages of journeymen car-

penters than it would kaye paid had the hourly

rate been $1.25 (R. 36).

On these facts the court below held that the

United States was not liable for the increased

costs resulting from the payment of the higher

wages, and accordingly refused to allow a recoyery

on this portion of Item I of petitioner’s claim

(R. 47, 48-62).*

* The remaining portion of Item I was based on the pay-

ment of an increased wage rate to common laborers. The

Pca minimum rate was 65¢ per hour, which was the rate

fixed by the Secretary of Labor as the prevailing wage rate

(R. 36). On February 9, 1943, this rate was increased by

the Wage Adjustment Board to 80¢ per hour (R. 36-37).

This ruling amounted to no more than permission to pay 80¢

per hour and was not a requirement that petitioner do so.

Employees Group of Motor Freight Carriers v. National War

Labor Board, 143 F, 2d 145 (App. D. C.), certiorari denied,

323 U. S. 735. When petitioner refer fo Par the by

rate, a subordinate of the contracting officer, acting wi out

authority, advised that this refusal was a noncompliance with

the terms of the contract and threatened ta report the matter

to the Department of Labor (R. 39). Petitioner thereafter

paid the increased wages without appealing to the contract-

ing officer or the head of the department. Judgment was en-

tered for $2,659.47 for the increased wages so paid. (R. 40,

47.) While we believe that this was error, in that the court

below held the Government liable because of the act of a sub-

ordinate official which was clearly unauthorized, especially

since petitioner made no effort under Article 15 of the con-

tract to obtain a ruling from the contracting officer or to

appeal to the head of ie department concerned, we did not

consider that this apparently isolated departure from the rule

eee

7

Trem III

The piers for 31 of the 35 buildings to be con-

structed under the second contract, NY-30083,

were erected by petitioner between October 26 and

November 26, 1942, and in intermittent working

periods during December 1942 (R. 41)" It was

anticipated that the foundations for the project

could be completed before cold weather set in, and

that work on the superstructures could go forward

during the winter (R. 41). However, little prog-

ress was made on the superstructures, as_peti-

tioner laid girders on the piers for only five build-

ings (R. 41). The Government granted exten-

sions of the contract time to cover all delays (R..

42). s

The piers were inserted 314 feet in the ground

at the natural grade, which was later found to be

somewhat lower than indicated on the plans

(R. 42). In the absence of superstructures being

placed on them, the only feasible method of pro-

tecting them against frost action would have been

by placing earth around them (R. 42). If the

grade had been as indicated in the drawings the

announced by this Court in United States v. Holpuch Co.,

328 U. S. 234, 239, and United States v. Blair, 321 U. 8. 730,

735, was of sufficient significance to warrant seeking a review

by this Court.

* This work was begun under Change Order No. 20 to the

first contract, NY-30082, in anticipation of the execution

of the second contract, in order that construction of the

superstructures might begin as soon as the second contract

was executed (R. 40-41).

774905—48——2

piers would have had more protection (R. 42).

Petitioner did not grade or place fill around the

piers, except to backfill earth removed in exca-

vating (R. 42). During the winter frost action

tilted approximately half of the piers out of line

(R. 42). Petitioner realigned ‘he piers, the fair

and reasonable price of the work done being

$11,500.93 (R. 46). Petitioner claimed additional

compensation for this work on the ground that

placing earth around the piers was the only

feasible method of protecting them from frost,

that under the specifications to contract NY-30083

it was not required to provide fill and that there

was no specific provision in the change order

under which this work was done requiring it to

protect or maintain the piers pending the placing

of the superstructures on them (R. 42, 45-46).

There was, however, a general condition in both

contracts requiring petitioner to protect all work

and material against damage from dampness and

cold, and because of this provision the court below

held that petitioner could not recover the expense

of resetting the piers (R. 42, 47, 54-55).

ARGUMENT

In connection with its claim under Item I,

petitioner contends that the first determination

of the Secretary of Labor as to the prevailing

wage rete was erroneous, and that it misled peti-

tioner to its detriment, and that the subsequent

modification of that determination increasing the

rate entitles it to recover the increased wages paid

by it. Petitioner further contends that the court

below erred in holding that it had waived, or was

estopped to assert, its claim for additional com-

pensation based on the payment of increased

wages. (Pet. 7, 20-21.) We submit that the hold-

ing of estoppel is fully sustained by the evi-

dentiary findings of the court below, and that the

original determination of the Secretary of Labor

as to the prevailing rates did not mislead peti-

tioner to its detriment.

(a) With regard to the conference between

petitioner’s representatives and the officials of

the Federal Public Housing Authority and the

Department of Labor, the court below found that

petitioner’s representatives did not affirmatively

agree to withhold claim for additional compensa-

tion should the carpenters’ wage rate be increased,

but found further that ‘‘Neither did they at that

time affirmatively correct the impression, which

they knew was held by both the Assistant Di-

rector and the Assistant Solicitor, that they had

agreed that the wage-rate increase would not re-

sult in added cost to the Government” (R. 34).

The court below found also that it was the policy

of the Labor Department to correct wage-rate de-

terminations only in cases in which it appeared

that such correction did not involve additional

cost to the Government for construction on which

such wage rates were to be paid and that, where

such additional cost was involved, the question

10

was referred to the Wage Adjustment Board for

appropriate action (R. 35). In such cireum-

stances petitioner’s representatives, having cre-

ated a false impression that they agreed to with-

hold a claim (based on increased wages), were

clearly under a duty to correct that impression

before the officials of the Government had acted

in reliance upon it. The finding of the court

below that they did not do so, which finding

is not questioned, is sufficient to estop petitioner

from contending now that there was no agreement

to waive the claim for excess costs, under the fa-

miliar rule that one who by his acts or representa-

tions, or by his silence when he ought to speak: out,

induces another to believe certain facts to exist,

is estopped to deny the existence of such facts

where the latter, having acted on such belief,

would be prejudiced by such denial. Gregg v.

von Phul, 1 Wall. 274, 281; Dustin Grain Co. v.

McAllister, 296 Fed. 611 (C. C. A. 8); Crane Co.

v. James McHugh Sons, Inc., 108 F. 2d 55, 59

(C. C. A. 10); In re Walton Hotel Co., 116 F. 2d

110 (C. C. A. 7).

(b) Petitioner was not misled as to its pros-

pective labor costs by the original determination

of the prevailing carpenter wage rates by ‘the

Secretary of Labor. To avoid the effect of the

estoppel, petitioner contends that ‘‘The effect of

the ruling of the Court of Claims is to give force

il

to the refusal af the Secretary of Labor to prop- ~

erly perform the duty imposed by. the statute

unless, as a condition, petitioner. waive such rights

as it might haye’’ (Pet. 21). This contention

is based on the assumption that the first deter-

mination of the prevailing wage-rate by, the Sec

retary of Labor was erroneous and that, therefore,

petitioner was entitled as a matter of right to

have that determination corrected. As petitioner

itself recognizes, however, this assumption is not

supported by any finding of the court heloy

(Pet. 19).

Petitioner’s dilemma argse out of the fact that

it had been paying carpenters working on Project

NY-30082 $1.35 per hour, whigh was more than

the minimum rate required to be paid by. that

contract, and that thereafter they refused to work

for less than $1.35 per hour on the second project,

even though wartime wage stabilization legislation

then prohibited the payment of more than the

minimum rate (R. 30-31). The ordinary method

of dealing with such problems was to apply to

the Wage Adjustment Board for. an increase in

the wage rate, where a decision could be obtained

in two or three months. Petitioner declined to

participate with the carpenters’ union in such an

effort. (R. 34.) Instead, almost three months

after the work stoppage began, petitioner songht

the aid of the Assistant Director of the Labor

12

Relations Division of the Federal Public Housing

Authority, and was told that the situation might

be taken care of quickly by a modification of the

Secretary of Labor’s finding as to the prevailing

wage rate, on condition that petitioner agree that

there would be no increased cost to the Govern-

ment by reason thereof (R. 34). Since Executive

Order No. 9250 ‘‘froze” wages at the September

15, 1942, level, which, with respect to the car-

penters in the Massena area, was fixed by the

Secretary of Labor’s determination of August 10,

1942, the proposed modification of that determina-

tion would solve petitioner’s problem by changing

the basis for the ‘‘freezing’’ provision of the ex-

ecutive order, thereby making it possible for peti-

tioner to pay the higher rate without violating

Section 5 (a) of the Stabilization Act of 1942,

56 Stat. 767, 50 U. S. C. App. 965 (a), under

which Executive Order No. 9250 was issued.

When petitioner’s representatives intimated that

they agreed to the condition in- the proposal, the

modification was made (R. 34-35).

Certainly, there was nothing about this proce-

dure which misled petitioner. Although the

court below found that petitioner used the $1.25

per hour rate in preparing its bid on the second

contract, it also found that petitioner at that time

had some hope that carpenters would be released

from other work at such times and in such num-

18

pers that they could be obtained for the second

contract at the $1.25 rate (R. 30). Petitioner

knew, however, that it had been paying $1.35 per

hour regularly to its carpenters on the first con-

tract in the same community, and by using: the

$1.25 rate in preparing its bid on the second con-

tract, it deliberately took the risk of being able to

procure earpenters to work for that wage. It

was a business gamble, and petitioner lost, be-

cause the carpenters refused to work for less than

$1.35 per hour (R. 30-31). Having lost on its

gamble, petitioner may not now pass its loss on to

the Government. 3

2. Petitioner contends in connection with Item

III of its Claim, that it is entitled to recover

compensation for the cost of realigning piers

which had been displaced by frost action. How-

ever, there is no question that petitioner was

required by the contract to ““* * * provide

temporary heating, covering, and enclosures as

necessary * * * to protect all work and ma-

terial against damage by dampness and cold

* * *” (R. 42.) The court below found that in

the absence of superstructures being placed on the

piers, the only feasible method of protecting them

against frost action would have been by placing

earth around them (R. 42). Petitioner asserts

(Pet. 21-22) that to do this would have required

it to provide fill, and that the necessity of grading

as such was excluded from the contract by a

4

paragraph of the specifications. which provided

(B42):

(£) Grade areas under buildings to

levels shown, on n plants {it aed If here

grade

are lower, no

vided. a ae 2

Undoubtedly this proyision in the specifications

relieved petitioner. of any obligation to provide

fill merely for the purpose of changing the grade.

However, it does not follow that this provision

also relieved petitioner of the positive obligation

to protect all work against damage by cold,

merely because the only feasible method of fur-

nishing such protection was by providing fill. In

such circumstances, providing fill is not grading

as ‘such but is furnishing protection from frost.

The holding of the court below that it was the

duty of petitioner to provide such protection is

not i in conflict with any of the cases cited by peti-

tioner (Pet. 22), and is, we submit, entirely cor-

rect. Moreover, petitioner failed to invoke the

appeal Se wag ti of Article 15 of the contract (R.

was thus precluded from raising this

paiva in the Court below. Cf. United States

v. Callahan Walker Co., 317 U. S. 56, 61; United

States v. _Holpuch Co., 328 U. S. 234, 240.

CONCLUEIDN

The decision of the court below is clearly cor-

rect, and there is no conflict of decision. The

15

petition for a writ of certiorari should, therefore,

be denied. ses

Respectfully sabmitted.

Pair B, Per-Man, i

Solicitor lial §

HG. Morison, |

Acting|Assistant Attorney General. .

Pau A. SwEENEy,

Joun R. BEnney,

Atvin O. West,

Attorneys.

JANUARY 1948.

APPENDIX

1. The pertinent provisions of the Davis-Bacon

Act of March 3, 1931, as amended, c. 411, 46 Stat.

1494; 49 Stat. 1011; 54 Stat. 399; 40 U. S. C. 276a,

are as follows:

The advertised specifications for every

contract in excess of $2,000, to which the

United States or the District of Columbia

is a party, for construction, alteration,

and/or repair, including painting and

decorating, of public buildings or public

works of the United States or the District

of Columbia within the geographical limits

of the States of the Union, the Territory

of Alaska, the Territory of Hawaii, or the

District of Columbia, and which requires

or involves the employment of mechanics

and/or laborers shall contain a provision

stating the minimum wages to be paid vari-

ous classes of laborers and mechanics which

shall be based upon the wages that will be

determined by the Secretary of Labor to be

prevailing for the corresponding classes of

laborers and mechanics employed on proj-

ects of a character similar to the contract

work in the city, town, village, or other

civil subdivision of the State, or the Ter-

ritory of Alaska, or the Territory of

Hawaii in which the work is to be per-

formed, or in the District of Columbia if

the work is to be performed there; and

every contract based upon these specifica-

tions shall contain a stipulation that the

contractor or his subcontractor shall pay

all mechanics and laborers employed directly

17

upon the site ef the work, unconditionally

and not less often than once a week, and

without deduction or rebate on

any yor pon ‘i full —— accrued at

time of payment, compu wage rates

not lect thon thove stated tei Ge Atvoutiond

specifications, * * *.

2. Executive Order No. 9250, 7 F. R. 7871, pro-

vides in part:

Trrtz II—Wace anp Sataky STaBILIZATION

Po.icy

1. No increases in wages rates, granted as

a result of voluntary agreement, collective

bargaining, conciliation, arbitration, or

otherwise, and no decreases in wage rates,

shall be authorized unless notice of such

increases or decreases shall have been filed

with the National War Labor Board, and

unless the National War Labor Board has

approved such increases or decreases.

2. The National War Labor Board shall

not approve any increase in the wage rates

prevailing on September 15, 1942, unless

such increase is necessary to correct mal-

adjustments or inequalities, to eliminate

substandards of living, to correct gross in-

equities, or to aid in the effective prosecu-

tion of the war.

x * * * €

3. The specifications of contract NY-30083

provided in part as follows:

6. Rates of Wages.

a. There shall be paid each mechanic or

laborer of the Contractor or any subcon-

tractor engaged in work-on the project un-

der the Contract in the trade or occupation

listed below, not less than the hourly wage

18

rate set opposite the same, regardless of

any sotitie ] rélationship which may be —

alleged to exist between the Contractor or ©

any subcontractor and such laborers and —

mechanics. =

Under Division 2—Excavating and Grading— 4g

Section 7: 3

( f) Grade areas under buildings to levels 4

shown on plants [sic]. If existing grades =

are lower, no fill need be provided. * * *, ©

4. The general conditions of contracts NY- =

30082 and NY-30083 contained the following pro-

Visions : 2

CARE OF WORK

a. The Contractor shall be responsible 3

for all damages to persons or property that

occur as a result of his fault or negligence ©

in connection with the prosecution of the ~

work, and shall be responsible for the ~

proper care and protection of all materials

delivered and work performed until com- ~

pletion and final acceptance. 4

b. The Contractor shall provide tempo- ©

rary heating, covering, and enclosures as ~

necessary and to the satisfaction of the ~

Contracting Officer to protect all work and =

material against damage by dampness and =

cold, to dry out the buildings properly, and

to facilitate completion of the work: q

U. S. GOVERNMENT PRINTING OFFICE: 1948