Court Opinion

ID: 8594608
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:01:38.707471+00
Date Added: 2024-06-11T16:54:49.501216
License: Public Domain

CoweN, Chief Judge,
dissenting:
Because I believe that the subject contract cannot reasonably be construed as containing a liquidated damages provision, I am unable to agree with the decision of the court.
No statute or regulation imposed a liquidated damages provision on the plaintiff’s contract. Rather the applicable provision of the Federal Procurement Regulations, 41 C.F.R. *446§ 1-1.315 (1964), left it to the discretion of tbe contracting officer whether a liquidated damages provision would be made a part of any contract of the type here involved. It would appear obvious that in order for the contracting officer to exercise that discretion, it would be necessary for him to include in the particular contract affirmative language informing the contractor that under given conditions, e.g., unexcused failure to perform his contractual responsibilities in a timely manner, he would 'become liable for liquidated damages in the amounts provided in Table 8.1 of FP-61 (“The Standard Specifications for Construction of Roads and Bridges in Federal Highway Projects.5’).1 The contractual provisions relied on by the defendant and the majority as reasonably comprising a liquidated damages clause do not satisfy that requirement for affirmative contractual language indicating the positive exercise of the contracting officer’s discretion with respect to liquidated damages. Article 5 (c) of the general provisions (part of Standard Form 23-A, 1961 ed.) and clause 8.8 of FP-61 are standard clauses likely to be found in every contract of this kind. Both clauses are hypothetically worded. Article 5(c) begins: “If fixed and agreed liquidated damages are provided in the contract * * paragraph 8.8 commences: “Pursuant to the general provisions of the contract providing for liquidated damages * * *”.2 Each of the cited provisions clearly informs the reader that he should look for another affirmative provision of the contract specifically subjecting the particular contractor to liquidated damages for his unexcused failure to perform on time. No such provision can be found in the subject contract. It is not reasonable to suggest that Article 5 (c) and clause 8.8 become less hypothetical by being read together. It is likewise unreasonable to argue that the contracting officer may exercise his discretion to make liquidated damages applicable to a given contract merely by including *447the above-cited standard form clauses.3 The regulation directs the contracting officer to consider several factors in deciding whether to impose a liquidated damages provision in a contract and thus envisions affirmative action on his part. 41 C.F.E. § 1-1.315-2 (1964).
It is perhaps significant that in 1968 (well after the instant dispute arose) the Federal Procurement Regulations were amended4 by the addition of, among others, the following new provision:
§ 1-18.110 Liquidated damages.
(a) A liquidated damages clause may, in the discretion of the contracting officer, be included in construction contracts. See § 1-1.315. Where such a provision is used, the invitation for bids or request for proposals shall include a clause reading substantially as follows:
Liquidated Damages
In case of failure on the part of the Contractor to complete the work within the time fixed in the contract or any extensions thereof, the Contractor shall pay to the Government as fixed, agreed and liquidated damages, pursuant to the clause of this contract entitled “Termination for Default-Damages for Delay-Time Extensions”, the sum of $— for each calendar day of delay.
One probable reason for the amendment was a recognition on the part of contracting officials that specific, positive language is required in contracts like the one before us to render applicable the hypothetical standard form provisions pertaining to liquidated damages.
For the reasons stated above, I do not think the subject contract can reasonably be construed as containing a liquidated damages clause. The contract is simply devoid of sufficient declaratory language to constitute such a provision.
That being so, I cannot accord the dispositive effect which the majority gives to the letters submitted by the plaintiff *448to defendant during performance (before the dispute arose). The letters indicate that the plaintiff believed that the contract contained a liquidated damages clause. If the contract was arguably ambiguous on this point and could reasonably be read as either including or omitting a liquidated damages provision, it would be relevant to look to such extrinsic evidence to determine whether, before the dispute arose, the parties concurred, by words or actions, in a common interpretation of the later-disputed provision.5 It is my view, however, that there is no ambiguity in this contract; there clearly was no liquidated damages provision. This court may, of course, reform a contract to conform to the true intent of the parties based on persuasive evidence that their intention was at variance with the written contract. I do not consider plaintiff’s letters to represent the kind of thoughtful assertions that would normally be necessary to justify such reformation. Jansen v. United States, 170 Ct. Cl. 846, 353-355, 344 F. 2d 363, 368-369 (1965). 'It may be that the plaintiff here relied on assertions of the contracting officer that the contract contained a liquidated damages provision, or that the plaintiff, unaided by legal advice, misconstrued the complex standard form paragraphs. As to that, we can only speculate. I do not, however, find the cited letters of sufficient probative force to conclude that the parties intended from the beginning to include a liquidated damages provision in a contract when its written terms do not reflect that intention.
A liquidated damages provision is necessarily a harsh contractual remedy, because it permits the Government to recover specified amomits upon an unexcused delay by the contractor without assuming the burden of establishing the actual amount of its loss, if any. Certainly the parties to a Government contract may agree, by appropriate language, to make such a provision a part of their bargain. The court should be reluctant, however, to imply such a clause in a contract when there is a lack of affirmative language to constitute a liquidated damages provision. Since I am persuaded that neither the contractual language nor the actions of the *449plaintiff during performance are sufficient to justify reading a liquidated damages clause into the subject contract, or to estop plaintiff from challenging the assessment of liquidated damages, I decline to join in the opinion of the court.
All this does not mean that the defendant is without a remedy. Plaintiff no longer contends that the delays complained of were excusable. The Government should be entitled to establish, in further proceedings, the actual damages, if any, resulting from plaintiff’s delay of 144 days in completing performance of the contract. Therefore, I would grant plaintiff’s motion for summary judgment on the liquidated damages issue and hold that plaintiff is entitled to remission of the liquidated damages assessed ($14,400), subject to the right of the Government to set off against that sum the amount of actual damages sustained by the Government as established by it in further proceedings before our trial commissioner.
KttNzig, Judge, joins in the foregoing dissenting opinion.

 Plaintiff cites illustrative language taken from a District of Columbia standard form construction contract:
“Liquidated damages will be imposed for each calendar day or major fraction thereof that any work shall remain uncompleted after the time specified for completion, and in the amount as set forth in the table below. * * *”

 Table 8.1 of FP-61 adds nothing; it merely states the daily amounts of liquidated damages to be charged, If applicable.

 This Is particularly true considering that FP-61 Is a voluminous document providing standard specifications for a wide variety of federal highway projects, most of which are not applicable to plaintiff’s relatively limited tunnel-work project.

 33 Fed. Reg. 14288, 14289 (1968).

 E.g.,Max Drill, Inc. v. United States, 192 Ct. Cl. 608, 620, 427 F. 2d 1233, 1240 (1970) and other cases cited by the majority.