United States v. Kimberly Construction, Inc.

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUL 25 2002
TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA, ex
rel. Fred Noyes dba A-2 Plumbing and
Heating,
Plaintiff - Appellee,
v.
KIMBERLY CONSTRUCTION, INC.
and VIGILANT INSURANCE
COMPANY,
Defendants - Appellants. Nos. 99-4188 and 99-4198
_______________________________ (D.C. No. 95-CV-790-K)
(D. Utah)
HI-VALLEY CHEMICAL, INC.
Plaintiff - Intervenor - Appellee,
v.
FRED NOYES, dba A-2 PLUMBING
AND HEATING,
Defendant - Appellee.
ORDER AND JUDGMENT *
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. This court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and
MILLER, ** District Judge.
This case involves a tortuous series of post-judgment motions and rulings,
resulting in an amended judgment from which the parties appeal and cross-appeal.
Kimberly Construction and Vigilant Insurance, defendants in the action below,
appeal the district court’s entry of judgment against them and in favor of Fred
Noyes, a sub-contractor, and the court’s creation of a lien in favor of Hi-Valley
Chemical against that judgment. Hi-Valley Chemical, an intervening plaintiff in
the action below, cross-appeals the district court’s decision to relieve Vigilant
Insurance from Hi-Valley’s original judgment against it. The parties raise other
issues on appeal, which are discussed below.
I.
Fred Noyes, dba A-2 Plumbing and Heating (“Noyes”), filed the instant
action under 40 U.S.C. § 270b(a) and (b) (“the Miller Act”) against its general
contractor, Kimberly Construction, Inc. (“Kimberly”), and Kimberly’s bonding
company, Vigilant Insurance Company (“Vigilant”), in the United States District
Court for the District of Utah to recover costs for “labor and materials” provided
to a Veterans Administration construction project (“V.A. project”). Kimberly
Honorable Walker D. Miller, U.S. District Court Judge, District of
**
Colorado, sitting by designation.
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counterclaimed against Noyes seeking amounts due on two prior construction
projects. Hi-Valley Chemical (“Hi-Valley”) intervened in the action, seeking
payment for chemicals it provided to Noyes on the V.A. Project. Approximately a
month prior to trial, Hi-Valley moved to file an amended complaint, seeking to
add Kimberly and Vigilant as defendants.
The trial court granted Hi-Valley’s motion to add Kimberly and Vigilant as
defendants on the first day of trial. Following a four-day bench trial, the district
court judge instructed all parties to file ten-page briefs in support of their closing
arguments, along with their proposed findings of fact and conclusions of law.
Vigilant did not raise a statute of limitations defense either at trial or in its post-
trial brief.
The district court issued its findings of fact and conclusions of law, finding
that Kimberly “agreed to pay Hi-Valley for materials provided to the V.A. Site.”
In its March 4, 1999, judgment, the district court granted Hi-Valley a judgment
against Kimberly and Vigilant, jointly and severally, for the materials provided to
the V.A. project, and for approximately half of the attorney’s fees that Hi-Valley
had requested. The district court found that Noyes was in breach on the first two
construction projects (prior to the V.A. project), entitling Kimberly to
reimbursement for those two projects in the approximate amount of $160,000.
For the V.A. project, however, the district court found that Kimberly owed Noyes
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a payment of roughly $82,000. Under the terms of the V.A. sub-contract, the
district court found that this sum due to Noyes was “to be applied as an offset
against the reimbursements” Noyes owed Kimberly from the previous two
construction projects. Accordingly, the March 4 judgment granted Kimberly and
Vigilant a judgment against Noyes for the difference between the amounts Noyes
owed to Kimberly and the amount Kimberly owed Noyes, resulting in a judgment
against Noyes of approximately $78,000. The district court also ordered Noyes to
pay Kimberly and Vigilant approximately half the attorney’s fees they had
requested.
Following the March 4 judgment, Vigilant and Kimberly filed a Rule 59(e)
motion to alter or amend the judgment, requesting that the district court remove
Vigilant from the judgment that Hi-Valley had against Vigilant and Kimberly.
They argued that the Miller Act’s one-year statute of limitations prevented Hi-
Valley from bringing a claim against Vigilant because the limitations period had
expired at the time Hi-Valley intervened. Contending that they had not waived
the statute of limitations defense, Vigilant and Kimberly insisted that they did not
raise it earlier “because Hi-Valley did not initially state a claim” against them,
even though Hi-Valley had sought to add Kimberly and Vigilant as defendants
over a month before trial. They also argued in this Rule 59(e) motion that
insufficient evidence was presented at trial to support the district court’s
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conclusion that Kimberly and Vigilant were responsible for payment to Hi-Valley
for the materials delivered to the V.A. Project.
On May 6, the district court granted the portion of Vigilant and Kimberly’s
Rule 59(e) motion requesting that Vigilant be removed from Hi-Valley’s
judgment against them. 1 Following this action by the district court, Hi-Valley
filed its own Rule 59(e) motion, requesting that the district court also find Noyes
liable for the materials Hi-Valley delivered to the V.A. project and that the court
grant Hi-Valley a lien against Noyes’s judgment against Kimberly. In response to
these requests, the court issued an amended judgment, in which it granted Hi-
Valley a judgment against Noyes and Kimberly, jointly and severally, for the
materials used at the V.A. site. It then granted Hi-Valley its requested lien, and
“[f]or purposes of foreclosing on or otherwise enforcing that lien,” granted Noyes
a judgment against Kimberly and Vigilant for the amount they owed Noyes on the
1
The court ordered that any reference to Vigilant be deleted in the
paragraph granting Hi-Valley’s judgment. The only other change to the judgment
was an increase in Hi-Valley’s attorney’s fees by $500.
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V.A. project, approximately $82,000. 2 The court granted Kimberly and Vigilant a
judgment against Noyes in the amount of approximately $78,000. 3
Kimberly and Vigilant appeal this amended judgment, claiming that the
district court erred (1) in creating a judgment against them and in favor of Noyes;
(2) in granting Hi-Valley a lien against that “fictional” judgment; and (3) in
granting Hi-Valley a judgment against Vigilant Insurance because, according to
them, the court had properly ruled earlier that Hi-Valley’s claim was barred by the
statute of limitations. 4 Kimberly and Vigilant also claim on appeal that the
evidence presented at trial was insufficient to support a finding that Hi-Valley
2
Specifically, the court stated:
Hi-Valley Chemical, Inc. is hereby granted a lien for that amount [materials
provided to V.A. site] against the amount Kimberly Construction, Inc. and
Vigilant Insurance Company owe Fred Noyes, . . . pursuant to the V.A.
subcontract, prior to any offsets. For the purposes of foreclosing on or
otherwise enforcing that lien, Fred Noyes . . . is hereby granted a judgment
against Kimberly Construction, Inc. and Vigilant Insurance Company,
jointly and severally, in the amount of $81,938.22.
3
It appears that if Noyes received a separate judgment for $82,000, then
Kimberly and Vigilant should have received a judgment for approximately
$160,000. The $78,000 represents a net judgment after offset for the $82,000
judgment to Noyes. However, the parties do not raise this mathematical
discrepancy in the appeal and so we do not address it.
4
We find this issue incorrectly characterizes the district court’s amended
judgment. The district court granted Hi-Valley a judgment against Noyes and
Kimberly, not against Vigilant. The court did grant Hi-Valley a lien against
Noyes’s judgment against Kimberly and Vigilant, but the court did not grant Hi-
Valley a judgment against Vigilant itself.
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was entitled to a judgment against Kimberly. Hi-Valley cross-appeals, rebutting
the issues Kimberly and Vigilant raise on appeal and claiming that the district
court erred (1) in granting Vigilant’s Rule 59(e) motion asserting its statute of
limitations defense; and (2) in reducing Hi-Valley’s claim for attorney’s fees.
The parties also request attorney’s fees associated with bringing their appeals and
cross-appeals.
II.
The district court had jurisdiction pursuant to 40 U.S.C. § 270b (a) and (b),
commonly known as the “Miller Act.” This court has jurisdiction pursuant to 28
U.S.C. § 1291.
A. Vigilant’s 59(e) motion asserting statute of limitations.
We review motions to alter or amend a judgment under Rule 59(e) for an
abuse of discretion. Brown v. Presbyterian Healthcare Servs., 101 F.3d 1324,
1331 (10th Cir. 1996). A district court abuses its discretion if it commits an error
of law. Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 269 F.3d 1149,
1153 (10th Cir. 2001). We will not disturb a trial court’s decision on a Rule 59(e)
motion unless we have “a definite and firm conviction that the lower court made a
clear error of judgment or exceeded the bounds of permissible choice in the
circumstances.” Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997). The
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applicability of a statute of limitations is a conclusion of law that we review de
novo. Sterlin v. Biomune Sys., 154 F.3d 1191, 1194 (10th Cir. 1998).
Hi-Valley claims that the district court erred in granting Vigilant’s Rule
59(e) motion in which Vigilant raised for the first time a statute of limitations
defense against Hi-Valley. Because Vigilant’s Rule 59(e) motion raised a new
issue that could have been raised prior to judgment, we believe that the district
court erred in granting the motion.
The statute of limitations under the Miller Act has been interpreted as an
affirmative defense, not an issue of jurisdiction. United States ex rel. Automatic
Elevator Co. v. Lori Constr., 912 F. Supp. 398, 401 (N.D. Ill. 1996). Therefore,
the district court was under no obligation to establish that Hi-Valley’s claim
against Vigilant came within the statute of limitations; rather, it was Vigilant’s
responsibility to raise the issue if it intended to claim the defense. Its failure to
do so prior to judgment precludes it from relief under a Rule 59(e) motion.
The law in this circuit is clear that a Rule 59(e) motion “cannot be used to
expand a judgment to encompass new issues which could have been raised prior
to issuance of the judgment.” Steele v. Young, 11 F.3d 1518, 1520 n.1 (10th Cir.
1993); see also Charles Alan Wright, et al., Federal Practice and Procedure: Civil
2d § 2810.1 (“The Rule 59(e) motion may not be used . . . to raise arguments or
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present evidence that could have been raised prior to the entry of judgment.”).
Rule 59(e) motions
are aimed at reconsideration, not initial consideration. Thus, parties
should not use them to raise arguments which could, and should,
have been made before judgment issued. Motions under Rule 59(e)
must either clearly establish a manifest error of law or must present
newly discovered evidence.
Jorge Rivera Surillo & Co. v. Falconer Glass Indus., 37 F.3d 25, 29 (1st Cir.
1994) (internal quotation marks omitted).
We find unavailing Vigilant’s argument that the district court properly
granted its Rule 59(e) motion because of the “unique circumstance” of the court
granting on the first day of trial Hi-Valley’s request to amend its complaint in
intervention, adding Vigilant as a defendant. Vigilant “could have raised the
issue prior to issuance of the judgment,” either before the trial started upon
receiving Hi-Valley’s motion seeking to file an amended complaint, at trial, or in
its brief and proposed conclusions of law following trial. Steele, 11 F.3d at 1520,
n.1. Its failure to do so precludes relief under Rule 59(e).
We reverse the district court’s grant of Vigilant’s Rule 59(e) motion and
order that the original judgment against Vigilant and Kimberly be reinstated.
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B. Noyes’s judgment to enforce Hi-Valley’s lien.
At oral argument, Hi-Valley stipulated that if we reversed the district
court’s grant of Vigilant’s Rule 59(e) motion, then such a holding would moot the
issue of whether the amended judgment’s creation of a lien on Hi-Valley’s behalf
was proper, as Hi-Valley only filed its Rule 59(e) motion because the court
granted Vigilant’s motion and dismissed Vigilant from the case. Pursuant to this
stipulation, we vacate the amended judgment as moot.
C. Sufficiency of the evidence.
Vigilant and Kimberly claim that insufficient evidence supports the district
court’s ruling that Hi-Valley was entitled to a judgment against Kimberly. This
ruling was based on the district court’s findings of fact, which we review for clear
error. Manning v. United States, 146 F.3d 808, 812 (10th Cir. 1998). Where the
evidentiary record is insufficient to permit review of an appellant’s claims of
error, we must affirm. Scott v. Hern, 216 F.3d 897, 912 (10th Cir. 2000). Under
Fed. R. App. P. 10(b)(2), an appellant claiming that a finding is unsupported by
the evidence must include in the record “a transcript of all evidence relevant to
such finding or conclusion.” Deines v. Vermeer Mfg. Co., 969 F.2d 977, 978-79
(10th Cir. 1992). The record on appeal, however, does not include the transcript
of Noyes’s testimony at trial, which is evidence relevant to determining whether
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Noyes acted as Kimberly’s agent in signing sales orders for Hi-Valley’s chemicals
that were delivered to the V.A. Project. Based on the incomplete record before
us, we are unable to review the district court’s judgment and must affirm it. 5
D. Reduction of Hi-Valley’s attorney’s fees.
Hi-Valley’s sales contract for the VA Site provided for attorney’s fees in
the event of a default. 6 The district court granted attorney’s fees to Hi-Valley, but
sua sponte halved the fees requested by Hi-Valley without any explanation. We
believe that in so doing the district court abused its discretion.
Although the Miller Act itself does not provide for attorney’s fees, see F.D.
Rich Co. v. United States ex rel. Indus. Lumber Co., 417 U.S. 116, 126 (1974),
superceded in part by statute as stated in U.S. ex rel. Cal’s A/C Elec. v. Famous
Const. Corp., 34 F. Supp. 2d 1042, 1043-44 (W.D. La. 1999), when they are
provided for by contract, “the fees are routinely awarded and the contract is
enforced according to its terms.” United States ex rel. C.J.C., Inc. v. Western
States Mech. Contractors, Inc., 834 F.2d 1533, 1548 (10th Cir. 1987). We have
explained that the award of attorney’s fees under federal civil rights or other
5
We do note, however, that based on the evidence we have before us, there
appears to be sufficient evidence to support the judgment.
6
The sales form stated that the “buyer agrees to pay collection costs
including a reasonable attorney’s fee . . . in the event of a default.”
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statutes is “fundamentally different” from the provision for fees between parties
in a commercial agreement. Id. at 1547. Where a contract, as opposed to a
statute, provides for attorney’s fees, the district court should not apply “close
scrutiny of awards,” but instead should award fees consistent with their
contractual purpose: “to give the parties the benefit of [their] bargain.” Id. at
1548.
The district court, however, must “determine if the claimed fees are
inequitable or unreasonable.” Id. at 1549. If the district court so determines, it
“has discretion to deny or reduce the fee award.” Id.; see also Accusoft Corp. v.
Palo, 237 F.3d 31, 61 (1st Cir. 2001) (recognizing district court’s discretion to
adjust or deny contractual award of fees if inequitable or unreasonable); United
States ex rel. Rent It Co. v. Aetna Cas. & Sur. Co., 988 F.2d 88, 91 (10th Cir.
1993) (same). In exercising its discretion to reduce fees, the district court must
provide a “concise but clear explanation” of its reasons for so doing. Mares v.
Credit Bureau of Raton, 801 F.2d 1197, 1201 (10th Cir. 1986) (internal quotation
marks omitted). “Unless district courts are specific in their reasons for awarding
attorneys’ fees, we have no adequate basis upon which to review such awards.”
Joseph A. v. New Mexico Dep’t of Human Servs., 28 F.3d 1056, 1061 (10th Cir.
1994). Here, the district court provided absolutely no explanation for its
reduction by half of the attorney’s fees requested by Hi-Valley. Accordingly, it
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abused its discretion and we remand the issue to the district court for a
determination of what fees are equitable and reasonable.
On remand, the district court should not “independently calculat[e] a
reasonable fee.” Western States, 834 F.2d at 1549 (internal quotation marks
omitted). Rather, it may choose to use the “familiar factors” from the federal
cases awarding fees in a statutory context to “assist in determining if the fees
claimed are unreasonable or inequitable,” and the court must provide an
explanation for any adjustments it makes to the fees claimed. Id. at 1550; see
also United States ex rel. Trustees of the Colorado Laborers Health & Welfare
Trust Fund v. Expert Env’l Control, Inc., 790 F. Supp. 250, 251-52 (D. Colo.
1992) (noting relevant factors from statutory context district court may use in
evaluating fees awarded by contract).
E. Attorney’s fees for bringing appeals.
Both parties make cursory requests for appeal-related attorney’s fees.
However, they have failed to demonstrate why they are entitled to these fees
under the contract, why we should exercise our discretion in granting these fees
under federal law, or why we should apply Utah law to the provision of appeal-
related attorney’s fees. Accordingly, their requests are denied. See Inselman v. S
& J Operating Co., 44 F.3d 894, 896 (10th Cir. 1995) (denying request for
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attorney’s fees for responding to appeal because party “offer[ed] no authority on
which such an award may be based”).
III.
We REVERSE the district court’s grant of Kimberly and Vigilant’s Rule
59(e) motion removing Vigilant from the judgment in favor of Hi-Valley and
against Kimberly and Vigilant and REMAND the issue to the district court with
instructions that it reinstate the original judgment. We VACATE portions of the
amended judgment that are inconsistent with this ruling. We AFFIRM the district
court’s determination that Kimberly is liable for the Hi-Valley debt, as we cannot
conclude on the record before us that such a determination was clearly erroneous.
We VACATE and REMAND the district court’s grant of attorney’s fees to Hi-
Valley, with instructions for the district court to state its reasoning for reducing
the fees claimed if it deems them to be unreasonable or inequitable. We DENY
both parties’ requests for attorney’s fees associated with bringing this appeal.
Ordered REMANDED consistent with this order.
ENTERED FOR THE COURT
David M. Ebel
Circuit Judge
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