Clearwater Forest Industries, Inc. v. United States

650 F.2d 233, 28 Cont. Cas. Fed. 81,371, 227 Ct. Cl. 386, 1981 U.S. Ct. Cl. LEXIS 283
United States Court of Claims·Decided May 6, 1981·No. No. 509-76·Published·Cited by 28 cases

Opinion

PER CURIAM:

This timber sale case, tried before Trial Judge Wood, involves a Forest Service "deficit” timber sale, [387] a concept new to this court and apparently new to plaintiff Clearwater Forest Industries, Inc. After trial, Trial Judge Wood held that plaintiff is not entitled to recover. In Part A, infra, we adopt and set forth the bulk of his opinion, with minor modifications by the court. In Part B, infra, we supplement the trial judge’s opinion with a discussion of some points particularly stressed by plaintiff in its written and oral contentions urging us to reject the trial judge’s conclusions. The court’s opinion consists of both Part A and Part B. Plaintiff cannot recover.1

PART A*

I

On June 9, 1975, plaintiff, a Delaware corporation, and defendant, acting through the Acting Forest Supervisor, Nezperce National Forest, Region One, Forest Service, United States Department of Agriculture, entered into Timber Sale Contract No. 17-01386-3 ("the Big Burn contract” or the "Big Burn timber sale”). Pursuant to that contract, defendant agreed to sell, and plaintiff agreed (among other things) to purchase, cut, and remove "Included Timber”.

The Big Burn timber sale had been proposed in 1970 and entered on the Clearwater Ranger District’s 5-year sales program; the proposed sale was scheduled for sale in fiscal year 1975 with an estimated volume of 5,000 MBF (thousand board feet). A major portion of the proposed sale area had been previously logged.

Prior to and at the time of advertisement of the proposed Big Burn timber sale, market conditions were depressed, and appraisal data indicated that the proposed sale would be a deficit sale. Where an appraisal develops less than 75 percent of normal profit, before the Forest Service can advertise the prospective timber sale, a prospective purchaser must request in writing that the sale be advertised. In April 1975, after Forest Service notification to several [388] prospective purchasers, plaintiff requested that the proposed Big Burn timber sale be advertised as scheduled.

Prior to June 9, 1975, the Forest Service provided to prospective purchasers, including plaintiff, an advertisement, a prospectus, and a bid form concerning the proposed Big Burn timber sale.

Among other things, the advertisement (as amended prior to June 9,1975) stated in substance that the proposed sale involved an estimated 4,690 MBF of timber; that applicable purchaser road credits were $166,194;2 that the sale was "in deficit”; and that full information concerning the timber, the conditions of sale, and the submission of bids should be obtained from the District Ranger, Clearwa-ter Ranger District, or the Forest Supervisor.

The phrase "in deficit” indicated to prospective purchasers that the proposed sale did not have sufficient value to realize a normal profit as calculated under the Forest Service’s appraisal system. When a proposed timber sale is "in deficit”, the proposed contract contains no payment mechanism for recovery of estimated road construction costs at advertised rates; a prospective purchaser has apparently to decide whether or not the sale is economically feasible in order to recover his operating costs.

Among other things, the Big Burn timber sale prospectus advised prospective purchasers that the sale area, and a sample contract, should be inspected before submitting a bid; that the quality, size, and age class of the timber involved were estimates based on detailed cruise information available for inspection at the Forest Service’s office in Grangeville, Idaho; that values shown were not estimates of a purchaser’s own recovery, and were not a part of the proposed contract; and that for these reasons bidders were urged to examine the timber sale area and make their own recovery estimates.

The prospectus further stated that the minimum acceptable bid rate had been established by appraisal as though roads specified by the proposed contract (described hereinafter) were in place, and that applicable purchaser credit up to the amount shown in the advertisement (i.e., $166,194) [389] would be credited to the purchaser’s timber sale account as the specified roáds were constructed and accepted; that purchaser credit might be applied only to timber charges in excess of timber value at base rates;3 and that "it is estimated that there will be $166,194.00 insufficient value of timber at advertised rates to permit purchasers to recover the total estimated cost of specified road construction.”4

Prospective bidders were further informed by the prospectus that Forest Service construction engineering for specified roads on the Big Burn sale would be completed after sale award;5 that approximately 2.8 miles of construction, and 4.4 miles of reconstruction, of specified roads would be required; that construction estimates for such roads were not guaranteed; and that the information in the prospectus, "together with related material, is made available with the understanding that costs or quantities shown are estimates.”

As noted above, plaintiff was awarded the Big Burn timber sale June 9, 1975. There is no evidence whatever that any of the governmentally authored provisions of the Big Burn contract departed in any way from the information available prior to June 9, 1975, to prospective timber purchasers (including plaintiff) from the Forest Service’s advertisement, prospectus, and sample timber sale contract for the proposed Big Burn timber sale.

By way of summary of the relevant contractual provisions, Section A2, "Volume Estimate * * indicated a total "Estimated Quantity” of sawlogs of 4,690 MBF, with the largest single species (grand fir) having an estimated quantity of 2,340 MBF; Section A5a, "Timber Payment Rates * * * for Species * * * to be Paid for at Rates Escalated under B3.2”, contained base and advertised rates per MBF (in this case identical in amounts as to each species, although not identical for all species), plaintiffs [390] "Bid Premium” rates (ranging from a high of $17 per MBF for grand fir to a low of $15 per MBF for ponderosa pine), a "Bid (Tentative)” rate6 for each species subject to quarterly adjustment for escalation under Section B3.2, and a base index for each species.7

Section B2.4, "Volume Estimate”, stated that "The estimated volumes of timber by species designated for cutting * * * and expected to be cut * * * are listed in A2.” Section B2.4 unambiguously added, however, that "the estimated volumes stated in A2 are not to be construed as guarantees or limitations of the timber volumes to be designated for cutting under the terms of this contract.”

Section B3.2 provided an "Escalation Procedure” with respect to the Bid (Tentative) rates for each species listed in Section A5a. Under the terms of Section B3.2, those rates were subject to escalation in the following amounts (in dollars per MBF):

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Clearwater Forest Industries, Inc. v. United States, 650 F.2d 233, 28 Cont. Cas. Fed. 81,371, 227 Ct. Cl. 386, 1981 U.S. Ct. Cl. LEXIS 283 (cc 1981).

650 F.2d 233 (Clearwater Forest Industries, Inc. v. United States) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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