MRT Const. Inc. v. Hardrives, Inc., 97-15983
| Decision Date | 14 May 1998 |
| Docket Number | No. 97-15983,97-15983 |
| Citation | 158 F.3d 478 |
| Parties | 98 Cal. Daily Op. Serv. 7820, 98 Daily Journal D.A.R. 10,869 MRT CONSTRUCTION INC., a Texas corporation, Plaintiff-Appellant, v. HARDRIVES, INC., a Minnesota corporation, dba U.S. Industrial Constructors, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Steven A. Hirsch, Bryan Cave, Phoenix, AZ; David C. Romm, Watt, Tieder & Hoffar, McLean, VA, for plaintiff-appellant.
Graeme Hancock, Fennemore Craig, Phoenix, AZ, for defendant-appellee.
Appeal from the United States District Court for the District of Arizona; Stephen M. McNamee, District Judge, Presiding. D.C. No. CV-93-01678-SMM.
Before: LAY, ** KOZINSKI and T.G. NELSON, Circuit Judges.
In May 1986, the U.S. Department of the Interior, Bureau of Reclamation ("BOR"), awarded Hardrives, Inc. ("Hardrives") a contract to construct a canal in Arizona. The contract incorporates the Contract Disputes Act, 41 U.S.C. §§ 601-613 ("CDA"). The contract terms allow Hardrives to pursue claims against the government for government-caused delays and errors, but also require Hardrives to complete the canal project on time without regard to any government error or misconduct.
In June 1986, Hardrives and MRT Construction, Inc. ("MRT") entered into a subcontract for specified work on the canal, including a major portion of the earthwork on the project. The subcontract requires MRT to complete its assigned work on schedule without regard to government errors. Further, under the subcontract, MRT is not entitled to payment for any work unless and until the government pays Hardrives.
The government furnished Hardrives with plans and specifications for the canal project. These plans and specifications contained several defects. MRT claims these defects caused it significant delays and cost overruns. On April 9, 1987, MRT demanded payment from Hardrives for increased costs. Hardrives claims MRT breached the contract on or around this same date by abandoning the canal project and failing to complete its assigned earthwork.
On April 15, 1987, Hardrives submitted a claim to the BOR, seeking to recover increased costs resulting from the defects in the government's specifications. This claim included MRT's claim as well as other amounts expended by Hardrives. After the BOR rejected or refused to rule on Hardrives' claims, Hardrives appealed to the Interior Board of Contract Appeals ("IBCA"). As of July 1987, Hardrives refused to make any further payments to MRT until all claims between Hardrives and the government were settled. Hardrives ultimately completed MRT's work.
In 1988, MRT sued Hardrives 1 in federal district court, claiming Hardrives breached the subcontract by failing to pay MRT in full. Following a bench trial, the district court 2 issued judgment for Hardrives. See MRT Constr., Inc. v. Hardrives, Inc., No. CIV 88-1768-PHX-WPC ("MRT I" ). The court found Hardrives had not breached the subcontract by failing to pay MRT, because the subcontract stated
MRT was entitled to payment only after the government had paid Hardrives. The court determined Hardrives had paid MRT in full for all amounts the government had paid to Hardrives as of the date of trial. Further, the court concluded MRT breached the subcontract by failing to complete the earthwork, and MRT owed Hardrives a total of $141,535. On May 19, 1992, the court awarded Hardrives judgment against MRT for $141,535 plus interest. The court also awarded Hardrives $291,826 in attorneys' fees and litigation expenses. 3
Prior to the decision in MRT I, the government filed an action in federal district court against Hardrives, alleging Hardrives' claims for increased costs related to the canal project violated the fraudulent claims provision of the CDA, 41 U.S.C. § 604, and the False Claims Act, 31 U.S.C. §§ 3729-3733. MRT cooperated with the government, and MRT's president testified against Hardrives. At the close of the government's evidence, the district court dismissed the case.
Shortly after it filed the fraud action against Hardrives, the government moved to intervene in Hardrives' claims before the IBCA and asked the IBCA to stay Hardrives' appeals. The IBCA granted the government's motion and stayed all proceedings on Hardrives' claims.
Upon dismissal of the government's fraud case, the IBCA proceeding resumed, and the IBCA held a hearing on Hardrives' claims. MRT attempted to intervene, asserting: (1) it did not and would not support Hardrives' claims; (2) it would not support the claim because Hardrives notified MRT that pursuant to the subcontract, Hardrives would seek a payment of attorneys' fees out of any recovery attributable to MRT; and (3) it had not released Hardrives from any claims. On August 4, 1993, the IBCA awarded Hardrives $3,488,360 for additional costs on the canal project. The IBCA also awarded Hardrives interest on those costs. The government paid Hardrives on September 3, 1993.
The Present Case (MRT II)
On August 26, 1993, MRT filed an action in federal district court seeking, among other things, an equitable accounting for the money Hardrives would receive as a result of the IBCA judgment, a lien on the IBCA award, and a declaratory judgment of the parties' rights concerning the IBCA award. Before trial, the district court 4 made several rulings, including:
1) With respect to any off-sets to which MRT is entitled arising from the costs Hardrives recovered from the IBCA, Hardrives may be entitled to assert a deduction for attorneys' fees and costs incurred in the IBCA proceedings and the earlier fraud litigation;
2) MRT is not entitled to any portion of the interest awarded to Hardrives in the IBCA proceeding;
3) The judgment rendered in MRT I is a final judgment, the factual determinations reached in that case bind the court in this case, and MRT is therefore precluded from relitigating factual issues determined in that action.
See MRT Constr., Inc. v. Hardrives, Inc., No. CV 93-1678-PHX-SMM, slip op. at 2-3 (D.Ariz. Apr. 28, 1997). Following trial, and based upon the accounting set forth below, the district court granted judgment in favor of Hardrives for $217,676 plus fees, costs, interest, and post-judgment interest.
5. According to Hardrives, this figure is an equitable multiplier used by the trial court. MRT urges the figure is based on the subcontract. Regardless of the figure's origin, neither MRT nor Hardrives dispute the percentage used.
A. Total of IBCA award to Hardrives on September 1, 1993: $2,044,050
(1) 66% 5 of IBCA award due MRT from Hardrives $1,322,673 (sic)*
*Although the district court, as well as both parties show that this figure is $1,322,673, our computation shows that 66% of $2,044,050 is $1,349,073. Rather than alter this figure and the judgment which reflects this erroneous calculation, we prefer to leave any amendment to the judgment reflecting the proper computation to the district court.
(2) Less amount Hardrives paid to complete MRT's $1,220,069 (sic)*
contractual duties
Subtotal due MRT from Hardrives $ 102,604 (sic)*
B. Total amount of attorney fees paid by Hardrives to $1,449,472
pursue IBCA and fraud suit
(1) 66% of total fees attributable to MRT claims due $ 956,652
Hardrives
(2) 66% of net amount of EAJA award ($903,000, p 50) $ 595,980
due MRT from Hardrives for fees and costs at
statutory amount
(3) Court's disallowance of Sinj[e]m Service claim $ 60,750
Subtotal due MRT from Hardrives $ 299,922 (sic)*
C. Miscellaneous costs
(1) Equipment utilization adjustment and other $ 8,515
equipment costs due MRT from Hardrives
(2) Amount due under paragraph 54(e) $ 26,620
(3) Amount due under Paragraph 54(f) $ 2,253
Subtotal due MRT from Hardrives $ 20,358
Total amount $ 217,676 (sic)*
MRT appeals.
Alleged errors in the Equitable Accounting
MRT claims the district court inserted two erroneous figures in its equitable accounting formula. First, MRT claims the court incorrectly inserted $2,044,050 as the amount of the September 1993 IBCA award to Hardrives. MRT claims the correct amount of the IBCA award is $3,488,260, and the IBCA's decision identifies this figure as the proper amount. In response, Hardrives contends the figure of $2,044,050 is correct and represents the portion of the IBCA award that related to MRT's earthwork on the canal project. Hardrives concedes the trial court's labeling could have been clearer in that this figure could have been labeled "total of IBCA award to Hardrives on September 1, 1993, for MRT related work." Hardrives Br. at 25.
In MRT's case to the trial court on the issue of MRT's total expenditures on the project, MRT presented the testimony of its accounting expert, Patricia Mensch. During her testimony, Mensch specifically indicated that MRT's costs related to the project totaled $2,001,409. See Excerpts of R. at 125; Supplemental Excerpts of R. at tab 5. This figure was slightly lower than the figure Hardrives' accounting expert identified as MRT's costs. MRT made no allegations during trial or in any post-trial motion 6 that $3,488,260 somehow represented its costs related to the project.
To now insert the figure of $3,488,260 into the court's accounting formula--a formula MRT does not contest--would result in MRT recovering more than its claimed costs. Neither the parties nor the district court intended such a result. Based on our review of the record, we conclude the figure the district court inserted accurately reflects the portion of the IBCA award to Hardrives that is...
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