Lamb Engineering & Const. Co. v. Nebraska Public Power Dist.

• Decision Date: 18 February 1997
• Docket Number: No. 95-3398,95-3398
• Citation: 103 F.3d 1422
• Parties: LAMB ENGINEERING & CONSTRUCTION COMPANY, Appellee, v. NEBRASKA PUBLIC POWER DISTRICT, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1422

103 F.3d 1422

LAMB ENGINEERING & CONSTRUCTION COMPANY, Appellee, v. NEBRASKA PUBLIC POWER DISTRICT, Appellant.

No. 95-3398.

United States Court of Appeals Eighth Circuit.

Submitted May 13, 1996.

Decided Jan. 9, 1997.

Rehearing Denied Feb. 18, 1997.

James Allen Eske, Lincoln, NE (Kile W. Johnson, Lincoln, NE, on the brief), for appellant.

Edward H. Tricker, Lincoln, NE (Tyler J. Sutton, Lincoln, NE, on the brief), for appellee.

Before McMILLIAN, FAGG and LOKEN, Circuit Judges.

McMILLIAN, Circuit Judge.

Nebraska Public Power District ("NPPD") appeals from a final judgment entered in the United States District Court for the District of Nebraska awarding Lamb Engineering & Construction Co. ("Lamb") $1,129,620 in contract damages. Lamb Eng'g & Constr. Co. v. Nebraska Pub. Power Dist., No. 4:CV94-29 (D. Neb. June 22, 1995) (Judgment) (Lamb Eng'g ). For reversal, NPPD argues the district court erred in denying its amended motion for judgment as a matter of law or, in the alternative, for a new trial, interpreting the contract, instructing the jury, and admitting certain evidence.

NPPD also argues the district court erred in awarding attorney fees in the amount of $277,649.50. Id. (Aug. 25, 1995). NPPD argues that the award of attorney fees was contrary to Nebraska law and unsupported by the evidence.

For the reasons discussed below, we affirm in part and reverse in part the order of the district court and remand the case to the district court for a new trial.

I. Background

NPPD, a public power district, is a public corporation and political subdivision of the State of Nebraska. On October 2, 1992, consistent with certain statutory competitive bidding requirements, NPPD opened bids for Contract No. 92-71 (the "contract") for refurbishing and upgrading 65 miles of NPPD's 115 kilovolt transmission line which runs along the Platte River from Columbus to Grand Island, Nebraska. The transmission line consists of three distinct sections which are separated by substations: section 1, from Grand Island to Central City; section 2, from Central City to Silver Creek; and section 3, from Silver Creek to Columbus. The line consists of 523 total structures.

NPPD wrote the contract as a unit-price contract in which estimated quantities of work were provided to bidders in order to compare bids offered under the contract on a uniform basis. On October 29, 1992, NPPD awarded the contract to Lamb as the responsible bidder who submitted the lowest and best bid of $769,300. The exact compensation payable to Lamb under the contract was to be determined on the basis of the unit-prices for work actually performed. On January 18, 1993, Lamb began work on the line, which was to be completed by June 5, 1993.

Lamb encountered difficulties in performing the contract. The circumstances giving rise to the difficulties are disputed. Lamb contends that NPPD administered the contract in bad faith, causing Lamb to be unable to fully perform the contract. Lamb maintains that "[d]uring the evaluation of the several bids, a faction developed within NPPD's System Planning and Engineering Division which opposed awarding the Contract to Lamb." Brief for Appellee at 1. Lamb also maintains that "these same individuals who opposed awarding Lamb the Contract, were given responsibility for administering the Contract and they never relented in their opposition to having Lamb perform the work." Id. at 2. Lamb claims that the faction tried to hinder and financially oppress Lamb through the faction's administration of the contract. Id.

On January 29, 1993, NPPD sent a letter to Lamb seeking assurances that Lamb would timely complete the contract. Lamb interpreted the letter as a threat that work be accelerated immediately or Lamb would face possible termination, based on the fact that NPPD sent a copy of the letter to Lamb's surety, who was only to be contacted in the event of a termination for default. Brief for Appellee at 2. Lamb suggests that NPPD's bad faith administration of the contract is evidenced by the fact that almost immediately after NPPD awarded Lamb the contract, NPPD increased its original estimate of work to be performed by 80%, but refused to extend Lamb's time for performance. Id. at 2-3. Lamb maintains that it was entitled to a time extension under the contract's force majeure clause ¹ because of the additional work imposed by NPPD and due to "unexpected and abnormally wet and muddy soil conditions during January through April, 1993." Id. at 3. Lamb claims that NPPD's unwillingness to extend the June 5, 1993, completion date resulted in greatly increased costs to Lamb for labor, equipment, and materials. Id. at 4.

NPPD's description of the circumstances surrounding Lamb's performance is markedly different from Lamb's. NPPD notes that "[a]lthough Lamb characterizes itself as an experienced contractor, it primarily has worked on substations and has had very limited experience with electric transmission lines." Reply Brief for Appellant at 8. NPPD claims that, not only did Lamb's field superintendent have no prior experience with an electric transmission line project, but also Lamb's right-of-way coordinator and material coordinator lacked any experience with such work. ² Id. at 8-9. As further proof of Lamb's inexperience, NPPD notes that neither Lamb's president nor Lamb's estimator, who prepared the bid, understood the contract's unit-pricing. Id. NPPD maintains that, for these reasons, NPPD's transmission engineering department discouraged awarding the contract to Lamb. Id.

After the contract was awarded to Lamb, however, NPPD claims to have taken "extraordinary steps to assist Lamb on the project," none of which were required under the contract. For example, NPPD allegedly performed an advance ground-level inspection of the line, prepared summary sheets for Lamb showing the expected work at each structure location, contacted landowners to arrange access routes for Lamb, and hired an outside expert to perform aerial inspection work. Id. The ground-level inspection of the line revealed that more poles required replacement than anticipated, resulting in an increase of approximately 11% over the original work estimate contained in the contract, with a total price increase of approximately $85,403. NPPD suggests that "Lamb's president mistakenly interpreted this increase to apply only to the first section of the line," rather than to the total contract. Id. at 10. NPPD claims that due to "Lamb's lack of progress during the first month of the project and the continued failure of Lamb's project manager to deliver required construction schedules to NPPD," it sent Lamb the January 29, 1993, letter seeking assurance that Lamb intended to complete the project on time. Id. NPPD maintains that the letter "expressly advised Lamb that the transmission line needed to be returned to service by the scheduled June 5th completion date in order to handle NPPD's increased summer load," and thus no extensions would be granted. Id.

NPPD maintains that the force majeure clause did not apply to the difficulties encountered by Lamb. At trial, NPPD presented extensive expert testimony by a meteorologist and a geotechnical engineer that "the precipitation, temperature, groundwater, and soil conditions experienced on the project were typical of conditions along the Platte River in Nebraska during winter and spring, and should reasonably have been anticipated by Lamb." Id. at 11. NPPD claims that it informed Lamb that, even though the force majeure clause did not apply, Lamb had the right under the contract to stop work if the weather or soil conditions were unsuitable. Id. In March 1993, NPPD notified Lamb that it should simply perform as much work as possible before June 5th. Id.

In March 1993, Lamb and NPPD negotiated a tentative "standby" agreement by which Lamb would temporarily shut down the project due to the weather and soil conditions. Lamb claims that the agreement was finalized, thus justifying Lamb's decision to send its crews home on March 17. Brief for Appellee at 5. NPPD asserts, however, that the terms of the agreement were subject to further review of applicable labor and equipment rates. Reply Brief for Appellant at 11. NPPD argues that it was justified in rejecting the "standby" agreement because it had not been reduced to writing and faxed to Lamb for modification or execution as agreed. Id.

In April 1993, Lamb's performance increased as the weather and soil conditions improved. On April 21, 1993, NPPD suggested in a letter to Lamb that all work in section 3 of the transmission line be deleted from the contract, as Lamb had not yet begun any of that work. Lamb rejected the proposal and on May 6, 1993, demanded that it be allowed to perform the work on section 3 as provided in the contract.

On May 7, 1993, NPPD gave Lamb written notice that it was terminating the contract under the contract's termination clause, which provided:

The DISTRICT may at any time, and without cause, terminate this Contract by mailing a written notice thereof to the CONTRACTOR at the address given in the Proposal Section of these Contract Documents. Upon any such Termination, the DISTRICT shall pay the CONTRACTOR reasonable and proper charges for termination.

Contract No. 92-71, at D-12. As of that date, Lamb had partially performed its work under the contract on the first two sections of the transmission line. Lamb had performed work on 262 of the 523 structures on the transmission line and had completed work on 123 of those structures.

During the project, Lamb submitted four progress payment invoices for work performed through February 24, 1993, March 17, 1993, April 7, 1993, and April 23, 1993. NPPD made adjustments to the invoices and deducted a 5% retainage fee, ultimately paying Lamb $260,991.22. Lamb also submitted an invoice to NPPD for state use taxes in the amount of $969.44, which NPPD paid in full on June 30, 1993. Lamb...