CROWN COAT FRONT CO. v. U.S.
Legal provision: 28 U.S.C. 2401
Argument of David Rose
Chief Justice Earl Warren: Crown Coat Front Company Incorporated Petitioner versus United States.
Mr. Rose you may continue with your argument.
Mr. David Rose: Mr. Chief Justice, may it please the Court.
Yesterday, we had discussed the question of when the 'cause of action' accrues in these Tucker Act suits involving disputes clauses and we've then begun to discuss the question of whether the period of limitation is tolled during the pendency of the disputes clause proceedings administratively.
We had focused on the statute itself and I pointed out that the statute provides for tolling in case of disability.
Mr. Justice White inquired as to whether the phrase 'disability' might be broad enough to encompass the situation here and I'd like to answer that now if I may.
I think the answer is quite clearly, no.
The original statute talked in terms of married women, persons under the age of 21 and first accrued during minority and of idiots, lunatics and the insane persons, this was what was meant by disability.
The statute was changed during the revision of Title XXVIII.
The revisers notes which are in the United States Code make it quite clear that it's only legal, these legal disabilities actually barring suit that constitute disability within the meaning of the statute.
So I think it's quite clear that that phrase was not intended to encompass this situation and none of the courts have ever suggested that it was.
I'd like to, I think more important perhaps is the question of congressional intent generally and as the Court may recall, in 1954, Congress confronted the situation of disputes clauses in government contracts.
In 1951 and there above ,this Court in Wunderlich Case had held that there's no review except for fraud.
In 1954, Congress passed the Wunderlich Act and changed that to provide for review in accordance with the Wunderlich Act for substantial evidence.
It was confronted at that time with the statute of limitations problem and if the Court will refer to page 27 of the brief, the House report there is think quite illuminating on what Congress understood.
They were confronted with the situation, Congress at that time with claims that had been pending administratively which had, which the six years had run from 1951 through 1954 in which there was no suit permitted under this Court's decision in Wunderlich Act.
Nevertheless, the Court said that this statute would apply only to claims, which were less than six years old and not heretofore filed in the courts.
Thus it's quite clear, that Congress thought that the significant thing in regard to the statute of limitations was the age of claim that is when the breach occurred and whether it was filed in the courts and it specifically declined to make the benefits of the Wunderlich Act available in all of those claims which had expired in the three-year interval.
We think this is a much, that's an a fortiori situation from the one we have here.
For here, the contractor had available to him a very easy remedy, when the claim was pending administratively.
In his district, in the Southern District of New York, it was clear as early as 1955 what contract in this situation should do and that is to file a suit and he could have done so and if he had done so, he would have protected himself and at the same time put the government under notice as to what his claims actually were.
So, we think that Congress was confronted with, if not precisely this situation, a situation directly analogous to it and that the solution that it came to, it was to protect, was to afford the government the protection, which the government receives under the Statute of Limitations applicable to these matters.
It did recognize that that statute was a jurisdictional one and has specifically declined to disturb the -- what is understood to be the situation or what we understand to be situation that when the claim accrues and is not interrupted, the period is not interrupted during the pendency of administrative claim.
I'd like to address myself now to the reasoning of the Third Circuit in the Northern Metal's case.
I'd point out that again that the Third Circuit is the only court, which has ever held that there's tolling during this period.
The Court of Claims repeatedly rejected that notion.
The reasoning of the Third Circuit appears to be that the government, if the claim is pending administratively, the government is on notice of the claim and can protect its records and so forth, but as I think I indicated in an answer to a question for Mr. Justice Fortas yesterday, that reasoning failed to take into account the breached claims, because there's no requirement in regard to these so called 'breached claims' of filing it administratively.
So the government does not in fact know the extent or the precise nature of the claims when it's simply pending administratively.
Also, the reasoning of the Third Circuit would apply to any matter that is filed administratively, whether it's filed administratively as a mandatory thing or permissibly.
Yet, the court's have never held that the mere processing of an administrative claim, tolled the period of limitations.
On the contrary, the Court of Claims decisions are up until Nager Electric were quite clear the other way and so were the District Court decisions.
So we think that they are notwithstanding a plausibility, the reasoning of Third Circuit is defective in this particular regard.
Justice Abe Fortas: Well, in connection with the breached claims, there would be no problem of tolling, would there ?
Mr. David Rose: Well, the Court of Claims has held alternatively that the period should be tolled for the breached claims as well as the other, because there's only one cause of action in each contract and the Court of Claims reasons that since you have to file them administratively in order to protect the claims, which are within the ambit of the disputes clause, the whole thing is tolled.
Justice Abe Fortas: I see, but if you took a breached claim separately, that is say considered a breached claim apart from the other claim whatever it is?
Mr. David Rose: Yes, claims under the disputes clause.
Justice Abe Fortas: Yes, under the disputes clause, then there would be no administrative proceedings, and there would be no problem?
Mr. David Rose: Well, that's right, but the Court of Claims has repeatedly held and we think it's probably good law that there should be only one suit on each contract, particularly so in regard to breach and arising under claims, because the two overlap greatly as to the nature of the facts and so forth.
There would be a multiplicity of suits to allow separate filings and they have held that there is just one cause of action on each contract.
And so, if it's tolled, it is tolled for all the claims that come under the contract, at least that's what they felt and we think that's probably right.
Justice Potter Stewart: The Court of Claims didn't hold that the statute was tolled that the cause of action didn't arise and I think the administrative proceedings --
Mr. David Rose: That's what their main holding Your Honor, but they did hold alternatively that if they are wrong on that, that they would agree with the Third Circuit.
Justice Potter Stewart: With the Third Circuit, yeah, I was going to ask you whether the reasoning of the Third Circuit will lead to the same as a result in the answer to Mr. Justice Fortas' question.
Mr. David Rose: I think the reasoning, I think, you see the Third Circuit wasn't confronted with a breached claim in the situation before and therefore, the Third Circuit didn't decide that the Court of Claims adopted the reasoning of the Third Circuit alternatively --
Justice Potter Stewart: Alternatively.
Mr. David Rose: -- and did apply it to both and we think that results in the trial of 12, 15 years afterwards of claims concerning facts, which occurred that many years before, and we don't think -- we think it's clear that this is not what Congress intended.
Justice Potter Stewart: Well, the Third Circuit would at least require the filing of the administrative claim within six years, wouldn't it?
Mr. David Rose: Yes.
Justice Potter Stewart: And the Court of Claims though would not?
Mr. David Rose: Yes that's quite right.
And obviously, the consequences are not as severe in the Third Circuit rule as they are in the Court of Claims rule, but they are nevertheless severe, because if the contractor is not diligent in prosecuting, there are rare instances in the United States Steel case is certainly an extreme example, but there's one that is example of the case, which is pending administratively for many, many years and certainly the underlying facts in regard to any breached claim in that kind of situation would in all probability have long since disappeared by the time they brought their action to court.
So, we think the same kind of consequences are inherently involved.
They're more severe in the Court of Claims situation than they are in the Third Circuit, but we don't think the Congress intended either.
I see my time is expired.
Chief Justice Earl Warren: Mr. McDermott.
Argument of Edwin J. Mcdermott
Mr. Edwin J. Mcdermott: May it please the Court.
Mr. Justice Stewart, in the Nager Electric Company case against the United States, I believe the answer to the question you directed to my brother is contained.
In that case, Judge Davis expressed the opinion for the Court of Claims that if there are two types of claims, which arise under a contract, one which is a breach and one which is a disputes article proceeding that is the claim under the changed conditions or Delays-Damages articles, then the contractor has a choice to make.
He may, if he wished immediately sue on his breach, within the six-year period if he doesn't want to wait for the administrative proceedings to be concluded, but if he does so, then he takes the chance that if that be concluded before the disputes article proceeding is completed, then he wouldn't be able under the single-suit theory to amend to bring in the administrative proceeding.
But also that since both suits arise out of the same contract and there should be only one suit, he will be permitted if he chooses to do so to await until the conclusion of the administrative proceedings and then bring both his breach suit and his administrative proceeding breached claim and his administrative proceeding claim in the same suit.
Now, I understood that Mr. – my brother stated that the Solicitor General agreed with that view that there should be only one action.
Now, also with respect to what position of the Department of Justice was before --
Justice Potter Stewart: They made it clear, they don't agree with the Court of Claims' view but that was my understanding.
Mr. Edwin J. Mcdermott: I do agree with the single contract, single-suit theory that was my point.
Now, with respect to the position which the department, that is the Solicitor General in the United States Court of Claims as the defendant represented by the Department of Justice, Nager Electric Company case of course, when our brief was submitted it was only in slip opinion, but since then it has been reported in F.2d (Federal Second) and it's at 368 F.2d (Federal Second) 847 and 368 I beg your pardon, and referring to page 854 and note 18, Judge Davis said this. Indicative of the government's general acceptance in this Court, prior to its recent re-survey of its position of the rule that the claim does not accrue until the administrative determination are the several instances in recent years in which the government has suggested dismissal of the petition in this Court, because the contractor had not yet obtained a final administrative decision on his claim.
It is also significant that the government's briefs initially filed in the four contract cases now before us, as well as in some others assume implicitly or explicitly that limitation does not run on claims under the contract until the administrative determination.
For this Court, the change in the government's view did not come until after oral argument in the present case.
Now, I, always understood the rule in the Court of Claims was that you were required under this Court's decisions to exhaust the administrative remedy provided by the clauses of the contract, changes, changed conditions, Delays-Damages articles and pursue the remedy provided by the disputes article, and that not until you receive the final administrative decision were you are permitted to proceed judicially in the Court of Claims.
Now, Judge Davis in his opinion, states that that is the logical position to take and I don't see where there's any quarrel that can be had with it when you view it from that viewpoint.
Now, anytime that there is an administrative proceeding of course, all the government's evidence is presented, their obligation to themselves, their witnesses testified, the claimants witnesses testify, exhibits are introduced, a record is made and nothing is lost to the government by waiting until the administrative proceeding is completed before a suit is instituted and when a suit is instituted, then the reviewing Court has only the right to examine the record made before the administrative tribunal.
So, we submit that all elements of fairness and justice require that the Court of Claims rule that the statute does not start to run until the final administrative decision be adopted by the Court, thanks.