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Nature of Suit Code: 130
Nature of Suit: Miller Act
Cause of Action: 

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FILED 

United Scares Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OP APPEALS OCT 2 6 1990 

FOR THE TENTH CIRCUIT ROBERT L. HOECKER 

UNITED STATES use of PRESTRESSED 

CONCRETE , INC . , 

Plaintiff-Appellee, 

v. 

MID-CONTINENT CASUALTY COMPANY, 

Defendant-Appellant, 

and 

MILNER CONSTRUCTION COMPANY, 

INC., 

Defendant. 

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Clerk 

No. 90-6177 

(D.C. No. CIV-88-357-T) 

(W.D. Okla.) 

ORDER ARD JODGIIENT* 

Before AHDERSOH, BALDOCK and EBEL, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Ped. R. App. P. 

34(a); 10th Cir. R. 34.1.9. The cause is therefore ordered 

submitted without oral argument. 

This Miller Act case is before us for the second time. MidContinent Casualty Co., Inc. appeals from a district court order 

granting judgment to Prestressed Concrete, Inc. We affirm. 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 90-6177 Document: 010110064894 Date Filed: 10/26/1990 Page: 1 
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BACKGROUND 

In June of 1986, General contractor Milner Construction 

Company (Milner) ordered concrete wall panels from Prestressed 

Concrete, Inc. (PSC) for use in a Federal Aviation Administration 

building project in Oklahoma City (the project). The project was 

bonded by Mid-Continent Casualty Co. (Mid-Continent). PSC cast 

the wall panels and delivered them to the project between November 

24, 1986 and December 1, 1986. PSC made some modifications, which 

were finished on January 27, 1987. On that date, the FAA inspector approved the modifications. 

In the latter part of February, 1987, Milner informed PSC 

that the precast vent panel openings in the east and west walls 

were too large for their metal covers. PSC claimed that the openings were cast as Milner had specified, but nevertheless agreed to 

fabricate and install filler panels to decrease the size of the 

openings. On March 4, 1987, PSC employees installed the filler 

panels. The FAA inspector· approved the additions on March 4, 

1988. 

Milner did not pay PSC for its labor and materials, and PSC 

made demand on Mid-Continent under its bond. When Mid-Continent 

refused to pay, PSC began this action on March 1, 1988. 

PROCEDURAL HISTORY 

Mid-Continent moved for summary judgment, asserting that the 

applicable statute of limitation expired prior to suit. The 

Miller Act states that no suit "shall be commenced after the 

expiration of one year after the day on which the last of the 

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Appellate Case: 90-6177 Document: 010110064894 Date Filed: 10/26/1990 Page: 2 
labor was performed or material was supplied ... 

§ 270b(b). 

" 40 u.s.c. 

Thus, the sole legal question is whether or not PSC's 

activities at the project on March 4, 1987 made it the day on 

which the last of the labor was performed or material was supplied 

by PSC within the meaning of 40 u.s.c. § 270b. In this case, the 

applicable legal test was whether the work was performed and the 

labor supplied as a "part of the original contract" or for the 

"purpose of correcting defects, or making repairs following 

inspection of the project." Austin v. Western Electric Co., 337 

F.2d 572-73 (9th Cir. 1964). 

The district court originally determined that the work done 

on March 4, 1987 was not part of the original contract. The court 

cited the fact that the FAA had approved PSC's work on January 27, 

1987. The court did not, however, determine whether the vent 

holes were defective. It reasoned that if the vent holes were not 

defective, "then the contract was complete before the filler 

panels were added, and they were not part of the contract." As a 

result, the court granted summary judgment for Mid-Continent. 

On the first appeal, we reversed and remanded, No. 89-6059 

unpub., stating that the record did not support the district 

court's conclusion that work on the contract was complete when the 

FAA inspector approved PSC's modifications on January 27, 1987. 

We instructed the district court to determine when the contract 

was completed and whether the vent holes were defective. 

Upon remand, the district court conducted an evidentiary 

hearing and found that the vent holes originally cast by PSC met 

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specifications and therefore were not defective. It accordingly 

found that PSC's suit was brought (March 1, 1988) within one year 

of the date (March 4, 1987) the last labor was performed and 

material supplied. The court entered judgment for PSC in the 

stipulated amount. 

On appeal, Mid-Content challenges the trial court's findings. 

A trial court's findings of fact should not be set aside unless 

clearly erroneous. Rule 52(a) Fed. R. Civ. P. "A finding of fact 

is 'clearly erroneous' if it is without factual support in the 

record, or if the appellate court, after reviewing all the 

evidence, is left with the definite and firm conviction that a 

mistake has been made." LeMaire v. U.S., 826 F.2d 949, 953 (10th 

Cir. 1987): ~ also Cowles v. Dow Keith Oil & Gas, Inc., 752 F.2d 

508, 511 (10th Cir. 1985), cert. denied, 479 U.S. 816 (1986): U.S. 

v. United States Gypsum Co., 333 U.S. 364, 395 (1948). 

The evidence at the hearing showed the following. The 

contract between Milner and PSC called for the openings in question to be produced in accordance with shop drawings approved by 

Milner. The contract further provided that PSC could make written 

requests to Milner for information and measurements, and that 

Milner would assume responsibility for the accuracy of the 

information and measurements it gave PSC. At PSC's request, 

Milner informed PSC of the dimensions for the vent openings on the 

final shop drawings. Milner approved the final shop drawings, and 

the vent openings were cast according to the dimensions on the 

drawings. We cannot say that the district court erred in finding 

that the vent openings were not defective. 

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Mid-continent argues that the openings varied from the 

original architectural specifications, that the openings were too 

large for their correctly constructed covers, and so the openings 

clearly must be defective. Recall, however, the relevant legal 

standard. In determining when the statute of limitations should 

begin to run, we differentiate between work done "as part of the 

original contract" and work performed in "correcting defects, or 

making repairs following inspection of the project." Austin, 337 

F.2d at 572-73. For the limited purpose of this test, the term 

"defect" has very particular meaning: defect in the subcontractor's "own initial performance." Palmer v. Debardelaben, 278 F. 

Supp. 722, 724 (D.S.C. 1967); Lank Woodwork Co. v. CSH 

Contractors, 452 F. Supp. 922, 925 (D.D.C. 1978). 

This standard gives subcontractors the incentive to perform 

their work properly the first time; corrections of their own 

defective work will not stay the statute of limitations. But if, 

as is the case here, the defect is the fault of the general 

contractor, and the general contractor calls the subcontractor 

back to correct it, the additional labor is considered part of the 

original contract. 1 Any other result would unfairly penalize subcontractors and serve as a disincentive to their cooperation. 

1 This is not inconsistent with the legislative history of the 

Miller Act amendments. The determination whether it was the 

subcontractor's work that was defective actually simplifies the 

query whether the additional work was performed under the 

contract. This is because the test's two options--"under the 

contract" or "correcting a defect in its own work"--are exclusive. 

PSC's fabrication and installation of the filler panels is either 

one or the other. As is the case here, if the subcontractor was 

not correcting a defect in its own performance, then it was 

performing under the original contract. 

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t 

By insisting that PSC supply the additional filler panels, 

Milner effectively communicated that it did not consider PSC to 

have adequately completed its performance under the contract. 2 

The evidence shows that PSC complied to assure that it would be 

paid under the contract. See Palmer, 278 F. Supp. at 724; 

Lankwood, 452 F. Supp. at 925. We refuse to hold that PSC's good 

faith compliance with Milner's request now bars it from being paid 

under the bond. PSC's work in March, 1987 was the last labor 

performed and material supplied for purposes of the Miller Act. 

We accordingly AFFIRM. 

ENTERED FOR THE COURT 

Stephen H. Anderson 

Circuit Judge 

2 In fact, Mid-Continent still insists on this appeal that PSC 

is to blame for the over-sized vent openings. 

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