Fidelity and Deposit Company of Maryland v. Harris

• Decision Date: 29 March 1966
• Docket Number: No. 20121,20122.,20121
• Citation: 360 F.2d 402
• Parties: FIDELITY AND DEPOSIT COMPANY OF MARYLAND and L. E. Dixon Company, Appellants, v. Van HARRIS, an individual, doing business as Harris & Sons, Appellee. FIDELITY AND DEPOSIT COMPANY OF MARYLAND and L. E. Dixon Company, Appellants, v. PARAMOUNT TRUCK RENTAL, INC., and Van Harris, an individual doing business as Harris & Sons, Appellees. PARAMOUNT TRUCK RENTAL, INC., Appellant, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND and L. E. Dixon Company, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

360 F.2d 402 (1966)

FIDELITY AND DEPOSIT COMPANY OF MARYLAND and L. E. Dixon Company, Appellants, v. Van HARRIS, an individual, doing business as Harris & Sons, Appellee.

FIDELITY AND DEPOSIT COMPANY OF MARYLAND and L. E. Dixon Company, Appellants, v. PARAMOUNT TRUCK RENTAL, INC., and Van Harris, an individual doing business as Harris & Sons, Appellees.

PARAMOUNT TRUCK RENTAL, INC., Appellant, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND and L. E. Dixon Company, Appellees.

Nos. 20121, 20122.

United States Court of Appeals Ninth Circuit.

March 29, 1966.

James W. Baldwin, Robert K. Worrell, Andrew J. Nocas, of Thelen, Marrin, Johnson & Bridges, Los Angeles, Cal., for appellants.

Van Harris, in pro. per.

Richard H. Floum, of Greenberg & Glusker, Beverly Hills, Cal., for appellee.

Before CHAMBERS and JERTBERG, Circuit Judges, and THOMPSON, District Judge.

THOMPSON, District Judge.

The United States, acting through the National Aeronautics and Space Administration, on December 22, 1961, entered into a written contract with California Institute of Technology (CIT) under which CIT agreed to operate the Jet Propulsion Laboratory at Pasadena, California, and to furnish all the scientific, engineering, technical and other personnel, labor and services for the management and operation thereof. The agreement provided, in part, that CIT "may, when authorized by Task Orders or Task Order Amendments, enter into subcontracts for the construction of facilities authorized by approved Construction of Facilities Projects." Pursuant to such a Task Order, on June 18, 1962, CIT entered into a written agreement with L. E. Dixon Company whereby Dixon undertook to construct the Central Engineering Building at the Jet Propulsion Laboratory according to the plans and specifications therefor. As required by the agreement, Dixon furnished a bond with Fidelity and Deposit Company of Maryland as surety for the payment in full of the claims of all persons performing labor upon or furnishing materials to be used in the construction of the building. The United States and CIT are named as joint obligees on said bond.

In anticipation of the contract, Dixon had negotiated with subcontractors and on June 8, 1962, Van Harris, doing business as Harris & Sons, submitted a letter-bid to Dixon covering certain site clearance, grading, excavating and backfilling work required by the construction contract. On or about June 18, 1962, Dixon prepared and sent to Van Harris a proposed written subcontract for the performance of this work, and on June 20, 1962, Harris returned the subcontract to Dixon with a covering letter. Relevant portions of the June 8 letter, the June 18 subcontract and the June 20 letter are quoted in the footnote.¹

On or about June 20, 1962, Harris entered into a written agreement with Andrew Franklin Yost whereby Yost undertook, for a lesser sum than Harris was to receive, the performance of all the work encompassed by the presumed agreement between Harris and Dixon. Subsequently, Yost contracted with Paramount Truck Rental, Inc. to rent from Paramount certain heavy construction equipment on an operated basis to perform a part of the work.

Work on the project commenced about July 1. Harris appeared at the job site, introduced Yost and his foreman, McFarland, to Dixon's General Project Manager, and assisted in getting the site clearance, grading and excavation work lined out and underway. Thereafter, Harris was at the project site from time to time but spent most of his time on other jobs. None of the actual site clearance, grading and excavation work was performed by Harris or by anyone employed by him.

On July 20, 1962, Harris submitted a bill to Dixon for $7,213.50 to cover the completion of the first thirty-five per cent of the work, and payment was made by Dixon less ten per cent retention about August 10, 1962. On August 20, 1962, Harris submitted a bill for an additional twenty per cent of the work. This was never paid. Shortly thereafter, disputes arose in the course of which Dixon charged Harris with having subcontracted the work in violation of the agreement; with having failed to perform certain work relating to small footings and trenches required by the agreement; and with having excavated a basement, leaving a wall twenty-five to thirty feet in depth which was dangerously steep and improperly sloped in violation of safety regulations. Dixon refused to make any further payments to Harris unless full and complete releases were obtained from Paramount and Yost. Harris countered with the contentions that his right to subcontract the job was a part of the agreement; that the small footings and trenches consisted of handwork or small machine work not required under the agreement; that any defects in performance were the result of improper engineering by Dixon; and that Dixon had no right to insist upon releases. Because of the impasse, Harris, Yost and Paramount withdrew from the project.

In October, Dixon needed some equipment immediately and negotiated directly with Paramount for equipment which was furnished and the rental for which has not been paid in the amount of $431.09, which sum is a part of Paramount's total claim for $8,730.87.

In due course, Yost and Paramount gave the written notices required by 40 U.S.C. 270b to Dixon and Fidelity, and thereafter brought actions under the Miller Act. Dixon filed a third party complaint against Harris in one action and a counterclaim in another alleging Harris' breaches of the subcontract, damages in the amount of $37,290, and Harris' obligation to indemnify Dixon for any claims of Yost and Paramount which Dixon might be required to pay.

The cases were consolidated for trial. Shortly prior to trial, Yost was adjudicated a bankrupt and the issues with respect to Yost were settled with the Trustee in Bankruptcy and thereafter were dismissed with prejudice. The case proceeded to trial on the Miller Act claim of Paramount against Dixon and Fidelity and on Dixon's cross-complaint against Harris for damages for breach of contract. Harris appeared and defended in his own proper person. The Pre-Trial Order entered September 28, 1964, approved by Harris and the attorneys for all the parties, admitted that on or about June 18, 1962, Dixon and Harris entered into a written subcontract whereby Harris agreed to perform all site clearance and demolition work at the proposed Jet Propulsion Laboratory site with certain exceptions set forth in said written subcontract. At the conclusion of the trial and on Harris' motion, the Court permitted the Pre-Trial Order to be amended to include as issues of fact and law "(1) that Harris was prevented from performance of any contract with Dixon by Dixon; and (2) that there was no valid written contract between Dixon and Harris."

In its Memorandum Opinion which encompasses its Findings of Fact, the District Court rendered judgment in favor of Paramount against Dixon and Fidelity for the sum of $8,730.87, and the Court rendered judgment in favor of Harris and against Dixon on the cross-complaint by Dixon for damages for the alleged breaches by Harris of the purported subcontract.

Dixon and Fidelity have appealed the judgment in favor of Paramount on its Miller Act claim. Dixon has appealed the judgment in favor of Harris on the breach of contract claim, and Paramount has appealed the refusal of the District Court to include attorney fees in the judgment in Paramount's favor under the Miller Act.

The trial court, which found in its Memorandum Opinion "that there was no meeting of the minds between Harris and Dixon and Dixon never accepted Harris' counteroffer", concluded that "there was no express contract between Harris and Dixon." We think the proper solution of all issues presented on this appeal is governed to a great extent by the sustainability of these findings. Dixon and Fidelity contend that if Harris' letter of June 20, 1962 accompanying the return of the signed subcontract was a counter-offer, Dixon's actions in proceeding to perform was an acceptance of the counter-offer, although, admittedly, there was no express acceptance by conversation, letter or otherwise. Beatty v. Oakland Sheet Metal Supply Co., 1952, 111 Cal. App.2d 53, 244 P.2d 25, is distinguishable because there was evidence of an express acceptance of the counter-offer; and Fidelity and Casualty Co. of New York v. Fresno Flume & Irrigation Co., 1911, 161 Cal. 466, 119 P. 646, 37 L.R.A., N.S., 322, also cited by Appellants, involved an insurance policy signed by the insurer but not by the insured, as is customary, and is of little help. The footnote quotation from the Beatty case properly summarizes the California law.² See Annotation, 135 A.L.R. 821.

Appellants' reliance upon the conduct of the parties as evidence of acceptance of the counter-offer is misplaced. True, the work of site clearance and excavation commenced and a progress billing was submitted by Harris and paid by Dixon, presumably in accordance with the contract, but which contract? This conduct would have been the same whether performed under the written subcontract dated June 18, 1962 (Ex. 3), as asserted by Dixon, or pursuant to the written subcontract as explained by the letter of June 8, 1962 (Ex. 6), and the counter-offer letter of June 20, 1962 (Ex. 5). This conduct is equivocal and justifies no inference of acceptance of a particular contract. Later, in August and September, when disputes arose, the evidence demonstrates with clarity that Dixon deemed Harris bound by the written subcontract standing alone, while Harris differed. Accordingly, Dixon objected to the Yost subcontract as being unauthorized, and Harris said it was covered by the June 20 letter; Dixon attempted to call Harris back to the jobsite for more than two "move-ins", and Harris said such expense was avoided by the June 8 and June 20 letters; Dixon complained of Harris' failure to perform certain small excavations and Harris...