Huna Totem Corp. v. United States

40 Cont. Cas. Fed. 76,937, 35 Fed. Cl. 603, 1996 U.S. Claims LEXIS 77, 1996 WL 275024
United States Court of Federal Claims·Decided May 24, 1996·No. No. 91-878C·Published·Cited by 4 cases

Opinion

OPINION

ROBINSON, Judge:

Plaintiff brought this action for breach of contract. The matter is now before the court on defendant’s motion for summary judgment and plaintiff’s cross-motion for summary judgment. Oral arguments were held on May 7,1996. The contract at issue covers a timber transportation cost share agreement between Huna Totem Corporation (“Huna Totem”) and the United States Forest Service (“Forest Service”). The parties disagree on the underlying interpretation of the contract terms from which the breach allegedly arises. The court grants defendant’s motion for summary judgment and denies plaintiff’s cross-motion for summary judgment.

BACKGROUND

This dispute concerns the transportation of timber resources located in and adjacent to the Tongass National Forest on Chicagof Island. This island lies offshore the Southeastern coastline of Alaska and is surrounded by the Icy Strait to the north, the Peril Strait to the south, the Gulf of Alaska to the west, and Chatham Strait to the east. The land on the northeastern portion of Chicagof Island is a vast, undeveloped wilderness with substantial timber resources. In early 1980, Huna Totem, a native Alaskan corporation, planned on developing and harvesting its timber resources located on this land as a means of providing employment and paying dividends to its shareholders. At the same time, the Forest Service was preparing an environmental impact statement (“EIS”) pursuant to the National Environmental Policy Act (“NEPA”), 42 U.S.C. §§ 4321, 4331-35, 4341^47 (1969), for a five-year road construction and logging operations plan of the Alaska Pulp Corporation (“APC”). With various timber companies forming plans to harvest the timber resources on their respective lands, Huna Totem entered discussions with the Forest Service for the development of roads designed to provide a means of transporting timber that would accommodate its needs.

[606] On June 10, 1982, the Forest Service and Huna Totem signed a ten-page Road Right-of-Way Construction and Use Agreement (“master agreement”). Under this agreement, the parties agreed to share the costs of developing roads providing access to and from areas of timber development on the parties’ parcels of land, referred to as “tributary areas.” The terms of the master agreement, one of which provided for the addition of supplemental agreements as the construction of specific roads and facilities was contemplated, are not in dispute.

On September 10,1982, the Forest Service and Huna Totem entered into Supplements 1 and 2 to the master agreement. While the master agreement set forth the basic procedures for the construction and maintenance of the roads, the supplements provided for the construction of specific roads and identified those roads that were to be jointly financed by the parties to the agreement. In particular, Section 3 of the supplements identifies the roads constructed or planned to be constructed and lists the corresponding costs. More importantly, Sections 4 and 5 of the supplements set forth the basis for calculating and paying each party’s cost share as follows:

4. Basis of Cost Sharing. The parties agree that the share of the construction to be borne by each party is set forth as stated in Section 3 above____ The parties agree that if within three (3) years of the signing of Supplement No. 1 [and 2] it is determined that the tributary area used as the basis of cost sharing changes by more than twenty-five percent (25%), the shares and excess costs will be recalculated____
5. Method of Payment. Unless amortized by other credits, it is intended that ... excess costs incurred under this supplement will be recovered ... at a rate of $1.01 per MBF [thousand board feet] or equivalent unit measure for its products hauled over the road, or at such higher rate as may be approved____

Defi’s Mot. for Summary Judgment at App. 567, 586. Thus, Supplements 1 and 2 provided a three-year window ending on September 10, 1985, for cost share recalculation. The parties agree that the language of Sections 4 and 5 was specially crafted for this cost share agreement.

On September 15, 1989, Huna Totem sent a certified claim to the contracting officer alleging that the Forest Service had determined to haul timber from the Whitestone tributary area over the cost share roads to the Long Island Harbor log transfer facility (“LTF”), entitling Huna Totem to a recalculation of its cost share. Plaintiff claimed it was entitled to reimbursement for overpaying its cost share by $846,356. On March 5, 1990, the contracting officer issued a final decision denying Huna Totem’s claim. On February 4, 1991, Huna Totem filed a complaint with this court alleging that the Forest Service was liable for breach of contract by failing to recalculate the parties’ cost shares. Plaintiff also alleges that the government breached its implied duty of good faith and fair dealing by failing to construct the White-stone Harbor LTF.

CONTENTIONS OF THE PARTIES

Based on discussions with the Forest Service, plaintiff alleges that the Forest Service was contemplating, if not planning, the construction of an LTF at Whitestone Harbor that would lie in the heart of the Whitestone tributary area. Construction of this facility, as well as the network of roads constructed pursuant to the cost share agreement, would give the parties access to their respective timber resources. This Whitestone Harbor LTF, plaintiff suggests, would have ensured that the parties’ costs would not exceed those contemplated by the cost share agreement embodied in the master agreement and Supplements 1 and 2. In the event that the Whitestone Harbor LTF was not constructs ed, over 500 million board feet (“MMBF”) contained within the Whitestone tributary could conceivably be transported over cost share roads to the Long Island LTF. That is, substantial amounts of timber from an area outside the original cost share tributary areas could become tributary to the Long Island LTF. The Forest Service ultimately decided not to build the LTF at Whitestone Harbor. Plaintiff alleges that the Forest Service, without the knowledge of Huna Totem, thus added the Whitestone tributary [607] area to the cost share agreement. Plaintiff argues that under Section 4 of the supplements to the master agreement, such action by the Forest Service should have triggered a recalculation of the parties’ respective cost shares.

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Huna Totem Corp. v. United States, 40 Cont. Cas. Fed. 76,937, 35 Fed. Cl. 603, 1996 U.S. Claims LEXIS 77, 1996 WL 275024 (uscfc 1996).

40 Cont. Cas. Fed. 76,937 (Huna Totem Corp. v. United States) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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