U.S. for Use and Ben. of Harvey Gulf Intern. Marine, Inc. v. Maryland Cas. Co.

• Decision Date: 19 May 1978
• Docket Number: No. 76-2467,76-2467
• Citation: 573 F.2d 245
• Parties: 24 Cont.Cas.Fed. (CCH) 82,388 UNITED STATES of America for the Use and Benefit of HARVEY GULF INTERNATIONAL MARINE, INC., Plaintiff-Appellee Cross-Appellant, v. MARYLAND CASUALTY COMPANY, Defendant-Appellant Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 245

573 F.2d 245

24 Cont.Cas.Fed. (CCH) 82,388

UNITED STATES of America for the Use and Benefit of HARVEY GULF INTERNATIONAL MARINE, INC.Plaintiff-AppelleeCross-Appellant, v.MARYLAND CASUALTY COMPANY, Defendant-AppellantCross-Appellee.

No. 76-2467.

United States Court of Appeals Fifth Circuit.

May 19, 1978.

H. Bruce Shreves, New Orleans, La., for defendant-appellantcross-appellee.

M. Arnaud Pilie, New Orleans, La., for plaintiff-appelleecross-appellant.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before COLEMAN, HILL, and RUBIN, Circuit Judges.

JAMES C. HILL, Circuit Judge:

This case involves three distinct issues under the Miller Act, 40 U.S.C.A. § 270b.We affirm in part, reverse in part, and remand the case to the District Court.

On November 10, 1977, the plaintiff subcontractor, Harvey Gulf International Marine, Inc.(Harvey Gulf), brought suit under the Miller Act against its prime contractor's surety, Maryland Casualty Company(Maryland Casualty), for amounts allegedly due for towing and other services performed in connection with three dredging contracts let by the U.S. Army Corps to the prime contractor.The United States District Court for the Eastern District of Louisiana subsequently dismissed Harvey Gulf's claim on one of these contracts, and granted summary judgment with respect to the other two contracts.Maryland Casualty appeals from the grant of summary judgment, and Harvey Gulf cross-appeals from the dismissal of one of its claims.Because each appeal raises a separate issue, it will be simpler to discuss the contracts in turn rather than outlining the disputes first.

I.

Of the three contracts let to Harvey Gulf's prime contractor, two were to be performed in the Eastern District of Louisiana the Home Place levee contract and the Grand Prairie levee contract.The third contract, the West Atchafalaya levee contract, was to be performed in the Western District of Louisiana.

Maryland Casualty appeals the grant of summary judgment with respect to the Home Place levee contract urging that the last labor was performed by Harvey Gulf on that contract over a year prior to the filing of suit.If so, the Miller Act one-year statute of limitations, 40 U.S.C.A. § 270b(b), would have run with respect to that contract.

The court has reviewed the record, and it appears from the uncontradicted documentary evidence introduced by both parties below that Harvey Gulf's tug Thomas Allen was performing services in connection with the Home Place levee contract through November 23, 1974, less than one year prior to the filing of suit.Consequently, the district court's grant of summary judgment on the Home Place contract is affirmed.

II.

As to the second contract to be performed in the Eastern District, the Grand Prairie levee contract, it is conceded that the last labor performed by Harvey Gulf in connection with that contract occurred on October 24, 1974, more than one year prior to the filing of this suit.The district court dismissed Harvey Gulf's claim for failure to file within the limitations period, 40 U.S.C.A. § 270b(b).Harvey Gulf urges, however, that it did file suit within one year in Louisiana state court.Although jurisdiction over Miller Act claims is exclusively federal, Harvey Gulf contends that its timely filing of suit, even in a court that lacked jurisdiction, interrupted the running of the limitations period.

The district court properly rejected Harvey Gulf's position.The rights created by the Miller Act are federal in nature and scope, F. D. Rich Co., Inc. v. United States for the Use of Industrial Lumber Co., Inc., 417 U.S. 116, 94 S.Ct. 2157, 40 L.Ed.2d 703(1974), and federal law controls the computation of the limitations period.

Those circuits that have considered the question have uniformly regarded the one-year filing requirement as a jurisdictional limitation on the substantive rights conferred by the Miller Act.United States for the Use of Celanese Coatings Co. v. Gullard, 504 F.2d 466(9th Cir.1974);United States for the Use and Benefit of General Dynamics Corp. v. Home Indemnity Co., 489 F.2d 1004(7th Cir.1973);United States for the Use and Benefit of Statham Instruments, Inc. v. Western Casualty & Surety Co., 359 F.2d 521(6th Cir.1966);United States for the Use of Soda v. Montgomery, 253 F.2d 509(3d Cir.1958).In principle, this is consonant with the thesis that, because the right is federal in nature, the filing of suit in a non-federal jurisdiction does not toll the statute.

It is regrettable that the parties proceeded through trial and verdict in the state court to no purpose.Had the issue been raised early in the state court proceedings, suit might yet have been filed timely in federal court.However, no contention that the surety should be estopped is made, and we need not consider, therefore, whether an estoppel might toll the statute.Because the district court below lacked jurisdiction over the Grand Prairie levee contract claim when it was filed, its dismissal of that claim is affirmed.

III.

We now address the third contract on which Harvey Gulf sued, the West Atchafalaya levee contract.Unlike the other two contracts, the West Atchafalaya contract was to be performed in the Western District of Louisiana, not the Eastern District where suit was filed.

Congress has expressly enacted a statute governing venue for Miller Act suits.In pertinent part the statute provides:

Every suit instituted under this section shall be brought . . . in the United States District Court for any district in which the contract was to be performed and executed and not elsewhere.

40 U.S.C. § 270b(emphasis supplied).

In the District Court, Maryland Casualty timely moved to dismiss the claim for improper venue.The District Court, without stating its reasons, denied Maryland Casualty's motion to dismiss and granted summary judgment in favor of Harvey Gulf on its West Atchafalaya claim.

There is no question that venue was improper, that the defendant did not waive its objection, and that there is no ambiguity in the language of the venue statute.We hold that the District Court erred in not dismissing the claim or in the alternative, transferring it to the proper forum pursuant to 28 U.S.C. § 1406(a).

It has been suggested that it would be pointless to reverse and remand the claim since only additional expense, delay, and inconvenience would result in the event of retrial and since the defendant has failed to demonstrate prejudice by being forced to defend the merits of the case in the Eastern District.We disagree.To embark upon the search for "harmless error" would be to disregard the unambiguous Congressional mandate that Miller Act suits be brought in the district in which the contract was to be performed "and not elsewhere."

The venue provision of the Miller Act is a restrictive one, enacted for the benefit of defendants, not plaintiffs.Texas Construction Company v. United States, 236 F.2d 138, 143(5th Cir.1956).Therefore the statute must be strictly construed, even more so than in the case of a general statute.

The proper approach is seen in Supreme Court authority as well as in the cases of our sister circuits.Michigan Nat. Bank v. Robertson, 372 U.S. 591, 83 S.Ct. 914, 9 L.Ed.2d 961(1963);Olberding v. Illinois Central R. Co., 346 U.S. 338, 74 S.Ct. 83, 98 L.Ed. 39(1953);Bechtel v. Liberty National Bank, 534 F.2d 1335(9th Cir.1976);Lied Motor Car Co. v. Maxey, 208 F.2d 672(8th Cir.1953).All of these cases have one central theme.In each, appellate courts have not hesitated to reverse for improper venue after the merits of the case have been decided.

Olberding was a diversity action brought under 28 U.S.C. § 1391(a) which, at that time, required suit to be filed "only in the judicial district where all plaintiffs or all defendants reside."The plaintiff brought suit where the claim arose (for which the amendment to § 1391(a) now makes provision) but not where all plaintiffs or all defendants resided.The defendant moved to dismiss on the ground of improper venue.The motion was overruled, the case went to trial, and the plaintiff won a verdict over the defendant.The defendant appealed.The Supreme Court, through Mr. Justice Frankfurter, reversed on the venue ground.

Congress in conferring jurisdiction on the district courts in cases based solely on diversity of citizenship, has been explicit to confine such suits to "the judicial district where all plaintiffs or all defendants reside."28 U.S.C. § 1391(a).This is not a qualification upon the power of the court to adjudicate, but a limitation designed for the convenience of litigants, and, as such, may be waived by them.The plaintiff, by bringing the suit in a district other than that authorized by the statute, relinquished his right to object to the venue.But unless the defendant has also consented to be sued in that district, he has a right to invoke the protection which Congress has afforded him.The requirement of venue is specific and unambiguous; it is not one of those vague principles which, in the interest of some overriding policy, is to be given a "liberal" construction.

346 U.S. at 340, 74 S.Ct. at 85(emphasis supplied).

Olberding was a case involving the general venue provision.In the case of a restrictive venue provision, enacted for the benefit of defendants, courts have even less liberty to deny the substantial rights granted to defendants by Congress.

The Supreme Court recognized this principle in Michigan Nat. Bank v. Robertson, supra.In Robertson, plaintiffs-respondents had purchased house trailers in Nebraska, executed and delivered notes and lien instruments to the local dealer who negotiated them to the defendant-petitioner, Michigan National Bank.The plaintiffs later initiated suit in Nebraska alleging violations of the Nebraska Installment Loan Act.

The Bank, relying upon the restrictive venue...