United States v. General Insurance Company of America

• Decision Date: 16 November 1965
• Docket Number: Civ. No. 9146.
• Citation: 247 F. Supp. 543
• Parties: UNITED STATES of America, to the Use of CLAUDE C. WOOD COMPANY, a California corporation, Plaintiff, v. GENERAL INSURANCE COMPANY OF AMERICA, a Washington corporation, Hooker Paving Materials Co., a California corporation, Hooker Paving Co., a California corporation, Hooker Sales Company, a California corporation, and Hooker Company, a California corporation, individually and as copartners doing business under the name and style of Hooker Company, a copartnership, Defendants.
• Court: U.S. District Court — Northern District of California

247 F. Supp. 543

UNITED STATES of America, to the Use of CLAUDE C. WOOD COMPANY, a California corporation, Plaintiff, v. GENERAL INSURANCE COMPANY OF AMERICA, a Washington corporation, Hooker Paving Materials Co., a California corporation, Hooker Paving Co., a California corporation, Hooker Sales Company, a California corporation, and Hooker Company, a California corporation, individually and as copartners doing business under the name and style of Hooker Company, a copartnership, Defendants.

Civ. No. 9146.

United States District Court N. D. California, N. D.

November 16, 1965.

Litts, Mullen & Perovich, Lodi, Cal., and Wilke, Fleury & Sapunor, Sacramento, Cal., for plaintiff.

Monteleone & McCrory, Los Angeles, Cal., for defendants.

HALBERT, District Judge.

In this action brought under the Miller Act (Title 40 U.S.C. § 270a et seq.) to recover on a subcontractor's surety bond issued by defendant insurance company, use plaintiff has filed a motion by which it seeks to recover attorneys' fees. Before the case came on for trial, the parties notified the Court that the litigation had been settled except for the matter of attorneys' fees and they therefore requested, by way of motion, that this Court determine the amount of such fees. Defendants object to the motion on the ground that they are not liable for attorneys' fees. The Court has studied the memoranda filed by the parties and is of the view that the motion before the Court presents a difficult question of federal jurisdiction that apparently has gone unnoticed by the parties. Since this Court is a court of limited jurisdiction, it must, on its own motion, raise such jurisdictional questions as may be present even though they are not raised by the parties (Mansfield, C. & L. M. Railway Co. v. Swan, 111 U.S. 379, 4 S.Ct. 510, 28 L.Ed. 462; Brandt v. Bay City Super Market, D.C., 182 F. Supp. 937). This Court is obliged to proceed on the assumption that it lacks jurisdiction until it is affirmatively demonstrated that jurisdiction exists (Turner v. Bank of North America, 4 Dall. 8, 1 L.Ed. 718; Brandt v. Bay City Super Market, supra).

Federal jurisdiction in this case was initially grounded on Title 40 U.S.C. § 270b which states that actions brought pursuant to that title "shall be brought * * * in the United States District Court for any district in which the contract was to be performed and executed * * *." The original complaint included a claim for attorneys' fees in addition to the demand for payment under the surety bond. Had the case gone to trial, there is little doubt that if use plaintiff had prevailed, this Court would have had authority to award attorneys' fees as prayed for in the complaint, notwithstanding the lack of specific statutory authority to do so (See: United States for Benefit and on Behalf of Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L. Ed. 2d 776; Sam Macri & Sons, Inc. v. United States, 9 Cir., 313 F.2d 119). Whether this Court may determine that same issue when the basic federal question has been mooted by a settlement agreement is the question now presented.

There are two theories (both of which are relied upon by use plaintiff) upon which this Court might be deemed to have authority to grant attorneys' fees in cases brought under the Miller Act, viz.: (1) as an element of "costs" under the authority of Rule 54(d), Federal Rules of Civil Procedure; or (2) as a contractual liability based upon the subcontracting agreement. Clearly, an award of attorneys' fees under the authority of Rule 54(d) would be at variance with the general and well-established rule that attorneys' fees are not taxable as costs except in exceptional and compelling cases (See, e. g.: Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184). While exceptional and compelling circumstances might be present in a given Miller Act case, there is nothing inherent in the nature of those cases which would give this Court the general authority to award attorneys' fees under Rule 54(d). The second ground relied upon by use plaintiff has, however, been accepted by a majority of the courts that have dealt with the problem. Where the basic subcontracting agreement makes provisions for such an award, attorneys' fees have been granted as an ancillary matter (See, e. g.: United States for Use and Benefit of Caldwell Foundry & Mach. Co. v. Texas Construction Co., 5 Cir., 237 F.2d 705).

It should be noted, however, that when the Court does award attorneys' fees in Miller Act cases it can do so only as a matter of ancillary jurisdiction. Since Title 40 U.S.C. § 270b grants jurisdiction to the federal courts solely to determine the issues arising out of the bonding agreement securing a subcontract protected by the Miller Act, and not those arising out of the subcontract itself, the Court has jurisdiction to decide the issue of attorneys' fees, if at all, only by virtue of the doctrine of pendent jurisdiction (Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148). While the courts that have exercised their authority to grant attorneys' fees in Miller Act cases have not generally expressed the jurisdictional foundation for the exercise of that authority, it cannot be doubted that they have necessarily done so under that doctrine (See, e. g., United States for Use of Dixie Plumbing Supply Co. v. Taylor, 5 Cir., 293 F.2d 717; United States to Use of Hendry Corp. v. Smith Engineering and Construction Co., D.C., 240 F.Supp. 189; and United States for Use and Benefit of Puget Sound Dredging Co. v. Elwin, D.C., 219 F.Supp. 418).

The doctrine of pendent jurisdiction derives from Chief Justice Marshall's statement in Osborn v. Bank of United States, 9 Wheat. 738, 823, 6 L.Ed. 204:

"We think, then, that when a question to which the judicial power of the United States is extended by the constitution, forms an ingredient of the original cause, it is in the power of Congress to give the circuit courts jurisdiction of that cause, although other questions of fact or law may be involved in it."

As Chief Justice Marshall's statement was developed by the federal courts, it came to be a means by which issues which arose out of a valid federal cause of action could be litigated in the federal courts even though such issues, in and of themselves, were not...