McDaniel v. Ashton-Mardian Co.

357 F.2d 511, 16 A.L.R. 3d 1243
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 1, 1966
DocketNo. 20128
StatusPublished
Cited by18 cases

This text of 357 F.2d 511 (McDaniel v. Ashton-Mardian Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McDaniel v. Ashton-Mardian Co., 357 F.2d 511, 16 A.L.R. 3d 1243 (9th Cir. 1966).

Opinion

MADDEN, Judge:

This is a Miller Act Claim, 49 Stat. 794 (1935), 40 U.S.C. § 270b (1964), by a subcontractor against a general contractor and its bonding company (jointly referred to as appellee). The question of liability was presented on cross motions for summary judgment by the parties. The essential issue in the case is whether the appellant as a subcontractor is entitled to compensation for delay in the course of doing certain portions of a job undertaken by appellee as prime contractor for an agency of the Federal Government.

On the same day appellee entered into a contract with the United States Government for the construction of an Air Force Station at Ajo, Arizona, it executed a subcontract with appellant under which the appellant agreed to do the plumbing and heating work on the job- The subcontract was expressly made subject to the prime contract and also subject to certain “terms and conditions” set forth on the back of the subcontract. The prime contract contained standard government contract provisions granting the Government the right to make changes in the job specifications within the general scope of the contract and as necessitated by changed conditions. The subcontract recognized within its own provisions that changes and additions might delay the work. Relevant portions of the prime and subcontracts are set out in the margin.1

[513]*513Under the prime contract it was contemplated that the wo.rk in question would take approximately 450 days; in fact the work took 196 days longer. The 196-day delay was the result in part of government change orders issued to the appellee and in part of other circumstances which need not be specified here. For the purposes of this appeal the delay may be considered as attributable entirely to the change orders. A total of thirty-nine change orders were submitted, three of which contained time extensions covering the delay period. Appellant did not receive any increase in the amount due on the subcontract by reason of these three change orders except the relatively minor amount of $242 on one of them. The parties have stipulated for the purposes of determining the issue of liability that as to at least a part of the delay period the appellant received no economic benefit therefrom.

Appellant remained substantially on schedule in its work and finished within the total time required for performance, including the additional 196 days. The practical effect of the delay period was that the work was performed over a substantially longer period of time than was originally contemplated and than would have been required had it not been for the change orders. Appellant was paid the subcontract price for the job and subsequently filed this action in the United States District Court for consequential damages alleged to have been caused by the delay. The parties thereupon agreed that appellee would pursue, for the benefit of appellant and other subcontractors, a claim for delay damages before the various government boards concerned, until administrative remedies had been, exhausted. Since appellant was not in contractual relation with the United States, only appellee could seek administrative or judicial remedies against the Government. The procedure followed in cases like this is that the subcontractor, in effect, “borrows” the name of the [514]*514prime contractor and then pursues relief through the administrative hierarchy in the name of the prime contractor, but for its own use and benefit.

Hearings were held before several administrative boards, all of which denied appellant any relief. Appellant then returned to the district court with its claim against appellee, which claim was denied in the decision from which appellant now appeals. The parties stipulated that appellant did not, itself, cause any part of the delay. The case is before us on the issue of liability alone.

Appellant appears to rest its claim against appellee on two bases, which, while they are closely related, we shall consider as a claim in tort and a claim in contract. The district court did not specifically deal with the tort claim, and we consider it first.

Both parties appear to agree that the general rule applicable to the tort aspect of appellant’s claim is that a contractor delayed in his work through no fault of his own but by virtue of a wrongful act of the other contracting party is entitled to damages.2 Appellant’s theory, then, requires it to point to some wrongful act of appellee by which it has been damaged. It was stipulated by the parties that the delay period was caused by the change orders and other factors beyond appellee’s control. Appellant recognizes that the Government was responsible for having made the changes and does not contest the Government’s right under the contract to have done so. Appellant contends, however, that appellee, as prime contractor, must bear responsibility for having accepted the changes, and that this act of acceptance is the wrongful act which supports the subcontractor’s right to damages under the general rule stated above.

Appellant's theory requires a brief explanation of the administrative procedure applicable to Government contracts such as the instant one. When the Government requests a change under contract provisions such, as those involved here, the prime contractor may or may not assent to the proffered change order. If the change order is accepted, and if it provides for an increase or a decrease of the contract price, the contractor will be compensated for the changes as provided for in the order. Rejection of the proffered change order by the prime contractor because, for example, of dissatisfaction with the price offered by the Government merely calls into play another provision of the contract, viz., that the contractor will make the changes as directed and will be entitled to an “equitable adjustment” of the contract price.

The provisions of the prime contract here involved relating to changes are standard clauses in government construction contracts. They have been considered in many decisions which have consistently held that under them the Government has the right to make changes within the general scope of the contract or necessitated by changed conditions and incur no liability for delays result[515]*515ing from such changes except for an equitable extension of the time for performance. United States v. Rice, 317 U.S. 61, 63 S.Ct. 120, 87 L.Ed. 53 (1942); United States v. Howard P. Foley Co., 329 U.S. 64, 67 S.Ct. 154, 91 L.Ed. 45 (1946). In the Rice case plaintiff was the receiver for a plumbing contractor, P. P had a prime contract for the plumbing, heating and electrical work for a veterans’ home which was being built for the Government. Another contractor had a prime contract for preparing the site and constructing the building. Construction began, unsuitable soil conditions were discovered, and the site and specifications of the building had to be changed. P was not able to begin work until five months later than he had contemplated, and overhead expenses accumulated during the delay. P was paid the contract price upon completion of the work, and he then sued the Government for delay damages.

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McDANIEL v. ASHTON-MARDIAN COMPANY
357 F.2d 511 (Ninth Circuit, 1966)

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Bluebook (online)
357 F.2d 511, 16 A.L.R. 3d 1243, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcdaniel-v-ashton-mardian-co-ca9-1966.