243 F.3d 25 (1st Cir. 2001), 00-1684, Northeast Drilling v. Inner Space Services

Docket Nº:00-1684
Citation:243 F.3d 25
Party Name:NORTHEAST DRILLING, INC., Plaintiff, Appellee, v. INNER SPACE SERVICES, INC.; NATIONAL GRANGE MUTUAL INSURANCE COMPANY, Defendants, Appellants, v. RANGER INSURANCE COMPANY, INC. Counterclaim Defendant, Appellee.
Case Date:March 16, 2001
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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243 F.3d 25 (1st Cir. 2001)

NORTHEAST DRILLING, INC., Plaintiff, Appellee,




RANGER INSURANCE COMPANY, INC. Counterclaim Defendant, Appellee.

No. 00-1684

United States Court of Appeals, First Circuit

March 16, 2001

Heard December 4, 2000


[Hon. D. Brock Hornby, U.S. District Judge]

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Richard L. Neumeier, with whom Timothy J. van der Veen and McDonough, Hacking & Neumeier, LLP, were on brief, for appellants.

Deirdre M. Smith, with whom Jerrol A. Crouter and Drummond Woodsum & MacMahon, were on brief, for appellees.

Before Selya, Circuit Judge, Stahl, Circuit Judge, and Lisi,[*] District Judge.

STAHL, Circuit Judge.

During the construction of a shipbuilding facility in Bath, Maine, a series of events, primarily attributable to the caprices of nature, delayed the schedule, forcing significant alterations to the work plan and ultimately making the project more expensive than had been anticipated. These events led to a dispute between the project's dredging subcontractor, Inner Space Services, Inc. ("ISSI"), and the drilling and blasting subcontractor it had hired, Northeast Drilling, Inc. ("NDI"), over who should bear the additional costs arising from these various matters. Following a six-day bench trial, the district court determined that NDI should receive some of the payments it claimed were due under its contract with ISSI, but that it was not entitled to the full amount because it had failed to render complete performance under its agreement with ISSI. The court also awarded attorney's fees and interest to NDI.

On appeal, ISSI challenges a number of the district court's factual findings, and argues that the court erred by declining to make certain additional findings. ISSI also assigns error to several legal determinations made by the district court, including the district court's failure to join the general contractor as a party, its refusal to grant ISSI's motion for judgment as a matter of law, and its approach to calculating damages. We affirm in all respects.

I. Background

The facts of this case are chronicled extensively in the district court opinion, Northeast Drilling, Inc. v. Inner Space Servs., Inc., No. 99-173-P-H, 2000 WL 761020 (D. Me. Mar. 31, 2000), and so we restrict our discussion to the facts bearing on this appeal. On September 21, 1998, ISSI, a Massachusetts-based firm, entered into an agreement with Atkinson Construction ("Atkinson"), the general contractor on the Bath Iron Works Land Level Facility Construction Project ("BIW Project" or "Project"). The BIW Project, which took place along the banks of the Kennebec River in Bath, Maine, involved the creation of a fifteen-acre facility enabling Bath Iron Works to build simultaneously three Navy destroyer ships and to launch those ships into a floating dry dock. To this end, ISSI was hired by Atkinson to lower the underwater rock table to a suitable elevation through drilling, blasting, and dredging.

Before submitting its bid to Atkinson, ISSI had contacted NDI, a drilling and blasting specialist headquartered in Maine, about NDI's availability to perform work on the BIW Project. After securing the subcontract with Atkinson, ISSI concluded an agreement with NDI on November 2, 1998. According to the terms of the ISSI-NDI contract, NDI was to be paid

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$1,140,000 for its drilling and blasting work on the area of submerged rock specified in the Atkinson-ISSI contract.1 For this sum, NDI agreed to perform blasting on a "6 x 6 grid, with the intent of supplying 'diggable' rock for dredging."2 Nowhere in the contract was the term "diggable" defined. The agreement further provided that if, at some point during the Project, ISSI asked NDI to perform drilling and blasting work outside of the designated area in order to achieve the desired elevation therein, NDI would receive a "proportional amount of any claims made to Atkinson by ISSI" for such additional work. Pursuant to the parties' arrangement, NDI was to be paid "if and only if ISSI receives compensation" from Atkinson for work in this "expanded" area.3 Finally, the timeline for NDI's performance under the contract was structured to account for the stringent environmental regulations protecting the Kennebec River's sturgeon population. NDI was to commence work on or about November 15, mid-November being the point at which the sturgeon typically vacate the affected area, and was to finish its operations by the end of March of the following year, when the fish were expected to return.

Unfortunately for the parties, the Kennebec River sturgeon were uncharacteristically slow to swim away from the Project area that year and, as a result, NDI did not receive authorization to begin blasting until January 7, 1999. By that time, ice floes had emerged on the surface of the river. This floating ice posed a significant challenge to NDI's operations by threatening to detach the detonation cords that NDI planned to stretch from the drilling barge to the holes in the submerged rock that contained the blast charges. In response to this problem, NDI abandoned its original blasting plan, which called for detonating several rows of explosives simultaneously, and decided to blast one row at a time. This attempt at problem-solving only created a new set of difficulties, however, as the blasting of the first row of charges broke up the rock in the surrounding area, making it nearly impossible to fulfill the contractual obligation to drill another row of holes six feet from the previous row. Accordingly, NDI proposed an alternative to ISSI: it would extend the size of the drilling and blasting grids from 6' x 6' to 6' x 7' or 6' x 8' while continuing to blast one row at a time. ISSI was reluctant to endorse this enlarged-pattern approach, as it knew that its likely byproduct would be larger pieces of rock that would be more difficult to dredge, and it expressed these concerns, in writing and in person, to NDI's president, Forrest Bradbury. Nonetheless, NDI went forward with the modified plan, believing that it had secured ISSI's acquiescence.

The ad hoc nature of this drilling and blasting technique also forced the parties to incur unexpected costs along the way. In order to account for the extra labor necessitated by the single-row, enlarged-grid blasting technique, Atkinson leased an additional drilling barge, known to the parties as the "Hughes barge," and backcharged its cost to ISSI. ISSI, in turn, deducted this cost from the amount to be paid to NDI. Additionally, NDI was called upon by ISSI to do drilling and blasting in the "expanded" area in an attempt to improve the quality of the blasted rock inside the contract area. ISSI, however, failed to submit a change-order request to Atkinson,

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as required under its agreement with the general contractor, until September 1999 -- nearly six months after NDI had demobilized from the BIW Project site.

Although NDI ultimately did complete its drilling and blasting work before the March 31 environmental window closed, the proportion of large rock it left behind made it impossible for ISSI to do dredging work using the equipment already on site.4 This forced ISSI to lease extra equipment and to spend more time dredging the area, and as a result, it was required to cancel a subsequent dredging contract in Boston, depriving it of additional revenue. Furthermore, a survey of the site commissioned by Atkinson after NDI's demobilization revealed that some of the submerged land, particularly that located in the "expanded" area, was not at the proper elevation.

Because of these problems, ISSI sent a default notice to NDI in March 1999, asserting that NDI had failed to perform its contractual obligations to provide "diggable" rock and to lower the submerged rock to the proper elevation. Although it made several payments after NDI's demobilization, ISSI refused to pay the remaining $403,431 due NDI under the initial $1.14 million contract price. ISSI also refused to absorb any of the cost of the "Hughes barge," electing to treat the full cost of approximately $126,707 as a component of the drilling and blasting operations for which NDI bore responsibility. Finally, a dispute between Atkinson and ISSI over the cost of the blasting and drilling performed by NDI in the "expanded" area resulted in NDI not receiving any payments for that work, as the contract provision dealing with work outside the target area stated that NDI would only receive a proportional share of the payments that ISSI obtained from Atkinson and ISSI did not initially seek such sums.

On April 29, 1999, NDI sued ISSI in the Superior Court of Sagadahoc County, Maine, claiming breach of contract, unjust enrichment, quantum meruit, and equitable accounting, as well as a cause of action under Maine law for delayed contractor payments, 10 M.R.S.A. § 1114(4). ISSI removed the case to federal district court based on the diversity of the parties and the existence of a controversy in the requisite amount, and on June 4, 1999, it filed an answer and counterclaim, asserting that NDI's failure to produce adequately sized rock and to lower the submerged rock to elevation amounted to negligence and a breach of the parties' contract. Both NDI and ISSI subsequently amended their complaints to add as defendants the parties' respective insurance carriers in an attempt to collect on the payment bonds that had been issued during the BIW Project.

Following a protracted discovery period, ISSI moved for partial summary judgment on NDI's unjust enrichment...

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