Taylor v. General Motors Co.
| Decision Date | 21 April 1999 |
| Docket Number | No. 98-3626,98-3626 |
| Citation | 187 F.3d 809 |
| Parties | (8th Cir. 1999) R. M. Taylor, Inc., a Missouri corporation, Appellee, v. General Motors Corporation, a Delaware corporation, Appellant. Submitted: |
| Court | U.S. Court of Appeals — Eighth Circuit |
Appeal from the United States District Court for the Western District of Missouri.
Before RICHARD S. ARNOLD and WOLLMAN,1 Circuit Judges, and WOLLE,2 District Judge
General Motors Corp. (GM) appeals from the denial of its motion for judgment as a matter of law following a jury verdict in favor of R.M. Taylor, Inc. (RMT), which found that GM had impliedly abandoned construction contracts with RMT. We reverse and remand.
RMT entered into contracts to design and construct conveyor systems at several GM plants. Each contract contained the following provision:
The Owner (GM) shall have the right at any time to require alterations in, additions to and deductions from the work shown on the Drawings or described in the Specification without rendering void the Contract. . . . All changes shall be described in an Emergency Field Order or Bulletin issued by the Owner. Receipt of Drawings or verbal orders shall not constitute authority to proceed with changes in the work. An Emergency Field Order authorizes the Contractor to proceed immediately with the work described therein with the price to be determined. A BULLETIN IS A REQUEST FOR QUOTATION. The Contractor shall not proceed with the work described in the bulletin until the work is authorized by [a]n Emergency Field Order, [a] Contract Supplement, or [a] Contract Change Order.
GM Construction General Conditions (GM 1638) 46.1, Appellant's Appx. at 204. The contracts also contained detailed provisions on the pricing of emergency field order work. See id. 46.2-46.4, Appellant's Appx. at 204-08. Because RMT placed the bids based on general drawings rather than customized designs for each plant, the provisions regarding changes in the work were particularly important.
To receive periodic payments under the contracts, RMT was required to inform GM of the status of its payments to subcontractors. See id. 44.12, Appellant's Appx. at 203. This requirement was included because the subcontractors could file mechanic's liens against GM's property if they were not paid by RMT. The contracts allowed GM to withhold payments from RMT and make payments directly to the subcontractors in the event RMT did not submit lien waivers showing that the subcontractors had been paid. Id.
During the construction of the conveyor systems, GM ordered many changes from the general drawings originally submitted by RMT. These changes were implemented through bulletins and emergency field orders. The number of changes ordered and overall increased costs of the projects were as follows:
Location Original Price Changes Final Price Increase
________ ______________ _______ ___________ _________
Arlington, TX` $ 5,100,000 15 $5,949,173 16.7%
Bowling Green, KY $14,265,815 42 $16,935,183 18.7%
Doraville, GA $11,754,000 64 $24,308,493 106.8%
Pontiac East, MI $ 4,500,000 44 $5,540,506 23.1%
Shreveport, LA $ 2,710,089 5 $3,200,498 18.1%
Wentzville, MO $ 7,787,845 3 $9,600,000 23.3%
See Trial Tr. at 541 (Wentzville final price), 1246-50 (Arlington original price, changes, and final price; Bowling Green original price, changes, and final price; Doraville original price, changes, and final price; Pontiac East original price, changes, and final price; Shreveport final price; Wentzville changes), 1578 (Shreveport original price), 2372 (Shreveport changes); Def. Ex. 958A (Wentzville original price).
Because bulletins were simply requests for quotations, RMT did not proceed with additional work described in bulletins unless it chose to submit a quotation and was awarded the additional work at that rate by GM. For emergency field orders, however, the contracts required RMT to perform the additional work immediately and then negotiate with GM to obtain payment. The negotiation process required RMT to provide GM's local contract manager a quote for the emergency field order work. The contract manager would then submit the quote to GM's plant engineer and overall project engineer for approval. GM could accept the quote or reject it and propose a different amount for payment. If GM rejected the quote, the contract manager and RMT's project manager would meet to discuss the discrepancy and agree on a price, which would be submitted to GM's plant engineer and overall project engineer for approval. This initial quotation process usually lasted between four and ten days.
After the parties agreed on a quote, RMT would submit a formal invoice, a sworn statement detailing the amounts to be paid to subcontractors, and the lien waivers to GM's contract manager. This documentation would then be submitted to the GM engineers for approval. It would then be forwarded to GM's accounting department, whereupon the first official "receipt" of the invoice would be generated. The documentation would then be returned to the contract manager for submission to the local GM finance department, resulting in the issuance of a second receipt, which would be sent to the GM disbursement department for payment. This process usually lasted between two and four weeks from the time the parties agreed on a quote.
If the invoice was for more than $100,000, it would pass through the audit department. If that department approved the invoice, the contract would be formally amended and RMT would be paid. In such a case, the total processing time for the invoice was three to six weeks from the time RMT provided GM's local contract manager with a quote for the emergency field order work. If the audit department found a problem with the invoice or its supporting documentation, however, it would return the materials to RMT for resubmission. In such a case, the total processing time might extend to more than ten weeks. Once the invoice was formally approved and the contract amended, GM had until the 25th of the following month to pay RMT.
This negotiation process, as opposed to the bidding process used for bulletins, required RMT to cover the additional expenses resulting from emergency field orders. The longer GM negotiated the price of the field orders, the longer RMT was forced to cover these expenses. As a result of these delays in payment, RMT was unable to pay its subcontractors, and it ultimately brought suit against GM, alleging excessive changes in the contracts and excessive delays in payment.
Count I of RMT's complaint alleged that GM's actions constituted a breach of the contracts; Count II alleged that GM impliedly abandoned the contracts. Although the jury heard evidence on both counts, the district court severed Count I "for separate resolution" and submitted only Count II to the jury. The jury found implied abandonment and awarded RMT quantum meruit damages of $21.5 million. The court entered judgment on the verdict and denied GM's renewed motion for judgment as a matter of law.
We review the denial of a motion for judgment as a matter of law de novo. See Arthaud v. Mutual of Omaha Ins. Co., 170 F.3d 860, 862 (8th Cir. 1999). GM is entitled to judgment as a matter of law "only if there was insufficient evidence to support the jury verdict." Id. We view all facts and resolve all conflicts in favor of RMT in making this determination, giving it the benefit of all reasonable inferences. See Varner v. National Super Markets, Inc., 94 F.3d 1209, 1212 (8th Cir. 1996). If the evidence is such that no reasonable juror could have inferred an intent to abandon the contracts, however, GM is entitled to judgment as a matter of law and we must reverse. See id.
Because our jurisdiction is premised on diversity, we apply state substantive law to RMT's claim. See Zunamon v. Brown, 418 F.2d 883, 889 (8th Cir. 1969) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). The district court correctly. concluded that Michigan law controls under the choice-of-law provision agreed to by the parties in the contracts. See Moses v. Union Pac. R.R., 64 F.3d 413, 418 (8th Cir. 1995) (); Consolidated Fin. Inv., Inc. v. Manion, 948 S.W.2d 222, 224 (Mo. Ct. App. 1997) ().
"The abandonment of a contract is a matter of intention to be ascertained from the facts and circumstances surrounding the transaction from which the abandonment is claimed to have resulted." Dault v. Schulte, 187 N.W.2d 914, 915 (Mich. Ct. App. 1971) (quoting 17 Am. Jur. 2d Contracts 484 (now 17A Am. Jur. 2d Contracts 543 (1991))). A party displays an intent to abandon if it "positively and absolutely refuses to perform the conditions of the contract, such as a failure to make payments due, accompanied by other circumstances, or where by [its] conduct [it] clearly shows an intention to abandon the contract." Collins v. Collins, 83 N.W.2d 213, 216-17 (Mich. 1957) (internal quotations omitted). Abandonment must be mutual, however; if one party continues to perform under the contract after the other party exhibits an intent to abandon, there has been no abandonment. See 17A Am. Jur. 2d Contracts 543; see also S. S. Silberblatt, Inc. v. Seaboard Sur. Co., 417 F.2d 1043, 1054-55 (8th Cir. 1969) (); Dault, 187 N.W.2d at 915-16 (...
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