Sneeden v. United States

33 Fed. Cl. 303, 1995 U.S. Claims LEXIS 79, 1995 WL 248073
CourtUnited States Court of Federal Claims
DecidedApril 27, 1995
DocketCong. Ref. No. 92-865X
StatusPublished
Cited by11 cases

This text of 33 Fed. Cl. 303 (Sneeden v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sneeden v. United States, 33 Fed. Cl. 303, 1995 U.S. Claims LEXIS 79, 1995 WL 248073 (uscfc 1995).

Opinion

REPORT OF THE REVIEW PANEL

HARKINS, Senior Judge.

The House of Representatives in H.Res. 568, on October 4, 1992, referred to the United States Claims Court1, a private bill, H.R. 6012, a bill for the relief of Donald W. Sneeden, Mary S. Sneeden and Henry C. Best. The hearing officer has conducted an investigation, including a trial from January 18-22, 1994, and has filed a report. Sneeden v. United States, 31 Fed.Cl. 671 (1994). The hearing officer has determined the facts and concluded that an award to plaintiffs would be a gratuity. Plaintiffs’ exceptions to the hearing officer’s findings and conclusions have been briefed and oral argument was heard on January 30, 1995. The review panel has considered plaintiffs’ exceptions to the findings and conclusions, and on the basis of the entire record, adopts the hearing officer’s report. The House of Representatives is [305]*305advised that any payment to plaintiffs would be a gratuity.

H.R. 6012 involves a claim for damages by plaintiffs, who are stockholders and officers of Lincoln Construction Co., Inc. (Lincoln), a subcontractor in a project of the Army Corps of Engineers (Corps), the Wilkerson Creek Bridge Replacement Project in Hyde County, North Carolina (Project). The Project involved the construction of a new fixed-span bridge over the Atlantic Intercoastal Waterway with an in-place earth embankment as an approach to each side of the bridge.

Plaintiffs’ claim in H.R. 6012 arises from negotiations in 1986 that culminated in an agreement dated June 5, 1986, between the United States and the prime contractor, on behalf of Lincoln, that released the Government from all claims arising out of the contract for the Project. H.Res. 568 includes the following:

(b) In conducting its proceedings concerning H.R. 6012 in accordance with section 2509 of title 28, United States Code, the United States Claims Court may recommend the payment of money under the bill, notwithstanding provisions in an agreement dated June 5,1986, between the United States and the contractor, J. Lawson Jones Construction Co., Inc., on behalf of its subcontractor, Lincoln Construction Company, Inc., that the contractor agreed to release the Government from all claims arising out of the contract dispute and that the agreement constituted a full accord and satisfaction of all the contractor’s claims against the United States. In determining whether such provisions in the agreement should bar the award of any additional money, the Claims Court shall determine whether the United States acted in bad faith in settling the claim, knowing that at the time of the settlement negotiations Lincoln Construction Company, Inc., because of its obligation to pay debts pursuant to a bankruptcy proceeding, was constrained to accept even an unreasonable settlement offer.

The prime contract for the Project was awarded on February 14, 1978, to J. Lawson Jones Construction Company, Inc. (Jones). The prime contract was a formally advertised procurement for an estimated amount of $4.2 million. Lincoln’s subcontract, in the amount of $1.3 million, was for the entirety of the earthen embankment work.

Contract specifications required the bridge embankments to be constructed to a height of approximately 45 feet. Construction for the roadways forming the approaches to the bridge required over 325,000 cubic yards of in-place earth. Prior to bidding the Project, Lincoln reviewed the plans and specifications. Lincoln also made a site investigation, which was conducted by Lincoln’s president, Mr. D.S. Sneeden.

The Corps’ design for the project was based upon a design by the North Carolina Department of Transportation (NC DOT). The NC DOT design had provided for an embankment 30 feet high. The Corps modified this design in response to a value engineering proposal by increasing the embankment heights and shortening the length of the bridge. The Project involved the first bridge in the lowlands of eastern North Carolina with an embankment greater than 40 feet in height. Lincoln’s bid on the IFB was based on the design specification as changed. Lincoln learned, after filing a Freedom of Information Act request, that the design had been changed in response to a value engineering proposal.

The Notice to Proceed was issued to Jones on March 9,1978, and the completion date for all contract work was 720 days later, February 27, 1980. Lincoln began work in March 1978 as a subcontractor. Both Jones and Lincoln anticipated the embankment work would be completed in approximately 6 months, by December 1, 1978.

Lincoln encountered problems allegedly as a result of changed site conditions and faulty contract specifications. Work fell behind schedule and resultant economic problems were substantial. After numerous meetings were unsuccessful in resolution of these problems, Lincoln made a formal claim to the contracting officer (CO) in October 1979, which resulted in a final decision of the contracting officer on November 5, 1979, that denied the claims. A timely appeal was [306]*306made to the Engineers Board of Contract Appeals (Board) on November 30, 1979. Hearings on the appeal extended for 7 weeks from December 8, 1980, to January 29, 1981. Lead counsel for the Corps was Mr. Alva Hah.

Lincoln completed the embankment work in September 1981. This was 8 months after the Board’s hearing on the appeal, and 3/£ years after Lincoln commenced performance.

During the period of waiting for the Board’s decision, Lincoln’s financial situation deteriorated. The surety would not support Lincoln, and Lincoln was unable to secure other contracts because it could not be bonded. These conditions allegedly forced Lincoln and Lincoln Development Company, Inc. (Development) to file bankruptcy proceedings in 1982 under Chapter 11. Development, also an asset of Mr. Sneeden, was engaged in real estate development. Both Lincoln and Development were in financial difficulty and the principal asset in the bankruptcy proceedings was Lincoln’s claim against the Government.

The Board announced its decision on February 27, 1986, and reconsideration was denied on June 17, 1986. Lincoln prevailed on all liability issues, 5 and l/i years after the hearing and 6 and years after its appeal to the Board. The Board remanded to the CO all matters of quantum for negotiation of a contract adjustment.

The CO for the Corps’ Wilmington District during quantum negotiations was Colonel Wayne Hanson. The Corps designated Mr. Hall to negotiate the quantum issue. Mr. Hall considered the Board’s decision to have been wrongly decided, and he wanted to try the quantum portion of Lincoln’s claim before the Board. He believed that the Government had defenses to the quantum issue, and this belief determined his beginning” point for the quantum negotiations.

Quantum negotiations required five sessions during the period February 27 to May 26, 1986, prior to execution of the settlement agreement by the CO on June 5, 1986. The negotiations involved claims of both Jones (approx. $1.5 million, plus interest) and Lincoln (approx. $5.49 million, plus interest). At the first negotiating session the Jones claim was settled for $810,000, including interest.

Lincoln’s negotiations were based both on cost claims that had been submitted on June 9, 1982, after post-hearing briefs had been filed in the Board proceedings, and the Corps’ audit report, dated April 11, 1983.

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33 Fed. Cl. 303, 1995 U.S. Claims LEXIS 79, 1995 WL 248073, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sneeden-v-united-states-uscfc-1995.