Court Opinion

ID: 6783647
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:59:05.156673+00
Date Added: 2024-06-11T16:02:54.615861
License: Public Domain

Cook, J.,
concurring in part and dissenting in part. I agree with today’s majority that courts and litigants may employ the formula articulated in Eichleay Corp. (1960), ASBCA No. 5183, 60-2 BCA ¶ 2688, 1960 WL 538, when calculating a contractor’s unabsorbed home office overhead damages. I also agree that the Eichleay formula, while acceptable, is not the only possible method of calculating such damages. See Fairfax Cty. Redevelopment & Hous. Auth. v. Worcester Bros. Co., Inc. (1999), 257 Va. 382, 390, 514 S.E.2d 147, 152. Today’s decision does not foreclose either plaintiff contractors or defendant government agencies from presenting alternate formulas that may, in certain situations, more accurately measure unabsorbed home office overhead. See Love, Theoretical Delay and Overhead Damages (2000), 30 Pub.Contr.L.J. 33, 51-62 (positing numerous hypotheticals in which the Eichleay formula does not accurately assess unabsorbed overhead damages); Darbyshire, Home Office Overhead as Damages for Construction Delays (1983), 17 Ga.L.Rev. 761, 793-794, 799-805 (theorizing that the Eichleay formula could actually underestimate the contractor’s actual loss under certain circumstances).
I write separately to emphasize that the Eichleay formula does not relieve a contractor of its burden of proving that it is entitled to recover unabsorbed home office damages. The Eichleay formula merely supplies a mathematical method of calculating those damages when the contractor has proven the fact of having suffered them. George Hyman Constr. Co. v. Washington Metro. Area Transit Auth. (C.A.D.C.1987), 816 F.2d 753, 756-757. As the court of appeals correctly noted in its opinion below, “before a contractor impacted by a construction delay can utilize Eichleay, or any other formula, to calculate its damages for unabsorbed home office overhead, the contractor must establish that the delay caused some portion of its home office overhead to be unabsorbed,” citing Royal Elec. *65Constr. Co. v. Ohio State Univ. (Dec. 21, 1993), Franklin App. Nos. 93AP-339 and 93AP-424, unreported, 1993 WL 532013, reversed on other grounds (1995), 73 Ohio St.3d 110, 652 N.E.2d 687. See, also, Worcester Bros. Co., 257 Va. at 390, 514 S.E.2d at 152; Broward Cty. v. Russell, Inc. (Fla.App.1991), 589 So.2d 983, 984. Absent some competent evidence of a contractor’s having suffered actual damage in the form of unabsorbed home office overhead, the contractor will not be entitled to recovery, regardless of what number the Eichleay formula may yield.
As a method of establishing actual damage, the majority opinion endorses the framework that federal courts have employed in determining whether a contractor has established an entitlement to Eichleay recovery. That is, the contractor must show a prima facie case for unabsorbed overhead damages by demonstrating that (1) it was on “standby” during a government-caused delay and (2) it was unable to take on other work while on standby. See West v. All State Boiler, Inc. (Fed.Cir.1998), 146 F.3d 1368, 1373 (identifying the two prerequisites to application of Eichleay). The government then bears the burden to present rebuttal evidence or argument showing that the contractor did not suffer or should not have suffered any loss because it was able either to reduce its overhead or take on replacement work during the delay. See Satellite Elec. Co. v. Dalton (Fed.Cir.1997), 105 F.3d 1418, 1421.
It is important to note that the framework endorsed by the federal courts and by today’s majority does not relieve the contractor of its burden of proof. The government’s burden is one of production only — the contractor bears the ultimate burden of proving that it was impractical to obtain sufficient replacement work to absorb overhead expenses originally allocated to the delayed contract. Melka Marine, Inc. v. United States (Fed.Cir.1999), 187 F.3d 1370, 1376. Thus, nothing in the burden-shifting framework changes the fact that it is the contractor who bears the risk of nonpersuasion on all of the prerequisite elements to Eichleay relief. “Entitlement to Eichleay damages turns on whether the contractor can establish: (1) government-caused delay; (2) that it was on ‘standby’; and (3) that it was unable to take on other work.” (Emphasis added.) Altmayer v. Johnson (Fed.Cir.1996), 79 F.3d 1129, 1133.
It is true that the analysis endorsed today takes as given the proposition that a contractor allocates indirect costs on a proportionate basis among all of its contracts. Indeed, the federal courts have taken this approach, accepting this premise as’ a basic truth of the bidding process on government contracts. See, e.g., All State Boiler, 146 F.3d at 1372; Mech-Con Corp. v. West (Fed.Cir.1995), 61 F.3d 883, 886. Nothing in today’s decision, however, forecloses the government from rebutting this premise with evidence that the contractor has not, in *66fact, allocated indirect costs to the contract at issue in the manner presupposed by the Eichleay formula.
Michael W. Currie and Daniel F. Edwards, for appellee and cross-appellant.
Betty D. Montgomery, Attorney General, William C. Becker, Jon C. Walden and Karhlton F. Moore, Assistant Attorneys General, for appellant and crossappellee.
. Barry M. Byron, Stephen L. Byron and John Gotherman, urging reversal for amicus curiae Ohio Municipal League.
Means, Bichimer, Burkholder & Baker Co., L.P.A., and Katherine Francis Dolan, urging reversal in part for amicus curiae Ohio School Boards Association.
With the foregoing observations, I agree with the majority’s decision to reverse and remand for a reapplication of the Eichleay formula. With respect to Complete General’s cross-appeal, I agree with the majority that the court of appeals erred in denying Complete General recovery of prejudgment interest. I would, however, affirm the judgment of the court of appeals in all other respects.