370 F.2d 733 (5th Cir. 1967), 23001, Blount Bros. Corp. v. Reliance Ins. Co.

Docket Nº:23001.
Citation:370 F.2d 733
Party Name:BLOUNT BROTHERS CORPORATION, Appellant, v. RELIANCE INSURANCE COMPANY, Appellee.
Case Date:January 11, 1967
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 733

370 F.2d 733 (5th Cir. 1967)

BLOUNT BROTHERS CORPORATION, Appellant,

v.

RELIANCE INSURANCE COMPANY, Appellee.

No. 23001.

United States Court of Appeals, Fifth Circuit.

January 11, 1967

Frank H. McFadden, Allen Poppleton, Bradley, Arant, Rose & White, Birmingham, Ala., for appellant.

Robert C. Black, Montgomery, Ala., Edward Gallagher, Washington, D.C., Hill, Hill, Stovall & Carter, Montgomery, Ala., for appellee.

Before TUTTLE, Chief Judge, and THORNBERRY and GOLDBERG, Circuit Judges.

TUTTLE, Chief Judge:

By this appeal, the appellant attacks the failure of the trial court to direct a verdict in its favor, and, in the alternative, the trial court's failure to grant a judgment notwithstanding the verdict, after a jury had found in favor of the appellee. F.R.Civ.P., Rule 50(a) and (b).

Page 734

There is no dispute as to the background facts leading up to the lawsuit. Appellant further contends that there was no disputed issue that could properly be presented to the jury as to its theory of the case. This is that appellee Insurance Company's principal, the William Dunbar Co., Inc., a painting contractor under contract with appellant, the general contractor, on a nuclear reactor facility being built for the United States Government in Montgomery County, Maryland, had failed to perform certain essential obligations of this contract which warranted termination of the contract by Blount and made the principal, and thus its surety, liable for the damages resulting from such termination.

On April 25, 1963, appellant Blount Brothers Corporation entered into a contract with the United States of America, acting through the General Services Administration, for the construction of a nuclear reactor facility in Montgomery County, Maryland. This facility consisted of a nuclear reactor, located in a concrete containment building, and a supporting laboratory and office wing. On August 2, 1963, Blount entered into a subcontract with the William Dunbar Company, Inc., by the terms of which Dunbar agreed to perform certain portions of the prime contract, specifically, the application of special coatings in the nuclear reactor building and the painting in the laboratory and administrative buildings. The Standard Accident Insurance Company was surety on Dunbar's bond. Standard was later merged with Reliance Insurance Company, which assumed all of the other company's obligations. By November 23, 1964, Blount, purporting to act pursuant to the authority of Art. XIII(a), of the general terms of the contract, notified Dunbar of a termination of the subcontract. Thereupon, Blount found another subcontractor who was engaged to complete the work (a substantial part) not already finished by Dunbar, and filed this suit against the bonding company to recover damages by reason of the fact that the subsequent contract cost substantially more than the unpaid balance due on the original subcontract with Dunbar.

The appellant's brief seeks too glibly to pitch the appellant's case on what it contends to be judicial admissions by appellee's counsel that the condition of the bond had been breached; that Mr. James Dunbar, president of the bonding company's principal, had admitted in open court on the trial of the case, that conditions of the bond had been broken; and then, in attempting to assert that there were no substantial issues of fact to be passed on by the jury, appellant in its brief, did not outline the testimony most strongly in favor of its opponent, which, of course, is the approach that must be taken to the evidence by one challenging the right of the court to submit the case to the jury for its consideration. The appellee, on the other hand, too blandly asserts that the trial court did not err in refusing to take the case from the jury, because the jury has decided all these questions. The brief says, 'A reargument of these questions before this court would not be justified unless the court wishes to consider the case de novo, which it can hardly afford to do.'

As might be expected from the fact that the work related to rooms to be used in connection with the housing of a nuclear reactor, the wall, floor and ceiling coverings, the subject of this contract, were of unusual (called by some 'sophisticated') coverings, quite different from ordinary interior house paint. Nevertheless, we must view the case in light of the fact that GSA desired to have this building completed exactly as prescribed in the specifications; Blount Brothers Company undertook to complete it in accordance with the same specifications; and Dunbar assumed the obligation to perform those parts of the job as fell within its contract to furnish the coverings. Of course, as required by the statute, the contractor and all of the subcontractors, including Dunbar, gave a performance bond to guarantee 'all the

Page 735

undertakings, covenants, terms, conditions, and agreements * * *' of their respective contracts.

The state of the briefs, referred to above, has made it necessary for us to read the entire transcript of the evidence and to study the more than one hundred documentary exhibits introduced on the trial on order to test the appellant's contention that through counsel's admission during the trial that Dunbar had not literally complied with each of the requirements of the subcontract, and in light of Mr. James Dunbar's testimony to the same effect, there was no substantial evidence of any fact which, if accepted as true, would legally excuse non-compliance with the written terms of the contract.

The historical facts relating to the status of the affair at the time of the letter of termination dated November 23, 1964, can be fairly simply stated. The subcontract required something unusual in the way of performance. It went much further than requiring that Dunbar cover the walls with a certain specified quality of wall coverings. It required, among other things, that, as to some of the work, the material to be used would have to be approved before application and it required, further, that Dunbar be approved by the manufacturer of the material as a qualified applicator, and that Dunbar also be approved by the GSA, as an approved applicator. 1 These requirements applied to four of the thirteen types of materials that were to be used in satisfaction of the painting and covering subcontract. The types were numbered 1 to 13, but the materials required under categories 1 through 9 were promptly approved. The difficulty arose from the ultimate failure, by Dunbar, at the time of termination, to commence applying item 10 and to obtain approval of the unusual, but somewhat less sophisticated materials required for items 11, 12 and 13, and the approval of the particular materials to be used to satisfy these requirements.

Type 10, as required by the specifications, is an elastomeric decontaminable coating for the interior surfaces of the exterior walls of the reactor area. It required several pages of the specifications adequately to set forth the specifications for type 10. It required 4 other pages to specify the items which Dunbar was required to submit to the government in connection with obtaining approval of a proposed manufacturer of special coating type 10.

Types 11, 12 and 13 are non-elastomeric decontaminable coatings intended for ceilings, walls and metal surfaces in the reactor area. It required four pages of the specifications to set forth the requirements as to these types, and six additional pages to specify the items which Dunbar was required to submit to the government in connection with obtaining approval of a proposed manufacturer of special coatings of types 11, 12 and 13. In the later discussion we are dealing only with types 10 through 13.

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On February 14, 1964, six months after the contract was signed, Blount wrote to Dunbar requesting strict compliance with these specifications. By a letter of June 6, 1964, General Services Administration criticised Blount for the delay and Blount in turn called this to the attention of Dunbar. In the meantime, Dunbar was submitting samples, together with some of the required supporting data in an effort to meet the specification...

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