Mallory & Evans Contractors & Engineers, LLC v. Tuskegee University ( 2012 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
MARCH 27, 2012
No. 11-10940
JOHN LEY
________________________
CLERK
D.C. Docket No. 3:10-cv-00026-WKW-CSC
MALLORY & EVANS CONTRACTORS & ENGINEERS, LLC,
Plaintiff-Appellant,
versus
TUSKEGEE UNIVERSITY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Alabama
________________________
(March 27, 2012)
Before DUBINA, Chief Judge, COX, Circuit Judge, and HUNT,* District Judge.
PER CURIAM:
*
Honorable Willis B. Hunt, Jr., United States District Judge for the Northern District of
Georgia, sitting by designation.
This case involves a contract dispute between the Plaintiff, Mallory & Evans
Contractors & Engineers, LLC, and the Defendant, Tuskegee University.1 Mallory
& Evans claims that Tuskegee has not paid it the full amount due under their contract.
Tuskegee claims that Mallory & Evans failed to satisfy a condition precedent for
payments in excess of the specified contract price. The district court agreed with
Tuskegee. After thoughtfully considering the parties’ briefs, and with the benefit of
oral argument, we find no reversible error. Therefore, we affirm.
I. FACTS
In 2009, Tuskegee contracted with Mallory & Evans for certain dormitory
renovations. It is undisputed that the parties contemplated a fixed contract price for
this work. It is also undisputed that the contract included the terms of Tuskegee’s
Purchase Order. Item number 6 of the Purchase Order provided: “Prior approval must
be granted by the Purchasing Department [of Tuskegee] if total exceeds amount
1
We raised earlier concerns about the district court’s jurisdiction in this case. Mallory &
Evans invoked the court’s diversity jurisdiction. But because Mallory & Evans is a limited liability
company, it must allege the citizenship of its members. See Rolling Greens MHP, L.P. v. Comcast
SCH Holdings, L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004). The complaint did not identify the
members of Mallory & Evans and did not allege their citizenship. After we raised this concern, we
allowed Mallory & Evans to amend its complaint to allege the citizenship of its members. Mallory
and Evans did so, but Tuskegee denied these allegations. On January 20, 2012, we entered a limited
remand order and directed the district court to make jurisdictional findings about the citizenship of
the members of Mallory & Evans. On remand, Tuskegee moved to amend its answer and admit that
the members of Mallory & Evans are citizens of Georgia. The district court granted that motion.
We are now satisfied that the district court had jurisdiction under 28 U.S.C. § 1332.
2
listed.” (Dkt. 31-4 at 2.) The amount listed was $3,850,535.00. The parties agree
that Item number 6 created a condition precedent for payments in excess of $3.85
million—namely, prior approval of those payments by Tuskegee’s Purchasing
Department.
It is undisputed that Mallory & Evans performed work outside the scope of the
original renovation contract. But significantly, the renovation contract contains no
relevant provision which excludes this additional work from the fixed contract price
of $3.85 million or which protects Mallory & Evans from unforeseen contingencies.
Instead, Mallory & Evans tried to modify the original contract (and increase the
contract price) through proposed change orders. These proposed change orders
identified the work not requested in the original contract. They also estimated the
cost of this additional work.
Over the course of the project, Mallory & Evans submitted the four proposed
change orders relevant to this appeal to Clifford Wesson, Tuskegee’s construction
manager. Pursuant to Tuskegee’s policy, Wesson was to review any proposed change
order and, if the order caused the project to exceed the contract price, forward it to
Tuskegee’s Purchasing Department for approval. If the proposed change order did
not cause the project to exceed the contract price, Wesson did not have to forward it
to the Purchasing Department. Mallory & Evans’s initial estimates for the cost of the
3
relevant proposed change orders kept the dormitory renovations within budget.
Wesson instructed Mallory & Evans to proceed with the work, but did not forward
the proposed change orders to the Purchasing Department.
Additionally, over the course of the renovation, Tuskegee purchased equipment
for Mallory & Evans to install. Because Tuskegee is exempt from state sales tax,
these purchases (described as Tax Packages) allowed Tuskegee and Mallory & Evans
to realize substantial tax savings. Mallory & Evans initially credited these Tax
Packages toward Tuskegee’s final bill.
In September 2009, Mallory & Evans had substantially completed its work and
submitted its final pay request. That request sought payment for approximately
$765,000. Tuskegee’s payments, including the Tax Packages for which it claimed
credit, already totaled about $3.45 million. Thus, Mallory & Evans’s final pay
request brought the project’s total cost to $4.2 million—roughly $400,000 more than
the amount listed in the contract. Tuskegee refused to pay that amount, and instead
paid about $380,000—the difference between what it had already paid (including the
Tax Packages) and the $3.85 million contract price.
II. PROCEDURAL HISTORY
Mallory & Evans brought this suit to recover what it contends it is still owed
under the contract. Before the district court, the parties agreed that Item number 6
4
created a valid condition precedent for payments in excess of $3.85 million. The
court found that Tuskegee did not breach the renovation contract when it refused to
pay more than $3.85 million because Mallory & Evans had not satisfied the condition
by getting prior approval from Tuskegee’s Purchasing Department. Mallory & Evans
countered that Tuskegee waived the condition precedent by clothing Wesson with
apparent authority to approve the proposed change orders, and thereby to authorize
payments in excess of the contract price.2 The district court rejected that argument
and entered summary judgment for Tuskegee. In a Fed. R. Civ. P. 59 motion, Mallory
& Evans asked the court to reconsider. In that motion, Mallory & Evans argued, for
the first time, that Tuskegee had not paid the full contract price and that Tuskegee had
ratified Wesson’s actions. The district court rejected these arguments as untimely and
on their merits. Mallory & Evans now appeals the district court’s grant of summary
judgment and the denial of its Rule 59 motion.
III. ISSUES ON APPEAL
Mallory & Evans raises the following issues on the appeal: (1) has Tuskegee
paid the full contract price; (2) did Tuskegee waive the condition precedent in
2
Mallory & Evans also sought recovery under an implied contract theory and under the
equitable doctrines of quantum meruit and unjust enrichment. The district court rejected these
arguments as barred by the existence of an express contract covering the same subject matter. See,
e.g., Brannan & Guy, P.C. v. City of Montgomery, 828 So. 2d 914, 921 (Ala. 2002); Kennedy v.
Polar-BEK & Baker Wildwood P’ship, 682 So. 2d 443, 447 (Ala. 1996). Mallory & Evans has not
pursued these claims on appeal.
5
Item number 6 when Wesson failed to forward the proposed change orders to the
Purchasing Department; (3) did Tuskegee waive the condition precedent in
Item number 6 by clothing Wesson with apparent authority to approve the proposed
change orders; and (4) did Tuskegee waive the condition precedent in Item number
6 by ratifying Wesson’s approval of the proposed change orders?
IV. STANDARD OF REVIEW
We review a grant of summary judgment de novo and apply the same standards
that bound the district court. See Midrash Sephardi, Inc., v Town of Surfside, 366
F.3d 1214, 1222–23 (11th Cir. 2004) (citation omitted).
We review the denial of a Rule 59 motion for abuse of discretion. Lockard v.
Equifax, Inc., 163 F.3d 1259, 1267 (11th Cir. 1998). A party cannot use a Rule 59
motion to “relitigate old matters, raise argument[s] or present evidence that could
have been raised prior to the entry of judgment.” Michael Linet, Inc. v. Village of
Wellington, Fla., 408 F.3d 757, 763 (11th Cir. 2005) (citation omitted).
V. DISCUSSION
The district court properly granted summary judgment in this case. It is
undisputed that Item number 6 made prior approval from Tuskegee’s Purchasing
Department a condition precedent under the contract for payments in excess of $3.85
6
million. It is undisputed that Mallory & Evans never obtained prior approval for its
costs in excess of that amount.
Instead, Mallory & Evans contends that Tuskegee waived the condition
precedent in Item number 6 because Wesson failed to forward its proposed change
orders to Tuskegee’s Purchasing Department. It says that after it had submitted the
proposed change orders to Wesson, it had done all it could do to obtain approval of
those orders. Therefore, it says we should excuse its failure to satisfy the condition.
Mallory & Evans’s argument is misguided. Item number 6 clearly requires that
“[p]rior approval must be granted by the Purchasing Department if total exceeds
amount listed.” (Dkt. 31-4 at 2.) Mallory & Evans cannot seriously contend that the
mere submission of a proposed change order would guarantee the Purchasing
Department’s approval of that order, even if Wesson had already given it his blessing.
The contract plainly required “prior approval” from the Purchasing Department
before Tuskegee would pay more than $3.85 million under the contract. If Mallory
& Evans wanted to get paid for change orders that caused the project’s costs to
exceed $3.85 million, it should have parked its equipment and waited for the
Purchasing Department’s approval. When Mallory & Evans kept working without
that approval, it did so at its peril. And, Mallory & Evans’s own records show that
7
it knew the Purchasing Department had not approved any of the relevant proposed
change orders before it largely finished the work. Thus, this argument fails.
Mallory & Evans also contends that Tuskegee clothed Wesson with apparent
authority to approve the proposed change orders and, thereby authorize payments in
excess of $3.85 million. Apparent authority exists when a principal represents that
an agent has authority to act and a third party reasonably relies on that representation
to his detriment. See McLemore v. Hyundai Motor Mfg. Ala., LLC, 7 So. 3d 318, 329
(Ala. 2008). Here, Mallory & Evans bore the burden of establishing Wesson’s
apparent authority to approve payments in excess of $3.85 million. See Johnson v.
Shenandoah Life Ins. Co., 281 So. 2d 636, 640 (Ala. 1973). But Mallory & Evans
identified no representations by Tuskegee which even suggest that Wesson had such
authority. Moreover, the plain language of Item number 6 put Mallory & Evans on
notice that Wesson lacked such authority. Because these are the only two arguments
Mallory & Evans offered in opposition to Tuskegee’s motion for summary judgment,
we affirm the grant of summary judgment.
We also affirm the denial of Mallory & Evans’s Rule 59 motion. In that
motion, Mallory & Evans raised two new arguments: (1) that Tuskegee did not pay
it the full contract price because the Tax Packages were erroneously credited to its
final bill, and (2) that Tuskegee ratified Wesson’s approval of the relevant change
8
orders.3 The district court rejected these arguments as an attempt to “relitigate old
matters, raise argument[s] or present evidence that could have been raised prior to the
entry of judgment.” Michael Linet, Inc., 408 F.3d at 763 (citation omitted). This was
not an abuse of discretion.
Although we are not required to address the substance of Mallory & Evans’s
new arguments, we note that the district court properly rejected them on the merits.
First, Mallory & Evans contends that Tuskegee has not paid it the full contract price.
It claims that the district court erroneously credited the value of the Tax Packages
toward Tuskegee’s final bill. After subtracting these amounts from the final bill,
Mallory & Evans claims that an unpaid balance of nearly $550,000 remains on the
contract price. This argument is belied by Mallory & Evans own statements during
this case. In its brief in opposition to summary judgment, Mallory & Evans treated
the $3.85 million contract price as including the Tax Packages. In its summary
judgment order, the district court found it undisputed that Tuskegee had paid the full
contract price. Only later, after entry of judgment, did Mallory & Evans claim the
contract price did not include the Tax Packages. The district court properly rejected
this argument as meritless.
3
In its initial brief, Mallory & Evans treats these arguments as if it raised them in opposition
to Tuskegee’s motion for summary judgment. They did not, and we review them accordingly.
9
Mallory & Evans also contends that Tuskegee ratified Wesson’s approval of
the relevant proposed change orders. A principal ratifies an agent’s actions when:
(1) the agent’s actions are unauthorized, see Tuskegee Inst. v. May Refrigeration Co.,
344 So. 2d 156, 158 (Ala. 1977); and (2) the principal accepts the benefits of those
actions with “full knowledge of all the material facts” or when he could have learned
of those facts through “reasonable diligence,” see Dusenberry v. First Nat’l Bank of
Birmingham, 122 So. 2d 716, 721 (Ala. 1960). Even if we assume that Wesson’s
actions were unauthorized, Mallory & Evans offered no evidence showing that
Tuskegee knew the relevant proposed change orders would cause the project’s costs
to exceed $3.85 million. Nor was Tuskegee in a position to discover the true costs
of those proposed change orders. In fact, Mallory & Evans did not know the final
costs of the proposed change orders as late as two weeks prior to submitting its final
pay request in September 2009. (Dkt. 65 at 9.) By that time, Mallory & Evans had
already done most of the work. If Mallory & Evans did not know the true costs at
that late date, it cannot seriously contend that Tuskegee could have discovered them
by exercising reasonable diligence. Thus, this argument fails on the merits.
VI. CONCLUSION
The undisputed facts show that Mallory & Evans failed to satisfy a condition
precedent under the contract to receive payments in excess $3.85 million. Tuskegee
10
did not clothe Wesson with apparent authority to waive that condition. The district
court properly granted summary judgment. The district court also properly rejected
the arguments made in Mallory & Evans’s Rule 59 motion.
AFFIRMED.
11