U.S. for Use of Georgia Elec. Supply Co., Inc. v. U.S. Fidelity and Guar. Co.
| Decision Date | 21 September 1981 |
| Docket Number | No. 80-7259,80-7259 |
| Citation | 656 F.2d 993 |
| Parties | , 29 Cont.Cas.Fed. (CCH) 81,897 UNITED STATES of America For the Use of GEORGIA ELECTRIC SUPPLY COMPANY, INC., Plaintiff-Appellee, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant-Appellant. . Unit B |
| Court | U.S. Court of Appeals — Fifth Circuit |
O. Torbitt Ivey, Jr., Augusta, Ga., for defendant-appellant.
Roy D. Tritt, Augusta, Ga., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Georgia.
Before MORGAN, RONEY and KRAVITCH, Circuit Judges.
In this Miller Act case, an electrical supplier for the construction of a post office successfully sued on a payment bond furnished by defendant. 1 On appeal, defendant asserts as error (1) the finding that the supplier complied with the Miller Act notice requirement; (2) the award of attorneys' fees and prejudgment interest; (3) the failure to reduce the judgment by certain claimed credits; and (4) the rejection of an estoppel defense. We reverse the award of attorneys' fees but affirm the judgment in all other respects.
In August 1976, a general contractor entered into a contract with the United States Postal Service for construction of a new post office in Thomson, Georgia. Defendant, United States Fidelity & Guaranty Company, furnished a payment bond as required by the Miller Act. 2 This bond guaranteed payment for laborers or materialmen who remained unpaid by the general contractor or its subcontractors.
In September, the general contractor subcontracted the electrical work on the project. During the course of its work, the subcontractor purchased electrical supplies on account from plaintiff, Georgia Electric Supply Company.
After repeated failure to receive payments on its account, plaintiff refused to supply further materials until the account was brought current. After the general contractor made a payment directly to plaintiff and the subcontractor's principal officers executed personal guaranties, plaintiff resumed shipment.
The building was accepted for occupancy by the Postal Service on September 30, 1977, although various work and repairs continued on the project for the next few months. On December 29, 1977, plaintiff notified the contractor that $21,000 was still owed on its account. After payment was refused, plaintiff filed this action under the Miller Act. 3 In a special verdict, a jury awarded it the amount claimed as due on the account, together with prejudgment interest and attorneys' fees. Defendant appeals.
The most difficult question in this case is presented by defendant's contention that plaintiff is barred from asserting its Miller Act claim because it failed to mail a notice of claim within ninety days of the last shipment of materials.
The Miller Act provides that a materialman such as plaintiff
shall have a right of action upon the said payment bond upon giving written notice to said contractor within ninety days from the date on which such person ... furnished or supplied the last of the material for which such claim is made. 4
Failure to comply with this ninety-day notice requirement will bar a claim on the payment bond. 5
It is undisputed plaintiff notified the general contractor of its claim on December 29, 1977. Therefore, counting back ninety days from this date, plaintiff must have "supplied the last of the material" within the meaning of the Miller Act on or after October 1, 1977, in order for notice to have been timely.
Evidence at trial indicated that although most of the materials for the project were supplied by plaintiff prior to October 1, three shipments were made after this crucial date. The first shipment, on November 11, included three phone receptacle covers and a switch plate. These parts had been back ordered since June and were billed to the electrical subcontractor at a total cost of $1.68. The second shipment, on November 22, consisted of a "Hubbell lens," which fitted over an outside light. The lens originally installed was cracked, although whether it cracked during shipment or after installation was not made clear. The billed cost was $7.80. The final shipment, on December 5, included fifteen "emergency lighting ballasts," which were battery packs that fit into interior fluorescent lighting fixtures, including exit lights. They were safety features designed to keep certain lights on even if there was a loss of power. The ballasts had been mistakenly omitted from the lighting fixtures, which were installed earlier. It is not clear whether the omission was the fault of the manufacturer, the electrical engineer or plaintiff. In any event, the invoice for the ballasts indicated a price of approximately $1,800, although no charge was billed. Plaintiff explained that no charge was made because the cost of the ballasts had already been included in the price of the lighting fixtures, previously billed.
The parties hotly dispute the legal significance of these shipments. Defendant contends the materials were furnished merely for repairs or the correction of defects and, as such, did not extend the notification period under the Miller Act. 6 Plaintiff, on the other hand, argues the materials were supplied as part of the original contract and were necessary to fulfill the original job specifications. Therefore, it concludes, the materials tolled the notice period. 7
The line drawn by this Court and in other jurisdictions, whether the materials were furnished for repairs or as part of the original contract, is admittedly hazy. As we noted in an earlier decision: "(E)ach case must be judged on its own facts and ... sweeping rules about 'repairs' offer little help in the necessary analysis." 8 The factors to consider include the value of the materials, the original contract specifications, the unexpected nature of the work, and the importance of the materials to the operation of the system in which they are used. 9
On which side of the line the shipments in the present case fall is a close question. Standing alone, the materials in the first two shipments would most likely be insufficient to extend the notification period, in view of their minimal value and the clear evidence the Hubbell lens supplied in the second shipment only replaced a previous lens. The emergency ballasts provided in the third shipment, however, could well be viewed as supplied in accordance with the original contract and as a necessary portion of the lighting system. The fact no separate charge was made for these ballasts does not preclude their effect for notification purposes. 10
The district court cannot be reversed for concluding a jury question was presented. The jury heard extensive testimony and evidence concerning the three shipments. It was then adequately instructed by the trial court on the law with respect to their effect for Miller Act purposes. On this record, we are not convinced that the jury erred in finding these shipments extended the notification period under the Act, "whether our task be viewed either as a simple examination of the (jury's) findings of fact for indications of clear error or as an independent application of law to fact." 11 Defendant has simply failed to meet its appellate burden of establishing error in the district court's denial of a judgment n.o.v. or error in the finding of the jury. 12
The defendant next argues that the jury erred in awarding attorneys' fees.
In F. D. Rich, Inc. v. United States ex rel. Industrial Lumber Co., 13 the Supreme Court decided that federal rather than state law governs the award of attorneys' fees in Miller Act cases. The Court held that absent a contractual basis, attorneys' fees may be awarded only where the opposing party "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." 14
In the present case, the sole allegation of bad faith is that defendant did not independently investigate the merits of plaintiff's claim. Defendant's response was limited to contacting the general contractor to see whether it had hired an attorney to investigate and defend against the claim. Defendant's claims supervisor testified as to the company's general practice: "(W)e have a Master Assurity Agreement signed by (the general contractor), and when we receive the lawsuit, or any claim, we direct it directly to (the contractor), calling on them to handle it in accordance with the provisions of the Master Assurity Agreement holding us harmless against any loss." Record Vol. 2 at 183.
The testimony of the claims supervisor, the sole evidence on which plaintiff based its claim for attorneys' fees, fails to establish that defendant acted vexatiously or in bad faith. It was not unreasonable for defendant to leave the investigation and defense of the claim to the general contractor, who was more familiar with the project and who apparently assumed ultimate liability on the claim pursuant to an indemnification agreement. Moreover, the validity of plaintiff's claim was sufficiently in doubt to justify the decision to litigate. As the Eighth Circuit held in a Miller Act case:
The mere finding ... that the sureties failed to investigate the claims and relied upon a solvent principal will not, by itself, justify the assessment of vexatious damages where the record demonstrates that the principal presented a reasonable, albeit unsuccessful, defense. Where there is an open question of fact or law determinative of the insured's liability, the insurer, acting in good faith, may insist on judicial determination of such questions without subjecting itself to penalties for vexatious refusal to pay. 15
The award of attorneys' fees must therefore be reversed.
The defendant contends the jury erred in awarding prejudgment interest.
Unlike attorneys' fees, it is not entirely clear what law governs the allowance of prejudgment interest. While this Court has previously...
To continue reading
Request your trial
-
U.S. for Use of C.J.C., Inc. v. Western States Mechanical Contractors, Inc.
... ... corporation; Commercial Union Insurance Co., a ... Massachusetts corporation; and Sandia ... 00 and provided that Sanchez would also supply the engineering and surveying required to perform ... Co. v. Fidelity and Casualty Co. of New York, 446 F.2d 439, ... Such a determination, however, merely leads us back to state law. Neither the Miller Act nor ... United States ex rel Georgia Elec. Supply Co., v. U.S. Fidelity and Guar. Co., ... ...
-
U.S.A For The Use And Benefit Of Wfi Ga. Inc v. The Gray Ins. Co.
... ... of America FOR the USE AND BENEFIT OF WFI GEORGIA, INC. and Capital Computer Group, LLC Plaintiffs, ... United States Fidelity and Guaranty Co. v. Hendry Corp., 391 F.2d 13, ... United States ex rel. Cal's A/C and Elec. v. Famous Constr. Corp., 220 F.3d 326, 328 (5th ... United States ex rel. Georgia Elec. Supply Co. v. United States Fid. & Guar. Co., 656 F.2d ... ...
-
Wilson County Sch. v Clifton
... ... written at the M-Team was for Chris to tell us what we needed to do to acoustically treat the ... Ct. App. 1982); Preston Lincoln-Mercury, Inc. v. Kilgore, 525 S.W.2d 155, 158 (Tenn. Ct. App ... Bartec Indus., Inc. v. United Pac. Co., 976 F.2d 1274, 1279 (9th Cir. 1992), amended on ... 1994); United States ex rel. Georgia Elec. Supply Co. v. United States Fidelity & ... ...
-
U.S. v. Fidelity and Deposit Co. of Maryland
... ... Pyramid Enterprises, Inc. ("C. Pyramid"), the general contractor on a ... Order") whereby Hussmann agreed to supply certain commercial refrigeration equipment to C ... , and your personnel continue to promise us that all materials are firth coming [sic] ... C ... 1983); United States for the use of State Elec. Supply Co. v. Hesselden Constr. Co., 404 F.2d ... Another Approach: the Georgia Electric Factors ... We feel ... United States Fidelity & Guar. Co., 82 Vt. 103, 71 A. 1109, 1111 (Vt.1909)) ... ...
-
Annual survey of fidelity and surety law, 1998.
...late notice defense. (1.) 135 F.3d 671 (9th Cir. 1998). (2.) 8 F.Supp.2d 1320 (M.D. Ala. 1998). (3.) 999 F.Supp. 734 (D. N.J. 1998). (4.) 656 F.2d 993 (5th Cir. (5.) 9 F.Supp.2d 585 (W.D. N.C. 1998). (6.) 71 Cal.Rptr.2d 164 (Cal.App. 1998). (7.) 674 N.Y.S.2d 654 (1998). (8.) 577 N.W.2d 657 ......