Opinion ID: 749857
Heading Depth: 2
Heading Rank: 1

Heading: The Materials Pit Claim

Text: 11 The contract required Brown to produce aggregates for the pavement structure; the aggregates were to be of a certain size. These aggregates were produced by a process of crushing raw material taken from a quarry and sifting the crushed material through an appropriate size sieve. The FHWA made the Benson Ridge Quarry available for this purpose. There was no other quarry available in the area. 12 Before crushing the raw material, clay and fines must be removed in a wasting step. Fines are small rocks, generally on the order of one-quarter inch in size. Clay must be removed because it clogs the crushing equipment and because it can put the aggregate out of specification. Wasting is accomplished by passing the raw material over a sieve to remove the clay and fines. The higher the clay content the more raw material that is wasted in order to produce the desired amount of aggregate. Wasting is inefficient because more material must be gathered and crushed and the waste material removed. 13 Because the amount of clay in the raw material can have a dramatic impact on the amount of time and effort required to produce the needed aggregate, the contract included information on the clay content in the Benson Ridge Quarry. There were two tests that were performed by the FHWA on the Benson Ridge Quarry. The first was a so-called washed sieve analysis test. The specific purpose of this test was to determine the quality of the quarry for aggregate production in order to assist the contractor in planning and estimating the crushing operation. 14 The FHWA Materials Division prepared a Materials Report which contained the results of the washed sieve test on the Benson Ridge Quarry. Those test results indicated that the quarry contained 2.2% to 5.9% of material which passed through the No. 200 sieve (referred to as minus 200 material). The test, as the Board found, indicated very little clay in the tested material. The report also listed NV or no value for the liquid limit and NP or non-plastic for the plasticity index, both of which indicate very little clay in the quarry. 15 It appears that the washed sieve test was not performed according to FHWA standards in that the sample used was comprised of weathered rock taken from the face of the pit. The relevant FHWA standard provided that a test sample should not include material weathered to such an extent that it is no longer suitable for the purpose intended. The Materials Division prepared a note, however, to alert contractors of this deviation from normal procedure. The noted stated: 16 The above gradations were produced by crushing in the laboratory samples of limestone rock only from the face of the quarry. None of the materials from clay seams that exist in the quarry was included in the above laboratory tests. 17 The Materials Division contacted the agency's project design engineer and asked him to include the note in the contract plans. This note, however, was not included in the plans as requested. Another note, prepared by the Materials Division, was included. That note simply stated that there is clay in the vertical fracture joints and also horizontal clay seams. This material will have to be wasted to produce specification material. 18 The second test performed by the FHWA on the Benson Ridge Quarry, the results of which were made available to the bidders, involved taking test borings of the quarry. Seven test borings were taken from various points in the Benson Ridge Quarry. Only three of the seven (B-1, B-4, and B-7), however, were taken from the area of the quarry that was to be used to produce the aggregate. The mean average fractured limestone was 77.4 percent for the seven logs. In sum, as the Board found, the boring logs, when read together, reported no clay at some locations and strata, very small amounts of clay in others, and unquantified amounts of clay at other locations and strata.... 19 Brown's first claim is that the FHWA misrepresented the composition of the Benson Ridge Quarry by omitting the note that indicated that the washed sieve analysis was performed on a weathered sample. The Board held that the omission did not rise to the level of a misrepresentation because it was unreasonable for Brown to rely on the results of the washed sieve analysis in light of the boring logs. According to the Board, it was unreasonable for [Brown] to have expected to obtain in production the same results reported in the Washed Sieve Analysis precisely because a washed sieve analysis is not representative of raw quarry material. The Board, citing United Contractors v. United States, 177 Ct.Cl. 151, 368 F.2d 585 (1966), reminded Brown that a contractor must consider all of the subsurface data made available to him and may not shut his eyes to relevant information of this type. 20 A contractor can recover damages under a contract for a misrepresentation by the Government in the contract documents. See Summit Timber Co. v. United States, 230 Ct.Cl. 434, 677 F.2d 852, 857 (1982); Morris v. United States, 33 Fed. Cl. 733, 744-47 (1995). In order for a contractor to prevail on a claim of misrepresentation, the contractor must show that the Government made an erroneous representation of a material fact that the contractor honestly and reasonably relied on to the contractor's detriment. See Roseburg Lumber Co. v. Madigan, 978 F.2d 660, 667 (Fed.Cir.1992); Summit Timber, supra; Morrison-Knudsen Co. v. United States, 170 Ct.Cl. 712, 345 F.2d 535, 539 (1965); Restatement (Second) of Contracts § 164 cmt. a (1979). A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so. Restatement (Second) of Contracts § 162 (1979). 21 Brown satisfied these elements. The FHWA made an erroneous representation regarding the clay content in the Benson Ridge Quarry. The washed sieve analysis reported that the minus 200 material in the quarry was between 2.2% to 5.9%. Ted Brown, the head of the company and an experienced road contractor, testified that he personally prepared the bid and that he relied on these results in preparing his bid. The clay content was significantly higher. Even though Brown was wasting as much as 50 percent of the raw quarry material, the minus 200 material consistently pushed up against the 12% limit of the contract. Brown's records indicate a liquid limit of as much as 29 and a plasticity index of 11. This was in contrast to the NV or no value for the liquid limit and NP or non-plastic for the plasticity index on the FHWA test results. Given the disparity between what was originally reported and the amount of minus 200 material actually encountered, we conclude that the FHWA made a material misrepresentation. 22 Brown's reliance was reasonable. The washed sieve analysis test was performed to particularly identify the amount of minus 200 material in the quarry. The FHWA obviously knew that bidders would rely on this information since it prepared a note to bidders specifically to alert them to the problem with the results, a note that was not transmitted to the bidders. If it was objectively unreasonable to rely on the washed sieve analysis results, as DOT asserts, the Materials Division would not have considered it necessary to qualify the results. The existence of the borings logs does not change our conclusion. Generalizations about the composition of the quarry cannot overcome the particularized results found in the washed sieve analysis test. See United Contractors, 368 F.2d at 597-98. 23 We find it particularly ironic that the Board cited United Contractors against Brown to bolster its conclusion. In that case, the court held that the plaintiff could not reasonably have expected to encounter subsurface water despite the existence of a contract clause that cautioned the contractor of high ground water in the area and drawings that showed pools and water ditches at the site. Id. at 598. The court was particularly persuaded by more specific test data in the record that suggested that there was no subsurface water. In such a case, the court concluded that the more specific test data trumps the more general test results. Id.; see also Woodcrest Construction Co. v. United States, 408 F.2d at 411 (We cannot say that plaintiff was wrong in following 'The most reliable and most specific indicator....' ). The same is true in this case. Accordingly, Brown is entitled to recover damages due to the FHWA's misrepresentation about the composition of the Benson Ridge Quarry; the Board's holding to the contrary is reversed. 24 Because we hold that, on these facts, the FHWA's conduct amounted to a misrepresentation, we need not reach Brown's alternative ground of recovery--differing site condition.