Cedar Lumber, Inc. v. United States

32 Cont. Cas. Fed. 72,561, 5 Cl. Ct. 539, 1984 U.S. Claims LEXIS 1397
CourtUnited States Court of Claims
DecidedJune 4, 1984
DocketNo. 356-80C
StatusPublished
Cited by21 cases

This text of 32 Cont. Cas. Fed. 72,561 (Cedar Lumber, Inc. 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
Cedar Lumber, Inc. v. United States, 32 Cont. Cas. Fed. 72,561, 5 Cl. Ct. 539, 1984 U.S. Claims LEXIS 1397 (cc 1984).

Opinion

OPINION

MEROW, Judge:

In this litigation plaintiff seeks damages for breach of contract on the Upper Sardine timber sale contract awarded by the United States Forest Service, Department of Agriculture, to plaintiff on May 5, 1976. Trial has been held and both parties have filed post-trial briefs. Pursuant to RUSCC 42(c) the court issued an order subsequent to trial limiting the issues for present decision to liability for breach. Since the court finds in favor of the plaintiff on the issue of liability, further proceedings are required to resolve the amount of recoverable damages, if any.

Plaintiff asserts several breach of contract claims against the Forest Service. Plaintiff claims that the Forest Service estimate of road construction costs in the contract was so grossly inadequate that it breached the warranty of reasonable accuracy. Plaintiff further claims that defendant’s delay in furnishing design plans was a breach of contract resulting in increased logging and construction costs and, moreover, that plaintiff was forced to “cover” its loss during the delay period by purchasing logs elsewhere at a price higher than the cost of timber under the Upper Sardine contract. Plaintiff also asserts that defendant’s refusal to utilize a revised cost guide to price additional work after contract award was a breach of contract.

Defendant counters that its estimates for road construction were not warranties and, even if they were construed as such, the estimates were not so grossly inaccurate as to constitute a breach of the warranty of reasonable accuracy. Defendant admits that there was a delay in furnishing the design plans but it contends that plaintiff contributed to the delay. Defendant maintains that since there were at best concurrent causes of delay attributable to both parties, neither party is liable in damages. Even if defendant did breach the contract, it insists that plaintiff’s sole remedy is an extension of time under the provisions of the contract.

Facts

On May 5, 1976 the Forest Service entered into the Upper Sardine timber sale contract with Cedar Lumber, Inc. The contract provided for the sale of approximately 8 million board feet of merchantable timber and 212 acres of “per-acre” material from the Detroit Ranger District in the Wiliam[542]*542ette National Forest. In addition to removing timber from the sale area over a five-year period, Cedar was required to perform road construction to facilitate logging and removal of the timber. Cedar was to reconstruct 10.6 miles of existing roads (designated as Segments “A,” “B” and “C” of S915 and S915F) as well as construct 3.41 miles of new roads (designated as S915 Segment D, S915J, S915L and S915M). Surveying, design and construction staking of the reconstruction roads were performed prior to contract award by the Forest Service. Surveying and construction of the new roads were the responsibility of the timber purchaser (Cedar) while the design of the new construction roads was to be performed by the Forest Service after contract award.

To compensate plaintiff for the road construction, the contract specified a certain number of timber “purchaser credits” which would be applied against amounts due the Forest Service for timber logged and hauled from the sale area. To arrive at the appropriate sum of purchaser credits, the Forest Service surveyed the sale area and estimated the amount and type of rock to be excavated during road construction. The terrain was a combination of “common,” “rippable” and “solid” rock. Using the “Zone V Cost Estimating Guide for Road Construction,” the Forest Service would apply the total cubic yards of excavation and derive a “base” cost from the guide. To arrive at the total number of purchaser credits, the base cost would be multiplied by a factor of one to arrive at the per unit cost of common excavation, a factor of two for rippable rock excavation and a factor of three for solid rock excavation. For instance, if the base cost were $0.50, then each unit of common excavation would be priced at $0.50, each unit of rippable rock at $1, and each unit of solid rock at $1.50. The purchaser credits for road construction at the time of contract award were totalled at $296,960, of which $141,-560 was allocated to reconstruction of existing roads and $155,400 was allocated to new construction.

The Forest Service purchaser credits reflect only the direct cost of road construction and do not include amounts for inflation, risk, overhead, profit or timber removal from the right-of-way. With this fact in mind, Brent Walker, Cedar’s purchaser representative, prepared the bid for the Upper Sardine timber sale contract. Walker investigated the site of the new construction prior to bidding without the assistance of a construction subcontractor. Since he was bidding for timber, he had to estimate the amounts of merchantable timber, the costs of processing, the sale price and the road construction costs in order to determine what bid price would yield a profit. Walker priced the road construction component of Cedar’s bid 22 percent higher than the Forest Service estimate of purchaser credits anticipating that the construction contractor’s price, which was not received pri- or to contract award, would exceed the Forest Service estimate by that percentage. Past experience with construction contractors in bidding on timber sale contracts with the Forest Service had borne out this variance.

Cedar solicited bids for the road construction in December 1976 and the lowest bid received was $445,000 from Lloyd Hill, to whom the subcontract was awarded. Hill’s bid was prepared by Jerry Bunde, an experienced engineer, who “walked” the site prior to bidding. Hill’s bid exceeded the pre-design purchaser credits by 55 percent. Another firm, Parkett Logging Co., submitted a bid in the amount of $557,051. A third contractor, North Santiam Paving Co., declined to bid, asserting that it could not perform the job “for anywhere near the credits.” After the Forest Service completed the post-design estimate for the new road construction it raised the purchaser credits for new construction from $155,400 to $290,330. The purchaser credits for reconstruction of roads remained the same at $141,560. Thus, the purchaser credits for road construction, including the survey work, were put at $431,890. Due to some further changes and technical errors, the final amount of post-design purchaser credits reached $451,170. Plaintiff paid a total [543]*543of $672,663.67 to Lloyd Hill, which included a 10 percent increase for rescheduling the start of work from 1977 to 1978.

The post-design estimates for new construction performed after the contract was awarded revealed that the construction contractor would have to excavate a greater amount of solid rock than was previously estimated. For instance, on Segment “D,” a new construction road, the pre-design estimate showed 40,000 cu. yds. of common rock, 10,000 cu. yds. of rippable and 3,510 cu. yds. of solid rock. The post-design estimate for the same road showed 32,270 cu. yds. of solid, 13,800 cu. yds. of rippable and 15,280 cu. yds. common rock.1 The plaintiff has maintained that such a dramatic difference in the amount of solid rock changed the essential nature of the job from a common one to a solid rock job. Hence, the cost guide utilized for the predesign estimates with the premise that this was a common job was inappropriate for use in what was essentially a solid rock job.

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Bluebook (online)
32 Cont. Cas. Fed. 72,561, 5 Cl. Ct. 539, 1984 U.S. Claims LEXIS 1397, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cedar-lumber-inc-v-united-states-cc-1984.