United States v. Alpha-Continental

• Decision Date: 08 September 1967
• Docket Number: No. 518-Civ.,523-Civ.,518-Civ.
• Citation: 273 F. Supp. 758
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: UNITED STATES of America for the Use of F. E. ROBINSON CO. OF N. C., INC., and F. E. Robinson Co. of N. C., Inc., Plaintiffs, v. ALPHA-CONTINENTAL, a Joint Venture consisting of Alpha of Texas, Inc. and Continental Electronics Manufacturing Company, and Alpha of Texas, Inc., and Continental Electronics Manufacturing Company, and Alpha-Continental, a Joint Venture consisting of Alpha of Texas, Inc. and Continental Electronics Systems, Inc., and Continental Electronics Systems, Inc., and Ling Electric, Inc., and St. Paul Fire and Marine Insurance Company, Defendants. LING ELECTRIC, INC., Plaintiff, v. FEDERAL INSURANCE COMPANY, Defendant.

273 F. Supp. 758

UNITED STATES of America for the Use of F. E. ROBINSON CO. OF N. C., INC., and F. E. Robinson Co. of N. C., Inc., Plaintiffs, v. ALPHA-CONTINENTAL, a Joint Venture consisting of Alpha of Texas, Inc. and Continental Electronics Manufacturing Company, and Alpha of Texas, Inc., and Continental Electronics Manufacturing Company, and Alpha-Continental, a Joint Venture consisting of Alpha of Texas, Inc. and Continental Electronics Systems, Inc., and Continental Electronics Systems, Inc., and Ling Electric, Inc., and St. Paul Fire and Marine Insurance Company, Defendants.

LING ELECTRIC, INC., Plaintiff, v. FEDERAL INSURANCE COMPANY, Defendant.

Nos. 518-Civ., 523-Civ.

United States District Court E. D. North Carolina, Washington Division.

September 8, 1967.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

No. 518 Civ.:

Ray Rankin, Charlotte, N. C., John H. Anderson, of Smith, Leach, Anderson & Dorsett, Raleigh, N. C., for plaintiffs.

James, Speight, Watson & Brewer, Greenville, N. C., R. M. Ginsberg, of Clark, West, Keller, Clark & Ginsberg, Dallas, Tex., for defendants.

No. 523 Civ.:

James, Speight, Watson & Brewer, Greenville, N. C., R. M. Ginsberg, Clark, West, Keller, Clark & Ginsberg, Dallas, Tex., for plaintiff.

Ray Rankin, Charlotte, N. C., John H. Anderson, of Smith, Leach, Anderson & Dorsett, Raleigh, N. C., for defendant.

OPINION and ORDER

LARKINS, District Judge:

SUMMARY

This Miller Act case, Civil No. 518, comes before the Court without a jury for recovery of the reasonable value of labor and materials furnished to defendants in Pitt and Beaufort Counties, North Carolina, by use plaintiff F. E. Robinson Co. of N. C., Inc. (hereinafter referred to as Robinson). Defendant Ling filed a counterclaim and a cross-action against Robinson and Robinson's surety, Federal Insurance Company, for damages for malicious injury to Ling's credit, property, business, and reputation.

Use plaintiff Robinson, the Labor Sub Contractor, sued Ling Electric (hereinafter referred to as Ling), the electrical subcontractor, Alpha-Continental, the prime contractor, and St. Paul Fire and Marine Insurance Company, the surety of the prime contractor. Defendant Ling moved that Federal Insurance Company be made a party since they were surety for use plaintiff Robinson. Upon the allowance of this motion, defendant Ling crossclaimed against Federal Insurance Company and counterclaimed against Robinson. Federal Insurance denied all liability claiming that the defendants had breached the contract and, therefore, Robinson had the right to cease performance.

Defendant Ling previously filed an independent action December 18, 1962 against the Federal Insurance Company in Dallas, Texas on grounds of diversity of citizenship which was subsequently transferred to the Eastern District of North Carolina and assigned Civil No. 523 for the convenience of witnesses, and it was consolidated with the action Robinson had filed in Civil No. 518 against Ling, Alpha-Continental, and Alpha's surety. Defendant Ling later elected to pursue its action against Federal Insurance instead of the counterclaim and cross-action against Robinson and Federal Insurance filed in Civil No. 518.

Use plaintiff was later permitted to amend the complaint after notice and hearing.

FINDINGS OF FACT

This controversy arises out of the construction of the Voice of America project in Pitt and Beaufort Counties, North Carolina. These facilities consisted of three different sites referred to as site A, site B and site C. The sites were about thirty miles from each other.

The United States Information Agency of the United States Government entered into a written construction contract dated November 10, 1960 with Alpha-Continental, a joint venture consisting of Alpha of Texas, Inc. and Continental Electronics Manufacturing Company in the amount of $12,173,000.00 for the construction and installation of radio transmitting and receiving facilities near Greenville, North Carolina.

Defendants other than Ling asserted in their answers that between November 10, 1960 and March 30, 1961 Continental Electronics Systems, Inc., was substituted by a novation agreement for Continental Electronics Manufacturing Company as a member of said joint venture, and the joint venture between Alpha of Texas, Inc. and Continental Electronics Systems, Inc., will hereinafter be called Alpha-Continental. The original contract required that Alpha-Continental pay the government liquidated damages if the contract was not completed by December 20, 1962 (Tr. 435.)

St. Paul Fire and Marine Insurance Company executed a bond payable in the sum of $2,500,000.00 as required by the Miller Act, Title 40 U.S.C. Section 270a, guaranteeing payment to all persons supplying labor and materials in the prosecution of the work provided for in contract No. 1A-7454 and modifications thereto. The bond bore date of November 9, 1960.

On March 30, 1961, Alpha-Continental and Ling entered into a written construction subcontract in the amount of $1,289.500.00 wherein Ling undertook to perform a certain portion of the work for the government project specified in contract No. 1A-7454.

On March 30, 1961, Ling entered into a written labor subcontract with Robinson in the amount of $325,000.00 which required Robinson to furnish a certain portion of the labor, related payroll expenses, tools, and equipment for the government project, which Ling was obligated to furnish under its subcontract with Alpha-Continental.

On April 7, 1961, Federal Insurance executed a performance bond in favor of Ling, guaranteeing Robinson's performance of the labor subcontract in the amount of $325,000.00.

Because of the nature of the disputes involved in this case it becomes necessary to examine certain portions of the contract between Alpha-Continental and Ling, and the contract between Ling and Robinson. Robinson's contract with Ling, paragraph one of the Continuation Sheet, related to payment for work done under the original contract and reads as follows:

"1. A sum of money monthly on the tenth (10th) of the month following the completion of the work equal to the total gross payroll for the previous month plus an additional ten per cent (10%) without any retainage. This manner of payment shall continue until payments totaling fifty per cent (50%) of the contract amount are advanced against the contract. Upon payment of fifty per cent (50%) of the total contract amount the two parties to this agreement shall review the actual completion of the contract with regard to releasing a percentage over and above the amounts paid as of that date. Total payments against this contract shall not exceed ninety-five per cent (95%) of the total adjusted amount until final acceptance of all work by the owner."

Paragraph 7 of the "Additional Provisions of Labor Sub Contract" between Robinson and Ling related to changes under the contract, and reads as follows:

"7. The Labor Sub Contractor shall accept no orders for extra work or changes under this contract unless same are presented in writing by the Sub Contractor, and shall make no quotations, suggestions or promises regarding any such work to any person other than the Sub Contractor. All extra work or changes hereunder shall be submitted to the General Contractor by the Sub Contractor only after receiving from the Labor Sub Contractor the labor requirements necessary to perform such changes or extras including overhead and profit. Payment to Labor Sub Contractor by Sub Contractor for any and all such extra work and changes shall be governed by separate agreement in writing and signed by both Labor Sub Contractor and Sub Contractor, and as the same may be affected by the general provisions of the general conditions."

The contract between Robinson and Ling also provided in pertinent part that the Labor Sub Contractor was

"* * * to furnish labor and related expenses as described in Section 3 hereof, for the Consolidated East Coast Facilities, Project 1A-5744, Sites A, B & C, for the United States Information Agency hereinafter called the owner at Greenville, North Carolina in accordance with all terms, covenants and conditions of the contract between the General Contractor and the Sub Contractor."

The Labor Sub Contractor further agreed to keep informed as to the progress of the job, to begin work seven days after notification by the Sub Contractor, to prosecute the work continuously with all possible speed, and to complete the entire work within the time prescribed by the contract. The contract between Ling and Robinson further provided that the Labor Sub Contractor was not responsible for delays caused by the neglect, delay, or default of the Sub Contractor. It also provided that Robinson was to be paid $325,000.00, subject to additions and reductions, for changes as may be agreed upon in writing by both parties provided that no payments were to be made unless the Labor Sub Contractor's rate of progress and work done was satisfactory to the Sub Contractor and the Contractor. The contract between Ling and Robinson did not provide for approval by the government or Alpha-Continental or payment by them before Ling was obligated to pay Robinson.

The additional provisions of the Labor Sub Contract provided that the Labor Sub Contractor acknowledge that it had read the plans, specifications, addenda, and covenants; that it had read the contract between the general contractor and the Sub Contractor; and that it would abide by all the conditions and terms of such documents, particularly the general and special conditions as the same applied to the Sub Contractor. The witness Bryant admitted that Robinson regarded the general and special conditions of the Alpha-Continental-Ling contract as a part of his contract with Ling (Tr. 234, 235), but that he rejected the general and special conditions when they were in conflict with the provisions of the Ling-Robinson contract. (Tr. 175.) Paragraph 4...