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UNITED STATES v. O. FRANK HEINZ CONSTRUCTION CO.

June 20, 1969

THE UNITED STATES OF AMERICA, FOR THE USE OF J.C. SCHAEFER ELECTRIC, INC., AN ILLINOIS CORPORATION, PLAINTIFF,
v.
O. FRANK HEINZ CONSTRUCTION CO., INC., AN ILLINOIS CORPORATION; AMERICAN CASUALTY CO. OF READING, PENNSYLVANIA, A PENNSYLVANIA CORPORATION; AND NATIONAL FIRE INSURANCE CO. OF HARTFORD, A CONNECTICUT CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Robert D. Morgan, District Judge.

OPINION AND ORDER

This cause comes before the Court on plaintiff's motion for summary judgment, raising the sole question of whether "* * * the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56, Federal Rules of Civil Procedure.

This suit is brought under the Miller Act, 40 U.S.C. § 270a, 270b (1964). This Act is highly remedial in nature to assure the payment of federal subcontractors and "is entitled to a liberal construction and application." MacEvoy v. United States, for Use and Benefit of Calvin Tomkins, 322 U.S. 102, 107, 64 S.Ct. 890, 893, 88 L.Ed. 1163 (1944).

A great many facts are admitted and therefore not in dispute. Among such are the following: On or about July 6, 1966, the real plaintiff herein, J.C. Schaefer Electric, Inc. (herein called Schaefer), orally communicated a "bid" to the president of defendant Heinz of $508,800.00, plus $28,740.00 for alternative "A", to perform the electrical work required on a proposed construction project on which Heinz was submitting a general contractor's bid to the United States. On July 7, 1966, Heinz submitted its bid and named Schaefer therein as the proposed electrical subcontractor. Heinz thereby became the successful bidder on the government contract. Shortly thereafter, O. Frank Heinz, president of defendant Heinz, orally asked Schaefer to reduce the amount of its bid for the electrical work and Schaefer refused. On August 2, 1966, defendant Heinz filed with the contracting officer of the General Services Administration a request to permit Heinz to change the electrical subcontractor in his bid. Under the government contract terms this may be done only with government consent. This request was initially denied August 11, 1966, with final denial ordered October 20, 1966.

On August 12, 1966, defendant Heinz entered into a construction contract with the United States, acting by and through the Public Building Service of the General Services Administration. Thereafter, defendants American Casualty Company of Reading, Pennsylvania, and National Fire Insurance Company of Hartford entered into a Payment Bond as sureties for defendant Heinz.

On November 2, 1966, Schaefer received from defendant Heinz a message on corporate paper and signed by the vice president of Heinz which stated:

  "Confirming my phone conversation with you of
  today — we will write you an order to proceed with
  Base Bid & Alternative `A' work for the quoted
  price. * * * You will receive our order this week.
  In the meantime you will proceed with the work. * *
  *"

On or about November 2, 1966, Schaefer, with the knowledge and consent of defendant Heinz and under the above quoted authority, commenced to perform the subject electrical work.

On November 8, 1966, Schaefer received a purchase order numbered GSA-95-125 which contained therein the following terms:

  "This contract is subject to the possible
  termination which may result from a pending
  appeal to the Board of Contract Appeals of the
  General Services Administration of the United
  States Government; which appeal filed on October
  27, 1966, by O. Frank Heinz Construction Company,
  Inc., seeks the right to substitute a
  subcontractor for all or a part of the work and
  materials referred to in this Purchase Order.
  "Acceptance of this contract constitutes
  acceptance of said condition of substitution."

These terms were unacceptable to Schaefer and an amended purchase order was requested by letter which, in pertinent part, stated:

  "Fourth: * * * It should be obvious
            that we can not become committed to
            purchase materials for this job nor to
            start the same under the threat of
            possible termination through the appeal
            which you mentioned. We had thought all
            difficulties relating to this matter
            were fully settled.
  "We shall expect an amended Purchase Order to be
  sent to us promptly, taking care of ...

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