U.S. for Use of Yonker Const. Co. v. Western Contracting Corp.

• Decision Date: 05 June 1991
• Docket Number: 89-2928,Nos. 89-2831,s. 89-2831
• Citation: 935 F.2d 936
• Parties: 37 Cont.Cas.Fed. (CCH) 76,115 UNITED STATES of America for the Use of YONKER CONSTRUCTION COMPANY, an Iowa Corporation, Appellee/Cross-Appellant, v. WESTERN CONTRACTING CORPORATION, a corporation, and The Aetna Casualty and Surety Company, Appellants/Cross-Appellees, v. CONCRETE INDUSTRIES d/b/a General Steel Products Co., Inc., Third Party Defendants, Western Contracting, Counter Defendant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 936

935 F.2d 936

37 Cont.Cas.Fed. (CCH) 76,115

UNITED STATES of America for the Use of YONKER CONSTRUCTION

COMPANY, an Iowa Corporation, Appellee/Cross-Appellant, v. WESTERN CONTRACTING CORPORATION, a corporation, and The

Aetna Casualty and Surety Company, Appellants/Cross-Appellees, v. CONCRETE INDUSTRIES d/b/a General Steel Products Co., Inc., Third Party Defendants, Western Contracting, Counter Defendant.

Nos. 89-2831, 89-2928.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 12, 1990.

Decided June 5, 1991.

Richard K. Willard, Washington, D.C., for appellee/cross-appellant.

Edward H. Tricker, Lincoln, Neb., for appellants/cross-appellees.

Before JOHN R. GIBSON, Circuit Judge, and HENLEY and ROSS, Senior Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Western Contracting Corporation and its surety, Aetna Casualty and Surety Company, appeal from a judgment in favor of Western's subcontractor, Yonker Construction Company, on Yonker's Miller Act claim. Western argues that Yonker's claims are barred because it failed to give written notice of cost overruns as required by their subcontract. Western also argues that the district court improperly awarded Yonker elements of damages not recoverable under the Miller Act, prejudgment interest, and attorneys' fees. We reverse the award of prejudgment interest but affirm the judgment of the district court in all other respects.

In 1981, the United States Bureau of Reclamation awarded Western a general contract to construct a portion of an irrigation canal near Ord, Nebraska. Pursuant to the provisions of the Miller Act, 40 U.S.C. Sec. 270a-d (1988), Western submitted a payment bond to the Bureau for the project; Aetna was surety on the bond.

In 1985, Western decided to subcontract a portion of the canal work to Yonker. In negotiating the subcontract, Western and Yonker agreed to certain conditions. Western agreed to deliver reinforcing steel, already fabricated, sorted, and tagged in accordance with contract specifications. Western also agreed to perform excavation work and to provide Yonker certain materials, equipment, and survey information, as well as access to work sites. Yonker relied on these conditions in calculating its bid price of $1,446,662.00. During construction, Yonker experienced numerous problems. Among other things, Yonker claimed that Western did not perform excavation work on time, did not deliver resteel according to specifications, and did not deliver the resteel sorted and tagged. Yonker also claimed that Western did not provide adequate access to job sites. Yonker asserted that these problems caused delays and that when Western refused to grant time extensions, it was necessary for Yonker to accelerate its work, causing Yonker to incur additional costs.

When Western refused to pay Yonker for its additional costs, Yonker filed suit against Western and Aetna in federal court based on the Miller Act. Yonker's complaint alleged ten specific acts of Western that it complained constituted breaches of their subcontract. Before trial, Aetna stipulated and the court entered an order that any judgment entered against Western would be entered against Aetna up to $2,500,000. United States ex rel. Yonker Constr. Co. v. Western Contracting Corp., No. 87-L-341, slip op. at 1 (D.Neb. Jan. 17, 1989). A thirteen day trial followed. The court submitted the case to the jury on Yonker's claims of breach of contract (Claims 1-9), final quantities (Claim 10), fraudulent misrepresentation (Claim 11), and cost of borrowed funds (Claim 12). The jury found in favor of Yonker on its claims of breach of contract, awarding damages of $367,397.00 for excess direct labor costs and $5,396.00 for excess equipment loss. The jury also found in favor of Yonker on its claims of additional quantities and fraudulent misrepresentation and awarded $77,255.11 and $40,889.00 in damages. ¹ The jury awarded Yonker $104,933.00 for its claim based on cost of borrowed funds. In addition, the jury found that Western acted in bad faith, and based on this finding the district court awarded Yonker attorneys' fees in the amount of $255,384.75. United States ex rel. Yonker Constr. Co. v. Western Contracting Corp CV87-L-341, slip op. at 2 (D.Neb. June 14, 1989). Finally, the district court awarded Yonker prejudgment interest in the amount of $173,993.49. United States ex rel. Yonker Constr. Co. v. Western Contracting Corp., CV87-L-341 (D.Neb. June 14, 1989). Western appeals the jury verdict and awards of prejudgment interest and attorneys' fees on several grounds, which we address, in turn, below.

I.

Western first argues that Yonker's claims are barred by its failure to provide written notice of increased costs within 20 days. The subcontract did not expressly require Yonker to provide a 20-day notice of increased costs. The subcontract did, however, contain a conduit clause, which provided that Yonker owed the same duties to Western as Western owed to the Bureau of Reclamation under the general contract. ² The general contract required Western to provide 20 days' written notice to the Bureau of increased costs incurred as a result of any change in the work ordered by the Bureau. ³ On this basis, Western claims that the subcontract incorporated by reference the 20-day notice provision contained in the general contract, and therefore, Yonker was obligated to provide written notice to Western within 20 days of incurring any additional costs.

Western does not argue that Yonker's alleged failure to provide written notice bars Yonker's claims as a matter of law. Instead, it argues that the court erred in refusing to instruct the jury that Yonker had a duty to provide written notice to Western of its increased costs, and for this reason, the judgment should be reversed and the case remanded for a new trial.

We cannot conclude that the district court abused its discretion in refusing to give Western's instruction regarding notice. "We have often held that when the district court fairly and accurately instructs on the applicable law, a party is not entitled to specific language that it may desire." Carlson Equip. Co. v. International Harvester Co., 710 F.2d 481, 483 (8th Cir.1983). Here, the district court instructed the jury that "the performance of certain obligations by one party could not occur until the other party first performed closely related obligations. In such circumstances, the party whose performance was dependent upon the earlier performance of the other party was not required to perform until the earlier performance had been done."

The general contract and subcontract were before the jury. There was testimony that the general contract required 20 days' written notice of all change orders and that the conduit clause in the subcontract imposed on Yonker the same obligations as the general contract imposed on Western. We believe that the court's instruction fairly instructed the jury on the applicable law.

Moreover, we are not convinced that the general contract changes clause even applied in these circumstances. The general contract changes clause applies only to "changes" ordered by the Bureau. Even if Yonker assumed the duty to provide written notice to Western, the evidence at trial established that Yonker based its claims on Western's breach of conditions of their subcontract, not on any "change " in the work.

In any event, substantial evidence at trial showed that Western received actual notice of Yonker's increased costs. Ray Moninger, Yonker's project engineer, testified that he provided daily logs on a regular basis to Western detailing the extra charges incurred for the time spent correcting problems caused by Western. Specifically, Mr. Moninger testified that he provided the logs to Western "at least once monthly and sometimes daily." In addition, Mr. Siegel, a supervisor for Yonker, testified that he had daily discussions with Tom Everist, Rick Everist, and later Neil Everist, ⁴ about the problems Yonker was experiencing with Western and the related cost overruns. Indeed, Mr. Bagley, a representative of Western, testified that he received and reviewed Yonker's daily logs and understood that Yonker was incurring back charges. For the foregoing reasons, we are satisfied that the court did not abuse its discretion in refusing to give Western's requested jury instruction on notice.

II.

Western next complains that the district court improperly awarded Yonker damages under the Miller Act. Damages under the Miller Act are limited to claims for "labor or material." 40 U.S.C. Sec. 270b(a). Western complains that the damage instruction for the breach of contract claims permitted the jury to award Yonker worker's compensation and general liability insurance premiums, small tools and equipment depreciation, profits and home office overhead, and that none of these items is recoverable under the Miller Act. See United States ex rel. Cobb-Strecker-Dunphy & Zimmerman, Inc. v. M.A. Mortenson, Co., 894 F.2d 311, 312 (8th Cir.1990) (Worker's compensation and comprehensive general liability insurance premiums are not components of "labor" compensable under the Miller Act). Western also argues that the cost of borrowed funds is not recoverable under the Miller Act. See Bill Curphy Co. v. Elliott, 207 F.2d 103, 109 (5th Cir.1953) (claim for money loaned was not recoverable under the Miller Act).

Yonker challenges Western's claims, arguing that the elements of damage Western complains about are recoverable under the Miller Act, and also that the court did not submit the case to the jury solely on the basis of the Miller Act, but that it also submitted the case on the basis of pendant state law breach of contract claims that allow recovery for such items. See, e.g., Nebraska Public Power Dist. v. Austin Power, Inc., 773 F.2d 960, 973 (8th Cir.1985) (cost of borrowed funds is recoverable as damages under Nebraska law).

We need not decide whether the elements of...