Allied Materials & Equipment Co. v. United States

569 F.2d 562, 24 Cont. Cas. Fed. 82,045, 215 Ct. Cl. 406, 1978 U.S. Ct. Cl. LEXIS 3
CourtUnited States Court of Claims
DecidedJanuary 25, 1978
DocketNo. 342-75
StatusPublished
Cited by59 cases

This text of 569 F.2d 562 (Allied Materials & Equipment Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allied Materials & Equipment Co. v. United States, 569 F.2d 562, 24 Cont. Cas. Fed. 82,045, 215 Ct. Cl. 406, 1978 U.S. Ct. Cl. LEXIS 3 (cc 1978).

Opinion

Per Curiam:

In an order of September 30, 1977 post at

902, the court denied defendant’s motion and plaintiffs cross-motion for summary judgment, and remanded the case to the Trial Division. Plaintiff has now moved for a rehearing en banc of its cross-motion for summary judgment. Defendant has filed a brief in opposition.

Briefly, this action was brought to recover anticipatory profits and more on the ground that defendant breached a contract under which plaintiff was to supply cylinder assemblies to the Army. The alleged breach was accomplished by defendant’s sale to a competitor of certain tooling equipment which was contractually obligated for use by plaintiff in performing the contract. Oral argument was heard on June 6, 1977, after which the aforementioned order was issued, remanding the case for further development of certain issues by the trial judge. In particular, we instructed the trial judge to determine whether defendant’s sale of the production equipment had effected a cardinal change in the contract, within the meaning of such precedents as, e.g., Edward R. Marden Corp. v. United States, 194 Ct. Cl. 799, 442 F.2d 364 (1971) and Air-A-Plane Corp. v. United States, 187 Ct. Cl. 269, 408 F.2d 1030 (1969). If the trial judge found that there was a cardinal change, thus providing this court with jurisdiction, he was then to determine whether the government was dealing in bad faith prior to and in effecting the termination for convenience.

Both parties have questioned the propriety of framing the issue as whether the sale of equipment was a cardinal change. The court’s instructions to the trial judge were not inadvertent, and our position will be further explained in response to each party’s contentions.

It is defendant’s position that the cardinal change doctrine applies only when a plaintiff seeks extra costs incurred because of a deviation from contract terms, but which are not recoverable under the contract. Defendant states that the cardinal change principle is "obviously irrelevant where plaintiff is instead seeking anticipated profits and lost revenues.” Inherent in this statement, however, is the fallacious assumption that the cardinal change concept’s applicability is dictated by the nature of [409]*409damages sought by a plaintiff. This is simply not so. Under established case law, a cardinal change is a breach. It occurs when the government effects an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for. By definition, then, a cardinal change is so profound that it is not redressable under the contract, and thus renders the government in breach. See, e.g., Edward R. Marden Corp. v. United States, supra, 194 Ct. Cl. at 808, 442 F.2d at 369; Air-A-Plane Corp. v. United States, supra, 187 Ct. Cl. at 275-76, 408 F.2d at 1033; Keco Industries, Inc. v. United States, 176 Ct. Cl. 983, 998-99, 364 F.2d 838, 847-48 (1966), cert. denied, 386 U.S. 958 (1967); Aragona Construction Co. v. United States, 165 Ct. Cl. 382, 390-91 (1964). In Marden, supra, we specifically stated that the purpose of the cardinal change doctrine is "to provide a breach remedy for contractors who are directed by the government to perform work which is not within the general scope of the contract.” We have certainly never intimated, however, that the contractor is limited to a suit for extra costs incurred in performing duties fundamentally outside of the scope of the contract, and we have never held that the applicability of this doctrine is in any way dependent on the nature of damages sought by the contractor. Although the typical case, thus far, has featured a plaintiff who undertook to perform despite the alteration of contractual obligations, this does not preclude a suit by a contractor who, for one reason or another, has not completed the contract. Undoubtedly, the cautious contractor might often proceed under the revised contract because of. doubt whether he could invoke the cardinal change doctrine. But if he has been prevented from performing, as in any breach case, the award of anticipatory profits is an appropriate remedy. See Carchia v. United States, 202 Ct. Cl. 723, 729, 485 F.2d 622, 625 (1973); General Builders Supply Co. v. United States, 187 Ct. Cl. 477, 485-86, 409 F.2d 246, 251 (1969); J.D. Hedin Construction Co. v. United States, 187 Ct. Cl. 45, 58-59, 408 F.2d 424, 431-32 (1969).

Conversely, it would seem at least moderately obvious that the failure to furnish property the government [410]*410promised to furnish would sometimes be remediable under the contract and therefore would not always be a breach. Compare S.S. Mullen, Inc. v. United States, 182 Ct. Cl. 1, 389 F.2d 390 (1968) with Chris Berg, Inc. v. United States, 182 Ct. Cl. 23, 389 F.2d 401 (1968).

Plaintiff also is of the opinion that cardinal change analysis is misapplied in this particular context. In support of this position, plaintiff notes that the standard changes clause in its contract is limited to variances in "drawings, designs, or specifications, where the supplies to be furnished are to be specially manufactured for the government in accordance therewith; method of shipment or packing; and place of delivery.” The contract also contains a Government Furnished Property clause authorizing equitable adjustments for "any delay in delivery of government-furnished property; delivery of such property in a condition not suitable for its intended use; and any withdrawal of authority to use property.” Plaintiff apparently reasons that the presence of a separate clause pertaining to the availability of the production facilities for use by Allied renders the cardinal changes doctrine inapplicable. There is no need to read the doctrine so restrictively as to hold that it applies only to deviations which are specifically within the conventional changes clause. The doctrine is couched in terms which apply generally to modifications which are so fundamental that they cannot be redressed within the contract by an equitable adjustment to the contract price, whether under the Government Furnished Property clause, the traditional changes clause, or any other. As we noted earlier, some variances in the availability of property contractually to be furnished by the government might well be remediable under the contract by an equitable adjustment.

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Cite This Page — Counsel Stack

Bluebook (online)
569 F.2d 562, 24 Cont. Cas. Fed. 82,045, 215 Ct. Cl. 406, 1978 U.S. Ct. Cl. LEXIS 3, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allied-materials-equipment-co-v-united-states-cc-1978.