Blanchard v. St. Paul Fire and Marine Insurance Co., 21107

Decision Date12 March 1965
Docket Number21111.,No. 21107,21107
PartiesCharles H. BLANCHARD, d/b/a Blanchard Construction Co., Appellant, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Appellee. Charles H. BLANCHARD, d/b/a Blanchard Construction Co., Appellant, v. UNITED STATES of America et al., Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

George E. Morse, Morse & Morse, Gulfport, Miss., for appellant.

James E. Hertz, Pensacola, Fla., for appellee St. Paul Fire & Marine Ins. Co.

Lawrence R. Schnieder, Atty., Dept. of Justice, Washington, D. C., Clinton Ashmore, U. S. Atty., Tallahassee, Fla., C. W. Eggart, Jr., Asst. U. S. Atty., Pensacola, Fla., Alan S. Rosenthal, Atty., Dept. of Justice, Washington, D. C., John W. Douglas, Asst. Atty. Gen., for the United States.

Before RIVES and WISDOM, Circuit Judges, and MORGAN, District Judge.

MORGAN, District Judge.

These appeals from the District Court were consolidated for the purpose of briefing and argument, and both cases having originated from the same transaction, in the interest of clarity and expediency, this Court will consider both appeals in this Opinion.1

Both cases grow out of a contract entered into on August 25, 1960, between Charles H. Blanchard, d/b/a Blanchard Construction Company (hereinafter referred to as "Blanchard") and the United States of America for the repair and modernization of airmen dormitories at Keesler Air Force Base, Biloxi, Mississippi. St. Paul Fire and Marine Insurance Company (hereinafter called "St. Paul") was the surety on Blanchard's performance bond. The contract was to be completed in 240 days, or by May 5, 1961. However, the completion date was extended by the United States until August 20, 1961. On July 18, 1961, the United States Contracting Officer terminated the contract for default in performance. Blanchard appealed to the Armed Services Board of Contract Appeals (hereinafter referred to as ASBCA).

Immediately upon the termination, the United States called upon St. Paul, as surety for Blanchard, to complete the contract. In order to mitigate the damages, St. Paul took over the contract for completion. In addition to the demand for takeover, St. Paul had the right to assume the contract under its Indemnity Agreement with Blanchard which contained a provision:

"The company shall have the right at its option and in its sole discretion —
"(a) To take possession of all or any part of the work of the said contract whenever, in its sole opinion, such action is desirable or necessary, and at the expense of the undersigned to complete or to contract for the completion of the same, or to consent to the reletting or completion thereof by the owner or obligee in said bond."

St. Paul's right under this contract provision is not questioned.

At the time St. Paul took over the project, Blanchard furnished St. Paul with a list of unpaid labor and material charges in the amount of $277,482.31 which St. Paul paid. St. Paul then completed the contract and did no work other than the work required by the contract between Blanchard and the United States.

On January 3, 1962, Blanchard filed suit against St. Paul in the District Court of the Northern District of Florida for an accounting. Blanchard alleged that there was $400,000.00 due on his contract with the United States and that St. Paul should have been able to complete the contract for $250,000.00, and he demanded in the action that St. Paul be required to account to him for the difference. St. Paul filed its answer denying the allegations of negligence and affirmatively pleaded that an accounting had been furnished Blanchard, and that the accounting showed Blanchard was indebted to St. Paul in the amount of $84,871.17, and St. Paul filed a counterclaim for this amount due on the basis of the Indemnity Contract between the parties.

Blanchard failed to file an answer to the counterclaim and, at the pre-trial hearing on April 17, 1962, was granted additional time by the District Court in which to make a responsive pleading. Blanchard then filed a motion to dismiss, motion for more definite statement, a motion to strike the counterclaim, and a motion for change of venue on the grounds that the action involved an action on a bond under the Miller Act, a reply to the counterclaim, and a motion for production of documents. Upon consideration of these motions, the Trial Court denied the motion to dismiss, the motion for change of venue, the motion for more definite statement, the motion to strike, and granted the motion for production of documents.

The trial of the case had been set at pre-trial on April 17, 1962, for May 22, 1962, and the Trial Court on May 1, 1962, confirmed the trial date. On May 7, 1962, Blanchard filed a motion for continuance on the grounds that the hearing in an action brought by him against the United States growing out of its contract termination was set for May 14, 1962, before ASBCA, and that due to the length of such trials, he would not be able to be present at the scheduled trial. The Trial Court continued the case, and trial was reset for August 20, 1962. Blanchard filed on August 16, 1962, another motion for continuance alleging that he was presently in litigation with the United States, that there were necessary documents to this litigation on file with ASBCA which were not available, and that he had pending certain other litigation in the Florida State Circuit Court on the date of August 20, 1962. The District Court denied Blanchard's motion for continuance and held that Blanchard's allegations in his motion were without merit, that the action was based on Blanchard's suit for accounting and St. Paul's countersuit on an Indemnity Contract and the case was set for trial. On August 20, 1962, the case went to trial on Blanchard's complaint for accounting and St. Paul's counterclaim on the contract for indemnity. Blanchard did not attend the trial. The Court, after hearing evidence, made its Findings of Fact and Conclusions of Law, and entered judgment for St. Paul on its counterclaim for the sum of $71,840.80 and $8,000.00 as attorneys' fees in accordance with the contract of indemnity. Blanchard filed a motion for a new trial on August 31, 1962, which was denied on September 13, 1962.

On September 14, 1962, the Court entered an order acknowledging the filing of Blanchard's "Amendment for a New Trial" ordering that said amendment be considered as a separate and distinct motion for a new trial. This "Amendment for a New Trial" filed by Blanchard was based on the grounds that ASBCA had ruled in his favor against the United States in his administrative proceedings. Blanchard's motion to withdraw his motion for a new trial was accepted by the Court, and the Court stayed execution of judgment until August 25, 1962, so that the Court could notify the United States Attorney in the event the United States had any interest in the case, and provided further that Blanchard refrain from transferring or encumbering any assets until satisfaction of the judgment or his posting of a bond. A bond was posted and then Blanchard filed a motion for relief from judgment under Rule 60(b) (4), (5) and (6) of the Federal Rules of Civil Procedure.

In his motion under Rule 60(b), Blanchard alleged that the judgment was void; that a prior decision being a quasi judgment of a quasi judicial body upon which the judgment entered in the cause has been reversed and/or it is no longer equitable that the judgment entered therein should have prospective application; and that the judgment was entered without the presence of a necessary and indispensable party, to-wit: the United States.

After hearing argument of counsel on Blanchard's motion for relief under the provisions of Rule 60(b), Federal Rules of Civil Procedure, the motion was denied on October 24, 1962, but the Court left in effect the stay of execution and bond in order that Blanchard could proceed with his litigation against the United States in the administrative proceeding.

On December 21, 1962, subsequent to the denial of his motion for relief under Rule 60(b) (4), (5) and (6), Federal Rules of Civil Procedure, Blanchard filed a new action against the United States and St. Paul in the District Court for the Northern District of Florida upon the Federal Tort Claims Act (28 U.S.C. §§ 1346(b), 2671 et seq.). In general, against the United States, Blanchard charged the United States and its servants with negligence, and claimed that, because of the tortious acts of the United States, St. Paul, as surety for Blanchard, was called upon to complete the contract and, as a result, St. Paul had a claim against Blanchard for a portion of the damages sought by Blanchard against the United States. A separate cause of action was filed against St. Paul for negligence in performing Blanchard's contract and interfering with the performance thereof. The complaint sought $210,140.84 as judgment against the United States and also demanded a like amount against St. Paul.

St. Paul filed a motion to dismiss the complaint against it on the grounds that the Court had previously entered a judgment for St. Paul based on the same facts. St. Paul also filed a counterclaim against Blanchard under the Indemnity Agreement for damages arising out of payments it had made in behalf of Blanchard since entry of the original judgment. No answer has been filed by Blanchard to the counterclaim.

The United States moved to dismiss Blanchard's complaint upon the ground that the District Court lacked jurisdiction over the subject matter, and that the complaint failed to state a claim upon which relief could be granted.2 Thereafter, the Court entered an order granting the motion to dismiss of both the United States and St. Paul.

Blanchard then filed appeals on both cases. The questions presented are whether: (1) the District Court erred in Case No. 21,107 by refusing Blanchard relief from the judgment of St. Paul under...

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