U.S. for Use and Ben. of Martin Steel Constructors, Inc. v. Avanti Constructors, Inc.

• Decision Date: 28 December 1984
• Docket Number: No. 83-2129,83-2129
• Citation: 750 F.2d 759
• Parties: 32 Cont.Cas.Fed. (CCH) 73,204 UNITED STATES of America, for the Use and Benefit of MARTIN STEEL CONSTRUCTORS, INC., Plaintiffs-Appellees, v. AVANTI CONSTRUCTORS, INC., Defendant, and Harvis Construction, Inc., Seaboard Surety Company, and The Home Insurance Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 759

750 F.2d 759

32 Cont.Cas.Fed. (CCH) 73,204

UNITED STATES of America, for the Use and Benefit of MARTIN

STEEL CONSTRUCTORS, INC., Plaintiffs-Appellees, v. AVANTI CONSTRUCTORS, INC., Defendant, and Harvis Construction, Inc., Seaboard Surety Company, and The

Home Insurance Company, Defendants-Appellants.

No. 83-2129.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 7, 1984.

Decided Dec. 28, 1984.

David Schulmeister, Cades Schutte Fleming & Wright, Honolulu, Hawaii, for plaintiffs-appellees.

Robert Hines, San Francisco, Cal., for defendants-appellants.

Appeal from the United States District Court for the District of Hawaii.

Before HUG, TANG and SCHROEDER, Circuit Judges.

TANG, Circuit Judge:

I. OVERVIEW

Defendant Harvis Construction, Inc. (Harvis), appeals the district court's grant of summary judgment in favor of use plaintiff Martin Steel Construction, Inc. (Martin). Martin brought suit under the Miller Act, 40 U.S.C. Sec. 270a-270d, for unpaid amounts due on its contract to supply steel materials to subcontractor Avanti Construction, Inc. (Avanti). Harvis maintains that summary judgment was improper because Martin failed to prove its prima facie case, and also because the district court erred in not allowing Harvis a set-off defense. These assertions are based on evidence showing that Martin made late and non-conforming deliveries to Avanti. We reject Harvis' assertions of error and affirm the summary judgment.

II. FACTS

Harvis was the general contractor for the construction of an electric shop addition to a building at the Pearl Harbor Naval Shipyard, Honolulu, Hawaii. In accordance with 40 U.S.C. Sec. 270a, Harvis executed a bond, accepted by the United States, to protect material and labor suppliers working on the project.

Harvis then entered into a subcontract with Avanti, wherein Avanti agreed to perform the steel work at the site. Avanti entered into a contract with Martin for supply of steel-related materials to be used in its subcontract. The contract is a purchase order dated May 17, 1977.

In accordance with the contract, Martin supplied steel materials eventually used in the project. Affidavits and correspondence in the record show that many of the shipments from Martin to Avanti were delayed and/or defective. Avanti encountered financial difficulties, failed to complete its work and failed to pay Martin for all shipments made under the contract. Although some required repair or alteration, all goods delivered by Martin undisputedly were used in the project.

On April 11, 1979, Martin filed suit against Avanti, Harvis, and Harvis' sureties under the Miller Act, 40 U.S.C. Sec. 270a-270b, to recover on Harvis' bond the amounts owed by Avanti to Martin. Harvis answered and counterclaimed against Martin for damages resulting from alleged delays and defective shipments to Avanti, but allegedly damaging Harvis. Avanti never answered, and default judgment was entered against it on July 10, 1979. In May 1982, Avanti filed bankruptcy and was dismissed by Martin from this suit.

In December, 1980, Martin moved for judgment on the pleadings on Harvis' counterclaim. After a hearing, Judge Curtis originally denied the motion, but on April 10, 1981 granted the motion to dismiss the counterclaim. Judge Curtis based the dismissal on the lack of privity between Harvis and Martin, finding it a bar to Harvis' affirmative contract claim. Harvis attempted to appeal this dismissal, but filed prematurely; the dismissal of the counterclaim has subsequently never been appealed. Harvis' attempt to amend its counterclaim was denied after a hearing by a magistrate.

On April 16, 1982, Martin filed the motion for summary judgment in this case. Martin claimed that under the Miller Act it was entitled to monies owed for materials supplied under its contract with Avanti as a matter of law. Judge Frye entered an Order granting the motion on May 21, 1982. Harvis appeals the summary judgment based on its contention that genuine issues of material fact exist, and that Harvis has a set-off defense not precluded by the dismissal of its counterclaim.

III. DISCUSSION

A. Standard of Review.

We review the grant of summary judgment under the same standard as the trial court; after viewing the evidence, de novo, in the light most favorable to Harvis, we must determine whether the trial court correctly found that there was no genuine issue of material fact and that Martin was entitled to judgment as a matter of law. Ward By & Through Ward v. United States Dept. of Labor, 726 F.2d 516, 517 (9th Cir.1984).

B. Prima Facie Case

The Miller Act, 40 U.S.C. Sec. 270a(a)(2), requires a general contractor on a federal project to post a bond to protect those who supply labor or materials for the project. The act allows a subcontractor's materials supplier to bring suit on the bond for any unpaid amounts owing for labor or materials, even if no contractual relationship exists between the general contractor and the supplier. 40 U.S.C. Sec. 270b(a). The purpose of the Act is to protect persons supplying materials and labor for federal projects, and it is to be construed liberally in their favor to effectuate this purpose. F.D. Rich Co., Inc. v. United States ex rel. Industrial Lumber Co., Inc., 417 U.S. 116, 124, 94 S.Ct. 2157, 2162, 40 L.Ed.2d 703 (1974).

The district court entered summary judgment in Martin's favor, holding that Martin, as a materials supplier, was entitled to collect unpaid amounts under its contract with Avanti, the subcontractor, as a matter of law. In order to prevail under section 270b of the Miller Act, a material supplier need only prove four elements:

(1) the materials were supplied in prosecution of the work provided for in the contract;

(2) he has not been paid;

(3) he had a good faith belief that the materials were intended for the specified work; and

(4) the jurisdictional requisites were met.

United States ex rel. Carlson v. Continental Casualty Co., 414 F.2d 431, 433 (5th Cir.1969) (affirming summary judgment for material supplier).

The record in this case shows that Martin supplied materials for use at the Navy project, and that Avanti failed to pay Martin for all the goods delivered. Additionally, Martin's good faith belief as to the use of goods is not at issue, since it is undisputed that all goods supplied were eventually used in the project. Finally, Martin undisputedly met the jurisdictional requirements of timely notice and filing under Sec. 270b(a). Under the Continental Casualty standard, Martin has made its required showing, and the district court correctly awarded summary judgment in its favor.

Harvis maintains that in addition to the elements of proof enumerated in Continental Casualty, materialmen claiming under the Miller Act must affirmatively prove compliance with the terms of the contract with the subcontractor. See, e.g., Jefferson Construction Co. v. United States ex rel. Bacon, 283 F.2d 265 (1st Cir.1960), cert. denied, 365 U.S. 835, 81 S.Ct. 748, 5 L.Ed.2d 744 (1961) (failure to plead or prove compliance with underlying contract and fulfillment of conditions precedent therein precluded summary judgment); United States ex rel. Foster Wheeler Corp. v. American Surety of N.Y., 142 F.2d 726, 728 (2d Cir.1944) (subcontractor and general contractor's stipulation as to balance owing under contract did not relieve subcontractor of burden to prove it performed its contract); United States ex rel. Purity Paint Products Corp. v. Aetna Casualty & Surety Co., 56 F.Supp. 431, 434 (D.Conn.1944) (supplier of paint to subcontractor must prove paint furnished was in accordance with contract terms requiring paint to conform to specifications of principal contract where subcontractor rejected shipments). Relying on these authorities, Harvis maintains that summary judgment was improper because the record contains evidence that Martin made late and...