Maccaferri Gabions, Inc. v. Dynateria Inc.

• Decision Date: 20 August 1996
• Docket Number: No. 94-5084,94-5084
• Citation: 91 F.3d 1431
• Parties: 41 Cont.Cas.Fed. (CCH) P 76,980 MACCAFERRI GABIONS, INC., Plaintiff-Appellee, Cross-Appellant, v. DYNATERIA INC., Moore & Artis, Ltd., Inc., et al. Defendants, Wilkinson & Jenkins Construction Co., Inc., Ohio Casualty Insurance Company, Defendants-Appellants, Cross-Appellees, Robert E. Rupert, Third-Party-Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1431

91 F.3d 1431

41 Cont.Cas.Fed. (CCH) P 76,980

MACCAFERRI GABIONS, INC., Plaintiff-Appellee, Cross-Appellant, v. DYNATERIA INC., Moore & Artis, Ltd., Inc., et al. Defendants,

Wilkinson & Jenkins Construction Co., Inc., Ohio Casualty

Insurance Company, Defendants-Appellants, Cross-Appellees,

Robert E. Rupert, Third-Party-Defendant.

No. 94-5084.

United States Court of Appeals, Eleventh Circuit.

Aug. 20, 1996.

Joseph W. Lawrence II, Cummings, Lawrence & Vezina, Ft. Lauderdale, FL, Mike Piscitelli, Frederick J. Springer, Tallahassee, FL, for Appellant.

Larry Klayman, Klayman & Associates P.C., Washington, DC, Paul J. Orfanedes, Washington, DC, for Appellees.

Appeals from the United States District Court for the Southern District of Florida.

Before TJOFLAT, Chief Judge, and RONEY and PHILLIPS ^*, Senior Circuit Judges.

PHILLIPS, Senior Circuit Judge:

Maccaferri Gabions, Inc. (Maccaferri), a materialman, sued general contractor Wilkinson & Jenkins Construction Co., Inc. (W & J) and its surety, The Ohio Casualty Insurance Co., for the balance due on materials Maccaferri had supplied on a federal construction project. The jury found for Maccaferri on three of its claims--one based on the Miller Act, 40 U.S.C. §§ 270a-270d (1986), one on a third-party beneficiary theory, and one on promissory estoppel--and the district court then denied W & J and Ohio Casualty's motions for judgment as a matter of law on each of these claims. W & J and Ohio Casualty now appeal the denial of these motions, as well as the district court's award of prejudgment interest on each of Maccaferri's successful claims. Maccaferri also cross-appeals, seeking an increase in the interest award. We conclude that the lower court erred in denying each of W & J's and Ohio Casualty's appealed Rule 50(a) motions, and we therefore reverse and remand with directions to enter judgment for W & J and Ohio Casualty on all the claims.

I.

This dispute arises out of a shoreline erosion-control project undertaken by the Army Corps of Engineers at Lake Okeechobee, Florida. In 1986, W & J bid for and was awarded the general contract for Section 5 of the project, which involved two large areas on the lake's south shoreline as well as a small test section. Ohio Casualty issued payment and performance bonds for the project.

W & J sub-contracted with Maccaferri after it received the general contract. Maccaferri manufactures gabions, which are stone-filled wire mesh baskets used in erosion control and other earth-retention projects. The general contract required W & J to use gabions to complete a test section of the project, and it installed Maccaferri's gabions in that section. Maccaferri was paid in full for those materials; no claims arise out of that transaction.

In early 1987, Maccaferri again approached W & J regarding the remaining work on the project. Maccaferri suggested that W & J subcontract some of that work to Moore & Artis (M & A), a contractor with whom Maccaferri previously had dealt. Maccaferri further offered to supply M & A with reduced-price gabions, which it could use to complete the rest of the project. Maccaferri claims that, at a meeting in Tampa attended by representatives of all three parties, both W & J and M & A agreed to use its gabions for all the remaining work; W & J denies ever making such a promise.

Whatever happened, W & J did contract with M & A to do work on the project. Section 3 of their subcontract required W & J to make monthly progress payments to M & A, but specified that those payments would not be due until five days after the Corps had paid W & J for that month's work. M & A also delivered performance and payment bonds to W & J; the sureties on those bonds were James Sugg and Ruben Ham. Another contractor, Dynateria, Inc., who had located these individual sureties, entered into separate contracts by which it, in turn, agreed to indemnify them.

In April of 1987, M & A ordered $574,304.64 worth of gabions from Maccaferri. Maccaferri agreed to supply the gabions, intending to deliver them in installments. In anticipation of performance, Maccaferri procured and stored the high-strength wire needed to make the mesh baskets, and it further began re-engineering its production line to produce the extra-large gabions needed for the project.

Because of the large size of this order and because Maccaferri was unsure of M & A's creditworthiness, Maccaferri approached W & J and asked it to directly guarantee M & A's payments on the order. W & J refused this request. But, to accommodate Maccaferri, W & J and M & A did eventually modify their subcontract to "allow payment by [W & J] for materials delivered to and provided on the Project by Maccaferri ... by bank checks payable to [M & A's escrow agent] Edward W. Bowen, Jr. and Maccaferri ... and to be distributed to Maccaferri."

Reassured by this arrangement, Maccaferri delivered on June 2 what was supposed to be the first of several shipments of gabions, for which it billed M & A $132,226.16. When M & A notified it of this charge, W & J included a portion of this fee in its June expense estimate, which it forwarded to the Corps. Although most of the gabions had not yet been incorporated into the project so that the Corps was not contractually bound to pay W & J for their inclusion, the Corps, in its discretion, paid W & J $74,722 of the total billed to M & A for the gabions. W & J, in turn, issued a joint check for the same amount made out to Maccaferri and Bowen. W & J mailed the check to Bowen, who endorsed and forwarded it to Maccaferri.

Under the terms of its agreement with Maccaferri, M & A was supposed to pay for any gabions delivered to the site within thirty days of their delivery. Because it still had not received full payment for its June 2 delivery by July 24, Maccaferri sent M & A a collection letter requesting full payment of the balance due on its account; it also sent a copy of that letter to W & J.

By mid-August it became apparent that M & A was in serious trouble, and, after M & A failed to meet its August payroll, W & J declared them to be in default and asked their surety, Dynateria, to step-in and complete M & A's work. During the same month, W & J prepared its July expense estimate, in which it included the balance due on the delivered gabions. But the Corps representative with whom W & J discussed this expense said that the Corps would make no more payments for gabions that had not yet been incorporated into the project until it received notice that Maccaferri had been paid for them.

In October, Dynateria and W & J entered into a new subcontract under which Dynateria would take over M & A's contractual obligations. The W & J/Dynateria subcontract contained the following language:

The Contractor [W & J] agrees to pay the Subcontractor [Dynateria] for the performance of this Subcontract ... subject to payments previously made to [M & A] for work under its Subcontract, and further subject to reimbursement to Contractor for labor costs advanced [M & A] ..., and payment to Maccaferri Gabions, Inc. in the sum of $57,226.00 for materials delivered and provided on the project for [M & A].

In January of 1988, Dynateria promised Maccaferri that it would pay the remaining balance due and complete the project using only gabions. Unfortunately, Dynateria did neither, and it formally defaulted in October of 1988. W & J then completed the project itself using rip-rap instead of gabions. Meanwhile, Maccaferri was never paid the balance due on its June, 1987 shipment, nor were a large portion of those gabions ever incorporated into the project. As a result, the Corps never paid W & J for those stored gabions. ¹

Maccaferri began this suit in June of 1988. During the following eight months, Maccaferri twice amended its complaint to add various claims and defendants. By February of 1989, it had included W & J, Ohio Casualty, Dynateria, M & A, and certain individual sureties as defendants. Against all defendants, Maccaferri alleged breach of contract, promissory estoppel, negligence and gross negligence, conversion, and Miller Act claims. ²

In July of 1989, Maccaferri moved for a preliminary injunction, asking that W & J be forbidden to complete the project without using gabions. The preliminary injunction was denied. After the injunction hearing, Maccaferri filed its third amended complaint, and in the months that followed, the parties filed numerous summary judgment motions. Eventually, Maccaferri, by various means, obtained judgments against M & A, Dynateria, and some individual sureties.

When the smoke had cleared, Maccaferri went to trial against only W & J on the claims of breach of contract, promissory estoppel, conversion, and the Miller Act claim--on which Ohio Casualty also remained a defendant. The jury found for W & J on the conversion and direct breach of contract claims, but found for Maccaferri on its third-party beneficiary breach of contract, promissory estoppel, and Miller Act claims, and awarded damages as follows: $57,226.16 for the Miller Act claim; $57,226.16 for the third-party beneficiary claim; and $45,800.00 for the promissory estoppel claim. ³ The district court also awarded simple prejudgment interest of 5.49%, which, it concluded, began accruing on July 2, 1987. Thus the district court awarded $48,878.98 interest on both the Miller Act and third-party beneficiary claims, and $39,119.47 interest on the promissory estoppel claim.

These appeals followed, with W & J and Ohio Casualty challenging the judgments against them ⁴ and Maccaferri challenging the district court's failure to award compound interest on those judgments.

II.

W & J first argues that the district court erred in failing to grant its motion for judgment as a matter of law and thereby dismiss Maccaferri's Miller Act claim. Specifically, W & J contends that because Maccaferri failed to provide it with appropriate notice of its claim for payment within the Act's...