ATLAS CORPORATION, ET AL., PETITIONERS V. UNITED STATES OF AMERICA

   No. 89-1705

   In The Supreme Court Of The United States

   October Term, 1990

   On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Federal Circuit

   Brief For The United States In Opposition

            TABLE OF CONTENTS
   Question Presented
   Opinions below
   Jurisdiction
   Statement
   Argument
   Conclusion

                            OPINIONS BELOW

   The opinion of the court of appeals (Pet. App. 1a-26a) is reported
at 895 F.2d 745.  The opinion of the United States Claims Court (Pet.
App. 27a-46a) is reported at 15 Cl. Ct. 681.

                             JURISDICTION

   The judgment of the court of appeals (Pet. App. 47a) was entered on
February 2, 1990.  The petition for a writ of certiorari was filed on
May 3, 1990.  The jurisdiction of this Court is invoked under 28
U.S.C. 1254(1).

                          QUESTION PRESENTED

   Whether the court of appeals correctly concluded that government
contractors had failed to state a claim that mutual mistake of fact
required contract reformation.

                               STATEMENT

   1. In the period following the Second World War, the Federal
Government, acting through the Atomic Energy Commission (AEC),
initiated a major program designed to encourage the domestic
production of uranium and other sources of atomic energy.  Pet. App.
2a.  The AEC prompted development of the industry by contracting with
private companies to purchase uranium production, funding research and
development activities, and providing technical support.  Ibid.

   Petitioners, or their predecessors, held contracts with the AEC
from 1950 to 1970 to supply uranium and/or thorium concentrate to the
federal government at a fixed-price per pound.  Pet. App. 2a-3a, 31a.
Each contract was individually negotiated and the contract price was
determined based upon ore cost, estimated milling costs, plant
amortization over the contract period, and a reasonable profit.  Pet.
App. 31a.  After 1970, petitioners were engaged in the production of
uranium and thorium for commercial use.  Pet. App. 32a.

   The production process results in significant quantities of a
sand-like waste residue, known as mill tailings, which has been
deposited into large piles on land adjacent to the mills.  Pet. App.
3a, 29a.  The large piles now also include mill tailings generated
from the commercial production which began in 1970.  Pet. App. 32a.
The tailings emit a low level of radiation, primarily in the form of
radon gas.  Pet. App. 29a.  Knowledge that the low level of radiation
emitted by the tailings poses a long-term potential health hazard was
nonexistent when the contracts were negotiated and performed;  it
became widespread in the late 1970's.  Pet. App. 32a.

   To alleviate this hazard, Congress in 1978 enacted the Uranium Mill
Tailings Radiation Control Act (UMTRCA), Pub. L. No. 95-604, 92 Stat.
3021 (codified at 42 U.S.C. 2022, 2113, 2114, 7901-7942).  Title I of
the UMTRCA provides that the Federal Government has responsibility for
the stabilization and decommissioning of all inactive mill sites which
were not licensed on January 1, 1978.  42 U.S.C. 7911-7919.  Title II
of the UMTRCA provides that the licensees of sites as of January 1,
1978, are responsible for complying with federal requirements
regarding stabilization, decontamination, and decommissioning of the
plant sites.  42 U.S.C. 2113.  The Environmental Protection Agency
(EPA) and the Nuclear Regulatory Commission subsequently issued
regulations governing such activities.  10 C.F.R. 40, 150;  40 C.F.R.
192.  As a result of the UMTRCA and the regulations issued pursuant to
it, petitioners have been required to undertake costly measures to
stabilize, decommission, and reclaim the tailings piles and the plant
sites.  Pet. App. 33a.

   Petitioner's contracts with the government, from 1950 to 1970, were
long ago completely fulfilled by the parties -- the concentrate was
delivered and the negotiated price paid in full.  Pet. App. 15a, 37a.
It is undisputed that none of the contracts at issue contains any
express provision concerning responsibility for the cost of
decommissioning and decontaminating the mills, clean-up and
reclamation of the mill sites, or stabilization and reclamation of the
tailings piles.  Pet. 3;  Pet. App. 32a.

   2. Petitioners brought suit in the Claims Court seeking recovery of
their stabilization and reclamation costs based upon various theories,
including contract reformation, breach of express contract, and breach
of implied-in-fact contract.  /1/ Petitioners alleged that the parties
to the contracts did not and could not have recognized the hazard
posed by the mill tailings and that, had the hazard been known, the
costs of obviating the hazard would have been included in the
contract.  Pet. App. 11a-12a.

   The United States moved to dismiss the complaints for failure to
state a claim upon which relief could be granted.  With respect to
petitioners' reformation claims, the United States explained that a
court can reform a contract only to correct a mistake made by the
parties in reducing their agreement to writing.  Reformation thus
could be granted only because of a mistake concerning the facts as
they existed at the time the parties entered into the contract;  a
failure accurately to foresee the future was not a mistake upon which
reformation could be granted.  Because the UMTRCA and the extensive
measures required to stabilize and reclaim the mills flowed from the
unanticipated actions of Congress, the plaintiffs were not alleging a
mistake as to existing facts but were seeking to have the court write
a new agreement for the parties.  Having failed to allege facts that
would support a mutual mistake, the complaints thus failed to state a
claim upon which the relief of reformation could be granted.  Gov't
Mot. for Judg. on Pleadings 16-21.

   The Claims Court granted the government's motion to dismiss, /2/
noting that its jurisdiction was limited to enforcing an agreement
that was actually negotiated by the parties and that it did not have
jurisdiction to write a new agreement for the parties.  Specifically,
the court explained that

      for reformation to form the predicate for a money judgment under
      28 U.S.C. Section 1491, there must be a prior agreement by the
      government as to the provisions involved which can be given
      effect.  The Claims Court has no authority to write contracts,
      or contract clauses, for the United States by means of
      reformation.

Pet. App. 34a.  The court found that the circumstances pled precluded
any actual agreement with respect to the costs of obviating the
tailings hazard because "it was not possible for the hazard to have
been known to the parties when contracting, (and therefore) no
agreement could have been made * * * which can now be placed into
effect." Pet. App. 34a-35a.  /3/

   3. The court of appeals affirmed.  Pet. App. 1a-26a.  It agreed
that reformation was available only "to make (a contract) reflect the
true agreement of the parties on which there was a meeting of the
minds." Pet. App. 8a.  In such cases, the court explained, "the
parties recognize the existence of a fact about which they could
negotiate, they mutually form a belief concerning that fact, but their
belief is erroneous." Pet. App. 9a.  Noting that in their complaints
each of the petitioners stated that the hazard associated with the
mill tailings was not within the contemplation of the parties when
they entered into the contracts, the court concluded that the parties
could not have formed any agreement regarding tailings costs and,
consequently, could not have formed a mutually mistaken belief
concerning those costs.  Pet. App. 11a.  In sum, the court found that
petitioners "have failed to allege a mistake that can support
reformation." Pet. App. 7a, 13a.

   The court of appeals held that petitioners had also failed to state
a claim for breach of an express contract or to demonstrate the
existence of an implied-in-fact contract.  Noting that their arguments
must therefore reduce to claims that the government owed them an
obligation "imposed by law," the court confirmed that the Claims Court
was without jurisdiction to hear "implied in law" contract claims.
Pet. App. 18a-19a.  The court therefore affirmed the Claims Court's
dismissal of the contract claims because petitioners had failed "to
state redressable claims." Pet. App. 20a.

                               ARGUMENT

   The court of appeals' decision is correct and consistent with well
established rules of contract reformation.  It does not conflict with
any decision of this Court or any court of appeals.  Nor does it
introduce any new jurisdictional standard under the Tucker Act.
Further review is therefore not warranted.

   1. Petitioners' contention that the Claims Court improperly
declined to reform their contracts with the United States is without
merit.  It hangs on the assertion (Pet. 5-7) that the Claims Court
introduced into the law of mutual mistake a novel and dangerous
concept when it discussed "knowable" and "unknowable" facts in
resolving petitioner's reformation claim.

   In fact, as the court of appeals made clear (Pet. App. 13a), the
Claims Court was merely attempting by its distinction between
"knowable" and "unknowable" facts to express the conventional doctrine
that reformation is only available to enforce an agreement about
existing facts reached by the parties.  The court of appeals thus
itself applied, and found petitioners' claims deficient according to,
traditional principles of the doctrine of mutual mistake.  Pet. App.
7a-10a.

   Specifically, the court explained that a party seeking to state a
claim for reformation based upon the doctrine of mutual mistake must
allege:

         (1) that the parties were mistaken in their belief regarding
      a fact;

         (2) that the parties' mistaken belief constituted a basic
      assumption upon which the contract was based;

         (3) that the mistake had a material effect on the parties'
      bargain;  and

         (4) that the contract did not put the risk of the mistake on
      the party seeking reformation.

Pet. App. 7a.  See Restatement (Second) of Contracts Section 151, at
383 (1981) (mistake "must relate to the facts as they exist at the
time of the making of the contract") (hereinafter Restatement (2d));
id. Section 152, at 385 (mistake must concern "basic assumption" that
has "material effect" on party who does not bear the risk of the
mistake);  id. Section 155.  The court explained that in order to
satisfy the first element, "a plaintiff must allege that he held an
erroneous belief as to an existing fact." Pet. App. 7a.  See
Restatement (2d) Ch. 6, at 379 (mistake must relate "to existing
facts").  The court then reasoned that "(i)f the existence of a fact
is not known to the contracting parties, they cannot have a belief
concerning that fact." Pet. App. 7a (emphasis in original).
Similarly, if the parties have no belief concerning a fact, there can
be no agreement between them concerning that fact.  Pet. App. 8a.  The
court of appeals correctly concluded that "(r)eformation is not a
proper remedy for the enforcement of terms to which the defendant
never assented;  it is a remedy the purpose of which is to make a
mistaken writing conform to antecedent expressions on which the
parties agreed." Ibid. (quoting 3 A. Corbin, Corbin on Contracts
Section 614, at 723 (1960)).

   This analysis is consistent with long-standing tenets of contract
law.  A court may reform a contract only "to make a writing express
the bargain which the parties desired to put into writing." 13 S.
Williston, Williston on Contracts Section 1549, at 132 (3d ed. 1970);
accord Restatement (2d) Section 155, at 406;  see, e.g., McNamara
Construction of Manitoba, Ltd. v. United States, 509 F.2d 1166, 1171
(Ct. Cl. 1975):

      For reformation we would need some antecedent expressions by the
      parties at variance with the terms of the contract or some
      articulated mutual assumption * * * which we would incorporate
      into the agreement or some indication that a mutual mistake
      existed as to a hard fact on which the parties had based the
      contract.

A court may not reform a contract to make a bargain the parties did
not intend to make.  See Russell v. Shell Petroleum Corp., 66 F.2d
864, 867 (10th Cir. 1933) ("It is not what the parties would have
intended if they had known better, but what did they intend at the
time, informed as they were.").  Similarly, a court may not rewrite a
contract for the parties or draw up a new agreement to cover an
unforeseen situation.  American President Lines, Ltd. v. United
States, 821 F.2d 1571, 1582 (Fed. Cir. 1987).  "(T)he erroneous belief
must relate to the facts as they exist at the time of the making of
the contract.  A party's prediction or judgment as to events to occur
in the future, even if erroneous, is not a 'mistake' as that word is
defined here." Restatement (2d) Section 151, at 383.

   In this case, petitioners state (Pet. 6) that the parties'
agreement was that the United States would pay the full costs of
production.  However, there is no evidence that, at the time the
contracts were made, the parties recognized or agreed that the costs
of production included the costs of stabilization and reclamation of
the tailings.  To the contrary, petitioners allege that the parties
did not even contemplate the possibility that costs to stabilize and
decommission the tailings piles would be incurred.  Pet. App. 11a-12a.

   That circumstance does not represent an "articulated mutual
assumption" that was in error or a mutual mistake of "hard fact." It
is instead an allegation that the parties did not anticipate future
legislative and regulatory action that made stabilization and
decommission of the tailings piles necessary.  As explained above,
however, reformation is not available to conform a contract to what
the parties "would have agreed" or "would have intended" had they
known better.  See 13 S. Williston, supra, Section 1548, at 122;  see
also, e.g., id. Section 1549, at 134-135.  /4/

   2. Contrary to petitioners' contention (Pet. 6), the judgment in
this case does not conflict with National Presto Industries, Inc. v.
United States, 338 F.2d 99 (Ct. Cl. 1964), cert. denied, 380 U.S. 962
(1965).  In National Presto, the parties were aware of the possibility
of an additional manufacturing step, negotiated over whether to
include the requirement in the contract, and agreed that the step was
not needed for completion of the contract.  During performance, it was
determined that the additional step was, in fact, necessary.  The
court found that the parties had labored under a "misapprehension"
about the existing technologies of the process.  338 F.2d at 108;  see
Pet. App. 9a.  ("They recognized the existence of a fact on which they
could reach an agreement, and they formed an erroneous belief
concerning that fact.").  Accord R.M. Hollingshead Corp. v. United
States, 111 F. Supp. 285 (Ct. Cl. 1953) (parties mutually mistaken
about possibility of performing contract requiring delivery of DDT in
metal containers without a loss of clear color).  By contrast, the
parties in the case at hand failed to anticipate a future action by
the government imposing a duty to clean up a hazard not yet
recognized.

   3. Petitioners assert (Pet. 8, 10-11) that the court's analysis of
the law of mutual mistake precludes any possibility "that parties
ignorant of a hazard may still enter into an agreement that
encompasses the unforeseen liability." Not so.  First, as the court of
appeals noted (Pet. App. 19a), there are several methods by which
petitioners might have protected their interests, such as including in
their contracts an escalation clause, a price adjustment provision, or
a contract provision making the contract price redeterminable.  Ibid.
/5/

   Second, insofar as petitioners are actually seeking relief for
subsequent liabilities imposed on their industry by the legislature,
government contractors have no different or more privileged a claim to
relief than do others.  As this Court held long ago,

      The two characters which the government possesses as a
      contractor and as a sovereign cannot be * * * fused;  nor can
      the United States while sued in the one character be made liable
      in damages for their acts done in the other.  Whatever acts the
      government may do, be they legislative or executive, so long as
      they be public and general, cannot be deemed specially to alter,
      modify, obstruct or violate the particular contracts into which
      it enters with private persons.

Horowitz v. United States, 267 U.S. 458, 461 (1925).  The UMTRCA and
its implementing regulations are "public and general" acts of
government;  they do not thereby alter pre-existing contractual
obligations between the government and private parties.  /6/ See,
e.g., Tony Downs Food Co. v. United States, 530 F.2d 367, 370-372 (Ct.
Cl. 1976);  D.R. Smalley & Sons v. United States, 372 F.2d 505, 507
(Ct. Cl.), cert. denied, 389 U.S. 835 (1967).

   4. Petitioners challenge (Pet. 6) the dismissal of their complaints
as manifesting "an unprecedented and fundamental shift in the
contractual jurisdiction of the Claims Court." In making this
argument, petitioners have confused the court of appeals' analysis of
the law of mutual mistake with the court's analysis of the Claims
Court's jurisdiction.

   The court of appeals did not, as petitioners assert, create a new
jurisdictional bar to contract claims.  Instead, the court concluded
that petitioners had failed to allege facts that would demonstrate the
existence of an agreement which the court could enforce.  Pet. App.
7a, 18a-20a.  The court first considered, and affirmed, the Claims
Court's holding that petitioners' complaints failed to state a claim
that the contracts which they had concluded with the government should
be reformed.  Pet. App. 7a, 13a.  The court of appeals then
considered, and affirmed, the Claims Court's holdings that the
complaints failed to allege the breach of any express contractual
provision or facts demonstrating a meeting of minds that would create
an implied-in-fact contract (Pet. App. 13a-18a), as required in order
to establish the existence of jurisdiction in the Claims Court under
the Tucker Act.  See W.R. Cooper General Contractor, Inc. v. United
States, 843 F.2d 1362 (Fed. Cir. 1988).  Given petitioners' failure to
allege facts that would establish a claim to contract reformation or
the breach of an express or implied-in-fact contract, the court of
appeals noted that petitioners' claims must reduce to an
implied-in-law contract claim ("an obligation that is imposed by law"
on the government) or a general equitable plea for "justness." Pet.
App. 18a-19a.  The court then confirmed the Claims Court's
unexceptional holding that it had no jurisdiction over such claims.
Pet. App. 19a;  see Merritt v. United States, 267 U.S. 338, 341
(1925).  The court of appeals thus concluded that the complaints had
"fail(ed) to state redressable claims." Pet. App. 20a.  It therefore
properly affirmed the Claims Court's dismissal of the claims.

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   KENNETH W. STARR

      Solicitor General

   STUART M. GERSON

      Assistant Attorney General

   DAVID M. COHEN

   ELIZABETH S. WOODRUFF

      Attorneys

   JULY 1990

   /1/ Petitioners have abandoned all theories here except for their
claims for contract reformation based upon the doctrine of mutual
mistake.  Pet. i;  Pet. 3 n.1.

   /2/ The court dismissed all counts of all complaints with the
exception of two claims raised by Western Nuclear, Inc.  Although
Western Nuclear joined in the appeal filed with the Court of Appeals
for the Federal Circuit, it has not joined in the petition.

   /3/ The Claims Court also explained that an indefinite agreement to
pay some future cost "would not have been sanctioned by the published
AEC policy which was premised upon determining a fixed price for
(uranium) delivered during the contract period" and that it might have
been beyond the scope of authority of a government officer to make
such an agreement.  Pet. App. 36a n.2.

   /4/ Petitioners assert (Pet. 8) that the court's analysis is
inconsistent with the district court's reasoning in Aluminum Co. of
America v. Essex Group, Inc., 499 F. Supp. 53, 64 (W.D. Pa. 1980).
There, the court rejected the distinction between facts which are
"unknown but presently knowable," and facts which "presently exist but
are unknowable," finding both sufficient to support a claim of mutual
mistake.  However, as the court of appeals recognized here (Pet. App.
11a), the court in Aluminum Co. was using the terms in a different
manner.  Thus it explained that while the crucial fact -- the
predictive value of an indicator -- was "not known and was scarcely
knowable," it was "a matter of fact, existing at the time they made
the contract." 499 F. Supp. at 64.  Specifically, the district court
determined that the parties' mistake concerning the accuracy of the
Wholesale Price Index as an indicator of nonlabor costs "was
essentially a present actuarial error."

   In contrast, the court of appeals explained that where the very
existence of a fact is unknowable, as here, "the parties cannot have a
belief concerning that fact, and they cannot make a mistake about it."
Pet. App. 11a.  Here, neither the United States nor petitioners knew
of the existence of any hazard associated with the mill tailings.
Therefore, they could not make a mistake about the hazard, including a
mistake about the cost of the hazard.  The problem instead arises
because of the parties' failure to predict that Congress would enact a
statute requiring petitioners to expend money to stabilize the
tailings piles.

   /5/ Thus the court stated that, however compelling the facts, the
conclusion was inescapable that petitioners' damages resulted simply
from bad business decisions.  The court explained that it was not
within the jurisdiction of the Claims Court to permit petitioners "to
renegotiate their contracts in order to take into account matters not
considered when the contracts were negotiated." Pet. App. 19a.

   /6/ For example, there is no contention that the obligations
imposed by UMTRCA and the regulations affect those who completed
contracts with the government in 1970, and no longer held licenses for
sites in 1978.