Court Opinion

ID: 8597237
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:04:35.628236+00
Date Added: 2024-06-11T16:55:01.365355
License: Public Domain

NICHOLS, Judge,
concurring and dissenting:
I agree with the holding of the panel insofar as it reduces the award from $999,551.20 to $133,200, but, respectfully, I would go further and dismiss the petition.
*460The FHWA contract with the State specified an amount and stated as follows: "[f]ederal funds are obligated for the project not to exceed the amount shown herein.” The contract and relevant regulation on the pertinent date are silent as to what happens in case of unbudgeted claims, breaking the ceiling if allowed. I think, in such circumstances, certain requirements are implied, or are to be met by reformation to effect the real agreement of the parties. They are, if the State wishes to pay the claims and be reimbursed, it should obtain FHWA approval in advance. It is not sufficient to inform the FHWA officials to attend the settlement negotiations as observers. The State should have insisted on prompt decisions. In argument before us, State counsel said they were fearful of an injunction suit (in the case of the Milford claim) and were aware by past experience how dilatory the FHWA would probably be in passing on requests for unbudgeted funds. I do not consider this excuse adequate. If defendant had failed to rule promptly on explicit reimbursement requests, thereby delaying the project and increasing the cost, it would have been liable in breach damages for failing in its "implied duty of cooperation and noninterference which is inherent in any contract.” S. A. Healy Co. v. United States, 216 Ct.Cl. 172, 188, 576 F.2d 299, 306 (1978), and cases cited. But an implied burden on defendant to make a ruling promptly does not arise until it has a request for one before it.
I do not read Louisiana Department of Highways v. United States, 221 Ct.Cl. 229, 604 F.2d 1339 (1979) as the panel does. The opinion of Senior Trial Judge White, which the court adopts as its own, seems to me to hold in the concluding portion that the settlement there involved was "reasonable and in the public interest” but reimbursement was not allowable because not given approval by defendant before being paid. The court in its preliminary per curiam remarks construes the White opinion to view the settlement as prudent to make but not reimbursable because not "grounded in contract provisions and specifications and actual costs incurred,” a standard stated in a regulation not argued to be applicable here. Apparently the regulation was meant to require disallowance of claim settlements even if prudent and reasonable, if the claim does not meet *461some objective criteria. But the court did not disavow the alternative ground stated in the White opinion and I think it is correct. Defendant did acknowledge that the FHWA has consistently contributed to additional (unbudgeted) costs (it deemed) reasonably incurred. That it has commendably waived the contract cost ceiling when persuaded the claim was reasonable, does not mean it waives it when not so persuaded. Nor do I think it can be estopped into a waiver by inaction (laches) of its representatives. Costello v. United States, 365 U.S. 265, 281 (1961).
It appears to me plaintiff is seeking equitable relief, whether we deem it reformation of the basic contract or enforcement of clauses added to it by implication. Where any obligation it incurs is supposedly to be reimbursed by the United States up to as much as 90 percent, it owes the United States a strong obligation in equity, first, to protect the interests of the United States, and second, to give it every opportunity to protect its own interests. It did not do the first, as we find, in the portions of the opinion I join in, that the settlements were grossly excessive. It did not do the second: instead of misconstruing the silence and nonfea-sance of dilatory FHWA representatives, it should have demanded a decision in a manner to reach the attention of FHWA highest levels. He who seeks equity must do equity. Viewing the claim as equitable, as I do, I do not deem a claimant that had conducted itself as inequitably as Pennsylvania has here, can require us still to reconstruct the agreement of the parties to allow Pennsylvania the small amounts the majority considers properly allowable. I would let all the loss lie where it has fallen.