U.S. for Use and Ben. of Gulf States Enterprises, Inc. v. R.R. Tway, Inc.

• Decision Date: 12 August 1991
• Docket Number: No. 90-3484,90-3484
• Citation: 938 F.2d 583
• Parties: , 37 Cont.Cas.Fed. (CCH) 76,158 UNITED STATES of America for the Use and Benefit of GULF STATES ENTERPRISES, INC., Plaintiff-Appellant, v. R.R. TWAY, INC., Phil Hoffman, Inc., and Federal Insurance Company, Defendants-Appellees. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 583

938 F.2d 583

20 Fed.R.Serv.3d 1049, 37 Cont.Cas.Fed. (CCH) 76,158

UNITED STATES of America for the Use and Benefit of GULF STATES ENTERPRISES, INC., Plaintiff-Appellant, v. R.R. TWAY, INC., Phil Hoffman, Inc., and Federal Insurance Company, Defendants-Appellees.

No. 90-3484

Summary Calendar.

United States Court of Appeals Fifth Circuit.

Aug. 12, 1991.

Charles H. Braud, Jr., Covert & Braud, Baton Rouge, La., for plaintiff-appellant.

Carolyn Pratt Perry, Baton Rouge, La., for defendants-appellees.

Appeal from the United States District Court for the Middle District of Louisiana.

Before JOHNSON, SMITH, and WIENER, Circuit Judges.

PER CURIAM:

Use Plaintiff-Appellant, Gulf States Enterprises Company, Inc., appeals from the magistrate judge's judgment in favor of Defendants-Appellees, R.R. Tway, Inc., Phil Hoffman, Inc., and Federal Insurance Company, on a claim under the Miller Act, 40 U.S.C. Sec. 270a, et seq., for payment of equipment rentals. Finding no error in the magistrate judge's alternative determinations that (1) the Miller Act claims were time barred, (2) Gulf States' connection with the project's prime contractor was too remote to permit recovery under the Miller Act, and (3) Gulf States' claims under Louisiana state law have no merit, we affirm.

I. FACTS

R.R. Tway, Inc. (Tway), as prime contractor, entered into a contract (the Prime Contract) with the United States to perform work in connection with a Corps of Engineers project, the East Atchafalaya Protection Basin Levee Project (the Project). In accordance with Sec. 1 of the Miller Act, Tway executed a payment bond on which Tway was the principal and Federal Insurance Company was the surety. Phil Hoffman (Mr. Hoffman) approached Tway representatives about the possibility of providing some equipment for use on the Project. On August 2, 1984, Tway and Mr. Hoffman entered into a contract (the Dozer Contract), using a form labeled "Sub-Contract", in which Mr. Hoffman agreed individually to furnish a bulldozer to Tway on a fully operated basis, as needed, for a rate of $42.00 per operating hour. On August 30, 1984, Tway entered into a second contract (the Dragline Contract), again using a form labeled "Sub-Contract", with J.P. Hoffman, Inc. ¹ (Hoffman, Inc.), in which Hoffman, Inc. agreed to perform "fill" or "dirt" work specified in Tway's prime contract. ² At Tway's request, Mr. Hoffman personally guaranteed his corporation's performance under the Dragline Contract.

Shortly after entering into the Dragline Contract, Mr. Hoffman approached David K. Williams, Jr., owner of Gulf States Enterprises Company, Inc., ³ (Gulf States) about renting a dozer and a dragline from Gulf States. Although there was apparently some discussion about the possibility of Mr. Hoffman buying the equipment, it is clear from the evidence that he rented both pieces of equipment from Gulf States. The rental agreements were oral. Williams was told by Mr. Hoffman that he had a contract with Tway, but Williams was not told by Mr. Hoffman that his corporation, Hoffman, Inc., also had a contract with Tway.

Gulf States rented a Kamatsu dozer and a Northwest 6 dragline to Mr. Hoffman. Gulf States invoiced Mr. Hoffman ⁴ for rental on the dozer from September of 1984 through April 17, 1985 for a total of $50,000.00. Gulf States invoiced Mr. Hoffman ⁵ for the rental of the dragline used in the performance of the Dragline Contract. The invoices covered the period of September 1984 through March 27, 1985, and totalled $36,000.00.

The dozer was not used to perform work under the Dozer Contract after December of 1984, but it was used to perform work under the Dragline Contract until March of 1985.

On June 5, 1985, Tway's attorneys demanded in writing that Gulf States remove the dozer and the dragline from the Project site. Tway refused to accept any further responsibility for the equipment, assumed Mr. Hoffman had abandoned it, and stated that the equipment had not been worked for many weeks. Gulf States removed the Kamatsu dozer on June 28, 1985, but the dragline apparently was not removed. Sometime in late June or early July Gulf States rented that dragline to Circle, Inc., another of Tway's subcontractors, for use in connection with repairing one of Circle's own draglines. Gulf States' dragline was not used in connection with completion of any work under the Dragline Contract after March of 1985.

Over a year later, on July 8, 1986, Gulf States filed suit pursuant to the Miller Act. In that suit Gulf States asserted an alternative basis for recovery under Louisiana law, insisting that it is entitled to recover on the theory that Tway had agreed to pay the debts of Mr. Hoffman and Hoffman, Inc. Gulf States also averred that under Louisiana law it was entitled to recover on the basis of unjust enrichment or quantum meruit.

After a bench trial, the magistrate judge ruled that Gulf States had failed to establish that it had supplied equipment to a "first tier subcontractor," as required by the Miller Act, and that Gulf States' Miller Act claims were barred by the Act's one year limitation period within which to bring suit. The magistrate judge also rejected Gulf States' state law theories of recovery. Gulf States subsequently filed a motion for new trial, which the magistrate judge denied with reasons. Gulf States timely appealed the magistrate judge's decisions. ⁶

II. STANDARD OF REVIEW

This action was tried by a magistrate judge by consent of the parties, and a judgment was entered by the magistrate judge under 28 U.S.C. Sec. 636(c). We review such judgments under the same standards that we review judgments entered by a district judge. Lockette v. Greyhound Lines, Inc., 817 F.2d 1182 (5th Cir.1987). Conclusions of law are reviewed de novo and findings of fact are upheld unless they are clearly erroneous. Fed.R.Civ.P. 52.

III. DISCUSSION

A. The Miller Act

The Miller Act requires that any contractor who is awarded a contract for "construction, alteration, or repair of any public building or public work of the United States," must provide a payment bond "for the protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person." Section 270b(a) gives the party supplying labor and material to such a contractor the right to sue on the payment bond for nonpayment of the labor or material supplied. This right extends to those parties "having direct contractual relationship with a subcontractor but no contractual relationship express or implied with the contractor...." (emphasis added). Subsection (b) of Sec. 270b goes on to provide that all suits under Sec. 270b must be commenced within "one year after the day on which the last of the labor was performed or material was supplied...."

B. Issues

This case presents three issues:

1) Did Gulf States supply the equipment to a subcontractor or did it supply the equipment to another supplier, thereby falling outside the ambit of the Miller Act?

2) Did Gulf States institute its suit within one year after last supplying the Kamatsu dozer and Northwest 6 dragline, as prescribed by Sec. 270b(b)?

3) Did Tway agree to pay the amounts Gulf States invoiced to Mr. Hoffman and Hoffman, Inc. on the dozer and the dragline?

We consider each issue in turn.

1. Mr. Hoffman: Subcontractor or Materialman?

To be a "subcontractor" and come within the protection of the Miller Act, a person must have a direct contractual relationship with either the prime contractor or a subcontractor of the prime contractor. J.W. Bateson Co. v. United States, 434 U.S. 586, 98 S.Ct. 873, 55 L.Ed.2d 50 (1978); United States use of Gold Bond Bldg. Products, Div. of Nat. Gypsum v. Blake Constr. Co., 820 F.2d 139 (5th Cir.1987). "Subcontractor", however, does not include "ordinary laborers and materialmen." Unlike a materialman, a subcontractor performs for and takes from the prime contractor a specific part of the labor or material requirements of the original contract. Clifford F. MacEvoy Co. v. United States, 322 U.S. 102, 64 S.Ct. 890, 88 L.Ed. 1163 (1944). The distinction between a "subcontractor" and a "materialman" turns on the substantiality and importance of the relationship between the middle party and the prime contractor. Only a middle party who has taken responsibility for a large and definable part of the construction project is a "subcontractor." Otherwise, he is a "materialman." (hereafter, "supplier") Id.; F.D. Rich Co., Inc. v. United States, 417 U.S. 116, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974); Aetna Casualty & Surety Co. v. United States, 382 F.2d 615, 617 (5th Cir.1967).

2. The Dozer Contract

A review of the Dozer Contract, denominated "Sub-Contract," between Tway and Mr. Hoffman indicates in paragraph one that Mr. Hoffman agrees to furnish fully operated dozers as needed at $42.00 per operating hour. The dozers were to be furnished for the construction of the "East Atachafalaya Basin Protection Levee." Contrary to Gulf States' contention, when we determine whether a contract is a "subcontract" within the meaning of the Miller Act, our findings are not controlled by the contract's label, or the labels the parties fashion for themselves, or the labels applied to them by others with whom they do business. We must examine the content and the effect of the agreement. United States for use of Consolidated Pipe and Supply Co. v. Morrison-Knudsen Co., 687 F.2d 129 (6th Cir.1982); United States use of Bryant v. Lembke Constr. Co., 370 F.2d 293 (10th Cir.1966). The Dozer Contract is clearly one in which Mr. Hoffman agreed to supply dozers and operators on an "as needed" basis. Although the record does not indicate whether Mr. Hoffman's operators were supervised directly by Tway, it is clear that the contract does not specify the particular work Mr. Hoffman was to perform. It is reasonable to conclude that when working on an "as needed" basis, he and his operators must...