Paragon Energy Corp. v. United States

645 F.2d 966, 28 Cont. Cas. Fed. 81,290, 227 Ct. Cl. 176, 1981 U.S. Ct. Cl. LEXIS 204
CourtUnited States Court of Claims
DecidedApril 8, 1981
DocketNo. 98-80C
StatusPublished
Cited by159 cases

This text of 645 F.2d 966 (Paragon Energy Corp. 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
Paragon Energy Corp. v. United States, 645 F.2d 966, 28 Cont. Cas. Fed. 81,290, 227 Ct. Cl. 176, 1981 U.S. Ct. Cl. LEXIS 204 (cc 1981).

Opinion

KUNZIG, Judge,

delivered the opinion of the court;

[177]*177This government contracts case comes before the court on defendant’s motion to dismiss for failure to state a claim. Plaintiff has brought suit under the Contract Disputes Act, alleging that it is entitled to contract modification and monetary compensation to mitigate the effect of a unilateral bid mistake. The sources of the alleged entitlement are twofold: 1) the equitable principles which this court has implemented in reforming contracts under the Tucker Act, and 2) the contract adjustment authority contained in Public Law 85-804. Plaintiff previously submitted its claim unsuccessfully before the contracting officer.

The Government contends that we lack jurisdiction to entertain this suit under the Contract Disputes Act. It points out, quite rightly, that the linchpin for appealing claims under the Contract Disputes Act is the contracting officer’s "decision”. No appeal, whether under 41 U.S.C. §606 (Supp. II1978) to the agency board of contract appeals or to this court under §609, may be taken without such a "decision”. In this case, continues the Government, no contracting officer "decision” could be rendered "since plaintiffs claim is not one susceptible to such a decision.”

The Government is only partially correct. The 85-804 portion of plaintiffs claim was not susceptible to a decision of the contracting officer. The request for equitable reformation, however, clearly fell within the contracting officer’s authority under the Contract Disputes Act. Hence, we conclude that we have an adequate jurisdictional ground for proceeding under the Contract Disputes Act.

I. Background

A. Contract Reformation in the United States Court of Claims. Although a contrary view apparently prevailed in earlier times,1 cases decided subsequently to the passage of the Tucker Act in 1887 have uniformly upheld the power of this court to reform a government contract, provided that [178]*178such action is taken as an incident to the rendition of a money judgment. This is our first legal strand.

Thus, it was held in United States v. Milliken Imprinting Co., 202 U.S. 168, 173-174 (1906) (Holmes, J.), that the Court of Claims was authorized to reform a government contract in connection with a claim- for money upon the contract. Although finding that reformation would not be proper under the particular circumstánces, the court rejected the government’s contention that the Court of Claims was without reformation powers, which contention was founded on the theory that the Court of Claims had no jurisdiction in equity, and that although the contractor’s demand was for money under a contract as it should have been drawn, yet that demand was incident to the' reformation asked. While reformation is not an incident to an action at law, but can be granted only by a court of equity, which may then go on to grant relief on the contract as reformed, observed the court, yet the Court of Claims was warranted in taking jurisdiction under a "fairly liberal interpretation” of the Tucker Act, giving-the Court of Claims jurisdiction of all claims founded upon any contract, express or implied, with the United States. "A claim for money upon a contract, which would be like a right of action at common law but for the need of help from equity to establish the contract,” concluded the court, seemed to fall within the words of the statute "in their obvious, literal sense.” See, e.g., Highway Products, Inc. v. United States, 208 Ct.Cl. 926, 945-946, 530 F.2d 911, 922 (1976).

In Iowa-Wisconsin Bridge Co. v. United States, 114 Ct.Cl. 464, 504, 84 F. Supp. 852, 863 (1949), cert. denied, 339 U.S. 982 (1950), we held that "where a party would have had the legal right to recover money damages from the United States under a written instrument except for the omission by mutual mistake of some essential element from that written instrument, and where it is clear that both parties intended such element to be included, [the Court of Claims] has equitable jurisdiction to reform the instrument so as to express the understanding and intentions of the parties, and for the purpose of determining whether the claim, if established, is a valid one against the United States, and having so determined, to award a money judgment.” See, [179]*179e.g., Higgs v. United States, 212 Ct.Cl. 146, 150, 546 F.2d 373, 376 (1976).

This court in Chernick v. United States, 178 Ct.Cl. 498, 504-507, 372 F.2d 492, 496-497 (1967), a unilateral mistake case, implemented its equitable jurisdiction so as to reform a government contract through the grant of a price increase to a contractor. The court invoked the principle that when a bidder has made an error in its bid price and the contracting officer has reason to know of the error, but takes advantage of it, and the bidder performs in accordance with the award, the price will be corrected upon presentation of evidence clearly and convincingly establishing what the price would have been but for the error. See, e.g., Bromley Contracting Co., Inc. v. United States, 219 Ct.Cl. 517, 596 F.2d 448, 453-454 (1979); Burnett Electronics Lab., Inc. v. United States, 202 Ct.Cl. 463, 472, 479 F.2d 1329, 1333 (1973).2 This principle, as will soon be made clear, is crucial to the case now before us.

B. Contract Adjustment Under Public Law 85-804. Pursuant to Public Law 85-804 — the second legal strand in this case — "The President may authorize any department or agency of the Government which exercises functions in connection with the national defense ... to enter into . . . contracts or into amendments or modifications of contracts . . . without regard to other provisions of law relating to the making, performance, amendment, or modification of contracts, whenever he deems that such action would facilitate the national defense.” §1, 72 Stat. 972 (1958), 50 U.S.C. §1431 (1976) (emphasis supplied). The same section continues: "[This] authority . . . shall not be utilized to obligate the United States in an amount in excess of $50,000 without approval by an official at or above the level of an Assistant Secretary or his Deputy, or an assistant head or his deputy, of such department or agency, or by a Contract Adjustment Board established therein.” The sec[180]*180tion further provides that the obligational authority which it confers is subject to a one-House veto if utilized to obligate the United States in an amount in excess of $25,000,000. President Eisenhower made the necessary authorizations to implement the law in an executive order of November 14, 1958. Exec. Order No. 10789, 23 Fed. Reg.

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Bluebook (online)
645 F.2d 966, 28 Cont. Cas. Fed. 81,290, 227 Ct. Cl. 176, 1981 U.S. Ct. Cl. LEXIS 204, Counsel Stack Legal Research, https://law.counselstack.com/opinion/paragon-energy-corp-v-united-states-cc-1981.