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GEVYN CONSTR. CORP. v. UNITED STATES

December 13, 1972

GEVYN CONSTRUCTION CORP., Plaintiff,
v.
UNITED STATES of America, Defendant


Robert L. Carter, District Judge.


The opinion of the court was delivered by: CARTER

MEMORANDUM AND ORDER

Robert L. Carter, District Judge

 In June of 1968 the parties entered into a contract which required plaintiff to construct and lease to defendant a Post Office building. Plaintiff's bid for this contract was based in part upon review of a drawing titled "Tentative Plans/United States Post Office" (Drawing RE-3731) which was prepared by defendant and was subsequently made a part of the agreement between the parties. Drawing RE-3731 indicated by line the location of "a proposed new drain to storm sewer in Ford Rd." (the Ford Road sewer). Plaintiff was required by the terms of the offer to verify the data contained in Drawing RE-3731.

 In an attempt to verify that connection with the Ford Road Storm sewer was possible and permissible, plaintiff inspected the site and obtained, from a Post Office representative, a copy of a letter from the State of Michigan, dated September 13, 1967, which stated that:

 
". . . the Michigan Department of State Highways will allow an 8 inch storm sewer tap into the existing Department of State Highways 24 inch storm sewer on the north side of Ford Road."

 There was a conversation between Post Office and Gevyn representatives regarding this letter, but the content of that discussion is in dispute.

 The state subsequently refused to permit connection with the Ford Road sewer and Gevyn was forced to connect its drain with a more distant outlet, thus incurring an additional expense which is alleged to be approximately $6,000.00. There is no evidence that either party had reason to doubt the reliability of the earlier state assurance. In this action to recover the amount of the additional expense both parties have moved for summary judgment.

 Courts have consistently held that Federal contract language to the effect that the bidder must verify data contained in plans and specifications will not relieve the government of responsibility for losses incurred as a result of reliance upon its misrepresentations. Hollerbach v. United States, 233 U.S. 165, 34 S. Ct. 553, 58 L. Ed. 898; United States v. Atlantic Dredging Co., 253 U.S. 1, 40 S. Ct. 423, 64 L. Ed. 735. In the usual case the misrepresentation relied upon by the plaintiff has been the result of negligence or other culpability on the part of the government. However, in the Atlantic Dredging case (supra) the Supreme Court noted that although it found that the government had "deceptively" failed to disclose certain information, its affirmance of judgment for the plaintiff contractor carried --

 
". . . no intimation of bad faith against the officers of the government and the Court of Claims regarded the misrepresentation of the character of the material as in the nature of a warranty; besides, its judgment is in no way punitive. It is simply compensatory of the cost of the work, of which the government got the benefit."

 See also Arcole Midwest Corp. v. United States, 113 F. Supp. 278, 125 Ct. Cl. 818, (1953).

 In a New York case, Atlanta Construction Co. v. State, 103 Misc. 233, 175 N.Y.S. 453 (Ct. of Cl., 1918), liability was found despite the admitted lack of government culpability. Plaintiff had contracted to construct a highway. State plans or maps contained the following information:

 
"The stone for item 40 shall be local material; the source of supply being one-half mile north of station 88 plus 00 and 133 plus 00, on road to be improved." (at p. 453)

 Plaintiff verified this information with the possessor of the supply source, but it later turned out that the possessor had only a life interest and could not sell. Plaintiff was awarded the extra cost:

 
"It was . . . a mutual mistake of the state and of the contractor, but one into which the contractor was led by the certain order, direction, and ...

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