Tang How v. Edward J. Gerrits, Inc.

• Decision Date: 14 May 1992
• Docket Number: Nos. 90-5712,91-5115,s. 90-5712
• Citation: 961 F.2d 174
• Parties: Lincoln P. TANG HOW, d/b/a Tang How Brothers, General Contractors, Plaintiff-Counterclaim Defendant-Appellee, v. EDWARD J. GERRITS, INC., Defendant-Counterclaimant, Third Party Plaintiff-Appellant, v. GUARDIAN INSURANCE COMPANY, Third-Party Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 174

961 F.2d 174

Lincoln P. TANG HOW, d/b/a Tang How Brothers, General

Contractors, Plaintiff-Counterclaim Defendant-Appellee, v. EDWARD J. GERRITS, INC., Defendant-Counterclaimant, Third

Party Plaintiff-Appellant, v. GUARDIAN INSURANCE COMPANY, Third-Party Defendant.

Nos. 90-5712, 91-5115.

United States Court of Appeals Eleventh Circuit.

May 14, 1992.

John H. Gregory, Welbaum, Zook & Jones, Coral Gables, Fla., for Edward J. Gerrits, Inc.

George W. Cannon, Jr., Law Offices of Ross and Cannon, Frederiksted, St. Croix, U.S.V.I., for Tang How.

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

Before HATCHETT and EDMONDSON, Circuit Judges, and HILL, Senior Circuit Judge.

HATCHETT, Circuit Judge:

In this construction dispute involving conflict of laws questions, we affirm the district court's ruling that the appellee could recover damages for work performed on a quantum meruit theory and recover attorney's fees under the written contract, although the appellee did not complete the work the contract required.

I. FACTS

Edward J. Gerrits, Inc. (Gerrits), a Florida construction corporation, managed the construction of a junior high school in St. Croix for the government of the Virgin Islands. Lincoln Tang How, a resident of the United States Virgin Islands, doing business as Tang How Brothers, General Contractors (Tang How) served as a subcontractor for the school's steel erection work. Gerrits and Tang How entered into an oral agreement whereby Tang How would perform steel work on the project and cure the original steel erector's defects. Later, Gerrits and Tang How entered into written contracts for the performance of plaster and decorative block work which consisted of the written contract, the contract drawings, and the specifications. Additionally, the written contract required Tang How to obtain a performance bond without which the contracts would be void. The contract also contained a forum selection clause which named the Southern District of Florida as the proper forum. On February 19, 1988, Gerrits forwarded the executed contract to the Virgin Islands government.

Gerrits and Tang How also entered into an oral contract for the correction of the previous contractor's plaster work. The plaster contract required a one-half inch plaster system applied in a three-coat process to a metal lath. Tang How exceeded the contract's anticipated plaster amount and requested an increase in funds for the extra plastering materials and labor. Gerrits instructed Tang How to continue the work and submit change orders for the extras. Although Tang How received approval for the change orders from Gerrits for extra plastering and was instructed on how to correct areas needing plaster, Gerrits did not pay Tang How for the extra plastering, labor, or materials. In addition, Tang How did not receive payment for the additional steel work, repair work, or block work. Nevertheless, Gerrits promised payment and insisted that Tang How continue the work.

On or about April 6, 1988, an architect from Frank Blaydon and Associates, the assistant commissioner of public works for the Virgin Islands government, and a Gerrits representative inspected the project and rejected Tang How's plaster work because of excessive cracking, improper curing, and improper application of the coating process. Tang How repaired cracks in three of the six buildings which comprised the project, and both Gerrit's superintendent and the government inspector accepted the work.

Under the block installation contract, Gerrits required Tang How to install eighteen blocks in a space that was too small to accommodate that many blocks. Although Tang How requested that alterations be made to install the blocks, Gerrits refused to allow any alterations and rejected Tang How's block work.

Throughout the project, the Virgin Islands government was extremely late in making payments. Gerrits and Tang How discussed the government's late payments, and Gerrits even threatened to suspend the work until the Virgin Islands government brought its payments current. Although Gerrits advanced Tang How $25,000 in March, 1988, in a meeting held on April 9, 1988, Tang How informed Gerrits that it needed payment in order to continue the work. Gerrits then promised Tang How an advancement of an additional $25,000 to continue the work, but payment was never made. Subsequently, Tang How reduced its work force to one-quarter of the regular size, and after making numerous payment requests, it left the job on May 6, 1988. As of May 6, 1988, the Virgin Islands government had not released any funds for the payment of Tang How's work.

II. PROCEDURAL HISTORY

On May 5, 1988, Tang How filed this lawsuit against Gerrits in the Virgin Islands, Division of St. Croix, pursuant to 48 U.S.C.A. § 1612(a, b) alleging breach of contract. Based upon the forum selection clause of the contract, the District Court of the Virgin Islands granted a change of venue and transferred the action to the United States District Court for the Southern District of Florida which had subject matter jurisdiction on the basis of diversity of citizenship under 28 U.S.C.A. § 1332. Gerrits filed its answer, affirmative defenses, and counterclaim to Tang How's complaint denying that any money was due and alleging that Tang How breached its contract by: (1) failing to perform in accordance with the contract documents; (2) performing defective work; and (3) abandoning the project. In its counterclaim, Gerrits sought damages against Tang How for the cost to correct and repair Tang How's defective work. Tang How denied the material allegations of Gerrit's counterclaim and set forth certain affirmative defenses.

On August 8, 1989, the court granted Tang How leave to amend its complaint to allege a quantum meruit theory. Additionally, the court ruled that the contracts between the parties were valid as a matter of law, based on the admissions of the parties. Later, Gerrits filed a motion for partial summary judgment on Tang How's quantum meruit claim. The district court denied the motion and ruled that a contractor wrongfully forbidden to complete its work may rescind a valid contract and maintain an action for quantum meruit.

During the jury selection process, Tang How exercised its peremptory challenges to exclude three prospective jurors from the fifteen-person jury venire. Gerrits also attempted to exercise its peremptory challenges to exclude two African-American females and one Latin-American female. Tang How objected to the challenges on the grounds that Gerrit's actions were racially motivated, and an improper attempt to exclude an identifiable group. Gerrits offered a neutral explanation as to one juror, and the district court honored the challenge as to that juror. The district court, however, denied Gerrit's request to strike the other African-American female because Gerrits could not offer a neutral explanation.

At the close of Tang How's case, and at the close of all the evidence, the district court denied Gerrits's motions for directed verdict. The jury found that Gerrits breached its oral and written contracts with Tang How by wrongfully preventing Tang How from completing the work. Consequently, the jury awarded Tang How $147,098 as quantum meruit damages for the reasonable value of the work performed in a sound and workmanlike manner. Additionally, the jury found that Tang How breached its contracts with Gerrits and awarded Gerrits $25,000.

Following trial, Tang How filed a motion for attorney's fees in the amount of $53,100 and costs in the amount of $41,469.69. The district court referred the attorney's fees and cost issue to a United States Magistrate Judge who, after hearing testimony and argument on the issue of Tang How's entitlement to attorney's fees and costs, issued a report and recommendation, recommending $47,650 for attorney's fees and $5,463.30 for costs. The district court adopted the magistrate judge's report and recommendation. 756 F.Supp. 1540 (S.D.Fla.1991).

Following the verdict, the district court denied Gerrits's motion for judgment notwithstanding the verdict or for new trial, finding that substantial evidence existed to support the jury's verdict. Additionally, the district court held that the jury's damage award was consistent with the evidence presented at the trial and that no basis existed for upsetting the jury's calculation of damages. The district court also denied the motion for new trial based upon the court's inclusion of the juror Gerrits sought to exclude.

III. ISSUES

Gerrits raises the following issues: (1) whether the trial court committed reversible error in permitting Tang How's quantum meruit claim to go to the jury; (2) whether substantial evidence exists supporting the jury's finding that Gerrits wrongfully prevented Tang How from completing the work; (3) whether the court erred in denying Gerrit's right to exercise its peremptory challenge; (4) whether the evidence and the law supports the jury's damage verdict; (5) whether the court committed reversible error in permitting Tang How to introduce testimony and opinions regarding the contract language and prior contract negotiations; (6) whether the court erred as a matter of law in awarding Tang How attorney's fees under the contract where Tang How elected at trial to proceed under its quantum meruit claim and not under the contract; (7) whether the court abused its discretion in determining that the fee awarded to Tang How was reasonable; and (8) whether the trial court abused its discretion as to the costs awarded Tang How.

IV. CONTENTIONS

To counter Gerrit's contentions, Tang How contends that the district court correctly ruled on the contract issues. Additionally, Tang How contends that it did not waive its rights under the contract and should not be estopped from seeking attorney's fees under the contract due to the election of a quantum meruit theory of recovery....