D. Federico Co., Inc. (Debtor) and U.S. Fidelity and Guaranty Co. v. New Bedford Redevelopment Authority

723 F.2d 122, 1983 U.S. App. LEXIS 15349
CourtCourt of Appeals for the First Circuit
DecidedNovember 10, 1983
Docket83-1055
StatusPublished
Cited by38 cases

This text of 723 F.2d 122 (D. Federico Co., Inc. (Debtor) and U.S. Fidelity and Guaranty Co. v. New Bedford Redevelopment Authority) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
D. Federico Co., Inc. (Debtor) and U.S. Fidelity and Guaranty Co. v. New Bedford Redevelopment Authority, 723 F.2d 122, 1983 U.S. App. LEXIS 15349 (1st Cir. 1983).

Opinion

TORRUELLA, District Judge.

This is a direct appeal by defendants New Bedford Redevelopment Authority and the City of New Bedford (hereinafter “Authority”) from findings of fact, rulings of law and denial of a motion for a new trial made by the United States Bankruptcy Court for the District of Massachusetts. 1 At issue in this action is the performance of Contract No. 5 of the South Terminal Urban Renewal Project, a contract awarded by the Authority to plaintiff-appellee D. Federico Company, Inc. (hereinafter “Federico”' or “the Contractor”) for the construction of *125 two earth-filled bulkhead piers known as Homer’s Wharf and Leonard’s Wharf.

The controversy primarily arose from extensive, extra work made necessary by an inadequate description of the material to be excavated in the preparation of the work site. The Authority maintained that its notice was adequate and that it advised the bidders to carefully examine the area for themselves in order to determine the extent of the work to be done. Federico argued that since the Authority had in its possession a detailed engineering report describing the obstructions which were eventually encountered, it misled the contractors by its failure to inform them of the existence of the report or to include in the description information summarized from the report.

From this core controversy flowed thirteen issues in the complaint, various counterclaims, and two 2 well reasoned, carefully detailed and documented opinions handed down by the bankruptcy court. The court found that the contractor was less than prudent in his cursory examination of the work site and that there was no breach of warranty or misrepresentation. It also found that the Authority had important information which it did not convey to bidders, that this information would have greatly assisted bidders in the preparation of their bids and that its notification could have been easily accomplished. Under these circumstances, the court held that the Authority should not expect to receive the benefit of this substantial additional work without compensation to the performing party merely because the contractor was less than conscientious in discovering the undisclosed problem. Citing Bloomgarden v. Coyer, 479 F.2d 201 (D.C.Cir.1973), the Judge imposed compensation based on the theory of unjust enrichment. Because of Federico’s own imprudence, the Judge also held that equity required the contractor to absorb all expenses that would have been avoidable had it been conscientious in the inspection made prior to bidding on the contract. These findings set the tone for the rest of the trial court’s decision.

The Authority immediately contested the trial court’s application of the equitable theory of unjust enrichment to an action at law. Appellant cites Spector v. Loreck, 342 Mass. 685, 175 N.E.2d 262, 264 (1961), among others, to support its contention that where there is an adequate remedy at law, the plaintiff and the court cannot resort to equity. Appellant points out in its brief that the court found that the Authority did not breach any warranty or contract. While it mentions the contractor’s failure to perform an adequate on-site investigation as required by the bid documents, the Authority neglects to mention its own imprudence in failing to include important, relevant information in said documents. When the government agency is in possession of information pertinent to construction work to be performed under a contract, there is a duty to fully disclose and furnish to the contractor the facts of which the agency has knowledge. Wm. A. Smith Contracting Co. v. United States, 412 F.2d 1325, 1338, 188 Ct.Cl. 1062 (1969); Leal v. United States, 276 F.2d 378, 383, 149 Ct.Cl. 451 (1960). See also Hardeman-Monier-Hutcherson v. United States, 458 F.2d 1364, 198 Ct.Cl. 472 (1972). Appellant possessed the Goodkind & O’Dea Engineering Report which would have alerted Federico to the probable presence of concrete piles and to the fact that this excavation was anomalous in comparison to others he had done in the area. It would have made him aware of the need for a more careful inspection of the area.

“In the event of failure to disclose available information which has the effect of misleading a government contractor with respect to conditions existing in the construction area, the contractor is entitled to equitable adjustment under the *126 ‘changed conditions’ clause of the construction contract.” 3
(emphasis supplied).
Wm. Smith, supra, 412 F.2d at 1338.

Although Federico did not specifically plead the theory of unjust enrichment, Federal Rule of Civil Procedure 15(b), incorporated by reference into Rule 715 of the Rules of Bankruptcy Procedure, provides that when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Rule 15(b) has rejected any concept that such amendments to conform with the evidence are barred if they result in a change of the Plaintiff’s cause of action. The fact that it involves a change in the nature of the cause of action, or the legal theory of the action, is immaterial so long as the opposing party has not been prejudiced in presenting its ease. See 3 Moore’s Federal Practice § 51.13 (2d ed. 1976).

Likewise, Bankruptcy Rule 754 indicates that Fed.R.Civ.P. 54(c) applies in related adversary proceedings and it permits the trial court to grant relief to which a prevailing party is entitled even though unrequested in the pleadings. United Roasters, Inc. v. Colgate-Palmolive Co., 649 F.2d 985 (4th Cir.1981), cert. denied, 454 U.S. 1054, 102 S.Ct. 599, 70 L.Ed.2d 590. See also Consove v. Cohen (In re Roco Corp.), 701 F.2d 978 (1st Cir.1983).

Of the fifteen remaining issues on appeal, many of them either turn upon facts of the case or are based upon the argument that the evidence in the record is insufficient to support the trial court’s findings of fact. In reviewing the decision of a court sitting without jury the test is not whether there can be found “substantial evidence” supporting the conclusion. Burgess v. M/V Tamano,

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723 F.2d 122, 1983 U.S. App. LEXIS 15349, Counsel Stack Legal Research, https://law.counselstack.com/opinion/d-federico-co-inc-debtor-and-us-fidelity-and-guaranty-co-v-new-ca1-1983.