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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1948
- **Citation:** 333 U.S. 832

## Text

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i. INDEX
S Page
= 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)
Be og i
a ae ;
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3 774905—48——1

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386416_1471%3A3. Public record. Not legal advice.