FGS Constructors, Inc. v. Carlow

• Citation: 64 F.3d 1230
• Decision Date: 05 September 1995
• Docket Number: No. 95-1164,95-1164
• Parties: 40 Cont.Cas.Fed. (CCH) P 76,825 FGS CONSTRUCTORS, INC., Appellant, v. Michael CARLOW, doing business as Carlow Enterprises; Carole Oberlitner; Carl Oberlitner; United States of America; Bureau of Indian Affairs, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1230

64 F.3d 1230

40 Cont.Cas.Fed. (CCH) P 76,825

FGS CONSTRUCTORS, INC., Appellant, v. Michael CARLOW, doing business as Carlow Enterprises;

Carole Oberlitner; Carl Oberlitner; United

States of America; Bureau of Indian

Affairs, Appellees.

No. 95-1164.

United States Court of Appeals,

Eighth Circuit.

Submitted June 14, 1995.

Decided Sept. 5, 1995.

George E. Grassby, Rapid City, SD, argued for Carl and Carole Oberlitner.

Jennifer H. Zacks, Asst. Atty. Gen., Washington, DC, argued (Barbara Biddle, on the brief), for U.S.

Before McMILLIAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and LOKEN, Circuit Judge.

BRIGHT, Senior Circuit Judge.

I. INTRODUCTION

FGS Constructors, Inc. (FGS) appeals the district court's granting of summary judgment in favor of the United States. In addition, FGS appeals the district court's granting of Michael Carlow's, Carole Oberlitner's and Carl Oberlitner's motions to dismiss, and denying FGS's motions to amend its complaint and to extend discovery. For the reasons that follow, we affirm in part and reverse in part.

II. BACKGROUND

This case arises from a renovation project of the White Clay Dam located on the Pine Ridge Indian Reservation. In 1989, the United States, through the Bureau of Indian Affairs (BIA), agreed to provide funding to the Oglala Sioux Tribe (Tribe) for repairs to the White Clay Dam, pursuant to the Indian Self-Determination and Education Assistance Act (ISDEAA). The Tribe contracted with Cooper Consultants, Inc. (CCI) to be the project engineer, and Michael Carlow d/b/a Carlow Enterprises (Carlow) to be the general contractors. These contracts were approved by the government. Carl and Carole Oberlitner provided Carlow with a surety bond pursuant to the Miller Act, 40 U.S.C. Sec. 270a-d, guaranteeing Carlow's performance on the contract.

Carlow then hired FGS as a subcontractor to perform mechanical and structural work on the dam. FGS's responsibility was to perform the key repair and reconstruction work on the dam gates and spillway. FGS claims that problems arose during the performance of their contract. Generally, FGS asserts that the BIA and CCI failed to perform their obligation of draining the dam which prevented FGS from performing its subcontract work on time and materially raised FGS's costs. FGS subsequently suspended work and requested payment for the work already performed. FGS claims that they have not been paid in full for the work that they have already performed.

FGS then brought a diversity action in federal district court against Carlow for breach of contract, against Carl and Carole Oberlitner for enforcement of Miller Act bonds, and against the government for negligence based on its violation of federal statutes and regulations and for the imputed negligence of CCI under the Federal Tort Claims Act (FTCA).

The district court issued two separate orders relevant to this appeal. First, the district court dismissed the contract action against Carlow and the Oberlitners on the grounds of comity and failure to exhaust tribal court remedies. Second, the district court granted summary judgment in favor of the United States, determining that the contract between CCI and the Tribe was not a self-determination contract and that CCI was not an "Indian contractor" within the meaning of the ISDEAA. Therefore, the district court determined that the United States was not liable for CCI's alleged negligent performance.

Additionally, FGS filed a motion to amend the complaint one and a half years after the original complaint was filed. The district court denied FGS's motion to amend on the grounds that it would increase the scope and complexity of the issues involved, require the parties to essentially start discovery from the beginning, severely prejudice the government and unduly delay the case.

This appeal followed.

III. DISCUSSION

A. Claims Against Carlow and the Oberlitners

The district court granted Carlow's and the Oberlitners' motions to dismiss. In granting the motions, the district court determined that due to comity concerns, FGS must first exhaust any tribal court remedies it had against Carlow and the Oberlitners. The district court concluded that, because this case arose out of a construction contract on the Pine Ridge Indian Reservation, with Indian and non-Indian parties, respect for the sovereignty retained by the Tribe dictates that the tribal courts be given the opportunity in the first instance to address FGS's claims. In addition, the district court ruled that Carlow and the Oberlitners waived the Miller Act venue requirement, ¹ requiring suits in the federal court to be brought in the district in which the contract was to be performed and executed, by the language of the dispute resolution clause in the contract.

FGS concedes that the district court correctly concluded that federal venue could be waived by a valid forum selection clause or a dispute resolution clause in a contract. FGS argues, however, that no waiver occurred in the contract, or subcontract, in this case.

The contract between Carlow and FGS contained the following dispute resolution clause: "In the event there is any dispute between the parties arising out of this agreement, it shall be determined in the Oglala Sioux Tribal Court or other court of competent jurisdiction." App. at 193. FGS argues that the phrase "or other court of competent jurisdiction" expanded the venue options to include the federal district court in addition to the tribal court. FGS contends that pursuant to In re Fireman's Fund Ins. Co., 588 F.2d 93 (5th Cir.1979), this contract clause should be enforced unless the appellees show that enforcement would be unreasonable under the circumstances.

We do not agree with the district court's determination that FGS must first exhaust its remedies in the tribal court. The contracting parties agreed that a plaintiff could sue either in the federal district court of South Dakota (a court of competent jurisdiction) or in the tribal court. By this forum selection clause, the Tribe agreed that disputes need not be litigated in tribal court. The district court, therefore, had no significant comity reason to defer this Miller Act litigation first to the tribal court. Indeed, while we agree with the district court that a federal court does not have exclusive jurisdiction over these Miller Act claims, it nevertheless is the usual forum for such claims and has a significant interest in determining the merits of the action.

The district court determined that the venue provision of the Miller Act, Section 270b(b), was a venue provision enacted for the benefit of defendants, like Carlow and the Oberlitners. The district court stated that "[f]ederal courts following the holding in F.D. Rich Co., 417 U.S. 116, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974) have held the statute to constitute a waiveable venue requirement and have recognized that the provision was enacted for the benefit of defendants in Miller Act actions. See In re Fireman's Fund Ins. Co., 588 F.2d 93, 94-95 (5th Cir.1979) (holding that the Miller Act venue requirement, enacted for the benefit of defendants, can be waived by a valid forum selection clause in a contract); ..." Dist. Ct. Opinion dated March 4, 1993, at 6. The district court concluded that because Carlow and the Oberlitners moved to dismiss the federal claims against them, they had, in effect, waived any right to litigate the Miller Act case in federal court.

We disagree with this analysis. While the Miller Act venue requirement, requiring suits to be brought in the district where the contract was to be performed, served to benefit defendants and could be waived by defendants, these rules and requirements have no relevance to this issue. No provision in the agreement gave these defendants the right to override a plaintiff's choice of forum under the forum selection clause. Since Carlow and the Oberlitners agreed to be sued in the federal district court of South Dakota, those defendants are not privileged to force the dispute into the tribal court. Accordingly, we reverse the district court's order granting Carlow's and the Oberlitners' motions to dismiss.

B. Claims Against the United States

We review the granting of summary judgment de novo, applying the same standard as the district court. Dillaha v. Yamaha Motor Co., 23 F.3d 1376, 1377 (8th Cir.1994). Summary judgment is appropriate if there is no genuine issue of material fact in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

The district court granted summary judgment in favor of the government and against FGS, concluding that the United States was not liable for the alleged negligent performance of the self-determination contract by CCI. The district court determined that in order for FGS to impute CCI's negligence to the government pursuant to this act, FGS has to prove two elements: 1)...