Louisiana Department of Highways v. United States

604 F.2d 1339, 221 Ct. Cl. 229, 1979 U.S. Ct. Cl. LEXIS 361
CourtUnited States Court of Claims
DecidedJuly 18, 1979
DocketNo. 129-76
StatusPublished
Cited by4 cases

This text of 604 F.2d 1339 (Louisiana Department of Highways 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
Louisiana Department of Highways v. United States, 604 F.2d 1339, 221 Ct. Cl. 229, 1979 U.S. Ct. Cl. LEXIS 361 (cc 1979).

Opinion

PER CURIAM:

This case comes before the court on plaintiffs exceptions to the recommended decision (opinion, findings, and conclusion of law) filed by Senior Trial Judge Mastín G. White on October 20,1978. Oral argument has been had, and the court has also considered the briefs and record. The court adopts the trial judge’s findings and opinion, as supplemented and explained by the following paragraphs, as the basis for its judgment in the case.1

The provision governing the participation of the Federal Highway Administration in settlements by the state with Federal-aid contractors is paragraph 19 of Policy and Procedure Manual 21-6.3, now 23 C.F.R. § 635.120 (1978).2 [231]*231The language particularly pertinent to this case is: "the extent to which such settlements are grounded in contract provisions and specifications and actual costs incurred.” Though the wording is far from clear (and could and should be clarified) we understand this provision to mean that the Federal Highway Administration will refuse to participate if the contractor’s claim is not reasonably, arguably, or colorably founded in some part of the contract or the specifications, fairly construed. Conversely, the regulation seems to mean that the Federal Government will not participate in a settlement of a contractor’s claim which is wholly unmeritorous, insubstantial or frivolous. We take it to be the deliberate policy of the Highway Administration to discourage the making and settlement of such worthless claims by letting it be known in advance that it will not participate in a settlement — even though the Federal Government will be liable to share the costs of the litigation if the matter does go to trial. That policy choice is, of course, one for the Highway Administration to make.

In this case, we understand (though there is no explicit statement or finding) the trial judge to have found and concluded that the claim of the contractor (Southern Bridge Company) fell into this category of one not reasonably, arguably, or colorably grounded in any provision or specification of its agreement with plaintiff. We accept that conclusion. The trial judge then goes on to hold that, even on that foundation, the settlement between the contractor and the plaintiff was reasonable and in the public interest — but as we read it the standard of paragraph 19 of Policy and Procedure Manual 21-6.3 (note 2, supra) goes beyond mere "reasonableness” or the generality of the "public interest” to demand that in any event the contractor’s claims have more substantiality and potential merit than the claim involved here.3

[232]*232On this basis and on the trial judge’s opinion and findings (as we understand them), the court concludes that plaintiff is not entitled to recover and that the petition must be dismissed.

OPINION OF TRIAL JUDGE

WHITE, Senior Trial Judge:

It is now necessary to consider the merits of this case, as earlier efforts by the defendant to dispose of the litigation by means of a motion to dismiss and, subsequently, a motion for summary judgment were not successful, and a trial to ascertain the facts was then held in March 1978.

Origin of Present Action

The case arose out of the construction during 1966-67 of a federal-aid highway project known as the Hearne Avenue Extension, in Caddo Parish, Louisiana. Before entering into a contract for the construction of the project, the Louisiana Department of Highways ("the Department”) submitted to the defendant’s Bureau of Public Roads (later the Federal Highway Administration) a proposal that the project be constructed as part of the national system of federal-aid highways, at an estimated cost of $1,557,100. The proposal was reviewed and approved by the Bureau of Public Roads; and on May 27, 1966, the Bureau authorized the Department to proceed with the construction of the Hearne Avenue Extension. This action by the Bureau, under 23 U.S.C. § 106(a) (1976) — which is part of the Federal-Aid Highways Act, as codified and reenacted by Pub.L. 85-767, 72 Stat. 885, 892 — created a contractual obligation on the part of the defendant to reimburse the Department for 50 percent of the costs incurred in constructing the project (State of Arizona v. United States, 204 Ct. Cl. 171, 176-77, 494 F.2d 1285, 1287-88 (1974)), provided the claim for reimbursement submitted by the Department was "grounded in contract provisions and specifications and actual costs incurred” (par. 19, Policy and Procedure Manual 21-6.3; now 23 C.F.R. § 635.120).

Before approving the Department’s proposal, it was the responsibility of the Bureau of Public Roads to scrutinize [233]*233the proposal, and its supporting documents, for the purpose of making sure that the estimated cost of the project met the standard of reasonableness (see State Highway Commission of Missouri v. Volpe, 479 F.2d 1099, 1113 (8th Cir. 1973)), and that federal participation would involve a proper and efficient use — and not a waste — of appropriated funds (see Mahler v. United States, 306 F.2d 713, 716 (3rd Cir. 1962), cert. denied, 371 U.S. 923 (1962)).

On July 18,1966, the Department entered into a contract with Southern Bridge Company, of Dallas, Texas ("Southern Bridge”), for the construction of the Hearne Avenue Extension. The contract allowed Southern Bridge 175 days for the completion of the project, and provided that Southern Bridge was to receive $1,415,590.59 for the work.

The Department on July 25, 1966, ordered Southern Bridge to proceed with the work under the contract; work was started by Southern Bridge on July 29, 1966; and the 175-day period allowed for the completion of the work began to run on August 5, 1966.

It took Southern Bridge 292 days to complete the work on the Hearne Avenue Extension. The Department found 16 days of the 117 days of delay to be excusable; but, after seeking and obtaining the approval of the defendant’s Bureau of Public Roads, the Department assessed against Southern Bridge liquidated damages for 101 days of delay at the rate of $280 per day prescribed in the contract, or a total of $28,280. Accordingly, the sum of $28,280 was withheld by the Department when it paid Southern Bridge for the performance of the work under the contract.

Southern Bridge subsequently filed suit against the Department in the United States District Court for the Eastern District of Louisiana, alleging that as a result of "gross misrepresentations and errors” in the contract plans and specifications, Southern Bridge incurred extra costs and liquidated damages in the sum of $256,941.37.

The litigation between Southern Bridge and the Department was ultimately settled by agreement of the parties on the basis of the Department paying Southern Bridge $28,280 (i.e.,

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604 F.2d 1339, 221 Ct. Cl. 229, 1979 U.S. Ct. Cl. LEXIS 361, Counsel Stack Legal Research, https://law.counselstack.com/opinion/louisiana-department-of-highways-v-united-states-cc-1979.