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UNITED STATES v. WOOTEN

May 7, 1954

UNITED STATES FOR USE AND BENEFIT OF COMMERCIAL EQUIPMENT CO., INC.
v.
WOOTEN ET AL.



The opinion of the court was delivered by: John E. Miller, District Judge.

In this suit Commercial Equipment Company Inc., hereinafter often referred to as plaintiff, seeks judgment against the defendant, R.K. Wooten, d/b/a Wooten Construction Company, and said defendant's surety, Maryland Casualty Company, for an alleged balance of $800 due to plaintiff by Wooten for work done pursuant to a subcontract between Wooten and plaintiff under the terms of which plaintiff contracted to do a portion of the work Wooten, as prime contractor, had contracted to do for the Government in improving the mess facilities on the third floor of Building No. 1, Army and Navy Hospital in Hot Springs, Arkansas.

Defendants admit the failure to pay $800, but allege that the defendant Wooten is entitled to a credit of $800 for liquidated damages he was required to pay the Government as a result of plaintiff's delay in performance of the work. While not denominated as such, defendant's claim for a credit is in fact a counterclaim, and the only issue before the Court is whether the defendant Wooten is entitled to recover from plaintiff in the nature of a set-off the sum of $800 for liquidated damages.

The case was tried to the Court, without a jury, on April 12, 1954, and at the conclusion of the trial the Court took the case under advisement pending receipt of briefs of the parties in support of their respective contentions. The briefs have been received, and now the Court, having considered the pleadings, ore tenus testimony of the witnesses, the deposition of Colonel Joseph S. Grygiel, stipulations, exhibits, and briefs, makes and files herein its findings of fact and conclusions of law, separately stated.

Findings of Fact

1.

The plaintiff, Commercial Equipment Company, Inc., is a corporation organized and existing under the laws of the State of Arkansas, having its principal office and place of business in Fort Smith, Arkansas. The defendant, R.K. Wooten, doing business as Wooten Construction Company, is a citizen and resident of Little Rock, Arkansas. The defendant, Maryland Casualty Company, is a Maryland Corporation authorized to do business in the State of Arkansas.

The contract sued upon was executed and to be performed in the Western District of Arkansas, Hot Springs Division; the complaint herein was filed on January 13, 1954, and summons served upon defendants on January 14, 1954; and the final settlement on the contract in question occurred less than one year prior to the commencement of this suit.

2.

On June 23, 1952, defendant Wooten entered into a contract with the United States to improve the mess facilities on the third floor of Building No. 1, Army and Navy Hospital in Hot Springs, Arkansas. The contract was subject to the approval of the Commanding General, Fourth Army Headquarters, or his authorized representative, and was approved on July 10, 1952, at which time Wooten was given "Notice to Proceed" with the work.

As required by the contract, Wooten obtained and filed a payment bond in the principal amount of $56,556.56 with the defendant, Maryland Casualty Company, as surety, to secure prompt payment to all persons supplying labor and material in the prosecution of the work covered by the contract.

3.

The contract between Wooten and the United States provided that "The work shall be commenced within ten (10) calendar days after receipt of Notice to Proceed and shall be completed within one hundred five (105) calendar days after date of receipt of Notice to Proceed." Paragraph SC-12(b) of the Specifications provided that:

    "In order that the General Mess may be out of use
  the minimum length of time, the contractor will not
  be allowed to start any actual construction in the
  Main Hospital Building until he furnishes evidence,
  satisfactory to the contracting officer, that he has
  all the necessary materials and equipment on hand and
  available to complete the project. In no case will
  the contractor be allowed to start any actual
  construction in the Main Hospital Building any
  earlier than 75 calendar days prior to the contract
  completion date."

Notwithstanding the provisions of Paragraph SC-12(b), the Government's Contracting Officer and Post Engineer, Lieutenant Colonel Joseph S. Grygiel, with full knowledge that there were not available and on hand the necessary materials and equipment to complete the project, on July 10, 1952, gave Wooten "Notice to Proceed" with the work. Likewise, Wooten, with full knowledge that said materials and equipment were not on hand, accepted said Notice to Proceed and thereafter began work on the project.

On July 18, 1952, defendant Wooten and plaintiff entered into a subcontract whereby plaintiff agreed to perform a part of Wooten's contract with the United States. Construction on the Main Hospital Building was begun on August 13, 1952, and at that time the necessary materials and equipment were still not on hand. In fact, due to Government restrictions on the use of nickel bearing steel — the type specified in the general contract — it was necessary to secure the acceptance of a different type of steel for use in the work to be done by plaintiff, and such acceptance as to some of the equipment was not obtained until October 17, 1952. Thus, on October 17, ninety-nine days after Notice to Proceed was given, the necessary materials and equipment were not on hand, and in view of the fact that a substantial portion of the materials and equipment were to be custom fabricated, there was no likelihood of said materials and equipment being on hand for at least several weeks. It is quite evident, therefore, that the entire time for completion of the whole project (105 days) had elapsed prior to the time the necessary materials and equipment were on hand to complete the project.

Some additional delay was caused by the Government's failure to provide certain equipment and necessary dimensions, and as a resultant factor of that delay, coupled with the delay caused by the beginning of the work before the necessary materials and equipment were on hand, the project was not completed until February 20, 1953, a total of 225 days after Notice to Proceed was given.*fn1

Extensions of time were granted by the Government to Wooten, the first modification extending the completion date to November 13, 1952 (because of the Government's failure to provide equipment and dimensions), and the second modification extending the completion date to include all the time actually consumed except eight days. The latter extension was made July 29, 1953, approximately five months after the work was accepted, and as a result thereof Wooten was relieved of any claim for liquidated damages except for the eight days above mentioned, the total liquidated damages thus being $800.

4.

After the use of 430 steel was approved, plaintiff ordered the necessary items which were to be installed in the General Mess. On January 15, 1953, plaintiff's manager wrote to Wooten advising that "Items Nos. 8, 9 and 11, Cafeteria Counter" were being shipped to Hot Springs, and that "As per our previous advices our crew stands ready to start the installation of this equipment when it arrives in Hot Springs." The cafeteria counter was delivered to the General Mess on Friday, January 23, 1953, and plaintiff immediately dispatched two men from Fort Smith to Hot Springs to set the counter in place. These men arrived at the Mess at 2:00 p.m. that day and worked the remainder of Friday and all day Saturday setting the counter in place. Plaintiff's employees returned to Fort Smith Saturday night, and during the eight day period from January 25 to February 1, inclusive, no employees of plaintiff were actually engaged in the installation work on the premises of the General Mess. It is for these eight days that the Government charged Wooten ...


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