Miller v. Mills Const., Inc.
| Decision Date | 18 December 2003 |
| Docket Number | No. 02-3793.,02-3793. |
| Citation | 352 F.3d 1166 |
| Parties | Wilma MILLER, doing business as Double Diamond Construction, Plaintiff-Appellee, v. MILLS CONSTRUCTION, INC.; Van Tol Surety Company, Inc., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
James E. Moore, Sioux Falls, SD and Thomas M. Frankman, Sioux Falls, SD, for appellant.
John F. Thomas, A. Stevenson Bogue and Michael T. Eversden, Omaha, NE, for appellee.
Before LOKEN, Chief Judge, LAY and HEANEY, Circuit Judges.
Wilma Miller, doing business as Double Diamond Construction ("Double Diamond"), filed suit against Mills Construction, Inc. ("Mills") and its surety, Van Tol Surety Co., Inc. ("Van Tol"), alleging that Mills failed to compensate Double Diamond for work performed under a subcontract between Double Diamond and Mills. The district court found in favor of Double Diamond in the amount of $83,723 and awarded prejudgment interest in the amount of $33,504.93. Mills and Van Tol appeal. We affirm.
Mills, a general contractor in Brookings, South Dakota, contracted with the City of Brookings to construct the Brookings AgriPlex, a series of buildings to be used for various purposes. One of the buildings to be constructed was a steel clear span arena 286 feet long by 209 feet wide. Due to the building's size and the fact that its construction would require the use of cranes, Mills decided to subcontract with a steel erection company for construction of the arena. Double Diamond, a steel erection company located in Lincoln, Nebraska, submitted a bid for the project, which Mills accepted. The parties entered into a subcontract dated March 18, 1998, under which Double Diamond agreed to provide the labor and equipment and Mills agreed to provide the prefabricated steel and other component parts for the building. Mills obtained the prefabricated steel for the building from American Buildings Company ("ABC"). Mills agreed to pay Double Diamond a total of $209,875 under the subcontract.
Double Diamond had to construct the building in two phases. The first phase, called the red-iron phase, involved erecting the building's frame. Generally, this phase involves setting side-wall columns onto concrete foundations, bolting them down, and bracing them with struts, pipe braces, and girts. Once the side-wall columns are erected, steel mainframes or rafters are set onto the columns and braced together with purlins, pipe braces, and x-bracing. The second phase is the steel-sheeting phase, which involves attaching metal sheeting to the frame to form the sides and roof of the building. Double Diamond never reached the second phase of construction because the structure collapsed before any sheeting could begin.
Under the subcontract, the delivery of materials was to begin the week of April 6, 1998. However, Mills, through ABC, did not make its first delivery until April 15, 1998, and some of the materials needed for the early stages of the building were not delivered until later shipments. As a result, construction was delayed. When Double Diamond was able to begin working on the building, it discovered numerous problems with the component parts supplied by Mills. Many of the steel components did not fit together properly, some of the mainframes were twisted, and other parts were missing or the wrong length.
Double Diamond reported the problems to Mills, who told Double Diamond to contact ABC directly. Double Diamond made numerous calls to ABC, but ABC did not resolve the problems. On May 12, 1998, Double Diamond ceased working on the project and informed Mills and ABC that nothing else could be done until the problems were corrected. On May 14, 1998, Wilma Miller wrote a letter to Mills, ABC, the City of Brookings, and the project architects, in which she recounted the problems encountered during construction and expressed concern about the structural integrity of the structure.
On May 15, 1998, Dave Roberts, an ABC representative, visited the construction site to examine the structure. A videotape of his inspection documented the many problems with the structure and materials. Before leaving the site, Roberts concluded that the structure did not need additional bracing and would be fine unless hit by a tornado. Later that evening, the structure collapsed in the wind. A climatologist testified that the wind speed at the approximate time of the collapse was thirty-five miles per hour, but he also noted that an observer at the scene reported wind speeds of nearly fifty miles per hour at the time of the collapse.
After the collapse, Double Diamond submitted to Mills an invoice dated May 21, 1998, in the amount of $119,928 for work completed on the project up to the date of collapse. The amount of the invoice was based on Double Diamond's estimate that phase one of the construction had a contract value of $149,910 and that Double Diamond had completed eighty percent of the work on phase one. Mills previously had paid Double Diamond $20,000 on an invoice dated April 23, 1998. Mills paid Double Diamond $50,000 in response to the May 21st invoice but refused to pay any more. On June 30, 1998, Double Diamond informed Mills that it would not return to work on the project unless Mills paid the balance due on the $119,928 invoice and executed a new contract with Double Diamond for completion of the project. When the parties did not reach a new agreement, Mills completed the project on its own.
Mills submitted a claim to its insurer for the damages it sustained when the building collapsed. In its claim, Mills included Double Diamond's $119,928 invoice plus $6,500 for additional move-in costs. In a June 18, 1998, letter from Mills to its insurance agent, Mills' project manager explained why these costs were reasonable. Mills' insurer approved $103,230.50 for structural steel erection plus nearly sixteen percent for profit and overhead, which amounted to approximately $119,600.
On February 22, 1999, Double Diamond filed what amounted to a breach-of-contract claim against Mills, seeking damages in the amount of $139,875. Double Diamond later amended its complaint to add an alternative theory of recovery of the same amount based on quantum meruit. Mills denied liability and asserted counterclaims based on negligence and breach of contract for failure to construct in a good and workmanlike manner. One of Mills' affirmative defenses was that Double Diamond breached the contract and was not entitled to recover because it voluntarily discontinued work on the project after the collapse, and failed to return to work despite numerous requests by Mills.
Following a bench trial, the district court held that Mills breached the contract by failing to provide the appropriate materials. The district court stated that the sheer number of problems made it impossible for Double Diamond to perform under the contract. The district court also found that the collapse was not the result of negligence on Double Diamond's part and that Mills could not maintain an action against Double Diamond for breach of contract because Mills did not substantially comply with its obligations under the contract. Even if Mills could maintain an action against Double Diamond, the district court found that Double Diamond's performance under the contract was not substandard.
The district court awarded Double Diamond damages of $49,928, after finding that Double Diamond proved by a preponderance of the evidence that eighty percent of the red-iron work was completed for a total amount of $119,928 and subtracting the $70,000 previously paid. The district court also awarded consequential damages of $33,795 for down-time charges from the date of collapse through the end of the contract term, finding that the damages were proximately caused by Mills' breach.1 After entry of judgment, the district court amended the judgment to add $33,504.93 in prejudgment interest.
Mills and Van Tol2 assert on appeal that the district court erred in its determination of breach of contract because this claim was not included in Double Diamond's amended complaint. The claims in Double Diamond's amended complaint are based on Mills' refusal to pay the amount due to Double Diamond for its work on the building through the date of collapse, not on Mills' failure to provide appropriate materials. While we acknowledge that Double Diamond's amended complaint does not allege that Mills breached the contract by providing defective building materials, we conclude that the parties tried the issue by consent.
Federal Rule of Civil Procedure 15(b) provides that "[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings." A party's consent may be implied "if evidence to support the claim was introduced at trial without objection." Shen v. Leo A. Daly Co., 222 F.3d 472, 479 (8th Cir.2000). Thus, under Rule 15(b), the district court could consider any theory of liability tried and argued by the parties, regardless of whether it was included in the pleadings. See Karlen v. Ray E. Friedman & Co. Commodities, 688 F.2d 1193, 1197 n. 3 (8th Cir.1982).
A review of the record reveals that Double Diamond argued the issue of Mills' failure to provide appropriate materials under the contract and introduced evidence to support a claim that this amounted to a breach of contract. Although Mills did not expressly consent to try the issue of breach of contract based on failure to provide appropriate building materials, its consent, nevertheless, may be implied from its failure to object to the introduction of such evidence. Therefore, we conclude the district court properly considered and decided the issue of whether Mills breached the contract by failing to provide...
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