U.S. for Use and Ben. of Water Works Supply Corp. v. George Hyman Const. Co.
| Decision Date | 10 October 1997 |
| Docket Number | No. 97-1577,97-1577 |
| Citation | 131 F.3d 28 |
| Parties | 42 Cont.Cas.Fed. (CCH) P 77,218 UNITED STATES of America for the Use and, Benefit of WATER WORKS SUPPLY CORPORATION, Plaintiff, Appellee, v. GEORGE HYMAN CONSTRUCTION COMPANY, National Union Fire Insurance Company of Pittsburgh, P.A., Federal Insurance Company AND Seaboard Surety Company, Defendants, Appellants. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Steven J. Comen, Boston, MA, with whom Jeremy M. Sternberg, Dori C. Gouin, Howard J. Hirsch and Goodwin, Procter & Hoar LLP were on brief for appellant, The George Hyman Construction Company.
Bert J. Capone, Boston, MA, with whom CharCretia V. DiBartolo and Cetrulo & Capone were on brief for appellant, National Union Fire Insurance Company of Pittsburgh, PA; Federal Insurance Company and Seaboard Surety Company.
Gary H. Kreppel, Framingham, MA, for appellee.
Before TORRUELLA, Chief Judge, CAMPBELL, Senior Circuit Judge, and BOUDIN, Circuit Judge.
Defendant-appellant George Hyman Construction Company ("Hyman") appeals from the district court's judgment awarding recovery to the Water Works Supply Corporation ("Water Works") under the Miller Act, 40 U.S.C. §§ 270a-270d (1986) (the "Miller Act" or the "Act"). Hyman makes a number of arguments as to why the district court erred in allowing recovery. In this opinion we concentrate particularly on Hyman's contentions: (1) that Water Works did not satisfy the Act's ninety-day notice requirement; and (2) that Water Works did not have a sufficiently close relationship to Hyman to qualify for recovery under the Miller Act. Finding no merit in these or in the other arguments that Hyman advances, we affirm.
The facts are largely undisputed. Hyman was the general contractor on a $70 million federal construction project to build a mail processing center in Waltham, Massachusetts (the "Post Office Project" or the "Project"). Pursuant to the requirements of the Miller Act, Hyman obtained a payment bond from National Union Fire Insurance Company of Pittsburgh, PA, Federal Insurance Company, and Seaboard Surety Company (collectively, the "Sureties"). On or about September 16 1994, Hyman entered into an oral agreement with Calvesco, Inc. ("Calvesco"), wherein Calvesco promised to serve as demolition, excavation and site work subcontractor for the Post Office Project.
On September 16, 1994, the same day that Hyman hired Calvesco, Calvesco submitted an application for credit to Water Works, a purveyor of pipe and piping materials. Water Works extended an unlimited line of credit to Calvesco. Calvesco was working on at least three projects at that time, and the credit application did not indicate whether it was for a particular project.
Subsequently, Calvesco informed Hyman that it could not legally serve as subcontractor on the Post Office Project because it was a non-union shop. On September 27, 1994, Hyman and Calvesco agreed to replace Calvesco with Iron Holdings, Inc. d/b/a Charles A. Jackson Co. ("Jackson"), a unionized company created by the principals of Calvesco.
On October 11, 1994, Jackson notified Water Works that it had replaced Calvesco as subcontractor on the Post Office Project. Jackson requested that it, rather than Calvesco, receive Water Works's invoices. Because Water Works had extended credit only to Calvesco and not to Jackson, Water Works refused to supply Jackson unless Calvesco executed a corporate guarantee. Until the corporate guarantee could be signed, Water Works agreed to ship piping materials to the Post Office Project site at Jackson's request and to send the invoices to Calvesco. That same day, Jackson placed an order for pipe. Water Works shipped the material to "Charles A. Jackson Co., c/o Calvesco." Water Works sent the invoice to "Calvesco, Inc. Attn: Jackson Gateman, Treas." ("Gateman").
From early October through December 29, 1994, Water Works filled seven purchase orders relating to the Post Office Project. Water Works continued to ship materials to the Post Office Project site and to send the invoices to Gateman at Calvesco. Jackson paid for five of the seven shipments; the other two invoices remain unpaid and are the subject of this action. The first unpaid invoice, for $53,493.83 and dated November 30, 1994, corresponded to an order placed on November 1, 1994 by Lou Ingegneri, the Post Office Project manager for Jackson. The second unpaid invoice, for $157.76 and dated January 12, 1995, related to the last delivery made by Water Works to the Project, which occurred on December 29, 1994. This second invoice does not indicate the name of the person placing the order.
During January and February of 1995, Water Works's credit manager Stanley Wernick ("Wernick") conversed on the telephone with several employees of Hyman about the outstanding November and December invoices. On March 7, Wernick sent a demand letter to Calvesco. Wernick also sent a copy of this letter to Hyman and the Sureties. Hyman responded to Wernick's communications in writing on March 22 by indicating that it had turned the matter over to its attorneys and was not paying any claims until it had a clear picture of its options.
On April 5, 1995, Water Works filed suit in Middlesex County Superior Court against Calvesco and its personal guarantor for monies owed on several jobs, including the Post Office Project. This state court suit resulted in a settlement in which Calvesco agreed to pay Water Works for the cost of its materials. Calvesco has not satisfied this judgment.
On the same day that Water Works filed its state action, it also filed a one-count Miller Act complaint against Hyman and the Sureties in the United States District Court for the District of Massachusetts. The district court consolidated Water Works's federal action with twenty-five other actions brought against Hyman arising from the Post Office Project in order to determine issues of fact and law common to all the claimants. The district court found that Calvesco and Jackson were separate corporate entities, and that Calvesco was Hyman's subcontractor from September 16, 1994 through September 27, 1994, with Jackson serving as subcontractor thereafter.
Water Works argued to the district court that it was in a direct contractual relationship with Calvesco during the period of time when Calvesco was Hyman's direct subcontractor. The district court rejected this argument finding that the credit application between Water Works and Calvesco did not constitute a contract.
Nevertheless, the court held that Water Works could recover under the Miller Act. Finding that Water Works had satisfied the 90-day notice requirement in the Miller Act, the court held that Water Works could recover from the payment bond on the amount owed for its November order under two alternative theories. First, Jackson had an open account with Water Works. Second, Water Works could recover under the doctrine of quantum meruit.
The district court allowed Water Works to recover the amount of its November shipment--$53,493.83, plus costs and interest--but not the amount of its December shipment--$157.76. The key distinction between the two orders, in the court's view, was that the November order was signed by Jackson's project manager, whereas the December order, being unsigned, could not be plainly attributed to Jackson.
We review de novo questions of statutory interpretation that present pure questions of law. See Riva v. Commonwealth of Mass., 61 F.3d 1003, 1007 (1st Cir.1995). The sufficiency of notice under the Miller Act, to the extent based on undisputed facts, is commonly reviewed de novo. See United States ex rel. Consol. Elec. Distributors, Inc. v. Altech, Inc., 929 F.2d 1089, 1092 (5th Cir.1991); United States ex rel. Moody v. American Ins. Co., 835 F.2d 745, 748 (10th Cir.1987). We uphold a district court's factual findings unless they are clearly erroneous. See Fed.R.Civ.P. 52(a); United States v. MSI Corp., 408 F.2d 1348, 1348 (1st Cir.1969).
The Miller Act requires a general contractor performing a contract valued at over $25,000 on any public construction project to obtain a performance bond for the protection of persons supplying labor and material in the prosecution of the work on the project. See 40 U.S.C. § 270a(a)(2). The Act provides that persons who have "furnished labor or material" to a public project may sue to recover from the payment bond any amount owed to them. Id. § 270b(a).
The purpose of the Miller Act is "to protect persons supplying labor and material for the construction of federal public buildings in lieu of the protection they might receive under state statutes with respect to the construction of nonfederal buildings." United States ex rel. Sherman v. Carter, 353 U.S. 210, 216, 77 S.Ct. 793, 796-97, 1 L.Ed.2d 776 (1957); see also United States ex rel. Pittsburgh Tank & Tower, Inc. v. G & C Enterprises, Inc., 62 F.3d 35, 35 (1st Cir.1995) (same). Courts give the Act a liberal interpretation to achieve that purpose. See, e.g., Carter, 353 U.S. at 216, 77 S.Ct. at 796-97; Clifford F. MacEvoy Co. v. United States ex rel. Calvin Tomkins Co., 322 U.S. 102, 107, 64 S.Ct. 890, 893-94, 88 L.Ed. 1163 (1944).
Despite the "highly remedial" nature of the Act, MacEvoy, 322 U.S. at 107, 64 S.Ct. at 893-94, there are two important limitations on who can recover from the payment bond. First, the Miller Act allows recovery from the bond by persons who have a "direct contractual relationship" with either the general contractor or a first-tier subcontractor of the general contractor. 40 U.S.C. § 270b(a). The Supreme Court has interpreted this provision to preclude recovery on the payment bond by anyone whose relationship to the general contractor is more remote than a second-tier subcontractor. See J.W. Bateson Co. v. United States...
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