Court Opinion

ID: 8597885
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:05:20.23666+00
Date Added: 2024-06-11T16:55:02.906178
License: Public Domain

NICHOLS, Judge,
concurring in the result:
In modern judicial writing, footnotes often contain the most important material the writer has to offer. The smaller the print, the more care required of one’s perusal. It is certainly so in this case, although the court has seen fit to revise Trial Judge Fletcher’s footnote 27. Its full unrevised text is as follows:
*372Although on the record in this case it cannot be said that actions of the Government contracting officer, Mr. Lin-don, had no reasonable basis, a strong argument can be made that his actions with respect to USF&G were at least negligent. USF&G officials gave the Government ample notice of Bard’s financial difficulties. As early as December 23, 1976, Mr. Lindon received notice from the surety that it was fearful of incurring liability on Bard’s payment and performance bonds for the Anniston contracts. Again on January 3, 1977, letters signed by Mr. Bard directing that future contract payments be made directly to the surety were received. Mr. Lindon testified that he failed to see those letters, which had been placed in the contract file while he was on vacation, when he reviewed the file in preparation for a meeting with the surety on January 10, 1977. This, if true, shows carelessness on his part. Again, in the January 10 meeting Mr. Lindon was shown further documentary evidence of Bard’s financial troubles (although he denies this). In addition, at this time, the Government had received notice and Lindon was aware of an outstanding bill of over $10,000 from one of the subcontractors on the aid station project. Mr. Linden’s admitted failure to make any further investigation into the financial situation of Bard Construction in the face of this evidence indicates negligent conduct on his part. (Cf. Fireman’s Fund Insurance, supra, in which a District Court faced with a similar factual situation said: ". . . the Government was under no duty to make progress payments to the surety, so long as the Government took reasonable steps to determine for itself that the contractor had the capacity and intention to complete the job.” 362 F.Supp. at 848 (emphasis supplied).) Certainly, the representatives of USF&G involved in this case had done everything they possibly could to give the Government notice of Bard’s financial situation and to prevent the progress payments from being made to what they correctly perceived to be a failing construction company. The Government contracting officer’s conduct in this case, while it does not rise to the level of bad faith or arbitrary and capricious abuse of discretion which is required to prove liability, clearly shows a lack of prudence and responsibility on the part of the Government official involved.
I suppose the able trial judge felt that these observations ought to receive the notice of the court, but was unable to decide whether they should be in the recommended opinion *373or in the findings and so decided on a position that would invite more attention than either.
As defendant argues, although in our precedent decisions we have always given lip service to a notion that the contracting officer has some kind of a duty in making progress payments to exercise discretion to protect the surety against needless loss, the extent of this duty has never been spelled out, nor has an example of a breach of it been furnished. If such alleged duty ever was more than a mere chimaera, it has become such by reason of the ASPR provision quoted in footnote 9. Negligence is nothing if not a breach of duty owed in some identifiable direction. If the contracting officer owed no duty to the surety, he was not negligent as unrevised footnote 27 says he was. I believe this is a correct exposition of the present law and I concur in the result on the basis of this belief.
Certainly if there was a duty, Mr. Lindon, the contracting officer, breached it. He could never have entertained any serious intent to protect the surety, if he did take a few ritual measures to protect his own posterior. He knew, or was on notice that, Mr. Bard had signed letters directing that all monies due on the Bard contracts be paid to USF&G, assigning monies due to a trust for benefit of creditors, and saying that due to the outstanding bills, Bard Construction was in default. A meeting between the contracting officer and USF&G representatives took place on January 10, 1977. A comparison between the trial judge’s footnote 8 to the proposed opinion, and finding 24(a) reveals that Mr. Lindon falsely denied that he was given copies of these letters on January 10. By finding 24(d) he said that the ASPR Regulation precluded his doing anything with the progress payment except paying it to Bard. It appears as in USF&G v. United States, 201 Ct.Cl. 1, 475 F.2d 1377 (1973) (USF&G I) the contracting officer really denied he had or would exercise the discretion this court said he had. See my concurrence, 201 Ct.Cl. at 17, 475 F.2d at 1386.
It became obvious Mr. Bard now no longer wanted done with the payment what his previous letters had said he wanted done. Mr. Lindon never asked him what had happened to bring about the change of position, or why *374performance in full now could be promised when the previous week it had been in jeopardy. Defendant surmises, plausibly to my mind, that Mr. Bard signed the letters he had signed, hoping that USF&G would fund the completion of his contracts but now he had learned they would not, his paramount object was to get his hands on the progress payment himself. He did, and work by his subcontractors stopped immediately and for good. Anyone with the inherent skepticism of a schoolboy of 10 would have seen that this was the probable outcome of giving him the progress payment unencumbered. Lindon asked a few ritual questions of Mr. Bard, but carefully avoided any searching ones that might have developed why Bard had changed completely around and now wanted to freeze USF&G (and, therefore, the unpaid subcontractors) out of the progress payment.
In the circumstances, I cannot accept as sufficient precaution asking a few leading questions of Mr. Bard, but not asking the ones that would be obvious to one who seriously intended to exercise discretion in a responsible way.
I think it is time for the court to come out from behind the bushes and either agree with Mr. Lindon, and with government counsel herein, that the contracting officer has no duty to exercise discretion in the premises, or else to require of the contracting officer a standard of care reasonably calculated to be of some use in limiting the losses these unhappy business failures by construction contractors always cause. As things are, we get the worst of both alternatives. We invite litigation in every case by giving the surety who has borne the loss an illusory gleam of light, yet we don’t fool anybody. I am sure that since USF&G I, no surety company has mitigated its fees for Miller Act coverage a single dollar because of any hope this or any other court will render it any aid in the circumstances here attendant.