U.S. for Use and Benefit of Ken's Carpets Unlimited, Inc. v. Interstate Landscaping Co., Inc.

• Decision Date: 06 September 1994
• Docket Number: Nos. 92-6571,92-6631,s. 92-6571
• Citation: 37 F.3d 1500
• Parties: 39 Cont.Cas.Fed. (CCH) P 76,705 NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit. UNITED STATES of America, for the Use and Benefit of KEN'S CARPETS UNLIMITED, INC., Plaintiff-Appellant, Cross-Appellee, v. INTERSTATE LANDSCAPING COMPANY, INC., Defendant-Appellee, Cross-Appellant, and United Fire and Casualty Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1500

37 F.3d 1500

39 Cont.Cas.Fed. (CCH) P 76,705

NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.

UNITED STATES of America, for the Use and Benefit of KEN'S CARPETS UNLIMITED, INC., Plaintiff-Appellant, Cross-Appellee, v. INTERSTATE LANDSCAPING COMPANY, INC., Defendant-Appellee Cross-Appellant and United Fire and Casualty Company, Defendant-Appellee.

Nos. 92-6571, 92-6631.

United States Court of Appeals, Sixth Circuit.

Sept. 6, 1994.

Before: JONES, RYAN, and BATCHELDER, Circuit Judges.

RYAN, Circuit Judge.

Ken's Carpets Unlimited, Inc. appeals the district court's order granting summary judgment for the defendant Interstate Landscaping Company, Inc. on Carpets Unlimited's action against Interstate Landscaping and its surety, United Fire and Casualty, for breach of contract and claim for recovery on a construction bond under the Miller Act, 40 U.S.C. Sec. 270(a) et seq. Interstate has filed a cross-appeal against Carpets Unlimited challenging the district court's failure to award completion costs and attorneys fees. The principal issues on appeal are (1) whether the district court erred in holding that Carpets Unlimited was required to pay its employees the prevailing wage in accordance with the Davis-Bacon Act, 40 U.S.C. Sec. 276a et seq., absent specific language in the subcontract; and (2) whether the district court erred in denying Carpets Unlimited recovery in quantum meruit. For the following reasons, we reverse and remand.

I.

Interstate contracted with the federal government to make improvements to the military base at Fort Campbell, Kentucky, in the total amount of $5,138,000. Carpets Unlimited submitted a bid to Interstate for $18,517 to furnish and install ceramic tile, resilient flooring, and vinyl base--a portion of the Fort Campbell job. Interstate accepted the bid and later the parties entered into a subcontract ultimately worth $21,012.

Interstate's contract with the government, the prime contract, obligated Interstate to pay laborers working on the project in accordance with the Davis-Bacon Act, including the Act's prevailing wage rate requirements. The subcontract between Interstate and Carpets Unlimited provided that the subcontractor would comply with at least some of the terms of the prime contract:

The Subcontractor agrees to furnish all material and perform all work ... in accordance with this Agreement, the Agreement between the Owner and Contractor, and in accordance with the General Conditions of the Contract, Supplementary General Conditions, the Drawings and Specifications and addenda prepared by the U.S. ARMY CORP OF ENGINEERS....

....

In addition to the foregoing provisions the parties also agree: That the Subcontract shall:

(1) Be bound to the Contractor by the terms of the Contract Documents and this Agreement, and assume toward the Contractor all the obligation and responsibilities that the Contractor, by those documents assumes toward the Owner, as applicable to this Subcontract.

The prime contract between the government and Interstate (between the "Owner" and "Contractor") required Interstate to conform to the standards of the Davis-Bacon Act. In fact, the contract reproduced exact language from the Davis-Bacon Act as a term of the contract, including the Act's prevailing wage requirement. The subcontract, however, did not include any explicit reference to the Davis-Bacon Act nor did it provide a wage scale. In the course of dealings between Interstate and Carpets Unlimited, the only direct reference to the Davis-Bacon Act came three months after the execution of the subcontract, but before Carpets Unlimited began its work, when Interstate sent an acknowledgement confirming that the subcontract was subject to the requirements of the Davis-Bacon Act. Carpets Unlimited executed the acknowledgement.

Carpets Unlimited began work in October 1989. By December, Carpets Unlimited had completed about 98% of the contract. The subcontract provided that Interstate would pay Carpets Unlimited within seven days after Interstate received payment from the government. Interstate received payment from the government on December 22, 1989. Interstate paid Carpets Unlimited on January 17, 1990. Two days later, Carpets Unlimited suspended work and announced that it was rescinding the contract because of Interstate's failure to make timely payment. Interstate completed the work at a cost of $1,472.34.

The Wage and Hour Division of the United States Department of Labor contacted Interstate to collect back wages due under the Davis-Bacon Act for employees who performed work on the project for Carpets Unlimited. Evidently, Carpets Unlimited did not pay the wages required by the Davis-Bacon Act nor did it provide Interstate with the federally mandated payroll documentation.

Carpets Unlimited sued Interstate seeking the reasonable value of the services it performed under the contract in the amount of $43,000. It claimed that the contract was invalid and unenforceable and it sought the value of its services under quantum meruit. Interstate brought a counterclaim seeking to recover the $7,825.37 it had to pay to the Department of Labor for the back wages it had to pay on behalf of Carpets Unlimited and the cost of completing work under the contract, $1,472.34.

Both parties moved for summary judgment. The district court held that Carpets Unlimited was required under the contract to meet the requirements of the Davis-Bacon Act, including the payment of Davis-Bacon wages. The district court reasoned that although the subcontract did not reference the Act, Carpets Unlimited did agree to perform its obligations under the subcontract in accordance with the conditions set out in the prime contract (the agreement between the government and Interstate), and the prime contract reproduced in full the requirements of the Act. The district court held that the subcontract "incorporated by reference" the required provisions of the Davis-Bacon Act and thus satisfied 29 C.F.R. Sec. 5.5(a)(6), which mandated that the Act's requirements must be "inserted" into any subcontract. The district court then held that Interstate was entitled to recover $7,825.37 from Carpets Unlimited, the amount Interstate paid to the government for back wages owed to Carpets Unlimited employees. Finally, the district court held that Interstate was not entitled to recover completion costs because Interstate itself breached the contract when it failed to pay Carpets Unlimited in a timely fashion. The district court also denied Interstate's request for attorney's fees. Both parties appeal.

II.

We review a grant of summary judgment de novo and use the same test as used by the district court. Brooks v. American Broadcasting Cos., 932 F.2d 495, 500 (6th Cir.1991). In reviewing summary judgment motions, we view the evidence in the light most favorable to the nonmoving party to determine whether a genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).

The fact that both parties have filed summary judgment motions does not alter the standard by which we review these motions. "Rather, the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration."

Taft Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991) (quoting Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed.Cir.1987)). Under Fed.R.Civ.P. 56(c), summary judgment is proper if all the evidence before the district court " 'show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to [a] judgment as a matter of law.' " Canderm Pharmacal, Ltd. v. Elder Pharmaceuticals, Inc., 862 F.2d 597, 601 (6th Cir.1988) (quoting Fed.R.Civ.P. 56(c)). Once the moving party has met its burden of production, the nonmoving party must go beyond the pleadings, and by affidavits, or by " 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.' " Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (quoting Fed.R.Civ.P. 56(e)).

III.

Under the Miller Act, "[b]efore any contract, exceeding $25,000 in amount, for the construction, alteration, or repair of any public building or public work of the United States is awarded to any person, such person shall furnish to the United States [certain] bonds, which shall become binding upon the award of the contract to such person...." 40 U.S.C. Sec. 270a(a). The Miller Act was designed to provide an alternative remedy to the mechanics' liens ordinarily available on private construction contracts. F.D. Rich Co. v. United States ex rel. Indus. Lumber Co., 417 U.S. 116, 122 (1974). Because "a lien cannot attach to Government property," persons supplying labor or materials on a federal construction project were to be protected by a payment bond. Id. at 121-22. "The Miller Act provides a federal cause of action, and the scope of the remedy as well as the substance of the rights created thereby are matters of federal not state law." Id. at 127.

A

Carpets Unlimited argues that the district court erred in concluding, as a matter of law, that Carpets Unlimited had a contractual duty to pay the Davis-Bacon Act prevailing wage because nothing in the subcontract refers to the Act or to the wage provisions. The district court held that the general language in the subcontract requiring Carpets Unlimited to perform in accordance with terms of the prime contract "incorporated by reference" the duty to pay Davis-Bacon wages which was quite extensively detailed in the prime contract. Incorporation by reference, however, is a term of art, and not every reference is...