_________________________________________ DISMISSED WITH PREJUDICE: September 6, 1996 __________________________________________ GSBCA 13069(11270)-REIN, 13070(11431)-REIN, 13071(11432)-REIN, 13072(11503)-REIN, 13073(11504)-REIN, 13074(11545)-REIN, 13075(11546)-REIN, and 13076(11547)-REIN SEAGRAVE COATINGS CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Timothy S. Kerr of Elliott, Reihner, Siedzikowski, North & Egan, Blue Bell, PA, counsel for Appellant. David L. Frecker and John E. Cornell, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges PARKER, BORWICK, and VERGILIO. PARKER, Board Judge. Appellant, Seagrave Coatings Corporation, moves to reinstate the above-captioned appeals, which were dismissed without prejudice in July 1994 pursuant to a settlement agreement entered into by the parties. Appellant claims that the parties were mistaken as to a material term of the settlement agreement and moves the Board to either void the agreement and reinstate the appeals or reform the agreement. Respondent, the General Services Administration (GSA), maintains that the mistake, if there was one, was made by Seagrave alone and does not entitle Seagrave to relief. GSA requests that the Board enforce the settlement agreement by dismissing the appeals with prejudice. The Board held a hearing on the motion on February 6, 1996. Findings of Fact The appeals which underlie the motions before us concern the Government's rejection in 1991 of various shipments of high-gloss paint which failed GSA laboratory testing. Seagrave maintained in the appeals that the rejected paint had been improperly tested and that the paint conformed to the contract specifications. Before the appeals went to trial, the parties settled. Their agreement provided that an agreed-upon neutral laboratory, Calcoast Analytical Laboratories, would test the paint pursuant to the applicable Federal specification, TT-E-489-H. GSA agreed to pay ninety-five percent of the contract price for each batch of paint which passed the test. The settlement agreement also provided that "Calcoast's results will be final and conclusive." Respondent's Motion to Enforce Settlement Agreement, Exhibit A. The parties agreed to dismiss the appeal without prejudice and to jointly move for the dismissal . . . with prejudice within 10 days of payment to Seagrave's account of any monies owing to Seagrave as a result of this Settlement Agreement. If no batches pass, then the parties shall agree to request dismissal within 10 days of receipt of Calcoast's results[.] Respondent's Motion, Exhibit A. Most of the paint batches failed the test. Seagrave promptly moved to reinstate the appeals, arguing that Calcoast had used the wrong test method for measuring the amount of color change after accelerated weathering. According to Seagrave, the settlement agreement is void because Seagrave (and possibly GSA) expected that Calcoast would use the "specular included," rather than the "specular excluded," method for measuring color change. Most of the paint would have passed the test if Calcoast had used the "specular included" method. Specification and Testing Methods Specification TT-E-489-H requires that the contract paint maintain its color within certain standards, after accelerated weathering. Respondent's Exhibit 1. In layman's terms, the specular included method of testing takes into account the white reflected light, or glare, in measuring the degree of color change. The specular excluded method, as the name implies, excludes the reflected white light in its measurement of color. Transcript at 39. The evidence is overwhelming that Calcoast used the proper method, specular excluded, for measuring the degree of color change for the high-gloss paint at issue in this case. The author of Federal Specification TT-E-489-H, Mr. Kestutis Chesonis, testified that the specification requires the use of the specular excluded method for measuring color change for the accelerated weathering test. This is because the glare, or specular component, contained in high-gloss paint tends to mask the amount of true color change if that component is included in the measurement. Accordingly, excluding the specular component during the measurement of glossy paint tends to provide a truer picture of the amount of color change. Transcript at 85-94. This is the method that GSA uses to measure color change in glossy paint. Respondent's other expert, Mr. Frederick Simon, concurred with Mr. Chesonis, and further explained that the specular excluded method is the preferred method in the paint industry generally for measuring color changes in high-gloss paint. Id. at 100-43. The Board finds the testimony of both Mr. Chesonis and Mr. Simon to be credible and instructive. Specification TT-E-489-H incorporates by reference American Society for Testing and Materials (ASTM) document number D 2244, entitled "Standard Test Method for Calculation of Color Differences From Instrumentally Measured Color Coordinates." Respondent's Exhibit 1 at 3, 8, 10. ASTM D 2244 and its sub- directives provide the methods for evaluating differences in color for determining whether the color change requirements in specification TT-E-489-H have been satisfied. ASTM D 2244 permits the use of two types of instruments for measuring color: bi-directional instruments (colorimeters), and hemispherical instruments (spectrophotometers). Respondent's Exhibit 6 at 2. Bi-directional instruments are capable of performing only specular excluded testing, while hemispherical instruments are capable of performing both the specular included and specular excluded methods. Transcript at 115-18. If a hemispherical instrument is used, however, ASTM E 1331 provides further guidance: 5. Significance and Use 5.1 The most direct and accessible methods for obtaining the color coordinates of object colors are by instrumental measurement using spectrophotometers or colorimeters with either hemispherical or bidirectional optical measuring systems. This test method provides procedures for such measurement by reflectance spectrophotometry using a hemispherical optical measuring system. . . . . 5.2.2.1 For the measurement of plane-surface high-gloss specimens, the specular component should generally be excluded during the measurement. Respondent's Exhibit 2 at 1 (emphasis added).[foot #] 1 Settlement Negotiations The subject of whether the specular included test would be used came up during negotiations for the settlement agreement. Appellant's former counsel suggested language specifying the use of the specular included "modification as required when tested by Qualifying Activity Fort Belvoir, Va. US Army Research, Development and Engineering Center." Respondent's Exhibit 3 at attachment (Deposition of Wendy Bazil). Respondent's former counsel, unable to find any such "modification," crossed out appellant's suggested language. Id. at 20. The final language contained in the settlement agreement entered into by the parties stated that: 3. Calcoast will perform testing pursuant to Federal Specification TTE-489H[] and the retention letter attached hereto as Exh. 2. The retention letter referred to in the agreement stated only that: 8. The instrument used for measuring color difference must have the capability of illuminant D65 as required by TTE-489H. Id. at attachment. The capability of illuminant D65 is not an issue in this appeal. Appellant's former counsel states that she advised appellant to agree to the final language because respondent's former counsel assured her that testing the paint in accordance with specification TT-E-489-H included the specular included method of testing color change. Appellant's Exhibit 2 at 34, 37 (Deposition of Marla Moss). Respondent's former counsel denies saying this. Respondent's Exhibit 3 at 36. Appellant's former counsel does admit, however, that the intent of the settlement agreement was "to mirror the testing procedures at the time of the actual contract, so that the parties would not argue over whose lab was incompetent. It would go to a neutral testing ----------- FOOTNOTE BEGINS --------- [foot #] 1 Appellant's expert, Mr. Hugh Fairman, opined that the specular included test should have been used because, although the paint samples were glossy before weathering, they had lost some of their gloss after weathering. Transcript at 64- 66. The Board finds more credible, however, Mr. Chesonis' and Mr. Simon's testimony that the paint at issue in this case was considered "high-gloss" even after weathering. Id. at 94 ___ (Chesonis), 144-45 (Simon). In any event, ASTM E 1331 provides that, even where paint is categorized as semi-glossy, "the use of bidirectional [specular excluded] is preferred." Respondent's Exhibit 2 at 1; see also Transcript at 115. ________ ----------- FOOTNOTE ENDS ----------- laboratory, but it would be under the same testing conditions as to the time period of the contract." Appellant's Exhibit 2 at 34. Discussion Appellant moves the Board to reinstate its original appeals because the settlement agreement pursuant to which the appeals were dismissed is invalid. According to appellant, the settlement agreement is invalid because a mutual mistake of fact occurred with respect to which method of testing would be used to test the contracted-for paint for color change after accelerated weathering. In the alternative, appellant maintains that it made a unilateral mistake as to that issue which entitles appellant to void the settlement agreement. For the reasons discussed below, we deny appellant's motion and dismiss the appeals with prejudice. Mutual Mistake A mutual mistake which would entitle appellant to relief must contain the following elements: the parties were mistaken in their belief regarding a fact; the mistaken belief constituted a basic assumption underlying the contract; the mistake had a material effect on the bargain; and the contract did not put the risk of the mistake on the party seeking reformation. Dairyland Power Cooperative v. United States, 16 F.3d 1197 (Fed. Cir. 1994). Appellant's claim of mutual mistake fails for at least three reasons. First, the mistake was not mutual; respondent bargained for the paint to be tested in accordance with the applicable specification, and that is exactly what the contract requires. Respondent made no mistake as to the exact test method to be used (specular excluded) because it cared only that all tests methods used be the appropriate ones. The record clearly shows that the independent laboratory, Calcoast, did perform the appropriate test for color change after accelerated weathering. Second, appellant's mistake did not constitute a basic assumption underlying the contract. In the most basic sense, both parties got exactly what they bargained for -- an independent test performed correctly under the same rules and under the same conditions as the original test. Appellant's former counsel admits that this was the purpose of the settlement agreement. Thus, although appellant may have expected that a different method would be used for testing color change, the basic assumption underlying the bargain was correct, and the bargain was carried out. Finally, appellant is not entitled to relief from the settlement because the risk of loss was allocated to appellant. The risk of loss is allocated to a party where: he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient. Restatement (Second) of Contracts 154 (1979). Here, in addition to its own experts, appellant had access to the same documents relied upon by the independent laboratory in determining the correct testing method to be used. Instead of performing proper research, however, appellant, by its own admission, chose to rely on the assurances of opposing counsel. Although we seriously doubt that respondent's former counsel assured appellant's former counsel that the specular included test would be performed, even if she had, appellant would have been negligent in relying on her statements. Appellant was aware, at the time the agreement was made, that it had only limited knowledge with respect to the mistaken fact, but treated its knowledge as sufficient. Unilateral Mistake Appellant argues in the alternative that a unilateral mistake occurred which entitles appellant to relief. Again, we disagree. Similar to the test for mutual mistake, an aggrieved party must prove: a mistake was made at the time the contract was made; the mistake concerned a basic assumption of the contract; the mistake has a material effect on the agreed exchange of performances; the party does not bear the risk of mistake. In addition, to obtain relief for a unilateral mistake, the party must show: the effect of the mistake would make enforcement of the contract unconscionable; or the other party had reason to know of the mistake or his fault caused the mistake. Morris v. United States, 33 Fed.Cl. 733 (1995). Appellant is not entitled to relief from the settlement for unilateral mistake. As discussed in connection with appellant's claim of mutual mistake, we hold that appellant has not shown that the mistake concerned a basic assumption of the contract, or that appellant does not bear the risk of mistake. We also find that the effect of appellant's mistake does not make the contract unconscionable. The settlement agreement provides for an independent test of whether appellant's paint met the contract specifications. The method used by the independent laboratory to test color change after accelerated weathering was the correct one under the applicable specifications. Appellant has not shown that this result is unconscionable. To the contrary, it would be hard to imagine a more fair result. Finally, we disagree with appellant that GSA either knew of appellant's mistake or that GSA's fault caused the mistake. Appellant has not met its burden of showing that respondent's former counsel misled appellant's former counsel during negotiations for the settlement agreement. Decision The appeals that appellant wishes to reinstate have been settled. The settlement agreement is valid and has been performed in accordance with its terms. Appellant's motion to reinstate the appeals is denied and the appeals are hereby DISMISSED WITH PREJUDICE. _____________________ ROBERT W. PARKER Board Judge We concur: ____________________ ANTHONY S. BORWICK Board Judge ____________________ JOSEPH A. VERGILIO Board Judge