B-163923, JUN. 11, 1968

B-163923: Jun 11, 1968

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GILKEY AND FITE: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 28. THE SUBJECT CONTRACT WAS AWARDED TO BILTMORE ON FEBRUARY 14. THE INVITATION FOR BIDS PURSUANT TO WHICH THE CONTRACT WAS AWARDED CONTAINED THE LEGAL DESCRIPTION OF THE SITE. INCLUDING INFORMATION THAT THE NORTH 25 FEET THEREOF WAS RESERVED FOR A ROAD EASEMENT AND THAT THE DESCRIPTION WAS IN ACCORDANCE WITH A SKETCH OF THE PROPERTY PREPARED BY BUCKNER REALTY AND SURVEYING. INVITATION PROVIDED THAT THE "PROPERTY WILL CONTAIN AREAS AND SPACES. THE OTHER TWO BIDS RECEIVED WERE IN THE AMOUNTS OF $16. THE OPTION TO PURCHASE THE SITE WAS ASSIGNED TO BILTMORE. WHICH WERE APPROVED BY THE POST OFFICE DEPARTMENT ON JUNE 21. IT IS REPORTED THAT IN JULY 1967.

B-163923, JUN. 11, 1968

TO RICHARDS, NODINE, GILKEY AND FITE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 28, 1968, WITH ENCLOSURES, PRESENTING ON BEHALF OF THE BILTMORE CONSTRUCTION COMPANY, A REQUEST FOR RENEGOTIATION OF THE CONTRACT AWARDED THAT COMPANY FOR THE CONSTRUCTION AND LEASE OF A NEW POSTAL FACILITY FOR THE SATELLITE BEACH BRANCH, EAU GALLIE, FLORIDA.

THE SUBJECT CONTRACT WAS AWARDED TO BILTMORE ON FEBRUARY 14, 1967, FOR CONSTRUCTION AND LEASE OF A POSTAL FACILITY ON A SITE FOR WHICH THE POST OFFICE DEPARTMENT HELD AN ASSIGNABLE OPTION. THE INVITATION FOR BIDS PURSUANT TO WHICH THE CONTRACT WAS AWARDED CONTAINED THE LEGAL DESCRIPTION OF THE SITE, INCLUDING INFORMATION THAT THE NORTH 25 FEET THEREOF WAS RESERVED FOR A ROAD EASEMENT AND THAT THE DESCRIPTION WAS IN ACCORDANCE WITH A SKETCH OF THE PROPERTY PREPARED BY BUCKNER REALTY AND SURVEYING, INCORPORATED, DATED FEBRUARY 2, 1966, AND DESIGNATED JOB NO. 66179. INVITATION PROVIDED THAT THE "PROPERTY WILL CONTAIN AREAS AND SPACES, IMPROVEMENTS AND APPURTENANCES FURNISHED AND PROVIDED IN ACCORDANCE WITH POST OFFICE DEPARTMENT DRAWING/S) NO./S).' 66-14-123 DATED OCTOBER 4, 1966, AND POST OFFICE DEPARTMENT PUBLICATIONS 39-B,"CONSTRUCTION REQUIREMENTS FOR LEASED POSTAL FACILITIES" , AND BE COMPLETED NOT LATER THAN 270 CALENDAR DAYS AFTER AWARD. THE INVITATION FURTHER PROVIDED FOR AN ANNUAL RENTAL FOR A BASIC LEASE TERM OF TEN (10) YEARS AND FOUR-FIVE YEAR RENEWAL OPTIONS. BILTMORE SUBMITTED AN ANNUAL RENTAL FIGURE OF $11,500, AND THE OTHER TWO BIDS RECEIVED WERE IN THE AMOUNTS OF $16,750 AND $23,868, RESPECTIVELY.

THE OPTION TO PURCHASE THE SITE WAS ASSIGNED TO BILTMORE, WHICH EXERCISED THE OPTION ON FEBRUARY 2, 1967, AND CLOSED THE SALE ON MARCH 22, 1967. REQUIRED BY THE CONTRACT, BILTMORE SUBMITTED FINAL PLANS AND SPECIFICATIONS FOR THE FACILITY, WHICH WERE APPROVED BY THE POST OFFICE DEPARTMENT ON JUNE 21, 1967. IT IS REPORTED THAT IN JULY 1967, AFTER CLEARANCE OF THE SITE FOR COMMENCEMENT OF CONSTRUCTION, BILTMORE DISCOVERED THAT THE STORM SEWER, SANITARY SEWER, WATER LINE, AND OVERHEAD ELECTRICAL SERVICE, SHOWN ON THE POST OFFICE DEPARTMENT DRAWING AS BEING OFF THE SITE AND TO THE NORTH THEREOF IN AN ASPHALT PARKING LOT, WERE ON PRIVATE PROPERTY AND THERE WAS NO EASEMENT FOR ACCESS THERETO. FURTHERMORE, IT DEVELOPED THAT THE OWNERS OF THE LAND ALSO OWNED THE TWO SEWER LINES AND DEMANDED EXORBITANT FEES TO CONNECT INTO THEM. IT ALSO APPEARS THAT THEY WILL NOT GRANT AN EASEMENT FOR ACCESS TO THE CITY-OWNED WATER LINE AND THE PUBLIC UTILITY POWER LINE.

IN VIEW OF THIS SITUATION, BOTH THE POST OFFICE DEPARTMENT AND BILTMORE EXPLORED ALTERNATE MEANS OF SECURING THESE SERVICES. BY LETTER DATED AUGUST 16, 1967, THE POST OFFICE DEPARTMENT ADVISED BILTMORE OF ITS RECOMMENDATIONS AND REQUESTED THAT THE WORK PROCEED IN ACCORDANCE THEREWITH. THIS LETTER ALSO ADVISED THAT IF ADDITIONAL COSTS WOULD BE INCURRED AS A RESULT OF THE ALTERNATE UTILITY CONNECTIONS AND IF A CLAIM WAS TO BE MADE FOR SUCH ADDITIONAL COSTS, THE AMOUNT THEREOF SHOULD BE SUBMITTED FOR CONSIDERATION. ON NOVEMBER 14, 1967, THE POST OFFICE DEPARTMENT ADVISED BILTMORE THAT THE COMPLETION DATE HAD PASSED AND NO REPLY HAD BEEN MADE TO THE LETTER OF AUGUST 16. BILTMORE REPLIED ON NOVEMBER 24, 1967, AND ADVISED THAT THE FACT CONSTRUCTION HAD NOT BEEN COMPLETED WAS NO FAULT OF ITS, BUT WAS DUE TO THE UNAVAILABILITY OF THE UTILITIES CONTRARY TO THE REPRESENTATIONS IN THE BID DOCUMENTS. IN THIS LETTER BILTMORE ALSO LISTED ADDITIONAL COSTS OF $13,853.75 IT WOULD REQUIRE BEFORE CONSTRUCTION WAS COMPLETED. BILTMORE ALSO ADVISED THAT THIS FIGURE DID NOT INCLUDE APPROXIMATELY $10,000 WHICH WOULD BE NECESSARY FOR ALTERNATE ELECTRICAL SERVICE IF AN AIR EASEMENT WAS NOT SECURED FOR TYING INTO THE POWER LINE LOCATED ON THE PRIVATE PROPERTY. ON JANUARY 30, 1968, THE POST OFFICE DEPARTMENT ADVISED BILTMORE THAT ITS CLAIM FOR ADDITIONAL COMPENSATION WOULD NOT BE ALLOWED AND COMPLETION OF THE PROJECT IN ACCORDANCE WITH THE CONTRACT WOULD BE REQUIRED.

THE POST OFFICE DEPARTMENT POINTS OUT THAT UNDER THE AGREEMENT TO LEASE, BILTMORE CONTRACTED TO PROVIDE A COMPLETED FACILITY ON THE SITE COVERED BY THE ASSIGNABLE PURCHASE OPTION IN ACCORDANCE WITH POST OFFICE DEPARTMENT DRAWING NO. 66-14-123 AND POST OFFICE DEPARTMENT PUBLICATION - B,"CONSTRUCTION REQUIREMENTS FOR LEASED POSTAL FACILITIES" , WHICH PROVIDES IN CHAPTER 4, SECTION A, AND IN CHAPTER 6, SECTION A, RESPECTIVELY, AS FOLLOWS:

GENERAL REQUIREMENTS

"THESE INSTRUCTIONS, TOGETHER WITH TENTATIVE PLANS AND SPECIFIC REQUIREMENTS INDICATE THE GENERAL PLUMBING FIXTURES, ACCESSORIES, SUPPLY AND DRAINAGE REQUIRED FOR THE PROPOSED FACILITY. ALL SOIL, WASTE, VENT, STORM WATER, ROOF DRAINAGE, DOMESTIC HOT AND COLD WATER, GAS, AND OTHER UTILITY PIPING, CONNECTIONS, METERS, REDUCING VALVES AND APPURTENANCES SHALL BE PROVIDED AS REQUIRED FOR A COMPLETE INSTALLATION. IT SHALL BE THE RESPONSIBILITY OF THE BIDDER TO VERIFY LOCATION, ELEVATION, ETC., OF ALL SEWERS, WATER MAINS AND OTHER NECESSARY SERVICES; TO ARRANGE FOR THE SERVICE AND TO ASCERTAIN THAT SUCH SERVICES ARE ADEQUATE AND THAT CONNECTION THERETO IS PERMISSIBLE. IF, AFTER ADEQUATE SITE STUDY, IT IS FOUND THAT PROPER DRAINAGE CANNOT BE AFFECTED BY CONNECTION TO PUBLIC SANITARY AND/OR STORM SEWERS WITHOUT THE USE OF SUMP PUMPS OR SEWAGE EJECTORS, THE MATTER OF EXTERIOR GRADING OR RAISING THE FLOOR ELEVATIONS SHALL BE REFERRED TO THE CHIEF, ENGINEERING BRANCH, FOR FINAL RESOLUTION. WHEN SANITARY SEWER OR WATER SERVICES ARE NOT AVAILABLE, OR CONNECTIONS THERETO ARE PROHIBITED, AND ADEQUATE INDIVIDUAL SEWAGE DISPOSAL AND/OR WATER SYSTEM SHALL BE INSTALLED AND COMPLETE DATA AND DESIGN DETAILS MUST BE INCLUDED WITH THE DRAWINGS.'

"SUCCESSFUL BIDDER SHALL ARRANGE FOR UTILITY SERVICE CONNECTIONS AND SHALL PAY ANY CONNECTION CHARGES, INSTALLATION COSTS, OR DEPOSITS.'

IT IS THE POST OFFICE DEPARTMENT'S POSITION THAT THESE PROVISIONS PLACE THE RESPONSIBILITY ON THE CONTRACTOR FOR DESIGNING AND COMPLETING THE FACILITY IN ACCORDANCE WITH THE TENTATIVE DRAWING, AND THAT THIS INCLUDES FULL RESPONSIBILITY FOR FURNISHING THE UTILITY SERVICES; THAT THE DRAWING CLEARLY INDICATES THE STORM AND SANITARY SEWER LINES, THE WATER MAIN AND ELECTRIC SERVICE TO THE NORTH ARE OFF THE SITE BEYOND THE 25 FOOT EASEMENT IN AN ASPHALT PARKING AREA; THAT THE DRAWING ALSO SHOWS ELECTRIC SERVICE AND A STORM SEWER IN JACKSON STREET TO THE SOUTH OF THE SITE; AND THAT THE DRAWING MAKES NO REPRESENTATION WITH RESPECT TO CONNECTION THERETO. THEREFORE, THE POST OFFICE DEPARTMENT CONCLUDES THAT IT IS BILTMORE'S RESPONSIBILITY "TO ARRANGE FOR THE SERVICE" BY WHATEVER MEANS NECESSARY.

IT IS YOUR BASIC CONTENTION THAT "SHOWING THE LOCATION OF THESE UTILITIES IMMEDIATELY ADJACENT TO THE PROPERTY * * * CONSTITUTED A REPRESENTATION THAT THESE UTILITIES WERE AVAILABLE FOR USE ON THIS SITE" AND, THEREFORE, TAKES PRECEDENCE OVER THE GENERAL REQUIREMENT OF POST OFFICE DEPARTMENT PUBLICATION 39-B THAT THE CONTRACTOR SHALL BE RESPONSIBLE FOR ARRANGING FOR UTILITY SERVICES AND ASCERTAINING THAT SUCH SERVICES ARE ADEQUATE AND THAT CONNECTION THERETO IS PERMISSIBLE. IN SUPPORT OF THIS PROPOSITION YOU CITE THE FOLLOWING PROVISION FROM 17A C.J.S. CONTRACTS, 371 (6):

"POSITIVE REPRESENTATIONS IN THE CONTRACT AS TO THE CONDITION, CHARACTER, OR NATURE OF THE WORK AMOUNTING SUBSTANTIALLY TO A WARRANTY MAY BE SUFFICIENT UPON WHICH TO BASE A CLAIM FOR EXTRA WORK, EVEN THOUGH THE CONTRACTOR IS REQUIRED TO MAKE INVESTIGATION AND SATISFY HIMSELF IN THESE MATTERS, UNLESS THE REPRESENTATIONS SHOW THAT IT WAS CLEARLY THE INTENTION OF THE PARTIES THAT THE CONTRACTOR SHALL RELY ON HIS OWN INVESTIGATION AND EXAMINATION.'

YOU ALSO CITE THE CASE OF HOLLERBACH V UNITED STATES, 233 U.S. 165, AND QUOTE THE FOLLOWING LANGUAGE:

"A GOVERNMENT CONTRACT SHOULD BE INTERPRETED AS ARE CONTRACTS BETWEEN INDIVIDUALS, WITH A VIEW TO ASCERTAINING THE INTENTION OF THE PARTIES AND TO GIVE IT EFFECT ACCORDINGLY, IF THAT CAN BE DONE CONSISTENTLY WITH THE TERMS OF THE INSTRUMENT. IN PARAGRAPH 33 THE SPECIFICATIONS SPOKE WITH CERTAITY AS TO A PART OF THE CONDITIONS TO BE ENCOUNTERED BY THE CLAIMANTS. TRUE, THE CLAIMANTS MIGHT HAVE PENETRATED THE SEVEN FEET OF SOFT SLUSHY SEDIMENT BY MEANS WHICH WOULD HAVE DISCOVERED THE LOG CRIB WORK FILLED WITH STONES WHICH WAS CONCEALED BELOW, BUT THE SPECIFICATIONS ASSURED THEM OF THE CHARACTER OF THE MATERIAL, A MATTER CONCERNING WHICH THE GOVERNMENT MIGHT BE PRESUMED TO SPEAK WITH KNOWLEDGE AND AUTHORITY. WE THINK THIS POSITIVE STATEMENT OF THE SPECIFICATIONS MUST BE TAKEN AS TRUE AND BINDING UPON THE GOVERNMENT, AND THAT UPON IT, RATHER THAN UPON THE CLAIMANTS, MUST FALL THE LOSS RESULTING FROM SUCH MISTAKEN REPRESENTATIONS. WE THINK IT WOULD BE GOING QUITE TOO FAR TO INTERPRET THE GENERAL LANGUAGE OF THE OTHER PARAGRAPHS AS REQUIRING INDEPENDENT INVESTIGATION OF FACTS WHICH THE SPECIFICATIONS FURNISHED BY THE GOVERNMENT AS A BASIS OF THE CONTRACT LEFT IN NO DOUBT. IF THE GOVERNMENT WISHED TO LEAVE THE MATTER OPEN TO THE INDEPENDENT INVESTIGATION OF THE CLAIMANTS, IT MIGHT EASILY HAVE OMITTED THE SPECIFICATION AS TO THE CHARACTER OF THE FILLING BACK OF THE DAM. IN ITS POSITIVE ASSERTION OF THE NATURE OF THIS MUCH OF THE WORK IT MADE A REPRESENTATION UPON WHICH THE CLAIMANTS HAD A RIGHT TO RELY WITHOUT AN INVESTIGATION TO PROVE ITS FALSITY.' SEVERAL OTHER CASES OF SIMILAR IMPORT ARE ALSO CITED.

FINALLY, YOU ARGUE THAT REFORMATION OF THE CONTRACT IS JUSTIFIED ON THE BASIS OF A MUTUAL MISTAKE. IN THIS CONNECTION, YOU CONTEND THAT LOCATION OF THE UTILITIES WAS INCLUDED ON THE SITE PLAN BECAUSE OF THE HONEST BELIEF OF THE POST OFFICE DEPARTMENT THAT THEY WERE AVAILABLE FOR USE, AND BILTMORE ALSO ASSUMED THEY WERE AVAILABLE FOR USE SINCE IT IS CUSTOMARY FOR AN EASEMENT TO BE GIVEN WHEN UTILITIES ARE INSTALLED.

WITH REGARD TO THE LATTER ARGUMENT, WE BELIEVE THERE IS NO QUESTION THAT THE AGREEMENT ACCURATELY REFLECTS THE INTENTION OF THE PARTIES. WHILE IT MAY BE TRUE THAT SUCH INTENTION WAS PREDICATED UPON THE HONEST BELIEF ON BOTH SIDES THAT IT WOULD BE PERMISSIBLE TO CONNECT TO THE UTILITIES AS IS CUSTOMARY, THERE IS NO BASIS FOR A CONCLUSION THAT THE AGREEMENT MAY BE REFORMED OR RESCINDED. IT IS WELL RECOGNIZED THAT WHERE, BECAUSE OF A MISTAKE AS TO AN EXISTING SITUATION, THE PARTIES MAKE A WRITTEN INSTRUMENT WHICH ACCURATELY EXPRESSES THEIR INTENTION BUT WHICH THEY OTHERWISE WOULD NOT HAVE AGREED TO BUT FOR THE MISTAKE, SUCH WRITING CANNOT BE REFORMED INTO ONE WHICH MIGHT HAVE BEEN MADE BUT IN FACT WAS NEVER MADE. WILLISTON (REVISED EDITION) SECTION 1549. SEE ALSO, MARYLAND CASUALTY COMPANY V UNITED STATES, 169 F.2D 102; ROWER SERVICE CORPORATION, V JOSLIN, 175 F.2D 698; RUSSELL V SHELL PETROLEUM CORPORATION, 66 F.2D 864. SINCE THERE WAS NO MISSTATEMENT IN THE CONTRACT OF THE ACTUAL TERMS AGREED UPON BETWEEN THE PARTIES, REFORMATION WOULD NOT BE PROPER.

AS TO THE ARGUMENT THAT THE DRAWING AMOUNTED TO A MISREPRESENTATION JUSTIFYING RELIEF ON THE THEORY OF HOLLERBACH AND THE OTHER CASES CITED, WE BELIEVE THE INSTANT CASE IS READILY DISTINGUISHABLE. IN HOLLERBACH THERE WAS A POSITIVE REPRESENTATION THAT THE DAM WAS BACKED WITH ,BROKEN STONE, SAWDUST, AND SEDIMENT TO A HEIGHT OF WITHIN TWO OR THREE FEET OF THE CREST * * *" WHEREAS THERE WAS ACTUALLY A CRIBWORK OF LOGS AND STONES BENEATH THE SOFT SLUSHY SEDIMENT ON THE TOP. IN THESE CIRCUMSTANCES, THE COURT WAS UNWILLING TO GIVE EFFECT TO THE GENERAL PROVISION OF THE CONTRACT REQUIRING THE CONTRACTOR TO RELY ON HIS OWN INDEPENDENT INVESTIGATION. SIMILARLY, THE OTHER CASES YOU CITE INVOLVED SITUATIONS WHERE THERE WAS A POSITIVE REPRESENTATION OF A MATERIAL FACT UPON WHICH THE CONTRACTOR RELIED TO HIS DETRIMENT AND WHICH FACT PROVED TO BE IN ERROR. IN THE INSTANCE CASE, THE POST OFFICE DEPARTMENT DRAWING WAS PREPARED FROM A SITE SURVEY CONDUCTED BY A THIRD PARTY AND, IN OUR OPINION, THE ONLY POSITIVE REPRESENTATION WITH RESPECT TO THE UTILITIES IS THEIR LOCATION. UNLIKE THE SITUATION IN LOYAL ORDER OF MOOSE V HORWITZ, 148 N.W. 3RD 362, WHICH YOU CITE, WHERE THE SURVEY INCORRECTLY DESCRIBED THE LOCATION OF THE WATER MAIN, THE LOCATION OF THE UTILITIES ON THE POST OFFICE DEPARTMENT DRAWING IS CORRECT AND WAS VERIFIED BY YOUR CLIENT. THESE CIRCUMSTANCES, WE DO NOT BELIEVE THE RULE OF THE HOLLERBACH CASE IS APPLICABLE. AS THE COURT STATED IN MIDLAND LAND AND IMPROVEMENT CO., V UNITED STATES, 58 CT. CL. 671, 683, AFFIRMED 270 U.S. 251:

"THE BURDEN OF PROVIG MISREPRESENTATION REST UPON THE PARTY MAKING THE ALLEGATION. IT IS NOT TO BE PRESUMED, AND ONE MAY NOT, EITHER UNDER THE CHRISTIE OR HOLLERBACH CASE, SIMPLY SHOW A DIFFERENT CONDITION IN SOME RESPECTS FROM THAT WHICH THE CHART OR BLUE PRINTS OF BORINGS DISCLOSES, * * *. THERE MUST BE SOME DEGREE OF CULPABILITY ATTACHED TO THE MAKERS OF THE MAPS AND CHARTS, EITHER THEY WERE KNOWINGLY UNTRUE OR WERE PREPARED AS THE RESULT OF SUCH A SERIOUS AND EGREGIOUS ERROR THAT THE COURT MAY IMPLY BAD FAITH. THE MANY CONTRACT CASES IN THIS COURT, TOO MANY TO CITE, SUSTAIN THIS PRINCIPLE.' WE BELIEVE THE PROPER RULE FOR APPLICATION IS THAT WHERE A CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT TO BE PAID, SUCH STIPULATION IS CONCLUSIVE ON THE PARTIES AND MEASURES THE AMOUNT OF RECOVERY FOR PERFORMANCE. BRAWLEY V UNITED STATES, 96 U.S. 168, AND SIMPSON V UNITED STATES, 172 U.S. 372. ALSO, THE GENERALLY ACCEPTED RULE IS THAT "WHERE ONE AGREES TO DO FOR A FIXED SUM A THING POSSIBLE TO BE PERFORMED, HE WILL NOT BE EXCUSED OR BECOME ENTITLED TO ADDITIONAL COMPENSATION, BECAUSE UNFORESEEN DIFFICULTIES ARE ENCOUNTERED.' UNITED STATES V SPEARIN 248 U.S. 132, 136; DAY V UNITED STATES, 245 U.S. 159.

THE CONTRACT VESTED IN THE UNITED STATES THE RIGHT TO RECEIVE A COMPLETED POSTAL FACILITY UPON THE EXPRESS TERMS THEREIN PROVIDED. IT IS A WELL ESTABLISHED RULE THAT WITHOUT A COMPENSATING BENEFIT AGENTS AND OFFICERS OF THE UNITED STATES HAVE NO AUTHORITY TO DISPOSE OF THE MONEY OR PROPERTY OF THE UNITED STATES, TO MODIFY EXISTING CONTRACTS, OR TO SURRENDER OR WAIVE CONTRACT RIGHTS THAT HAVE VESTED IN THE GOVERNMENT. SIMPSON V UNITED STATES, 172 U.S. 372; UNITED STATES V AMERICAN SALES CORP., 27 F.2D. 389.

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR AUTHORIZING REFORMATION OF THE CONTRACT.