Ramada Development Co. v. Rauch

• Decision Date: 14 May 1981
• Docket Number: No. 78-3773,78-3773
• Citation: 644 F.2d 1097
• Parties: 8 Fed. R. Evid. Serv. 405 RAMADA DEVELOPMENT COMPANY, Plaintiff-Appellee, v. Martin W. RAUCH et al., Defendants-Third Party Plaintiffs-Appellants, J. Stewart Stein, Third Party Defendant. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1097

644 F.2d 1097

8 Fed. R. Evid. Serv. 405

RAMADA DEVELOPMENT COMPANY, Plaintiff-Appellee, v. Martin W. RAUCH et al., Defendants-Third Party Plaintiffs-Appellants J. Stewart Stein, Third Party Defendant.

No. 78-3773.

United States Court of Appeals, Fifth Circuit.

Unit B

May 14, 1981.

Richard H. Frank, Mark F. Kelly, Tampa, Fla., for defendants-third party plaintiffs-appellants.

Carlton, Fields, Ward, Emmanuel Smith & Cutler, P.A., Edward C. Adkins, James M. Landis, Tampa, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before TUTTLE, RONEY and VANCE, Circuit Judges.

TUTTLE, Circuit Judge:

On December 13, 1972, Martin Rauch signed a contract in which the Ramada Development Company agreed to design, furnish, and construct a 160-unit Ramada Inn Motor Hotel and Restaurant in Venice, Florida. The contract allowed for progress payments, and disbursement of progress payments were made by Rauch's lender, First Federal Savings and Loan Association of Sarasota.

The construction was commenced shortly after the signing of the contract. By January 25, 1974, the construction of the motel was, according to one witness, "substantially complete" in accordance with the construction contract. "Substantial completion" as defined in the "specifications," meant the project was sufficiently complete for Rauch to occupy all or part of the motel. All that remained for completion were the "punch list" items a list of defects compiled by Rauch and given to Ramada. Rauch occupied most of the motel using the restaurant and renting rooms. A Ramada construction report indicates that on February 1, 1974, Rauch made a spot inspection and was "very pleased" with the motel and had "no complaints." The motel was furnished, and the inn supplies were substantially on the premises. But at some time Rauch became dissatisfied with the motel or the furnishings and supplies. Although the contract demanded that the final payment was due upon "substantial completion," Rauch admittedly refused to make the final payment. According to one witness, Rauch refused to endorse the lender's check that was jointly payable to Ramada and Rauch. Rauch claims that he refused to make the final payment because he was not yet satisfied with the work while Ramada claims that by that time Rauch had not made any complaints beyond the usual "punch list" items. On February 19, Ramada's representative responsible for correction of "punch list" items left the project to the subcontractors who had agreed to complete the punch list work.

With the final construction payment stopped and the contract balance for the furnishings and inn supplies unpaid, the present dispute crystalized. On January 31, 1975, approximately one year after Rauch occupied the motel and refused to make further payments to Ramada, Ramada brought this diversity action against Rauch for the balance due under the contract for the construction, furnishing and supplying of the motel. ¹ Ramada sought to establish a lien on the property and asked that, in event of Rauch's failure to pay the lienable amounts owed, the court foreclose upon the property. The defendant answered, denying liability and alleging a counterclaim against Ramada for failure to perform according to the contract and for negligence in planning and construction of the project. ² In addition, Rauch denied that Ramada had satisfied the statutory prerequisites for the establishment of its lien claim.

Beginning on September 5, 1978, the main claims and the counterclaims were tried to a jury. In answering a set of special interrogatories, the jury, on September 22, 1978, gave a verdict that was basically favorable to Ramada. The jury found that Ramada had substantially performed its construction obligations and should receive $79,902.10 as the final payment for construction. Although the jury found that Rauch was damaged by a failure of Ramada to completely finish the construction work, the jury believed that Rauch should receive no money because he had prevented Ramada from completing the work. The jury further found that Ramada had substantially furnished the motel and delivered the inn supplies as required under the contract. Rauch, according to the jury, owed Ramada $373,933.38 and $73,018.68 respectively as the unpaid balance for those two items. Following this verdict, on November 6, 1978, the district court found that plaintiff had a valid mechanic's lien under Florida law for $288,042.88, plus prejudgment interest of $145,587.21 and attorneys fees of $175,000 also secured by the lien. In addition, the district court ordered the property sold at public auction if Rauch did not pay $470,042.88 to Ramada. ³

From this disposition by the district court, Rauch appeals. He alleges several claims relating to the liability issue and in addition questions whether Ramada complied with the Florida lien law. We find that Rauch's claims respecting the liability portion of the judgment are without merit. On the other hand, we believe that Rauch's appeal has exposed a problem with respect to the validity of the lien. Accordingly we reverse and remand that portion of the case to the district court for further proceedings.

I. Liability

Rauch raises four issues concerning the district court's submission of the case to the jury and one issue regarding excluded evidence.

A. Requested Charge on Negligence

Rauch argues first that the district court erred by refusing to give his requested charge on the plaintiff's alleged negligence. The district court charged the jury regarding Rauch's breach of contract counterclaim but refused to instruct the jury regarding negligence despite Rauch's request for a charge on negligence. The district court, after a motion for a new trial, stated that a separate charge on negligence was unnecessary because the duty owed Rauch under the contract was broader than any duty owed under a tort theory and therefore "the negligence claim was subsumed by the breach of contract claim."

We affirm the district court. Florida law may recognize the possibility of alternative claims of negligence and breach

                of contract under circumstances such as are present in this case.  4  Such authority, however, does not necessarily control this question.  Rauch draws his primary support from Ajax Hardware Manufacturing Corp. v. Industrial Plants Corp., 569 F.2d 181 (2d Cir. 1977).  The Ajax court found error in a district court's dismissal of a negligence claim that the lower court felt was " 'completely merged in the alleged breach of contract.' "  Id. at 185.  Rauch offers no additional authority for his position and stands on his claim that he is entitled to submit to the jury any legal theory sufficiently based in the evidence.  This proposition, although attractive, cannot mean that the district court's refusal to instruct on negligence constituted reversible error.  All relevant facts were submitted to the jury.  Any duty owed Rauch arose out of the contract and the jury found that Ramada had not breached its contract with Rauch.  Any negligent tort committed by Ramada would necessarily have been a breach of the contract.  Cf. Richardson v. City of Conroe, 582 F.2d 19, 19-20 (5th Cir. 1978) (not reversible error to refuse to charge jury that police officers would be liable under § 1983 for "constitutional torts" of gross negligence where court also charged jury that officers could not be liable for their actions in good faith).  And the jury decided these factual issues against Rauch.  Indeed, Rauch has failed both in his brief and at oral argument, to describe any prejudice resulting from the district court's refusal to submit a charge regarding a distinct legal theory that is applicable to the nucleus of facts before the jury.  In some cases, the withholding of a charge of negligence may make a difference.  For example, actions constituting a breach of contract may also constitute a tort for which punitive damages are recoverable, see Nicholas v. Miami Burglar Alarm Co., 339 So.2d 175 (Fla.1976), or a contract action may be time barred, whereas the tort statute of limitations may be unexpired, having begun to run at a later date.  See Victorson v. Bock Laundry Machine Co., 37 N.Y.2d 395, 373 N.Y.S.2d 39, 335 N.E.2d 275 (1975).  The Ajax court faced a situation where the availability of a negligence theory did potentially make a difference.  Judge Oakes, in a concurring opinion, noted that the reinstatement of the negligence claim made possible an award of punitive damages.  569 F.2d at 187.  Rauch's inability to point to any such material prejudice from the district court's actions convinces us that we need not reverse the district court
                

B. Instruction on Prevention of Performance

Rauch next claims that the district court incorrectly instructed the jury on the issue of prevention of performance. The district court submitted to the jury interrogatories permitting a finding that if Ramada failed to fully perform its part of the contract, the jury might still consider whether Rauch had prevented completion of the contract. See generally Nitron, Inc. v. M/V Cretan Life, 599 F.2d 1359, 1371 (5th Cir. 1979); Ballard v. El Dorado Tire Co., 512 F.2d 901, 907 (5th Cir. 1975). On this issue, the district court instructed the jury that:

So in this case, if you find from a preponderance of the evidence that the Plaintiff, including Plaintiff subcontractors, was ready, willing and able to perform its contractual obligations, but the Defendants did something which effectively hindered, obstructed or prevented the Plaintiff from so doing, then the Defendants cannot recover damages for that failure, because they, themselves, became charged under the law with responsibility for it.

To recapitulate for a moment, if you find that the Plaintiff substantially performed the construction portion of the (emphasis added). Rauch contends that these instructions potentially...