FGS Constructors, Inc. v. Carlow, 95-1164

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: Before McMILLIAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and LOKEN; BRIGHT
• Citation: 64 F.3d 1230
• 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.
• Docket Number: No. 95-1164,95-1164
• Decision Date: 05 September 1995

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.

Page 1231

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

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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

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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...