B & J Crane and Rigging, Inc. v. Beker Resources Corp.

• Decision Date: 01 December 1978
• Docket Number: No. 77-1004,77-1004
• Citation: 587 F.2d 1065
• Parties: B & J CRANE AND RIGGING, INC., a Texas Corporation, Plaintiff-Appellee, v. BEKER RESOURCES CORPORATION, a Delaware Corporation, Defendant-Appellant, and Deltak Corporation, a Minnesota Corporation, Defendant-Appellee, and John Williams, Individually, Third Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1065

587 F.2d 1065

B & J CRANE AND RIGGING, INC., a Texas Corporation, Plaintiff-Appellee, v. BEKER RESOURCES CORPORATION, a Delaware Corporation Defendant-Appellant and Deltak Corporation, a Minnesota Corporation, Defendant-Appellee and John Williams, Individually, Third Party Defendant-Appellee.

No. 77-1004.

United States Court of Appeals Tenth Circuit.

Argued May 9, 1978.

Decided Dec. 1, 1978.

W. T. Martin, Jr. of Matkins & Martin, Carlsbad, N. M., for defendant-appellant Beker Resources Corp.

Henry G. Coors, IV, Albuquerque, N. M. (with W. John Brennan, Albuquerque, N. M., on the brief), of Coors, Singer & Broullire, Albuquerque, N. M., for plaintiff-appellee B & J Crane and Rigging, Inc. James L. Dow of Dow & Feezer, P. A., Carlsbad, N. M., for defendant-appellee Deltak Corp.

Before BARRETT and McKAY, Circuit Judges, and BRATTON, District Judge. ^*

McKAY, Circuit Judge.

This diversity action began when B & J Crane and Rigging, Inc. sought to foreclose a lien on property owned by Beker Resources Corporation. In addition, a dispute between Beker and Deltak Corporation was litigated when Deltak, another lien claimant, was joined as a defendant. Since the two lien disputes turn on different underlying obligations, the two controversies can be dealt with separately.

THE B & J CASE

Beker desired to move a chemical facility from Illinois to New Mexico. To that end it entered into two written contracts with B & J. One was an $85,000 fixed sum contract for removing and shipping a large converter. The other was a cost plus five percent contract for the balance of the disassembly project. The first contract estimated the converter's weight at 250 tons. However, its true weight was 360 tons. ¹ B & J discovered the weight discrepancy when its equipment, capable of handling 250 tons, could not do the job. Once the true facts relating to weight became known, Beker's construction supervisor authorized B & J to obtain alternate equipment and to accomplish the task under the cost plus five percent contract. B & J then disassembled its original rigging and completed the task with new rigging.

When B & J sent invoices totaling $85,000 under the fixed sum contract, both Beker's construction supervisor and controller at first refused to certify them because of concerns about duplicate payment. Shortly before he left Beker's employ, however, the supervisor instructed the controller to pay the $85,000. The controller declined to comply but instead sent the invoices to Beker's home office, which authorized payment. Beker paid the invoices and also paid the full amount due under the cost plus five contract. ²

During the course of dismantling and shipping the plant, the parties entered into a third contract under which B & J agreed to install the converter in New Mexico for $55,000. Three days later, Beker, knowing that B & J was not licensed to contract in New Mexico, initiated modifications in the contract in order to avoid possible violations of New Mexico law.

When Beker refused to pay the amount due under this third contract, B & J filed a lien and sued to foreclose. Beker answered, asserting violation of the New Mexico contracting laws as a bar. Beker further alleged fraudulent collusion between its construction supervisor and B & J in the negotiation of the contract, and counterclaimed for recovery of moneys paid under the first two contracts alleging the same fraudulent collusion. The trial court held for B & J on its claim and against Beker on its counterclaim. Beker brought this appeal.

Beker contends that certain of the trial court's findings of fact are clearly erroneous, either because they result from incorrect perceptions of the law of fraud, or because they are unsupported by the evidence. The core of Beker's fraud claim is its evidence that B & J paid at least $11,000 directly to the construction supervisor who acted for Beker in negotiations for all three contracts. Beker claims these payments compromised the supervisor's loyalty and business judgment in B & J's favor. Beker seeks to draw additional inferences of fraud Although there was disputed evidence as to whether the payments to Beker's supervisor were "finder's fees" for tips on jobs with other firms, there is no other evidence to support a finding of fraud. On the other hand, the record supports an inference that the weight of the converter was misrepresented by Beker and that B & J substantially performed its first contract to remove the converter before the true weight was discovered. The record indicates that Beker's controller was aware of this and the consequent requirement that B & J perform the removal with different materials and methods. It further indicates that B & J's records were examined before the "duplicate" payments were authorized. The prices involved were not such as to compel a finding of fraud. ³ The record establishes that Beker's misrepresentation of weight excused further performance under the initial fixed sum contract and that Beker agreed to pay both the fixed sum and the cost plus five percent in order to have the work completed.

from the duplicate payments for work on removing the converter and from the supervisor's direction to the controller to pay the $85,000 within days of his leaving the company's employ. Beker also suggests some inference of fraud should be drawn from the contract prices themselves. After reviewing the record on these contentions, we are not left with the "definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948).

Beker's claim that the action on the third contract is barred by New Mexico law is not supported by the facts or the New Mexico cases. In support of his contention, Beker refers to N.M.Stat.Ann. §§ 67-35-1 to 67-35-63 (1953), which requires certain contractors to be licensed. But the testimony at trial showed that Beker initiated changes in the form of the third contract in order to take it out from under the licensing statute. The trial court concluded that the revised contract was a rental and consulting contract, and therefore exempt from the statute. It also found that Beker waived the provisions of N.M.Stat.Ann. §§ 67-35-1 to 67-35-63 (1953). In light of the testimony at trial, we cannot say that these findings are clearly erroneous. Furthermore, the New Mexico Supreme Court has held that where, as here, the unlicensed party has fully and satisfactorily performed, the other party may not "use the statute as a shield against paying a just obligation." Olivas v. Sibco, Inc., 87 N.M. 488, 535 P.2d 1339, 1340 (1975).

Beker also argues that B & J had contractually waived its right to file a lien against Beker's property. This argument was neither pleaded, briefed nor tried. It was first introduced by way of a post-trial motion to amend the pleadings to conform to the proof under Federal Rule of Civil Procedure 15(b), after all the evidence had been presented. The trial court did not abuse its discretion in refusing to allow the issue to be interjected at that stage. Since it was not properly before the trial court, it is not properly before us.

Beker also challenges the trial court's award of attorney's fees under N.M.Stat.Ann. § 61-2-13 (1953), which grants such fees to successful lien claimants. Beker alleges that the section applies only to actions brought in the state court. We think this issue is controlled by the principles set out in Alyeska Pipeline Serv. Co. v. Wilderness Soc'y :

(I)n an ordinary diversity case where the state law does not run counter to a valid federal statute or rule of court, and usually...