Dale Benz, Inc., Contractors v. American Casualty Co.

• Decision Date: 01 August 1962
• Docket Number: No. 17464.,17464.
• Citation: 303 F.2d 80
• Parties: DALE BENZ, INC., CONTRACTORS, an Arizona Corporation, et al., Appellants, v. AMERICAN CASUALTY COMPANY of Reading, Pennsylvania, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

303 F.2d 80 (1962)

DALE BENZ, INC., CONTRACTORS, an Arizona Corporation, et al., Appellants, v. AMERICAN CASUALTY COMPANY of Reading, Pennsylvania, Appellee.

No. 17464.

United States Court of Appeals Ninth Circuit.

May 14, 1962.

Rehearing Denied August 1, 1962.

Cox & Cox, Z. Simpson Cox, Phoenix, Ariz., for appellant.

Moore & Romley, Jarril F. Kaplan, Phoenix, Ariz., for appellee.

Marion R. Smoker, Newton Frishberg, Alfred S. Cox, Phoenix, Ariz., of counsel for the appellant.

Before HAMLEY and BROWNING, Circuit Judges, and ROSS, District Judge.

ROSS, District Judge.

This action involves a claim by appellants (hereinafter Benz), a general contractor, against Appellee (hereinafter American), the surety of Basich Brothers Construction Company (hereinafter Basich), a subcontractor, for damages incurred as a result of the failure of Basich to complete its subcontract with Benz. It is a diversity case wherein the district court had jurisdiction pursuant to the provisions of 28 U.S.C. § 1332, and the matter is brought here under 28 U.S.C. § 1291.

According to the pertinent allegations contained in the complaint, on or about the 14th day of May, 1958, Benz held a general contract with the United States of America for construction of certain buildings. On said date it entered into a subcontract with Basich for the performance of work and the furnishing of materials required under the general contract, on a job at the Marine Corps Supply Center, Barstow, California. American, as surety for Basich, made and executed a Performance and Payment Bond. On January 27, 1959, Benz gave American and Basich notice that Basich was in default under the subcontract. Numerous demands were made upon Basich and American for completion of said subcontract, but they failed to comply with said demands. Because of the refusal of Basich, and/or its surety, to complete the subcontract, Benz, as prime contractor, was required to complete the work at its own cost and expense. Benz now seeks to recover from American, the Basich surety, the money thus expended, plus interest and attorney fees.¹

A bench trial was had between Benz and American Casualty Company and a judgment was entered for Benz in the sum of $12,525.00. Subsequently an order was entered denying Benz's "Motion to Amend and Supplemental Findings of Fact and Conclusions of Law" and "Motion to Alter and Amend Judgment or in the Alternative for New Trial." Benz has appealed from the above mentioned judgment and order, and also from an order denying its "Motion for Summary Judgment."

We will list the contentions argued by Benz in its opening brief filed in this Court. However, before doing so we are compelled to comment on the District Court's "Findings of Fact and Conclusions of Law." We have heretofore stated the following:

"Findings of fact are required under Rule 52(a) Federal Rules of Civil Procedure, 28 U.S.C.A. The findings should be so explicit as to give the appellate court a clear understanding of the basis of the trial court\'s decision, and to enable it to determine the ground on which the trial court reached its decision." Irish v. United States, 225 F.2d 3, 8 (9th Cir., 1955).

Unfortunately the "Findings of Fact and Conclusions of Law" which were entered in this case fail to meet the standard alluded to in the above quotation. Therefore, the litigants, as well as this Court, are somewhat hampered by the Trial Judge's manner of handling this facet of the case.

Further, at this juncture it is important to bear in mind that findings of fact shall not be set aside unless clearly erroneous. See Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A.

As a further preliminary statement to our discussion of this case we observe that ordinarily we would remand the matter back to the trial judge for more explicit findings. However, as this case is now before us we feel that we are in as good a position to determine the issues involved on the record before us as would be the trial judge on remand. Those issues arise out of and are concerned with figures and arithmetical calculations. In view of the foregoing, and to the end that useless motion and delay be eliminated we will determine the case at this time on its merits, being of the opinion that no good would be served by directing a remand for further and more specific findings.

In light of these comments we will address ourself to the following contentions contained in Benz's argument.

1. The District Court should have granted its Motion for Summary Judgment.

2. The computations of the District Court were erroneous.

A. Overhead is part of cost.

B. Ten Per Cent should have been added to the cost of the Yeager subcontract.

C. The Court erred in deducting wobble wheel rental of $4,200.00.

D. Back charges for October and November, 1958, are proper items of cost.

E. Damages to American were erroneously awarded.

i. Benz did not depart from the payment provisions of the subcontract.

ii. Benz did not misrepresent to American the percentage of the contract completed by Basich.

iii. There is no evidence that American suffered damage in any amount.

3. American is liable to Benz for attorneys' fees.

A discussion of the above assertions follows:

1. The Court erred in denying Benz's motion for a summary judgment.

Pursuant to the provisions of Rule 56(c) of the Federal Rules of Civil Procedure, a summary judgment shall be rendered if the pleadings, depositions and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. It is obvious that the lower court had before it genuine issues of material facts, therefore, in accordance with the provisions of Rule 56(c) the District Court properly denied the motion of Benz for summary judgment.

2A. Benz states that it is evident from the Findings of Fact and Conclusions of Law and the Judgment that the Trial Court deducted the overhead amount from its cost of finishing the Basich subcontract. It refers to Appendix B.²

2B. Benz states, ten percent should have been added to the cost of the contract which Benz entered into with Yeager Brothers Construction Company for the completion of a portion of the uncompleted Basich subcontract.

A consideration of these assertions, 2A and 2B, involves an interpretation of paragraph 8 of the subcontract between Benz and Basich. This paragraph provides, inter alia, that should Basich fail to perform, Benz shall have the right after two days written notice, to terminate the contract. Further, "in that event, the Contractor Benz shall provide the necessary material, labor, etc., to complete the contract in whole or in part and charge the cost thereof plus 10% to the Subcontractor Basich * * *." Plaintiff's Exhibit 3.

The above quoted language does not contemplate the inclusion of overhead in the "cost" of finishing the Basich subcontract, but simply means that to the actual cost of material, labor, etc., should be added 10% of said costs. Therefore, the trial court properly deducted Benz's overhead of twenty-two percent.

Turning next to the question of whether ten percent should have been added to the cost of the Yeager subcontract. In support of its position, Benz cites the case of Hamilton v. Coogan, 7 Misc. 677, 28 N.Y.S. 21 (C.P.Ct.1894), which affirmed a judgment in favor of a contractor in an action to foreclose a mechanic's lien. The case held that ten percent profit may be added by the contractor to the cost of a subcontract even though a subcontractor includes his own profit in computing his charge to the contractor. This writer was not able to find a reported case directly in point and American did not treat us with any citations pertaining to this matter.

American concedes that Benz was entitled to subcontract a portion of the Basich work, but states "it is not at all certain that under the provisions of the Basich subcontract, Appellants Benz are entitled to add 10% to the price of another subcontract." Brief for Appellee, p. 12. From a reading of American's brief it appears that American implied that Benz would be entitled to ten percent in the event that Benz completed the necessary work itself, but, on the other hand, where Benz subcontracts the work it is not entitled to add ten percent. With this view, the majority of the Court agrees and, therefore, a ten percent markup on the Yeager subcontract has been excluded in our award.

However, in reference to this matter, the writer does not agree with American's theory nor with the holding of the majority of the court. Whether or not Benz, itself, actually performed the necessary work or subcontracted the same, does not, to this writer, seem to be a logical basis for allowing or disallowing a 10% markup. It is, of course, customary for a general contractor to subcontract work and as American concedes, Benz was entitled to subcontract a portion of the Basich work. This writer can not understand why, American, a surety of the party in default, can be permitted to successfully contend that Benz is entitled to a 10% markup only where Benz actually performed the work itself.

2C. Benz asserts that the court allowed a set-off in the amount of $4,200.00³ for a wobble wheel which belonged to Basich and was left at the job site and used by Basich. That there is absolutely no evidence that it, Benz, used the Wobble Wheel more than forty-two hours.⁴ Further, that a "set-off" for the use of the wobble wheel was not affirmatively pleaded by American in accordance with Rule 13 of the Federal Rules of Civil Procedure.

American contends that Basich is entitled to a set-off against Benz for the use of the wobble wheel and that American is entitled to the benefit of the set-off.

We believe that American should be allowed a set-off,⁵ even though it failed to affirmatively plead a set-off in accordance with Rule 13. However, the set-off should only be...