United States Ex Rel. Wallace v. Flintco Inc.

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 96-11360
_______________________
THE UNITED STATES OF AMERICA For the
Use of MARSHALL E. WALLACE d/b/a
WALLACE CONSTRUCTION COMPANY, ET AL.,
Plaintiffs,
MARSHALL E. WALLACE, doing business as Wallace
Construction Company,
Plaintiff - Counter Defendant
Appellee-Cross-Appellant,
versus
FLINTCO INC.; AMERICAN HOME ASSURANCE CO.,
Defendants-Counter-Claimants Third Party Plaintiffs
Appellants-Cross-Appellees,
versus
VICTORE INSURANCE COMPANY,
Third-Party Defendant-Appellee-Cross-Appellant.
_________________________________________________________________
Appeals from the United States District Court
for the Northern District of Texas
________________________________________________________________
June 29, 1998
Before KING and JONES, Circuit Judges, and WERLEIN*, District
Judge.
By EWING WERLEIN, JR., District Judge:
*
District Judge of the Southern District of Texas, sitting by
designation.
This case presents cross-appeals by a contractor and a
subcontractor, and their respective bond sureties, from an Amended
Judgment entered after a two-week jury trial. After a careful
review of the trial proceedings, we conclude that those portions of
the Amended Judgment of the district court that award costs to both
sides against their respective adversaries, should be VACATED and
REMANDED for further proceedings, and that the Amended Judgment, as
reformed herein for clarification, should otherwise be AFFIRMED.
Background
The United States Army Corps of Engineers ("Corps”) engaged
Flintco, Inc. ("Flintco"), a general contractor, to build an
enlisted dormitory at Sheppard Air Force Base, Texas, ("the
Project"). Flintco, in turn, subcontracted with Marshall E.
Wallace d/b/a Wallace Construction Company ("Wallace") for Wallace
to perform dirt and paving work on the Project. Flintco and
American Home Assurance Co. ("AHAC"), Flintco’s surety, furnished
a payment bond pursuant to the Miller Act, 40 U.S.C. § 270a;
Wallace and Victore Insurance Co. ("Victore"), Wallace's surety,
furnished private payment and performance bonds.
Wallace began work on the Project in March 1992. In July
1992, August 1992, and January 1993, Wallace submitted change
orders No. 1, No. 2, and No. 3, respectively, for additional
2
compensation. Each was approved, and pursuant to each, Wallace was
compensated.
In July 1993, the Corps issued a directive that the compaction
of the subgrade of the parking lots be increased from 90% to 95%
density. Wallace began this work before submitting a claim to the
Corps, through Flintco, for additional compensation. Wallace later
submitted the claim, but before the claim was fully processed,
Wallace ceased work on the Project and left the Project site on
December 23, 1993, leaving his own subcontractors unpaid to the
extent of approximately $101,000. Flintco contracted with another
dirt and paving subcontractor to complete the unfinished work.
In April 1994, Wallace submitted a "Request for Equitable
Adjustment" in which he sought $ 215,292.50 in compensation for the
increased compaction. The Corps responded with an award of only
$7,000.00. Wallace later submitted an amended claim which was
denied.
Wallace filed this suit against Flintco and AHAC for breach of
contract and for quantum meruit. Wallace alleged that Flintco, the
Corps, and other subcontractors interfered with his work on the
Project, and caused him "productivity impact" damages. Flintco and
AHAC counterclaimed against Wallace for breach of the subcontract,
and filed a third party action against Victore on the performance
and payment bonds.
A two-week jury trial resulted in a special verdict for
Wallace on all questions submitted. Among other things, the jury
3
found that Flintco breached its contract with Wallace; that Wallace
was entitled to a quantum meruit recovery; that Wallace had
fulfilled all contractual conditions precedent to filing suit
against Flintco and AHAC; and that Flintco and AHAC had breached
the Miller Act bond by failing to pay Wallace. Conversely, the
jury also found that Wallace had not breached his contract with
Flintco; that Wallace was not negligent in performing his work;
that Wallace had not waived his claims against Flintco; that
Flintco had not fulfilled all contractual conditions precedent to
filing suit against Wallace and Victore; that Flintco did not
acquire from Wallace’s subcontractor creditors their claims against
Victore; and that Wallace and Victore did not breach their
obligations to Flintco under the payment bond. The jury awarded
$197,777.00 to Wallace and awarded nothing to Flintco.
Wallace moved for entry of judgment; and Flintco and AHAC
filed a “Motion for Judgment Notwithstanding the Verdict” under
Fed. R. Civ. P. 50(b).1 The trial court granted in part Flintco’s
and AHAC’s Rule 50(b) motion, holding as a matter of law that they
were entitled to recover from Wallace and Victore approximately
$101,000 that they had paid to Wallace’s subcontractors whom
Wallace had not paid when he ceased work on the Project. The trial
1
The correct terminology under Rule 50(b) is now “renewed
motion for judgment as a matter of law,” although, as will be seen,
Flintco and AHAC did not initially file a Rule 50(a) motion for
judgment as a matter of law.
4
court ultimately signed an Amended Judgment, which is summarized as
follows:
! Judgment for Wallace against Flintco on Wallace's
state law quantum meruit claim for:
“1. Actual damages in the amount of $197,777.00;
“2. Pre-judgment interest thereon in the amount of
$62,681.85;
“3. Post-judgment interest on all amounts awarded
in item numbers one and two above at the
currently prevailing rate pursuant to 28
U.S.C. § 1961 of 5.90% per annum, compounded
daily, from the date of this judgment until
paid.”
R. Vol. 13 at 3776-77 (footnotes omitted).
! A take nothing Judgment on Wallace's claim for
breach of contract against Flintco;2
! Judgment for Wallace and against Flintco and AHAC,
jointly and severally, on Wallace's Miller Act payment
bond claim for:
“1. Actual damages in the amount of $197,777.00;
“2. Pre-judgment interest thereon in the amount of
$62,681.85;
“3. Post-judgment interest on all amounts awarded
in item numbers one and two above at the
currently prevailing rate pursuant to 28
U.S.C. § 1961 of 5.90% per annum, compounded
daily, from the date of this judgment until
paid.”
Id. at 3777.3
2
This aspect of the Amended Judgment was based on
Wallace's election to recover on his quantum meruit theory rather
than for breach of contract.
3
It appears that the trial court did not intend for this
three-numbered segment of the Amended Judgment and the first three-
5
! A take nothing judgment on Flintco and AHAC's breach
of contract claim against Wallace;
! Judgment for Flintco and AHAC and against Wallace
and Victore, jointly and severally, on their third-party
payment bond claim in the amount of $101,187.30, plus
pre-judgment interest in the amount of $30,834.13, and
post-judgment interest at a rate of 5.90%;
! A take nothing Judgment on Flintco and AHAC's third
party performance bond claim against Victore;
! $73,778.43 in costs recoverable by Flintco and AHAC
from Wallace and Victore, jointly and severally;
! $90,091.00 in costs recoverable by Wallace from
Flintco and AHAC, jointly and severally;
! $256,338.00 in attorneys’ fees recoverable by
Wallace from Flintco; and
! $183,425.78 in attorneys’ fees recoverable by
Flintco from Wallace.
It is this Amended Judgment that is the subject of the cross
appeals in almost every respect.
numbered segment of the Amended Judgment, first quoted above, to be
a double recovery for Wallace, and the parties have not argued a
contrary understanding. The Amended Judgment is intended to make
one award to Wallace in the amount of $197,777.00, plus prejudgment
interest of $62,681.85 and post-judgment interest, but adjudged
against Flintco on two grounds -- on quantum meruit, in the first
segment, and on the Miller Act payment bond, in the second segment.
The joint and several liability of Flintco’s surety, AHAC, for that
full sum arises only from its obligation on the Miller Act payment
bond, in the second segment. For clarification, and to avoid any
ambiguity about Wallace’s entitlement to recover only one sum of
$197,777.00, plus interest, the Amended Judgment will be reformed
to consolidate these two decretal segments.
The Amended Judgment also orders that post-judgment interest
be compounded daily. This is plain error; post-judgment interest
is “computed daily to the date of payment” but “compounded
annually.” 28 U.S.C. § 1961(b) (emphasis added).
6
7
Analysis
I. Quantum Meruit and Miller Act Claims
Flintco and AHAC first challenge the sufficiency of the
evidence to support a judgment for Wallace on his quantum meruit
and Miller Act claims because the Flintco-Wallace subcontract
contained a "no damages for delay" clause. In response, Wallace
contends that Flintco failed to move for a “directed verdict”4 at
the close of the evidence and thereby waived its right to appellate
review of the sufficiency of the evidence. Wallace therefore
contends that this Court must review Flintco’s and AHAC’s arguments
as if they are presented for the first time on appeal, under the
plain error standard.
A. Standard of Review
Challenges to the sufficiency of the evidence must be raised
in a Fed. R. Civ. P. 50(a) motion for judgment as a matter of law
before submission of the case to the jury. If the trial court does
not grant a motion for judgment as a matter of law made after the
close of all the evidence, then the movant may renew its request
for judgment as a matter of law after the entry of judgment. Fed.
4
The correct terminology under Rule 50(a) is now “motion
for judgment as a matter of law." See McCann v. Texas City Ref.,
Inc., 984 F.2d 667, 670 n.3 (5th Cir. 1993).
8
Rawle Civ. P. 50(b). A party that fails to move for judgment as a
matter of law under Rule 50(a) on the basis of insufficient
evidence at the conclusion of all of the evidence waives its right
to file a renewed post-verdict Rule 50(b) motion, and also waives
its right to challenge the sufficiency of the evidence on appeal.
Bay Colony, Ltd. v. Trendmaker, Inc., 121 F.3d 998, 1003 (5th Cir.
1997) ("Generally, a party who fails to renew his motion for
directed verdict at the close of all the evidence waives his right
to challenge the sufficiency of the evidence."); Polanco v. City of
Austin, Tex., 78 F.3d 968, 974 (5th Cir. 1996) ("Where the
defendant failed to timely move for judgment as a matter of law, we
will consider the issue as waived by the defendant and will treat
the issue as being raised for the first time on appeal."); Allied
Bank-West, N.A. v. Stein, 996 F.2d 111, 114-115 (5th Cir. 1993) (a
district court cannot consider a Rule 50(b) motion for judgment as
a matter of law unless the movant has first sought a directed
verdict).
The Rule serves two purposes:
to enable the trial court to re-examine the sufficiency
of the evidence as a matter of law if, after verdict, the
court must address a motion for judgment as a matter of
law, and to alert the opposing party to the insufficiency
of his case before being submitted to the jury.
MacArthur v. University of Tex. Health Ctr. at Tyler, 45 F.3d 890,
897 (5th Cir. 1995). Rule 50(b) is to be examined and applied "``in
the light of the accomplishment of [its] particular purpose[s] as
well as in the general context of securing a fair trial for all
9
concerned in the quest for truth.’" Bay Colony, 121 F.3d at 1003
(quoting McCann, 984 F.2d at 671 (alterations in original)).
In certain cases in which a party has failed to meet the
technical requirements of Rule 50(a) but has still satisfied the
Rule's purposes, non-compliance has been excused. See, e.g., id.
at 1003-04 (defendant's motion for directed verdict at the close of
plaintiff's case-in-chief, which asserted that there was no
evidence or insufficient evidence for the issue to go to the jury,
and defendant's subsequent objections, on the same grounds, to the
proposed jury charge, satisfied the purposes of Rule 50(b));
Polanco, 78 F.3d at 974-75 (defendant's motion for judgment as a
matter of law at the close of plaintiff's case, which was taken
under advisement by the court and followed by the presentation of
thirteen defense witnesses and no rebuttal witnesses, alerted
plaintiff and the court to defendant's challenge to the sufficiency
of plaintiff's proof). Although Rule 50's requirements have been
liberally construed in this circuit, Hinojosa v. City of Terrell,
Tex., 834 F.2d 1223, 1228 (5th Cir. 1988), cert. denied, 493 U.S.
822, 110 S. Ct. 80 (1989), "[e]ven with a liberal interpretation
[of Rule 50(b)], . . . this circuit has never completely
disregarded the requirement that the defendant must move for
judgment as a matter of law at the close of all the evidence."
Polanco, 78 F.3d at 974.
10
Flintco did not do so. It neither moved for judgment as a
matter of law under Rule 50(a) at the close of Wallace's case or at
the close of all the evidence. Moreover, Flintco did not
challenge the sufficiency of the evidence in connection with or as
a basis for making objections to the court’s jury charge.
Nonetheless, Flintco contends that the purposes of the Rule were
satisfied by its attempt to comply with the Rule's requirements, by
the trial court’s perceived understanding of Flintco’s unstated
insufficiency points and disinclination to hear the motions until
after a verdict was received, and by Flintco’s general objections
to certain issues being submitted to the jury. The Court
disagrees, although the argument requires a careful review of the
record.
At the close of Wallace's evidence, Mr. Sessions, Flintco's
counsel, stated his desire to present "certain motions," to which
the trial court replied that motions could be presented at the
lunch recess. R. Vol. 21 at 706, lines 5-11.5 During a recess
later that morning, but before the lunch recess, the trial court
5
The exchange occurred as follows:
Mr. Sessions stated, "Your Honor, I believe it's at this time
traditionally when we present certain motions to the Court.
I believe the Court has already indicated -- "
The trial court interjected, "We can do that at lunch time."
Mr. Sessions responded, "That'll be fine. We'll go forward
with it," and proceeded to call Flintco's first witness. R.
Vol. 21 at 706, lines 5-11.
11
informed counsel that such matters would be considered instead
during a recess "a little after" lunch. Id. at 783, lines 1-4.6
During the same exchange, the trial court commented, "I suspect I'm
going to have a motion here that I told Mr. Sessions would be
deferred so I have some legal decisions to make here on the current
state of this record . . . ." Id. at 787, lines 10-13. During the
recesses and the hearings outside the presence of the jury that
followed, Flintco addressed a number of matters with the court but
never reminded the court of Flintco’s previously-indicated desire
to present “certain motions,” and never moved for judgment as a
matter of law based on the evidence at the close of Plaintiff’s
case-in-chief.
At the close of Defendants’ evidence7 and before submission of
the case to the jury, the Court observed that motions had not been
"formally made" because the Court had "cut [] off" Mr. Sessions.
R. Vol. 22 at 947, lines 15-17. The Court then stated that motions
could be made post-verdict.8 R. Vol. 22 at 947, lines 17-22; R.
6
Specifically, the trial court stated, "There's been a
change in plans. What I told you we were going to do at lunch
time, we'll do a little after and take a break about then. I'll
just let you know as we go." R. Vol. 21 at 783, lines 1-4.
7
Wallace presented no witnesses in rebuttal.
8
Specifically, the trial court stated, "I know that although
it was not formally made because I cut everyone off or cut you off,
Mr. Sessions, any type of motion practice anyone may have with
regard to claims by the opponents can all be taken up post verdict.
There's no point in me deciding something if I don't have to decide
it. The Jury decides it for me. But -- well, that speaks for
itself." R. Vol. 22 at 947, lines 15-22.
12
Vol. 23 at 996, lines 2-4, 14-23. Flintco did not object to the
trial court’s deferral of the parties’ “motion practice,” and again
did not orally attempt to present a motion for judgment as a matter
of law. Moreover, Flintco did not file a written motion for
judgment as a matter of law.
The next morning during a lengthy jury charge hearing held
outside of the presence of the jury, Flintco objected to certain
instructions and portions of the proposed charge, including
portions addressing its liability under quantum meruit and the
Miller Act. The court sustained some of the objections and
modified the instructions. Flintco made no objection to the
proposed charge, however, on grounds pertaining to the sufficiency
of the evidence. R. Vol. 23 at 973-983, 985-987. In particular,
Flintco made no objection that there was insufficient evidence to
warrant submission of liability issues on Wallace’s breach of
contract, quantum meruit, and Miller Act claims or submission of
damages questions related to those claims.
After hearing the parties' objections to the proposed jury
charge and making certain changes in the charge, the trial court
commented,
One other thing so that -- so that you aren't blind sided
or no one is blind sided, and I'm saying this to let you
know so that it's on the record, and I have not
formulated any final opinions one way or another, but
after sitting here for two weeks and listening to this
case and looking at everything again, I want to let you
know that there was no motion -- you can make all this
post-verdict, but I, as a matter of law, am concerned
13
about two things. And one is that -- is the partial
summary judgment Mr. Sessions filed against Victore about
conditions precedent about the materials and whether that
was triggered or not. And we can talk about that later
and revisit that issue, but I'm even more concerned about
the damage -- the aspect of damages that the Plaintiff
proved and whether or not as a matter of law that a
reasonable fact finder could could [sic] find -- find
that.
I'm just putting you on notice now so you won't think
it's something I haven't been thinking about all along,
but there are motions, but I am going to go ahead and get
the jury verdict.
Id. at 995-996.
In sum, when Plaintiff rested his case-in-chief, Flintco’s
counsel observed that “it’s at this time traditionally when we
present certain motions to the court.” R. Vol. 21 at 706, lines 5-
7. That was the one and only allusion ever made by defense counsel
of a desire to make a motion for judgment as a matter of law under
Rule 50(a). At the close of all of the evidence and before
submission of the case to the jury, Flintco never filed a written
Rule 50(a) motion; never asked to make an oral Rule 50(a) motion;
never objected to the trial court’s statement that “any type of
motion practice . . . can all be taken up post-verdict”; never
stated the grounds that would form the basis of a motion for
judgment as a matter of law if one were to be made, either in
writing or orally; never insisted upon its right either to file or
orally to make a Rule 50(a) motion even though the court chose not
to rule upon it until after a verdict; and never voiced objections
14
to the submission of liability and damage questions on grounds of
insufficiency of evidence.
Flintco argues that the purposes of Rules 50(a) and (b) were
served by the trial court’s above-quoted comment that he was
“concerned” about “the aspect of damages that the Plaintiff proved
and whether or not as a matter of law that a reasonable factfinder
could find -- find that.” R. Vol. 23 at 996, lines 9-13. Flintco
argues that the judge’s comment relates solely to the insufficiency
of Plaintiff’s evidence as a matter of law and that the purposes of
Rule 50 were thereby served. Flintco, however, did not follow up
the trial court’s comment with a Rule 50(a) motion. Nor did
Flintco state on the record what would be the basis of such a
motion had one been made. Under Rule 50(a), a movant is required
to “specify the judgment sought and the law and the facts on which
the moving party is entitled to the judgment.” Fed. R. Civ. P.
50(a)(2). Flintco never did this.
It is not enough for a party to rely upon “concerns”
volunteered by a trial judge as a substitute for making a Rule
50(a) motion. Not even a court of appeals, in holding that there
was sufficient evidence to send to the jury a question on gross
negligence and reversing the case for retrial on that issue, can
excuse the defendant from making a Rule 50(a) motion before the
case is submitted to the jury in the new trial. This is what
happened in Sims’ Crane Serv., Inc. v. Ideal Steel Prods., Inc.,
800 F.2d 1553 (11th Cir. 1986). On retrial, the defendant did not
15
make a motion for directed verdict on the gross negligence issue
because the court of appeals had previously ruled that the evidence
was sufficient to require its submission and because defendant
viewed the court of appeals’ decision as having declared the law of
the case. Id. at 1557. After the new verdict was returned for
plaintiff, the trial court granted a judgment notwithstanding the
verdict. On appeal from this judgment, the Eleventh Circuit Court
of Appeals held that the failure of defendant to have made a Rule
50(a) motion limited the court’s review to a determination of plain
error. Id. The appellate court wrote that although defendant’s
reasons for having not made a Rule 50(a) motion were
persuasive to some extent, we note that counsel sometimes
must take certain required, albeit formalistic, steps to
preserve the rights of their client and to perfect the
record for post-verdict proceedings.
Objections, proffers, and motions are frequently
required in trials even when it may seem certain to the
pertinent lawyer that the trial judge’s view is that such
efforts ought not to prevail. Of course, almost nothing
is really certain in litigation; ``[i]ndeed, it is always
probable that something improbable will happen.’ Warren
v. Purtell, 63 Ga. 428, 430 (1879) (Bleckley, J.). Thus,
it is hard to know when some act would have been truly
useless. In any event, orderly and definite procedural
steps are necessary to sharpen the issues before the
court and to avoid misunderstanding. While it is true
that this Circuit has not been strict about motions for
directed verdicts, we cannot depart completely from Rule
50(b).
Id. In the instant case, Flintco, in arguing now that it should be
excused for not having made the motion because of the trial court’s
volunteered declaration of its “concerns” about the evidence, has
16
a far less cogent excuse than that given by the defendant in Sims’
Crane. The Eleventh Circuit summarized the law as follows:
A lawyer who never moves for directed verdict, given the
wording of Rule 50(b) and the clear case law regarding
the effect of such a decision -- regardless of the
reasons for such a decision, must realize that a
subsequent motion for jnov can be granted only if plain
error can be proven.
Id.; see also McCann, 984 F.2d at 672 (“While it is true that this
Circuit approaches such questions [about compliance with Rule
50(b)] with a ``liberal spirit,’ we are not willing to rewrite the
Federal Rules of Civil Procedure.”) (internal citation omitted).
Because Flintco made no Rule 50(a) motion and did not specify
what judgment was sought and the law and the facts that would
entitle Flintco to such a judgment, we conclude that the second
purpose of Rule 50 -- to alert Wallace to the specific grounds for
an anticipated challenge to the sufficiency of its proof and to
allow Wallace the opportunity to move to cure any such deficiency
-- was not served. In that the purposes of Rule 50 were not met,
non-compliance with the Rule cannot be excused. McCann, 984 F.2d
at 671 ("In each case where we have excused noncompliance with Rule
50(b), this Court has concluded that the purposes of the rule had
been satisfied.") (emphasis in original); see, e.g., Guilbeau v.
W.W. Henry Co., 85 F.3d 1149, 1160 (5th Cir. 1996) (the purpose of
Rule 50(a)'s requirement that a motion for judgment as a matter of
law specify the law and the facts upon which the moving party
17
relies “is to assure the responding party an opportunity to cure
any deficiency in that party's proof that may have been overlooked
until called to the party's attention by a late motion for
judgment") (citing Fed. R. Civ. P. 50 advisory committee's note
(1991 amendment)), cert. denied, ___ U.S. ___, 117 S. Ct. 766
(1997); Hinojosa, 834 F.2d at 1228 (“In this case [defendant] did
not at any time move for a directed verdict in his favor . . . ,
nor did he object to the submission of any of the interrogatories
pertaining to these claims on the ground that the claims were
unsupported by the evidence. . . . [Defendant thus] failed to
alert [plaintiff], prior to submission of the case to the jury, to
the possibility that insufficient evidence was presented . . . .").
Because of Flintco’s non-compliance with Rule 50(a), we must
consider Flintco's objections to the sufficiency of Wallace's
evidence on its quantum meruit and Miller Act claims as though they
were raised for the first time on appeal. Polanco, 78 F.3d at 974.
"It is the unwavering rule in this Circuit that issues raised for
the first time on appeal are reviewed only for plain error. In
other words, this Court will reverse only if the judgment
complained of results in a ``manifest miscarriage of justice.'"
McCann, 984 F.2d at 673 (internal citation omitted). On plain
error review "the question before this Court is not whether there
was substantial evidence to support the jury verdict, but whether
there was any evidence to support the jury verdict." Id.
18
(emphasis in original). If any evidence supports the jury verdict,
the verdict will be upheld. Polanco, 78 F.3d at 974.
B. Discussion
Flintco challenges the sufficiency of the evidence to support
the jury verdict on Wallace's quantum meruit and Miller Act claims.
Flintco specifically argues that Wallace's damages are precluded by
the "no damages for delay" clause in the parties' subcontract, that
there is insufficient evidence to support the amount of damages
awarded by the jury, and insufficient evidence of the actual "out
of pocket expenses" Wallace incurred in support of a verdict on the
Miller Act claim. Because our review is under the plain error
standard, the jury verdict in Wallace's favor on its quantum meruit
and Miller Act claims will be upheld unless there is no evidence to
support the jury's verdict on those claims.
19
1. There is some evidence that Wallace's damages fall
outside of the "no damages for delay" clause in the
parties' subcontract.
The "no damages for delay" clause at issue provided:
In the event delays in the performance of this
Subcontract are occasioned by FLINTCO, Owner, Architect
or some other subcontractor, an extension of time for the
completion of this Subcontract shall be granted for a
period of time equal to the delay caused to
Subcontractor. Such extension of time shall be in lieu
and in full satisfaction of any and all claims whatsoever
of Subcontractor against Owner, Architect, FLINTCO or
other subcontractor causing such delay.
R. Excerpt 5D to Appellant’s Brief at ¶ 11. Clauses such as this
have been upheld under Texas law, and have been found to bar damage
claims that are based on delay. United States ex rel. Straus Sys.,
Inc. v. Associated Indem. Co., 969 F.2d 83, 85 (5th Cir. 1992)
(applying Texas law to "no damages for delay" clause); City of
Houston v. R.F. Ball Constr. Co., 570 S.W.2d 75, 77 (Tex. Civ.
App.--Houston [14th Dist.] 1978, writ ref'd n.r.e.). "No damages
for delay" clauses will be strictly construed and enforced unless
the delay at issue (1) was not contemplated by the parties; (2) was
so long as to justify abandonment of the contract; (3) was caused
by fraud, misrepresentation, or bad faith; or (4) was caused by
actual interference with the performance required under the
contract. R.F. Ball, 570 S.W.2d at 77 & n.1.
Wallace argues that his complaint is not one of delay within
the meaning of the “no damages for delay” clause, but is for
20
Flintco’s active interference and hindrance of Wallace’s
performance. Indeed, a leading Texas decision on this subject
upheld damages, notwithstanding a “no damages for delay” clause,
where the defendant was found to have committed the following acts
and omissions:
(1) Failure to plan development and construction of whole
project; (2) Failure to furnish master progress schedule;
(3) Failure to coordinate work of various prime
contractors; (4) Failure to proceed with underground
utilities contract until August 1, 1952; (5) Failure to
proceed with the sidewalks contract until July 1, 1953;
(6) Failure to expedite flow of information; (7) Failure
to decide on type of water heaters; (8) Failure to
deliver water heaters; (9) Arbitrary and capricious
requirements of Architects; (10) Instructions to asphalt
tile sub-contracts; (11) Refusal to accept the buildings
within reasonable time after August 25, 1953.
Housing Auth. of Dallas v. Hubbell, 325 S.W.2d 880, 890 (Tex. Civ.
App.--Dallas 1959, writ ref’d n.r.e.). The Court explained:
[T]he ``no-damage-for-delay’ provision did not give Owner
a license to cause delays ``willfully’ by ``unreasoning
action’, ``without due consideration’ and in ``disregard of
the rights of other parties’, nor did the provision grant
Owner immunity from damages if delays were caused by
Owner under such circumstances.
Id. at 891.
In the instant case, there is evidence from Rodney Wallace, Ed
Wallace, and Donald McDonald that Flintco, and the other
subcontractors on the site over which Flintco had control,
disrupted and actively interfered with Wallace's performance under
the subcontract. That disruption and active interference consisted
of (1) Flintco's failure properly to coordinate and sequence the
21
work done by all the subcontractors on the job; (2) Flintco's
direction of Wallace to small, piecemeal jobs on the site; (3)
Flintco's failure to ensure that its other subcontractors removed
their materials and debris from the areas in which Wallace had to
work; (4) Flintco's improper surveying and staking of an area
around two of the buildings on the project that required Wallace to
regrade areas it believed had been completed to specifications; (5)
Flintco's failure to locate timely and remove physical obstacles
(power poles and a gas line) from the areas in which Wallace had to
work; and (6) Flintco's failure to ensure that the work Wallace had
completed was not adversely affected by the other subcontractors on
the site. This disruption and interference, according to the
testimony of Rodney Wallace, Ed Wallace, and Donald McDonald,
caused Wallace to suffer productivity impacts, resulting in
increased labor costs, increased equipment costs, and increased
overhead expenses. Because the record contains some evidence that
the actions of Flintco constituted active interference with
Wallace's performance and that Flintco breached the contract, and
because Texas law recognizes that a “no damages for delay” clause
does not preclude a contractor from recovering damages when the
delay is caused by active interference with the contractor’s
performance,9 there is no plain error in the Court’s submission of
9
Flintco relies on Black Lake Pipe Co. v. Union Constr. Co.,
Inc., 538 S.W.2d 80, 86 (Tex. 1976) to argue that Wallace cannot
recover in quantum meruit because the damages it claims are covered
by the parties’ contract. Black Lake Pipe, however, does not
22
questions and the jury’s findings on Flintco’s liability and
Wallace's damages.
2. There is some evidence to support the amount of damages
awarded to Wallace by the jury on the quantum meruit
claim.
Damages must be proven to a reasonable certainty, but
mathematical precision is not required.
All that the law requires is that the best evidence of
which a case is susceptible be produced, and if from such
evidence the amount of damages caused by the defendant
can be inferred or estimated by the jury with reasonable
certainty, then the amount of such damages is for the
jury.
Bildon Farms, Inc. v. Ward County Water Improvement Dist. No. 2,
415 S.W.2d 890, 897 (Tex. 1967); see also South Builders, Inc. v.
preclude Wallace from obtaining a quantum meruit recovery. When a
general contractor actively interferes with its subcontractor’s
performance, the subcontractor may “treat the contract as rescinded
and recover under quantum meruit the full value of the work done.”
McCracken Constr. Co. v. Urrutia, 518 S.W.2d 618, 621-22 (Tex. Civ.
App.--El Paso 1974, no writ); see also United States ex rel. Aucoin
Elec. Supply Co. v. Safeco Ins. Co. of Am., 555 F.2d 535, 542 (5th
Cir. 1977) (when general contractor prevents performance,
subcontractor may recover in quantum meruit); Citizens Nat’l Bank
v. Vitt, 367 F.2d 541, 546 (5th Cir. 1966) (“``Once a subcontractor
has established a breach of contract by the prime, he can recover
the value of the work he has done or the service he has rendered.
In other words, he is entitled to a quantum meruit.’”) (quoting
McBride and Wachtel, Government Contracts 49-185, § 49.150(4));
Kleiner v. Eubank, 358 S.W.2d 902, 905 (Tex. Civ. App.--Austin
1962, writ ref’d n.r.e.). In this case, the jury found in response
to Jury Question No. 1 that Flintco had breached the parties’
contract. Given that finding of a breach by Flintco, Wallace was
entitled to “treat the contract as rescinded and recover under
quantum meruit the full value of the work done.” Kleiner, 358
S.W.2d at 905.
23
Brown, 449 S.W.2d 542, 548 (Tex. Civ. App--Eastland 1969, writ
ref'd n.r.e.) (a subcontractor suing a general contractor for
breach of the subcontract is required to prove his damages in such
detail that the jury can make an estimate of the damages with
reasonable certainty). In reviewing whether damages have been
proven to a reasonable certainty, all evidence is to be considered
in the light most favorable to the party that was awarded damages.
Thompson and Wallace of Memphis, Inc. v. Falconwood Corp., 100 F.3d
429, 435 (5th Cir. 1996).
Donald McDonald, Wallace's damages expert, testified without
objection to his estimate of quantum meruit damages in the amount
of $297,643.88. R. Vol. 17 at 149-151, 156. The estimate appears
not to have been based on the reasonable value of the work
performed but instead, like his estimate of contract damages, on
man and machine hour averages. This methodology has been accepted
in calculating damages in construction cases. See U.S. Indus.,
Inc. v. Blake Constr. Co., Inc., 671 F.2d 539, 547 (D.C. Cir.
1982); see also Servidone Constr. Corp. v. United States, 931 F.2d
860, 861-62 (Fed. Cir. 1991) (modifying the total cost method to
account for bid inaccuracies was a proper method of calculating
damages); Neal & Co., Inc. v. United States, 36 Fed. Cl. 600, 638
(Fed. Cl. 1996), aff’d, 121 F.3d 683 (Fed. Cir. 1997) (allowing
modified total cost method of calculating damages). We have found
no precedent, however, specifically approving the use of this
24
methodology to prove quantum meruit damages. Nonetheless, given
our inability to review the sufficiency of the evidence and the
fact that there is some evidence of quantum meruit damages in the
approximate amount of $297,000, the jury's award of $197,777.00 to
Wallace on its quantum meruit claim does not constitute plain
error.
25
3. There is some evidence to support the judgment awarding
damages to Wallace on the Miller Act claim.
Under the Miller Act, 40 U.S.C. § 270b, only out-of-pocket
costs of delay are recoverable. In awarding Miller Act damages,
the district court must be assured that the subcontractor did not
cause the delay and then "carefully limit the recovery to 950 F.2d 284, 287 (5th Cir. 1992) (quoting United States ex
rel. T.M.S. Mechanical Contractors, Inc. v. Millers Mut. Fire Ins.
Co. v. The Craftsmen, Inc., 942 F.2d 946, 952 (5th Cir. 1991))
(emphasis in original).
The Miller Act claim was submitted to the jury as follows:
QUESTION NO. 14:
INSTRUCTIONS:
AHAC issued a Miller Act bond to the Army Corps of
Engineers on behalf of Flintco in order to protect anyone
who furnishes labor and material for the construction, to
insure that they will be paid. A person is entitled to
payment under the Miller Act bond if he has furnished
labor or materials which, in good faith, were believed to
be necessary and furnished, or incorporated into the
project, for the work to be performed under the
construction contract, and if he has not been paid in
full for that work within 90 days after the last day on
which the labor was done or the materials were furnished.
Generally, where a subcontractor is entitled to recover
from a general contractor for breach of contract or
quantum meruit, the subcontractor may recover from the
general contractor, as principal, and its surety under
the Miller Act bond.
26
In this case, the Army Corps of Engineers required
Flintco to furnish bonds guaranteeing that should Flintco
fail to pay its project bills or complete the contract
work, a bonding company or surety would do so. The
Miller Act imposed upon Flintco an obligation to furnish
to the Army Corps of Engineers separate payment and
performance bonds to guarantee the contract in question.
These two bonds were executed by Flintco and its contract
surety, AHAC, in favor of the Army Corps of Engineers.
QUESTION:
Do you find from a preponderance of the evidence
that Flintco and American Home Assurance Company breached
the Miller Act bond by failing to pay Wallace
Construction Company?
ANSWER: yes
(yes or no)
R. Vol. 11 at 3070. A separate damage question on the Miller Act
claim was not submitted. Neither party made a request for a
separate damage question or objected to its omission.
Consequently, the trial court determined that damages on the Miller
Act claim were the same as those found by the jury in response to
Jury Question No. 6:
QUESTION NO. 6:
. . . what sum of money, if any, if paid now in
cash, would fairly compensate Wallace Construction
Company for labor, material, or services that they
provided Flintco which remain unpaid by Flintco, if any?
ANSWER: $197,777.00
R. Vol. 11 at 3068.
On appeal, Flintco and AHAC challenge the damage award on the
Miller Act claim on the basis that Wallace presented no evidence of
27
the actual labor, material and equipment costs it had expended and
for which it had not been paid. Neither Wallace nor AHAC made this
objection before submission of the case to the jury. Thus, the
award of damages to Wallace on its Miller Act claim is reviewed
only for plain error to determine whether “there is any evidence to
support the amount of damages” awarded to Wallace. Resolution
Trust Corp. v. Cramer, 6 F.3d 1102, 1107-08 (5th Cir. 1993)
(emphasis in original); see also House of Koscot Dev. Corp. v.
American Line Cosmetics, Inc., 468 F.2d 64, 68 n.5 (5th Cir. 1972)
(When sufficiency of the evidence is not preserved for review, “we
may inquire whether there was any evidence supporting the issue of
damages to the jury, even though we may not question the
sufficiency of such evidence as we do find.”); United States v.
33.5 Acres of Land, 789 F.2d 1396, 1400-1401 (9th Cir. 1986)
(upholding on plain error review a damage award that was $36,000
less than the expert’s damage calculation).
Expert testimony was received from Donald McDonald. Based
upon his review of numerous records and logs, including among
others Wallace's certified payroll records, Wallace's daily records
that showed the use of the equipment on the project, and the
Corps’s cost rates for equipment, McDonald found that Wallace had
suffered net damages in the total amount of approximately $297,000.
There is evidence that at least to some extent McDonald considered
sums actually expended by Wallace. To engage in a detailed
28
analysis of all of the elements considered by McDonald, such as
Wallace’s costs of labor, equipment, and material, would require a
review of the sufficiency of the evidence, which we cannot do. In
this review only for plain error, we observe that McDonald included
in his estimate at least some elements that are properly
recoverable under the Miller Act, that the district court granted
judgment in favor of Wallace on his Miller Act payment bond claim
in an amount which was approximately $100,000 less than the net
damage figure to which McDonald testified, and that Flintco and
AHAC have failed to demonstrate that any improper elements of
damages included in McDonald’s estimate of damages, if entirely
disregarded, would leave the trial court’s judgment on damages
without any support in the evidence. We find that the trial court
did not commit plain error by entering judgment in Wallace’s favor
in the amount of $197,777.00 on the Miller Act claim.
II. Flintco’s Claim that Wallace Breached the Subcontract
Flintco’s final argument is that the trial court erred in
sustaining the jury’s finding that Wallace had not breached the
subcontract by abandoning the work. Flintco contends that it had
proved beyond a preponderance of the evidence, and as a matter of
law, that Wallace had so breached the contract, and that the trial
court erred by failing to disregard the jury’s answers that Wallace
had not breached its contract with Flintco, and that Flintco was
entitled to no recovery of damages from Wallace.
29
A. Standard of Review
Unlike the preceding points where Wallace had the burden of
proof and Flintco attempted to challenge the sufficiency of the
evidence to support findings favorable to Wallace, on this point --
that of proving that Wallace breached the subcontract -- Flintco
had the burden of proof. A claimant who bears the burden of proof
and who believes that he is entitled to judgment as a matter of
law, is also obliged to move for judgment as a matter of law before
the case is submitted to the jury. Fed. R. Civ. P. 50(a); see,
e.g., Bender v. Brumley, 1 F.3d 271, 275 (5th Cir. 1993)
(plaintiff's failure to move for directed verdict on his federal
claims at the close of all evidence limited the court of appeals to
a review of whether any evidence supported the jury verdict);
Illinois Cent. Gulf R.R. Co. v. International Paper Co., 889 F.2d
536, 541 (5th Cir. 1989) (given the plaintiff's failure to move for
directed verdict at the close of evidence, the court of appeals
could only review the evidence to support the jury verdict for
plain error); Coughlin v. Capitol Cement Co., 571 F.2d 290, 297
(5th Cir. 1978) (absent motion for directed verdict, appellate
court cannot review jury verdict for sufficiency of the evidence);
Rawls v. Daughters of Charity, 491 F.2d 141, 147 (5th Cir.) (same),
cert. denied, 419 U.S. 1032, 95 S. Ct. 513 (1974); Parker v.
American Oil Co., 327 F.2d 987, 988 (5th Cir. 1964) (same); McCarty
30
v. Pheasant Run, Inc., 826 F.2d 1554, 1555-56 (7th Cir. 1987)
(motion for directed verdict is a prerequisite to judgment
notwithstanding the verdict). If a party with the burden of proof
has conclusively established all of the elements of its claim with
evidence that the jury cannot reject, that party must move for
judgment as a matter of law under Rule 50(a) at the close of all
evidence in order to preserve its ability, in the event that the
jury finds to the contrary, to move for judgment as a matter of law
under Rule 50(b). See id. Otherwise, the claimant must depend on
the plain error standard for review or move for a new trial under
Rule 59.10
At the close of all evidence on its breach of contract claim
against Wallace, Flintco did not move under Rule 50(a) for judgment
as a matter of law. Given Flintco's failure to make such a motion,
and because no exception to the requirement has been shown to
apply, Flintco waived its right to file a renewed motion for
judgment as a matter of law under Rule 50(b). Therefore, the plain
error standard of review applies.
10
9A Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 2539 (2d ed. 1995) ("The availability of the
alternative motion for a new trial is beneficial also to the party
who has lost a verdict and who would be entitled to judgment as a
matter of law save for some procedural blunder. For example, the
evidence may be wholly insufficient to support the verdict but the
trial court cannot order judgment as a matter of law under Rule
50(b) if the party neglected to move for judgment at the close of
all the evidence or if the party did not properly renew the motion
after the unfavorable verdict was returned.").
31
B. Discussion
Wallace introduced evidence that it was Flintco that first
breached the subcontract by requiring Wallace to perform work for
which he was not paid. Wallace also offered evidence of numerous
acts and omissions by Flintco that Wallace relied upon for proof of
Flintco’s active interference with Wallace’s performance. Under
Texas law, if one party to a contract breaches, there is no
obligation for the non-breaching party to continue performance.
See O'Shea v. International Bus. Machs. Corp., 578 S.W.2d 844, 846
(Tex. Civ. App.--Houston [1st Dist.] 1979, writ ref'd n.r.e.) ("As
a general rule, performance is excused when a party to a contract
prevents the other party from performing."); L. H. Land Painting
Co., Inc. v. S & P Constr., Inc., 516 S.W.2d 14, 16 (Tex. Civ.
App.--Fort Worth 1974, writ dism'd) ("The law is that if one party
to a contract is prevented by the acts of the other party to the
contract from performing such contract, then the party so prevented
from performing is excused from further performance of the
contract."); see also D.E.W., Inc. V. Depco Forms, Inc., 827
S.W.2d 379, 382 (Tex. App.--San Antonio 1992, no writ) ("[A] party
who is in default or breach cannot maintain a suit for breach of
contract."). Given that there is some evidence of record that
Flintco first breached the subcontract, there is no plain error
associated with the jury verdict against Flintco on its claim that
Wallace breached the contract.
32
III. Wallace’s and Victore’s Payment Bond Liability to Flintco
Wallace’s and Victore’s first three points on their cross-
appeal against Flintco and AHAC relate to the trial court’s
disregarding the jury answers and entering judgment for Flintco and
AHAC for recovery of $101,187.30, plus prejudgment interest, on
their payment bond claim. Flintco and AHAC had alleged that
Wallace and its surety, Victore, breached their duties under the
payment bond which was issued to insure payment of Wallace’s
suppliers. When Wallace stopped work and, along with Victore,
failed to pay those suppliers, Flintco and AHAC did so and sought
to recover the sums that they had paid to Wallace’s suppliers on
behalf of Wallace and Victore.
A. Standard of Review
Again, Flintco and AHAC are claimants and, in order to
preserve their right to file a Rule 50(b) renewed motion for
judgment as a matter of law, were required to have filed a Rule
50(a) motion for judgment as a matter of law before submission of
the case to the jury. They did not do so, and therefore the plain
error standard of review applies. Likewise, the trial court could
grant Flintco’s motion for judgment as a matter of law only if it
found plain error in the jury verdict. Sims' Crane, 800 F.2d at
1557 ("A lawyer who never moves for directed verdict, given the
wording of Rule 50(b) and the clear case law regarding the effect
33
of such a decision--regardless of the reasons for such a decision,
must realize that a subsequent motion for jnov can be granted only
if plain error can be proven."). In the absence of plain error,
the trial court could not consider Flintco's Rule 50(b) motion.
Purcell v. Seguin State Bank & Trust Co., 999 F.2d 950, 956-57 (5th
Cir. 1993); McCann, 984 F.2d at 670-73. Accordingly, we review the
trial court's ruling on Flintco’s and AHAC's payment bond claim to
determine whether that ruling was required to cure plain error in
the jury verdict.
34
B. Discussion
The jury findings on Flintco’s and AHAC's payment bond claim
were as follows:
QUESTION NO. 15:
Did Flintco acquire from Wallace Construction
Company's project creditors claims against Victore
Insurance Company?
ANSWER: No.
(Yes or No)
QUESTION NO. 16:
Do you find from a preponderance of the evidence
that Wallace and Victore breached their obligations to
Flintco under the payment bond issued by Victore?
ANSWER: No.
(Yes or No)
QUESTION NO. 17:
What amount of money, if paid now in cash, would
fairly and reasonably compensate Flintco for its damages
proximately caused by Wallace's and Victore's breach of
the payment bond, if any?
ANSWER: $ None
R. Vol. 11 at 3071-3073. In disregarding the foregoing jury
findings on the payment bond claim, the trial court wrote in its
“Order Partially Disregarding Jury Verdict”:
35
Flintco and AHAC reurge their arguments contained in
their August 25, 1995 Motion for Summary Judgment, or in
the Alternative, for Partial Summary Judgment, which
addressed whether Victore breached its Miller Act payment
bond. The Court denied this motion before trial, on
November 2, 1995, in order to allow the parties to more
fully uncover and develop the facts relating to this
claim. At trial, Flintco proved by a substantial
preponderance of the evidence and as a matter of law that
it was entitled to recover sums justly due from Victore,
Wallace's bonding company, for breach of its Miller Act
payment bond when Wallace failed to pay its materialmen
and suppliers. Under the terms of the payment bond, it
was undisputed that Flintco needed only show, and did
show, that Wallace was supposed to, but did not pay the
five materialmen and suppliers in question in full within
ninety days after Wallace abandoned the Project. The
evidence was that Flintco stepped in and paid five of
Wallace's materialmen and suppliers a total of
$101,187.30 in claims unpaid by Wallace, Victore's
principal. In exchange for paying Wallace's unpaid
bills, Flintco received an assignment from each creditor
of all their claims against Wallace and Victore. In
other words, Wallace defaulted to its creditors and
Flintco paid the claims itself. Instead of reimbursing
Flintco for Wallace's bills which Flintco paid per the
terms of the payment bond, Victore refused to recognize
its liability to Wallace's creditors and their assignee.
R. Vol. 13 at 3665-3666 (footnotes omitted). The trial court’s
statement of the evidence is accurate, and a review of the trial
record reflects nothing to controvert the overwhelming evidence in
support of Flintco’s and AHAC's payment bond claim. Because there
is no evidence to support the jury's verdict on Question Nos. 15-
17, the jury's findings on those questions constitute plain error.
The assignability arguments advanced by Victore as to why it
should not be held liable on the payment bond claim were also
thoroughly and correctly addressed by the trial court in connection
with its grant of judgment as a matter of law to Flintco and AHAC
36
on their payment bond claim.11 Wallace and Victore argue that the
11
On Victore’s assignability issues, the trial court correctly
reasoned and concluded:
Victore paradoxically argued that (1) the assignment did
not cover claims against Victore since Victore was not
mentioned by name; and (2) the assignment released
Victore even though it was not mentioned by name.
Victore's first contention, that Flintco did not acquire
any claims against it from Wallace's unpaid suppliers but
only acquired claims against Wallace, is legally
incorrect. Flintco acquired claims from the creditors it
paid against Victore and Wallace, even though not
specifically mentioned, because Victore's obligations
were co-extensive with those of Wallace. This point
seems too obvious to merit comment since construction
financiers routinely rely upon assignments naming
contractors only, and since Victore's unsupported legal
contention/objection is wholly impracticable.
Accordingly, since the assignments of claims against
Wallace transferred to Flintco the derivative right to
pursue payment under Victore's payment bond, Victore's
first contention fails.
Victore's second contention, that Wallace's unpaid
suppliers' assignment to Flintco released Victore even
though it was not mentioned by name, is equally
incorrect. According to Victore, the provision in the
assignment that releases Flintco "and any other
party(ies) or surety(ies) from which Claimant might seek
payment for materials and/or labor supplied to Wallace
. . . " operates to excuse Victore from paying anyone,
whether as original obligee or assignee. Texas law,
however, adheres to the "unity of release" rule which
considers a party released "only if the release refers to
him by name or with such descriptive particularity that
his identity or connection with the tortious event cannot
be doubted." Randall v. Dallas Power & Light Co., 745
S.W.2d 397, 401 (Tex. App.--Dallas 1987), rev'd on other
grounds, 752 S.W.2d 4 (Tex. 1988) (emphasis in original)
(citing Duncan v. Cessna Aircraft Co., 665 S.W.2d 414
(Tex. 1984). Under this rule, "[t]he reference in a
release to 'all other persons, firms, or corporations
liable, or who might be claimed to be liable, does not
supply the descriptive particularity necessary to
specifically identify an otherwise unnamed or
unidentified tortfeasor." Banowsky v. State Farm Mut.
37
amounts Flintco paid to Wallace's materialmen and suppliers were
offset by the jury in assessing Wallace's Miller Act and quantum
meruit damages. This argument is also without merit. The jury
instructions did not ask for or require any such offset, and this
Court cannot impute to the jury’s answers to Question Nos. 15, 16,
and 17, a conjectural explanation for answers which on their face
have no support in the evidence and that are plainly in error.
Moreover, the jury specifically was instructed not to "increase or
reduce the amount of damages, if any, in one question because of
the instructions regarding or your answers to any other questions
about damages, and do not speculate about what a party's ultimate
recovery may or may not be." R. Vol. 11 at 3066. We presume that
the jury followed these instructions.
Because there is no evidence to support the jury verdict on
Question Nos. 15, 16, and 17, the verdict on Flintco’s and AHAC’s
payment bond claim was plain error that affected substantial rights
and required correction when the judgment was entered. The trial
court cured that plain error with its grant of judgment to Flintco
and AHAC on their payment bond claim, and its judgment on this
point is upheld under the plain error standard of review.
Auto. Ins. Co., 876 S.W.2d 509, 513 (Tex. App.--Amarillo
1994, no writ) (citing Duncan, 665 S.W.2d at 419-20).
Since the language now relied upon by Victore is
virtually identical to that rejected by the court in
Banowsky, it is clear that Victore is not "released."
R. Vol. 13 at 3666-3668 (footnotes omitted).
38
39
IV. Attorney’s Fees and Costs
Finally, Wallace argues that the trial court abused its
discretion by awarding attorney’s fees and costs to Flintco. In
its Amended Judgment the district court awarded to each side a
recovery from the other side of the full amount of its attorney’s
fees and costs, without any segregation by the parties of the
portions of their attorney’s fees and costs that were attributable
to the issues upon which they had prevailed. According to Wallace,
because Flintco and AHAC prevailed only on the payment bond claim,
Flintco should not have been awarded attorney's fees or costs.
Wallace maintains that the district court at the very least erred
in failing to segregate and to limit the awards of attorney’s fees
and costs only to those incurred on the payment bond claim upon
which Flintco and AHAC prevailed. Under Texas law, when a
case involves more than one claim, ordinarily attorney’s fees can
be awarded only for necessary legal expenses incurred in connection
with the claims upon which the recovery of fees is authorized.
Bank One, Texas, N.A. v. Taylor, 970 F.2d 16, 35 (5th Cir. 1992),
cert. denied, 508 U.S. 906, 113 S. Ct. 2331 (1993). Wallace,
however, did not object at any time to Flintco’s failure to
segregate its requested attorney’s fees or to the award of
attorney’s fees to Flintco. This Court generally refuses to
consider issues not raised below unless the issue presents a pure
question of law or an issue which, if ignored, would result in a
40
miscarriage of justice. Deshotels v. SHRM Catering Servs., Inc.,
842 F.2d 116, 120 (5th Cir. 1988) (citing Volkswagen of America,
Inc. v. Robertson, 713 F.2d 1151, 1166 (5th Cir. 1983)). Likewise,
a new argument raised for the first time on appeal, even if it
concerns an issue considered by the trial court, will not be
addressed unless it meets the plain error standard. Forbush v.
J.C. Penney Co., 98 F.3d 817, 822 (5th Cir. 1996) (new argument on
appeal regarding award of attorney’s fees rejected as not meeting
plain error standard). The rule applicable here, as regards
Wallace’s complaint on appeal about the award of attorney’s fees to
Flintco and AHAC, is as it was stated in Powell v. Old Southern
Life Ins. Co., 780 F.2d 1265, 1268 (5th Cir. 1986):
[N]o issue concerning the amount of fees due or the
method of calculating the award was raised in the
district court, and we do not consider issues not raised
below unless they present a pure question of law or a
refusal to do so would “result in a miscarriage of
justice.”
(quoting Volkswagen of America, Inc., 713 F.2d at 1166). Flintco
and AHAC prevailed on a portion of the litigation and, in
particular, upon their successful motion for judgment as a matter
of law notwithstanding an adverse jury verdict on Flintco’s and
AHAC’s payment bond claim. Upon this record, and given Wallace’s
waiver of the fee segregation issue in the trial court, we affirm
the district court’s determination on attorney’s fees.
41
Wallace did object in the trial court that Flintco and AHAC
were not entitled to recover costs because the costs sought by them
were not incurred in connection with the claim upon which Flintco
and AHAC were successful.12 Wallace especially complained that
$40,415 of the $73,778 in costs awarded to Flintco and AHAC were
for expert witness fees although Flintco’s and AHAC’s expert did
not testify regarding the payment bond claim on which Flintco and
AHAC prevailed. In this appeal Wallace argues that the trial
court’s award of $73,778.43 in costs to Flintco and AHAC, including
$40,415.68 for fees for an expert witness who offered no evidence
on the one claim on which Flintco and AHAC prevailed, constitutes
an abuse of discretion. Flintco and AHAC argue that the award was
within the trial court’s broad discretion, but also point out that
of the $90,091 in costs awarded to Wallace, $76,610 was for his
expert’s fees.
12
In his Motion for Entry of Judgment based on the Jury
Verdict, Wallace requested attorney’s fees and costs. Flintco, in
its Motion for Judgment Notwithstanding the Verdict, also requested
attorney’s fees and costs. Flintco did not oppose Wallace’s
request to recover his attorney’s fees and costs and, remarkably
enough, Wallace did not argue against Flintco’s request to recover
its attorney’s fees and costs. In the Order Partially Disregarding
the Jury Verdict, the district court awarded costs of $71,546.50 to
Flintco and AHAC, and $90,091.00 in costs to Wallace. In his
Motion to Alter and Amend, Wallace argued that it was error to
award costs to Flintco and AHAC when the costs incurred by them
were not related to the one claim (the payment bond claim) upon
which they ultimately prevailed. Flintco did not object in the
trial court to the costs awarded to Wallace. Despite Wallace’s
costs argument, the Amended Judgment included cross-awards of costs
to Flintco and AHAC in the total sum of $73,778.43 and to Wallace
in the total sum of $90,091.00.
42
As set forth above, Flintco and AHAC prevailed only on the
payment bond claim, and Flintco and AHAC incurred no expert witness
fees in prosecuting that claim. We agree that the trial court
abused its discretion when it included $40,415.68 in expert witness
fees as part of the costs that it awarded to Flintco and AHAC.13
Wallace’s complaint on this point, however, requires us to
observe a more fundamental error of law, namely, that the cross-
awards of costs include amounts for expert witness fees in excess
of the amounts allowed by 28 U.S.C. § 1821. Flintco and AHAC
claimed and were awarded expert witness fees in the sum of $40,415
and Wallace and Victore claimed and were awarded expert witness
fees in the sum of $76,610. Both sides sought recoveries of those
expert witness fees in the trial court by relying upon Copper
Liquor Inc. v. Adolph Coors, Co., 684 F.2d 1087, 1100 (5th Cir.
1982), which had held that expert witness fees in excess of that
provided for by 28 U.S.C. § 1821 may be awarded in “exceptional
circumstances” such as when the “expert testimony was necessary or
helpful to a presentation of civil rights claims, or indispensable
to the determination of the case.” That holding of Copper Liquor
was directly overruled by International Woodworkers of Am. v.
13
Such an award may be viewed as impermissibly shifting the
costs incurred by Flintco and AHAC on claims on which they did not
prevail to Wallace and AHAC. See Hall v. State Farm Fire & Cas.
Co., 937 F.2d 210, 216 (5th Cir. 1991)(“A trial court has wide
discretion with regard to the costs in a case and may order each
party to bear his own costs. The judge cannot, however, order the
prevailing party to share, or shoulder all of, the costs of a
nonprevailing party unless the costs serve as a sanction.”).
43
Champion Int’l Corp., 790 F.2d 1174, 1175-76 (5th Cir. 1986) (en
banc), aff’d sub nom Crawford Fitting Co. v. J.T. Gibbons, Inc.,
482 U.S. 437, 107 S. Ct. 2494 (1987). In International
Woodworkers, this Circuit held that “the fees of non-court-
appointed expert witnesses are taxable by federal courts in non-
diversity cases only in the amount specified by § 1821, except that
fees in excess of that amount may be taxed when expressly
authorized by Congress, or when one of the three narrow equitable
exceptions recognized by Alyeska applies.” Id. at 1181. None of
the Alyeska exceptions14 applies to this case.
Because expert witness fees in excess of those provided for by
28 U.S.C. § 1821 may not be awarded as costs in a nondiversity case
such as this, International Woodworkers, 790 F.2d at 1175, and
because neither side in this dispute limited its claims for costs
to those amounts allowed by § 1821, the cross-awards of costs in
this case constitute plain error.
14
Costs in excess of that allowed by § 1821 may be awarded
under the exceptions announced in Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y, 421 U.S. 240, 95 S. Ct. 1612 (1975) when:
(1) the trustee of a fund or property, or a party in
interest, preserved or recovered the fund for the benefit
of others in addition to himself;
(2) a party acted in wilful disobedience of a court
order; or
(3) the losing party had acted in bad faith,
vexatiously, wantonly, or for oppressive reasons.
International Woodworkers, 790 F.2d at 1177.
44
To reverse Flintco’s and AHAC’s erroneous recovery of $40,415
in expert witness fees but to leave standing Wallace’s erroneous
recovery of $76,610 in expert witness fees would amount to a
manifest miscarriage of justice. Moreover, since the district
court must reconsider the taxation of costs on remand, in a case
such as this -- where each party has prevailed on a portion of the
case -- the district court should have before it the entire costs
issue. Otherwise, the district court would effectively be deprived
of its broad discretion to consider the total costs that are
properly taxable and the competing arguments of the parties as to
how those costs should be fairly borne. Because the cross-awards
of taxable costs that were adjudged here are both unusual and
intertwined, and because the awards are infected with erroneous
inclusions of expert witness fees in excess of what is permitted
under § 1821, we conclude that a manifest miscarriage of justice
can be avoided on this issue only by setting aside the cross-awards
of costs and remanding the costs issue for further proceedings by
the district court.
Conclusion
For the foregoing reasons, we REVERSE and VACATE those
portions of the Amended Judgment that adjudge cross-recoveries of
costs by Flintco and AHAC from Wallace and Victore, and by Wallace
from Flintco and AHAC, and we REMAND this case to the district
court for further proceedings consistent with this opinion on the
45
taxation of costs; we REFORM the Amended Judgment to consolidate
the two segments discussed above in footnote 3, as follows:
It is ORDERED and ADJUDGED that Marshall E.
Wallace, d/b/a Wallace Construction Company, shall
recover from Flintco, Inc. and American Home
Assurance Co., jointly and severally:
1. Actual damages in the amount of
$197,777.00;
2. Pre-judgment interest thereon in the amount of
$62,681.85;
3. Post-judgment interest on all amounts
awarded in item numbers one and two above
at the currently prevailing rate pursuant
to 28 U.S.C. § 1961 of 5.90% per annum,
compounded annually, from the date of
this judgment until paid;
we REFORM all awards of post-judgment interest in the Amended
Judgment to provide that post-judgment interest shall be compounded
annually; and the Amended Judgment is otherwise AFFIRMED.
46