Worthington Corp. v. Consolidated Aluminum Corp., 75-3058

Decision Date20 December 1976
Docket NumberNo. 75-3058,75-3058
Citation544 F.2d 227
PartiesWORTHINGTON CORPORATION, Plaintiff-Appellee, Appellant, v. CONSOLIDATED ALUMINUM CORPORATION (formerly Gulf Coast Aluminum Corporation), and Parish of Calcasieu, State of Louisiana, Defendants-Appellants, Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Robert W. Clements, Lake Charles, La., for defendants-appellants, appellees.

Frank J. Peragine, James A. Burton, New Orleans, La., A. Lane Plauche, Lake Charles, La., for plaintiff-appellee, appellant.

Appeals from the United States District Court for the Western District of Louisiana.

Before GOLDBERG, SIMPSON and GEE, Circuit Judges.

GEE, Circuit Judge:

Relying on diversity jurisdiction, Worthington Corporation filed suit in Louisiana federal district court to recover the balance of the contract price for construction of a power plant for Consolidated Aluminum Corporation. 1 Under the contract between the parties, Worthington was responsible for both designing and constructing an isolated power plant to meet all of Consolidated's energy needs for an aluminum manufacturing complex in Lake Charles, Louisiana. In addition to the $1.1 million contract balance, Worthington also claimed entitlement to a $300,000-plus heat rate bonus provided under the contract if the efficiency of the power plant exceeded a specified energy rate.

Consolidated defended on the ground that Worthington had not substantially performed according to the contract terms, asserting "design deficiencies" in the completed plant. Consolidated also counterclaimed for damages in excess of $4 million, allegedly caused by Worthington's failure to complete the power plant upon the specified contract date. The trial judge severed the counterclaim from Worthington's demands and entered a partial summary judgment that any delay damages were limited by specific terms of the contract to liquidated damages of $500 per day, in no event to exceed $100,000.

After a two-week trial on the remaining issues, the jury returned the following answers to special interrogatories:

(1) Worthington had not fully completed all of its obligations under the contract; (2) Worthington had, however, substantially completed the contract; (3) the cost of fully completing the contract was $287,260; and (4) Worthington had earned the heat rate bonus provided in the contract. The court entered judgment on the verdict and denied the parties' motions for judgment n. o. v. and for new trial. Both parties appeal from portions of the judgment.

Consolidated urges the following grounds of error:

1. The district court erred as a matter of law when it permitted to stand the jury's determination that the contract for design and construction of the power plant had been substantially completed.

2. The trial court committed reversible error in taking from the jury the question of the adequacy of three gas jet-engine turbines on the issue of substantial completion.

3. The evidence was insufficient to support the jury verdict that Worthington had earned the heat rate bonus under the contract.

4. The district court erred in granting Worthington's Motion for Partial Summary Judgment on Consolidated's counterclaim for delay damages.

5. The trial court erred in granting legal interest from the dates the respective contract payments allegedly became due rather than from the date of judicial demand.

Worthington's appeal challenges only the $287,260 cost-of-completion offset allowed against its contract balance claim, contending that the district court erred as a matter of law when it permitted to stand the jury's determination that the cost of remedying alleged design deficiencies should be deducted from the balance of the contract price due.

Consolidated's Appeal

1. Substantial completion. Under Louisiana law, if a contractor has substantially performed a building contract, he is entitled to sue on the contract for recovery of the contract price less the cost of completion. Airco Refrigeration Service, Inc. v. Fink, 242 La. 73, 134 So.2d 880 (1961). In the instant case, Consolidated resisted Worthington's attempt to recover the remainder of the contract price by contending that Worthington had failed to substantially perform its contract obligation to design a power plant to meet the needs of Consolidated's aluminum complex for steady, dependable electrical energy. At trial, Consolidated sought to show that nineteen alleged "design deficiencies" made the power plant substantially inadequate for its intended use.

All of the experts who testified at trial about the plant's design had been directly involved to some degree with the power plant construction or operation on behalf of either Worthington or Consolidated. As to each of the nineteen claimed design deficiencies, Worthington's experts testified that each item represented a "good design" in accordance with applicable engineering principles. Consolidated experts, on the other hand, opined as to the same nineteen items that they represented bad or defective designs in violation of engineering standards. The jury resolved this sharply disputed issue in Worthington's favor, answering in response to a special interrogatory that Worthington had substantially completed the contract. As its first point of error, Consolidated contends that the trial court erred in allowing this jury finding to stand. A review of the record reveals more than enough evidence to support the jury's answer and to justify the trial court's refusal to grant judgment n. o. v. on this issue. A general sufficiency-of-the-evidence challenge to the jury's finding of substantial completion therefore fails.

Consolidated, however, raises two specific sub-points attacking the finding. First, Consolidated urges that the trial court improperly instructed the jury as to what constitutes substantial completion. In Airco Refrigeration Service, Inc. v. Fink, supra, the Louisiana Supreme Court, drawing from earlier cases, observed:

The principal question presented in this case is whether or not there has been substantial performance so as to permit recovery on the contract. This is a question of fact. Among the factors to be considered are the extent of the defect or non-performance, the degree to which the purpose of the contract is defeated, the ease of correction, and the use or benefit to the defendant of the work performed.

134 So.2d at 882. Consolidated, arguing that Airco requires equal consideration of the four listed factors, contends that the trial court placed undue emphasis upon the usefulness of the plant for its intended purpose.

At the outset we note that alleged error in jury instructions is not properly raised on appeal by a complaint of insufficient evidence to support a jury finding. However, even if the point had been properly presented, we would not hold the instruction erroneous. The challenged portion of the court's charge reads:

Under Louisiana law, substantial performance is a question of fact and a primary factor is whether the plant can be put to the use for which it was originally intended. In making this determination and the determination of whether or not there has been substantial compliance you should consider the extent of the alleged defects as compared to the total contract. You should consider the degree to which the purpose of the contract may have been defeated. You should consider the ease and the cost of corrections in relation to the entire undertaking and the use or the benefit to the owner of the work performed.

Appendix, vol. 4, at 1272-73 (emphasis added).

The Airco case relied upon by Consolidated contained no question relating to jury instructions; and contrary to Consolidated's contention, nothing in the Airco opinion indicates that the factors mentioned by the court are the exclusive considerations or have to be given equal weight in determining substantial completion. In addition, the charge employed by the court in the instant case is substantially the same as the charge in C. H. Leavell & Co. v. Board of Commissioners of Port of New Orleans, 309 F.Supp. 626, 629 (E.D.La.), aff'd, 424 F.2d 764 (5 Cir. 1970). See also Jerrie Ice Co. v. Col-Flake Corp., 174 F.Supp. 21, 25-26 (E.D.La.), aff'd, 278 F.2d 508 (5 Cir. 1960). In the absence of some case specifically questioning the correctness of these charges or some showing that they are inherently inconsistent with Airco, we see no basis for holding that the court's charge in the instant case was improper. Moreover, Consolidated's objection to the court's emphasis upon usefulness for the intended purpose is substantially weakened by Consolidated's own position on the proper form of interrogatory. The following colloquy occurred between counsel for Consolidated and the court:

MR. CLEMENTS: * * * * I did make the request of Your Honor that interrogatory number one read as follows: Was the contract by Worthington for the design and construction of the power plant completed in its entirety for the purposes for which it was intended ? And with regard to interrogatory number two: Was the contract by Worthington for the design and construction of the power plant substantially completed for the purposes for which it was intended ?

THE COURT: Well, what, in effect, you would have me to do, sir, is to add, for the purposes which intended?

MR. CLEMENTS: That's correct, Your Honor.

THE COURT: The Court feels it has taken care of that by the instructions.

Appendix, vol. 4, at 1371-72 (emphasis indicates change sought by Consolidated).

We fail to see how the court's emphasis on intended use, buried in a long jury charge, could have improperly weighted the jury's consideration more than if the language sought by Consolidated had been included in the interrogatories. It is apparent that Consolidated affirmatively sought emphasis on whether the plant could be put to its intended use. The court chose to place this requested emphasis in the charge rather than in the...

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