MATTER OF RABER INDUSTRIES, INC., Bankruptcy No. 78-1438 T.
| Decision Date | 02 February 1981 |
| Docket Number | Bankruptcy No. 78-1438 T. |
| Citation | 8 BR 631 |
| Parties | In the Matter of RABER INDUSTRIES, INC., Debtor. RABER INDUSTRIES, INC., Plaintiff, v. SOUTHERN MACHINE & STEEL and H.D. Rutledge & Son, Inc., Defendants. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Frank H. Cobb, Tampa, Fla., for Raber Industries, Inc.
R. Thomas Corbin, Fort Myers, Fla., for Southern Machine & Steel and H.D. Rutledge & Son, Inc.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND MEMORANDUM OPINION
THE MATTER under consideration is an objection to claim no. 88 filed by Raber Industries, Inc. (Raber) the Debtor-in-possession in this Chapter XI arrangement proceeding. Claim No. 88 is actually an amended claim of claim no. 64 initially filed by Southern Machine and Steel, Inc. (Southern) which seeks damages in the amount of $24,058 arising out of an alleged breach of contract by Raber. Raber's objection to claim no. 88 is based on an alleged right of set-off against the amount otherwise admittedly due and owing.
The facts relevant to this controversy may be summarized as follows:
At all times relevant to this controversy, Raber was a subcontractor who was low bidder for the erection of structural steel and miscellaneous metals on a school construction project in Lee County, Florida. H.D. Rutledge & Son, Inc., was the general contractor on the project who used Raber's bid in formulating its own bid for the project.
Raber and Southern entered into their agreement on October 27, 1978 (Raber's Exh. # 3). The agreement provides that Southern will unload and erect both structural steel and miscellaneous metals at the job site. There is no provision in the agreement for fixing payment terms for the work to be performed by Southern. Neither is there a provision for monthly draws or progress payments. The agreement is equally silent concerning whether Raber must first receive funds from its general contractor Rutledge, as a prerequisite to making payment to Southern.
The record reveals that Southern commenced work on the project on October 30, 1978 and on November 10, 1978, submitted to Raber invoice # 9263 titled "Xtra — San Carlos School" in the amount of $1,860. A second invoice # 9820 was submitted by Southern on November 20, 1978 in the amount of $12,000. The record further reveals that by the terms of an agreement between Raber and its general contractor, Rutledge, Raber was required to submit its own draws to Rutledge on the 25th of each month preceding the month in which Raber was requesting payment. It is without dispute that Raber never honored the invoices of Southern.
On December 15, 1978, Raber filed its Chapter XI petition with this Court. As of that date, Raber had not received any of its payments from Rutledge as per the terms of their agreement. It further appears, however, that Raber never made a draw request from Rutledge. Southern left the project once on December 19, 1978 and then after returning for a short while left the project a second and last time on January 4, 1979.
On January 12, 1979 Raber advised Southern that its failure to perform was a default under the agreement and unless cured, Raber will engage another subcontractor to complete the work and Southern will be charged with the cost of completion. In due course, Raber hired C & T Erectors, Inc. (C & T) to complete Southern's work on the project and was billed $17,300 for the work by C & T.
It is disputed whether Southern performed any of the erection of miscellaneous metals on the project. It is without dispute, however, that both Raber and Southern anticipated that the miscellaneous metals could be erected for approximately $3,000, a figure which ultimately turned out to be too low. Part of the reason for the miscalculation of bids was that the work turned out to require significantly more time than originally anticipated, thus, costs more per ton to erect than structural steel erection. It is without dispute, however, that Southern did perform 90% of the contract for erection of steel by weight.
The record further reveals that there is no previous course of dealings between the parties and further that the parties disagree concerning the prevalent local custom in the construction industry with respect to when a sub-subcontractor is entitled to receive payments from a subcontractor.
Southern contends that it left the project because Raber refused to honor the invoices submitted for partial payments and, therefore, it was justified in refusing to further perform unless paid for the...
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