United States Ex Rel. Belt Con Construction, Inc. v. Metric Construction Co. , 314 F. App'x 151 ( 2009 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
February 25, 2009
TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA for
the use of BELT CON
CONSTRUCTION, INC.,
Plaintiff/Counter-Defendant/
Appellee,
v. No. 07-2091
METRIC CONSTRUCTION CO., (D.C. No. CIV-02-1398-JB/LAM)
INC.; SAFECO INSURANCE (D. New Mexico)
COMPANY OF AMERICA,
Defendants/Counter-Claimants/
Appellants.
ORDER AND JUDGMENT *
Before BRISCOE, TYMKOVICH, and GORSUCH, Circuit Judges.
Belt Con Construction, Inc. (“Belt Con”) brought a Miller Act action
pursuant to 40 U.S.C. §§ 270a–270d against Metric Construction Co. Inc.,
(“Metric”) arising out of contracts to construct a Federal Law Enforcement
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
Training Center Campus (“Training Center”) in New Mexico. Metric responded
by filing counterclaims. After a bench trial and an order addressing Metric’s
motion to amend judgment, the United States District Court for the District of
New Mexico awarded Belt Con damages and concluded Belt Con was the
prevailing party. Metric now appeals the district court’s denial of two claims
made in its motion to amend judgment: (1) to reduce Belt Con’s damage award by
the value of the roof warranties Belt Con did not provide; and (2) to apportion to
Belt Con damages from delays during construction. Metric contends that the
district court correctly determined that Belt Con failed to satisfy its contractual
obligation to provide roof warranties, but wrongly decided that there was
insufficient evidence to determine the value of the warranties. As regards
damages caused by delay, Metric contends that the district court wrongly
determined that any delays attributable to Belt Con were concurrent with delays
caused by others and that given the evidence presented, concurrent delays could
not be apportioned. We have jurisdiction pursuant to 28 U.S.C. § 1291, and
affirm.
I
Metric contracted with the General Services Administration (“GSA”) to
build dormitories, and physical training and security buildings. Metric also
contracted with the GSA to build two firing ranges. Metric subcontracted with
Belt Con for masonry work on the dormitories and physical training building.
2
The construction project was not completed on time.
As a result of the construction delays, GSA withheld liquidated damages
from its contract payment to Metric. Metric disputed this decision and filed
claims against the United States, contending that GSA caused the delays. Metric
and GSA resolved these claims in a settlement agreement. The terms of the
settlement agreement include the following language:
The GSA maintains that it properly withheld and is entitled to
liquidated damages on the Dormitory project and the Range project.
Metric concedes some liability for the late completion of the
projects, but maintains that it is entitled to compensation for some
delay and changed or extra work performed by Metric on the
projects.
Aplt. App’x Vol. II at 280.
After the settlement between GSA and Metric, Belt Con filed the present
action. Belt Con alleged that Metric failed to pay Belt Con all of the money it
owed to Belt Con under its subcontract and that Belt Con was entitled to
additional compensation for delays and extra work. Among other defenses,
Metric responded that Belt Con failed to complete the contracted work on
schedule. Additionally, Metric brought a counterclaim against Belt Con for
clean-up costs Metric incurred after Belt Con completed its work. Metric also
argued that any award to Belt Con should be reduced by the value of the roof
warranties Belt Con failed to provide, and by the value of the liquidated damages
GSA assessed against Metric that were in fact caused by Belt Con’s delay.
3
The district court held a four-day bench trial. The district court found that
California law governed the contract between Metric and Belt Con. Applying
California law to its factual findings, the district court determined that Belt Con
was entitled to the unpaid balance on the contract, plus interest. The district
court, however, did not grant Belt Con’s requests for delay damages. Regarding
Metric’s counterclaims, the district court awarded Metric its requested clean-up
costs. Despite finding that the contract required Belt Con to provide roof
warranties and that Belt Con failed to provide them, the district court concluded
that “Metric has not proved by a preponderance of the evidence damages for Belt
Con’s failure to provide the roof warranties.” Aplt. App’x Vol. I at 155.
Similarly, the district court denied Metric’s request for liquidated damages
resulting from Belt Con’s delays. As regards attorney fees and costs, the court
found that Belt Con was the prevailing party.
In response to the district court’s Findings of Fact and Conclusions of Law
entered after the bench trial, Metric filed a motion to amend judgment. Metric
asked the district court to apportion some of the delay to Belt Con, and offset the
contract balance awarded to Belt Con by the value of the roof warranties and the
“pipe identification work” that Belt Con did not provide. Aplt. App’x Vol. I at
219. The court reduced the award by the value of the pipe identification work,
corrected scriveners errors in its prior findings, and denied the balance of
Metric’s motion. Metric now appeals, arguing that the district court erred by not
4
reducing Belt Con’s award by the value of the roof warranties and by not
apportioning any delay to Belt Con.
II
A. Roof Warranties
Metric contends the district court erred as a matter of law in its rulings
regarding the roof warranties. It appears that Metric agrees with the district
court’s findings of fact on this issue. Because Metric’s challenge involves only
the application of legal principles to undisputed facts, our review is de novo. See
Hollern v. Wachovia Sec., Inc., 458 F.3d 1169, 1175 n.4 (10th Cir. 2006)
(applying this standard in the context of attorney fees).
After the bench trial, the district court addressed the roof warranties issue
in its Findings of Fact and Conclusions of Law. The court found that GSA
requested roof warranties from Metric, who in turn in its contract with Belt Con
required Belt Con to provide them. Belt Con did not provide the roof warranties
to Metric. In its later Memorandum Opinion and Order, the court noted that Belt
Con stated “it was not going to provide the warranties until Metric paid Belt Con
all the money to which Belt Con felt it was entitled.” Aplt. App’x Vol. I at 231.
Metric asked other roofing contractors to provide warranties, but they declined to
warrant another contractor’s work. Id. 149–50; 154–55. The district court later
clarified that “Metric was able to obtain only one quotation for a roof warranty
[from another roofer] in the amount of $118,000.” Id. at 231. Although the
5
district court acknowledged that “Metric remains liable to the GSA for any
warranty items that may arise relating to the roof,” the district court found that
“[t]he GSA has not called on Metric to honor the warranty, and Metric has not
performed any warranty work.” Id. at 154–55; 232. “[T]he GSA called Belt Con
directly several times to repair the roof . . . Belt Con responded to each call and
performed work on the roof even when Belt Con felt that the warranties did not
cover the repairs.” Id. at 232. In the Memorandum and Opinion addressing
Metric’s motion to amend, the district court considered Metric’s damages
regarding roof warranties to be the difference between Metric’s settlement amount
with the GSA, and the hypothetical amount that Metric would have requested if
the warranties were provided. Id. The district court found that “Metric does not
know how much less it took in settlement because of the warranty issue.” Id.
The district court concluded the testimony regarding the value of the warranties
that was based upon another roofer’s offer was “speculative and conjecture.” Id.
at 155; 256. After trial and after considering Metric’s motion to amend, the
district court concluded that “Metric has not . . . proved that it has been
damaged.” Id. at 155; 256–57 (“Metric failed to demonstrate that it suffered any
damages.”). The district court denied Metric’s motion to amend judgment based
upon Belt Con’s failure to provide the roof warranties.
Metric agrees with the district court’s factual findings, but contends that
the district court misapplied the law regarding contractual damages. First, Metric
6
argues that the district court “misapplied the ‘reasonable certainty’ rule and
confused the distinction between uncertainty as to amount with uncertainty of
existence.” Aplt. Br. at 21. To support this argument, Metric relies on the facts
that it contracted with Belt Con for the roof warranties, did not receive them, and
remains liable to the GSA for “roof warranty issues.” Id. Metric also argues its
failure to receive the roof warranties was the present loss of a contractual right,
and not “future damages” as characterized by the district court. Second, Metric
argues that if the amount of damages—the value of the roof warranties—is
difficult to calculate, any disadvantage arising from that difficulty should be
borne by Belt Con and not Metric. Similarly, Metric argues that because of the
nature of Belt Con’s breach, the evidence Metric presented was the best available
evidence and provides a sufficient basis for the court to approximate Metric’s
damages. Metric concludes “[c]ertainly there is no evidence in the record to
suggest that the value of the roof warranties was zero[; i]t is illogical to presume
the warranty has no value where warranties are present protection against
unknowns and uncertain future liabilities.” Aplt. Br. at 29. 1
1
Metric also argues that the district court could have created an equitable
remedy forcing Belt Con to deliver the roof warranties. Belt Con responds that
this argument was not presented to the district court. In its reply, Metric does not
dispute this assertion or reference where in the record this argument was
previously made. Absent extraordinary circumstances, we will not consider
arguments raised for the first time on appeal. Governor of Kan. v. Kempthorne,
516 F.3d 833, 841 (10th Cir. 2008) (citation omitted.)
7
We agree with the district court that California law governs this contract.
We look to the conflict of law rules of New Mexico, the forum state, to determine
which state’s laws control. Mountain Fuel Supply v. Reliance Ins. Co., 933 F.2d
882, 887–88 (10th Cir. 1991). Unless it would result in a violation of
“fundamental principles of justice,” New Mexico courts apply the law of the state
where the parties executed the contract. Demir v. Farmers Tex. County Mut. Ins.
Co., 140 P.3d 1111, 1113–14 (N.M. Ct. App. 2006) (“When differences between
the law of the forum state and the law of the state where the contract was
executed concern only contract interpretation, we will apply the law of the state
where the parties entered the contract.”). Belt Con and Metric executed the
contract at issue in California. Aplt. App’x Vol. I at 151. Neither party disputes
that California law applies.
Under California law, every contract action requires the establishment of “a
causal connection between the breach and the damages sought.” Thompson Pac.
Const., Inc. v. City of Sunnyvale, 66 Cal. Rptr. 3d 175, 188 (Cal. Ct. App. 2007).
In the context of building construction, the amount of damages is the difference
between the contract price and the price of completing the contract work.
Fairlane Estates, Inc. v. Carrico Const. Co., 39 Cal. Rptr. 35, 40 (Cal. Ct. App.
1964). Damages that are not causally connected with the breach of a contract are
not recoverable. Patent Scaffolding Co. v. William Simpson Const. Co., 64 Cal.
Rptr. 187, 191–92 (Cal. Ct. App. 1967). Damages that result from a liability to a
8
third party are not recoverable unless the party seeking the damages “proves to a
reasonable certainty that the liability could and would be enforced by the third
party” or that the party seeking the damages “could and would satisfy the
obligation.” Green Wood Indus. Co. v. Forceman Int’l Dev. Group Inc., 67 Cal.
Rptr. 3d 624, 632 (Cal. Ct. App. 2007).
Accordingly, the existence of a mere liability is not necessarily the
equivalent of actual damage. This is because the fact of damage is
inherently uncertain in such circumstances. The facts that a third
party has demanded payment by the plaintiff of a particular liability
and plaintiff has admitted such liability are not, by themselves,
sufficient to support an award of damages for that liability, because
that third party may never attempt to force the plaintiff to satisfy the
alleged obligation, and plaintiff may never pay the obligation.
Id. at 633 (stating that such reasoning applies whether the claim sounds in
contract or tort).
Metric attempts to base its alleged damages on the district court’s finding
that Metric remains liable to the GSA for roof warranty issues. Metric argues that
its damages should be the present value of the protection from future liability.
Aplt. Br. at 23 (“[As] a direct result of Belt[]Con’s refusal to furnish the roof
warranties, Metric has lost the protection against possible liability that it
contracted for.”). To support this argument, Metric cites the California Supreme
Court’s opinion in Caminetti v. Manierre, 142 P.2d 741, 745 (Cal. 1943), for the
statement: “The courts are not so impotent that they will permit a total loss of
such a right merely because of a claimed uncertainty or difficulty in determining
9
the extent to which the insured may be damaged by the breach of the promise.”
The California Supreme Court, however, went on to state, “Of course, the proof
must establish with reasonable certainty and probability that damages will result
in the future to the person wronged. And the nature of the damages should be
ascertainable.” Caminetti, 142 P.2d at 745 (citations omitted).
The requirement of proof of damages with “reasonable certainty and
probability that damages will result in the future” is where Metric’s claim falls
short. Id. Metric has not provided any evidence related to the probability that
GSA will hold it liable for the roof warranties. Metric’s only evidence related to
the value of the roof warranties consists of hearsay testimony that one roofer
would provide substitute roof warranties for the amount of $118,000, which
Metric’s president was unsure he would accept, and that if Metric had the
warranties, it may have tried to settle with the GSA for a greater amount. The
district court questioned the credibility and reliability of this evidence. On the
other hand, there was evidence that the GSA called Belt Con for roof repairs and
that Belt Con responded in each instance and provided the work requested.
Because there is no evidence indicating a probability that GSA would hold Metric
liable, and there is evidence that GSA has not held Metric liable, the existence of
Metric’s liability to the GSA is insufficient to establish actual damages. We
conclude that the district court did not err in denying Metric’s motion to reduce
Belt Con’s award by the value of the roof warranties.
10
B. Apportioning the Delays
Metric also challenges the district court’s decision to not attribute any of
the construction delays to Belt Con. Metric challenges the district court’s legal
analysis and its factual conclusions. We review issues of law de novo and the
challenged fact findings for clear error. Hjelle v. Mid-State Consultants, Inc.,
394 F.3d 873, 879 (10th Cir. 2005) (“If a finding of fact, we review only for clear
error . . . ; but if an issue of law, our review is de novo.”) (citations omitted).
After the bench trial, the district court denied Metric’s request for
liquidated damages resulting from delays Metric attributed to Belt Con. The
district court determined that it would not grant Metric’s request without evidence
of the amount of delay attributable to Belt Con. The district court found, “Metric
and other subcontractors delayed the FLETC project concurrently with Belt Con.”
Aplt. App’x Vol. I at 155. The district court also noted, “because Metric did not
prove by a preponderance of the evidence how much, if any, delay should be
attributed to Belt Con, any award of damages would be speculative.” Id.In the Memorandum and Opinion addressing Metric’s motion to amend
judgment, the district court expanded upon its factual findings and the legal basis
for its conclusion. The district court stated that the project’s scheduling created
problems during construction and hindered the court’s efforts to trace the causes
of the delays. Aplt. App’x Vol. I at 222–23. The district court also found that
“two of the largest culprits of delay—the GSA and R&R Concrete Contractors,
11
Inc. (“R&R[”])—[were] not parties to the case.” Id. at 222. Although Metric and
Belt Con presented expert testimony regarding the project’s time line and the
necessary order of benchmarks—the critical path 2—the district court “did not find
[Metric’s expert’s] methodology, evidence, or testimony reliable.” Id. at 224.
“Both experts that testified at the trial apportioned the construction delays
between Belt Con and R&R.” Id. at 226.
According to the findings of the district court, the critical path began on the
first floor of “Building 21” and continued through Building 19. Id. at 224. “Belt
Con admits that its masonry work on [Building 21’s first] floor was completed
two days late.” Id. at 228. In its analysis regarding this work, the district court
also considered that Metric did not deliver the entire first floor, as provided in the
schedule, when Belt Con began working. Metric did not claim any delays
associated with Belt Con’s work on Building 19’s first floor. Regarding Belt
Con’s work on Building 19’s second floor, Belt Con’s expert “determined that
Belt Con completed the work eight days late,” but that “there were concurrent
delays” attributable to Belt Con and R&R. Id. at 230. When asked to clarify how
the delays were concurrent, Belt Con’s expert stated, “They’re running—They’re
both delaying the work. They are not exactly at the same time. Both of them
2
A delay along the critical path delays completion of the entire project.
Morrison Knudsen Corp. v. Fireman’s Fund Ins. Co., 175 F.3d 1221, 1231–32
(10th Cir. 1999).
12
caused additional delay . . . .” Id. The district court noted that Belt Con’s expert
did not quantify what portions of the delay were concurrent and what portions
were sequential. On the other hand, the district court also found that “Metric’s
expert . . . concluded that [the delays related to Building 19’s second floor] did
not delay the project.” Id. Regarding Building 19’s third floor, the district court
found that Belt Con’s expert testified that the delays were concurrent.
Based on these expanded findings, the district court again declined to
apportion the delays and reduce the amount of damages awarded to Belt Con.
The district court stated, “Metric is correct that the Court can, where appropriate
and the evidence so supports, apportion delay . . . The Court will not hesitate to
undertake that task where appropriate. Metric has not, however, with its factual
presentation or its legal arguments, convinced the Court that it should do so in
this case.” Id. at 244. Although the district court acknowledged that California
law allowed courts to apportion damages for sequential delays, the court found
that the delays were not sequential. The district court rejected Metric’s
contentions that the delays at issue were sequential, reasoning “the Court cannot
determine that Belt Con’s delays were sequential when there was never a reliable
project schedule in place.” Id. at 254.
Significantly, the district court questioned Metric’s credibility in its effort
to attribute fault for the delays to Belt Con. Id. at 225 (“Metric’s shifting position
undercut its credibility with the Court.”). Before this action began, Metric
13
submitted a claim to the GSA with a delay analysis that attributed all of the delay
to the GSA. This analysis consisted of a “twenty-page, single-spaced report with
thirty-five pages of exhibits” and according to Metric’s president was “made in
good faith . . . and complete to the best of [his] knowledge and belief.” Id. at
248. Based on this, the district court determined that “Metric did not equitably
allocate delay damages in good faith, but arrived at [its expert’s] analysis for
purposes of litigation.” Id. at 249. The district court concluded its analysis of the
allocation of delays by agreeing with Metric’s initial analysis that the GSA
caused all of the delays directly or indirectly.
Metric raises four arguments challenging the district court’s conclusions
regarding the allocation of damages caused by delay. First, Metric argues that
California law favors enforcing liquidated damages clauses and apportioning
delay damages. Second, Metric contends that courts can apportion sequential and
concurrent delays both as a matter of law, and as a result of a provision in the
contract (Article 8) between Metric and Belt Con. Third, Metric asserts, “There
was sufficient evidence presented . . . to allow the trial court to allocate the
delay.” Aplt. Br. at 38. Lastly, Metric argues that some of the delays were
sequential. Belt Con responds that the district court’s findings were correct,
highlighting Metric’s prior analysis attributing the delays to the GSA.
California courts apportion contractual liquidated damages “where delays
in construction projects have been caused by both the owner and by the
14
contractor.” Stop Loss Ins. Brokers, Inc. v. Brown & Toland Med. Group, 49 Cal.
Rptr. 3d 609, 621 (Cal. Ct. App. 2006) (citing Jasper Constr., Inc. v. Foothill
Junior Coll. Dist., 153 Cal. Rptr. 767 (Cal. Ct. App. 1979); Nomellini Constr. Co.
v. California ex rel. Dep’t of Wat. Res., 96 Cal. Rptr. 682 (Cal. Ct. App. 1971)).
In Nomellini, the California Court of Appeals rejected the notion that “where
delays are caused on both sides there is no way to ‘apportion damages[.]’” 96
Cal. Rptr. at 686. Instead, the California Court of Appeals reasoned that
“[q]uantum of delay in terms of time is all that is being apportioned. That is an
uncomplicated fact finding process.” Id. Following Nomellini, the California
Court of Appeals noted the importance of the contractual language allowing
apportionment. Jasper, 153 Cal. Rptr. at 774 (listing “because the contract
contained an explicit provision allowing apportionment” and the distinctions
between public and private contracts as the two reasons for applying
apportionment).
We are unaware of, nor does Metric provide, 3 California law addressing
apportionment of concurrent delays. The reasoning of Nomellini suggests that
California would not apportion concurrent delays, but such a determination is
3
Although Metric devotes several pages to its assertion that “Both
Sequential and Concurrent Delay Can Be Apportioned,” the only legal support for
this argument is a citation to a case from the United States Court of Federal
Claims. As stated, because California is the place of execution for the contract,
we apply California law unless it contravenes New Mexico public policy. Metric
has not addressed apportionment of delays under New Mexico law.
15
unnecessary for our present analysis. Following the court’s direction in Jasper,
we turn to the present contractual provision that addresses apportioning
concurrent delays. Article 8 of the contract states in pertinent part:
If delays are caused by more than one subcontractor, Contractor shall
equitably allocate the damages for delay among the Contractor and
those subcontractors responsible for the delay, and the Contractor’s
decision as to the allocation shall be final and binding on all
subcontractors as long as the decision is made in good faith.
Aplt. App’x Vol. II at 261–62. The district court found that Metric did not
allocate the damages in good faith, relying on Metric’s initial delay analysis that
attributed all of the delay to the GSA. Although Metric does not argue that this
finding is incorrect, Metric dismisses the “so-called ‘delay analysis’ [as] a
document prepared by Metric’s counsel in litigation advocating the position of its
client prior to any discovery.” Aplt. Reply Br. at 8. This argument does not
nullify the district court’s conclusion that “Metric did not equitably allocate delay
damages in good faith, but arrived at [its trial expert’s] analysis for purposes of
litigation.” Aplt. App’x Vol. I at 249. Moreover, as noted by the district court,
the contract “is silent . . . with regard to what happens if Metric’s allocation was
not done in good faith.” Id. at 249.
We conclude that the district court’s findings of fact and conclusions of
law regarding the apportionment of damages in this case are correct. The court
looked to the applicable contractual language and found Metric did not allocate
concurrent damages in good faith. Consequently, we turn to Metric’s argument
16
that the delays were sequential, not concurrent.
Metric bases its argument on the testimony of Belt Con’s expert. While
testifying about the construction of Building 19, the expert had this exchange with
counsel:
A. On the second and third floor there are concurrent
delays between the masonry and concrete work.
Q. So does that mean that the concrete delay and the
masonry delay are running at the same time, during the same
period of time?
A. No. They’re running—They’re both delaying the work.
They are not exactly at the same time. Both of them caused
additional delay to the floor construction.
Aplt. App’x Vol. IV at 776. Metric concludes this argument by asserting, “If the
delays are truly concurrent delays and are simultaneously caused by two
subcontractors, each should bear a portion of the prime contractor’s delay damages
. . . .” Aplt. Br. at 40.
This testimony is insufficient for us to determine that the district court’s
factual findings were clearly erroneous. The district court heard Metric’s expert
testify that Belt Con’s work on the second floor of Building 19 was not part of the
critical path. The district court found that “Belt Con’s expert testified that there
were concurrent delays between the masonry and concrete [on the third floor of
Building 19].” Aplt. App’x Vol. I at 247. Metric’s reference to a statement where
Belt Con’s expert equivocated slightly does not establish that these findings were
clear error. See Pencro Assocs., Inc. v. Sprint Spectrum, L.P., 499 F.3d 1151,
17
1161–62 (10th Cir. 2007) (“[P]ointing to conflicting evidence inconsistent with the
district court’s finding is insufficient, standing alone, to establish clear error, for
every trial is replete with conflicting evidence, and in a bench trial, it is the district
court, which enjoys the benefit of live testimony and has the opportunity to weigh
firsthand to weigh credibility and evidence, that has the task of sorting through and
making sense of the parties’ competing narratives.”) (quotation omitted). We
conclude that the district court did not err in denying Metric’s motion to amend
judgment to attribute some of the construction delay to Belt Con.
III
We affirm the judgment of the district court.
Entered for the Court
Mary Beck Briscoe
Circuit Judge
18
07-2091, United States of America for the use of Belt Con Construction, Inc. v.
Metric Construction Co.
GORSUCH, J., Circuit Judge, concurring in part and dissenting in part.
I fully concur in the court’s conclusion that Metric failed to adduce sufficient
evidence about the value of the roof warranties Belt Con failed to supply. As the
court notes, under California law a party must establish proof of damages with
competent evidence affording “reasonable certainty.” Caminetti v. Manierre, 142
P.2d 741, 745 (Cal. 1943). In this case, however, the only evidence Metric
proffered was hearsay, the credibility of which the district court understandably
found insufficiently reliable.
The court proceeds, however, to offer an additional basis for rejecting
Metric’s roof warranty claim, holding that Metric was required as a matter of law
to demonstrate GSA was likely to hold it liable for work subject to Belt Con’s
(unproduced) warranties. But it is far from clear that California law holds
insurance contracts to lack any recoverable value until and unless a claim under
them is made or probable; indeed, such a conclusion appears at odds with the
California Supreme Court’s decision in Caminetti. 1 In any event, I see no need to
1
In Caminetti, the California Supreme Court faced a case in which holders
of noncancellable disability insurance policies sought damages from defendants
for the fact that their policies were liquidated in a company restructuring. 142
P.2d at 742-43. The defendants argued that the plaintiffs might never suffer
damages because they might die before becoming disabled. The Court squarely
rejected this argument, noting that “[t]he effect of that argument would be to
render wholly valueless the noncancellable feature of the policy, a definite and
concrete promise of the insurer.” Id. at 745. It continued “[t]hat the insureds will
(continued...)
reach such a legal holding, given Metric’s failure to adduce any competent
evidence whatsoever of the warranties’ value.
On the separate question of liability for delays, the parties before us, as well
as the district court, recognized that there are two potential bases for holding Belt
Con liable for delays it caused the project. First, Belt Con could be held liable
under a contractual provision providing that a subcontractor would be responsible
for delays allocated to them by Metric so long as the allocation was “made in good
faith.” Aplt. App. at 139-140. And second, Belt Con could be held liable as a
matter of California law. The district court held that Metric did not allocate delays
in “good faith,” and therefore proceeded to consider whether, as a matter of law, it
could perform the allocation itself. It held it could not, concluding that the delays
at issue were concurrent, not sequential, and that California law did not permit the
allocation of concurrent delays.
Like the court today, I find the district court did not clearly err in concluding
that Metric did not allocate delays in good faith and in finding that the delays were
concurrent and not sequential. Unlike the court, however, I do not think these dual
1
(...continued)
be damaged in the instant case is clear. They have forever lost the protection
against possible loss which was secured to them by their policies. They have lost
the chance they had to be specifically benefitted by that protection.” Id. at 746.
The Court then proceeded to state that the preferred damage award would be to
grant the plaintiff damages according to the “replacement rule,” namely the cost
of similar insurance from another insurer. Id. at 747.
-2-
determinations end the matter. There remains the question whether California law
permits the court to allocate concurrent delays. The court concludes that the
reasoning of Nomellini, a 1971 case from the California Court of Appeals,
“suggests that California would not apportion concurrent delays,” but that “such a
determination is unnecessary” for its present analysis. Maj. Op. at 15-16 (citing
Nomellini Constr. Co. v. California, 19 Cal.App.3d 240, 246 (1971)). With respect
to my colleagues, I believe such a determination, one way or the other, is necessary
to resolve this case – otherwise we are left with a conclusion by the court that
delays were concurrent, but no explanation why those delays cannot be
apportioned.
Moreover, I read California law as permitting the allocation of concurrent
delays of the type encountered in this case. Nominelli suggests as much, where the
court stated that:
categorical statements that where delays are caused on both sides there is no
way to ‘apportion damages’ are an absurdity. . . . Quantum of delay in terms
of time is all that is being apportioned. That is an uncomplicated fact finding
process. That is what courts are for.
19 Cal.App.3d at 246. While I can envision a case in which delays attributable to
distinct parties are so intertwined that it is impossible to separate them
meaningfully, this is not such a case. Both parties presented experts that did
apportion the delays attributable to Belt Con – the experts differed only as to the
number of attributable days of delay, and neither party argued to the district court
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that apportionment of delays was an impossibly complicated task. And if the fact
finding in this case was not impossibly complicated for the parties, I fail to see how
it was impossibly complicated, as a matter of law, for the court. Indeed, resolution
of factually intensive disputes “is what courts are for.” Id. at 246; cf. Robinson v.
United States, 261 U.S. 486, 489 (1923) (upholding damage award and stating
“[h]ere the fault of the respective parties was not so clearly distributed in time, and
it may have been difficult to determine, as a matter of fact, how much of the delay
was attributable to each. But the Court of Claims has done so in this case.”).
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