*The HONORABLE RICHARD H. KYLE, United States District

Judge for the District of Minnesota, sitting by

designation.

___________

No. 95-1721

No. 95-1788

___________

Dave Kolb Grading, Inc., *

*

 Appellant/Cross-Appellee, * 

* 

v. * 

* 

Terra Venture Bridgeton Project * Appeals from the United States

Joint-Venture; American National* District Court for the

Insurance Co., a General * Eastern District of Missouri.

Partner; Bridgeton Development *

Company, a Kansas General *

Partnership; Jack W. Isley; *

L. Gary Turner; Larry D. Ross, *

*

 Appellees/Cross-Appellants.*

___________

 Submitted: January 11, 1996

 Filed: June 4, 1996

___________

Before BOWMAN and JOHN R. GIBSON, Circuit Judges, and KYLE, District

*

Judge.

___________

JOHN R. GIBSON, Circuit Judge.

Dave Kolb Grading, Inc., a grading contractor, appeals from the

judgment in its suit against Terra Venture Bridgeton Project Joint-Venture,

a real estate developer. Kolb sued to recover money due under a written

contract with Terra Venture, as well as additional moneys Kolb claimed

were due for extra work it performed 
 The Honorable Catherine D. Perry, United States District 1

Judge for the Eastern District of Missouri. Judge Perry was a

magistrate judge at the time she tried this case. The parties

consented to trial before a magistrate judge. 

-2-

on Terra Venture's project. Terra Venture denied liability for the extra

work, which it says it did not authorize, and also asserted a set-off claim

for costs it incurred in settling a trespass claim that it contends Kolb

is responsible for. The magistrate judge awarded Kolb the entire amount 1

it had earned under the contract, denying Terra Venture's set-off claim,

but also denying Kolb's claim for the extra work. The court awarded Kolb

prejudgment interest and attorneys' fees under the contract. Kolb appeals

the court's denial of the extra work claim, and Terra Venture cross-appeals

the court's award of prejudgment interest and attorneys' fees. We affirm.

Kolb contracted with Terra Venture to do the site excavation and

grading for a shopping center in St. Louis County, Missouri. The contract

was a "lump sum" contract, meaning that it specified the work Kolb had to

do and the total price Terra Venture had to pay (as opposed to, say,

payment by the hour). The contract stated that no change order work would

be approved or paid for without advance written approval by Terra Venture,

in the form of the signatures of Terra Venture's management consultant, E.

B. Roberts, and its project manager, Kevin Fitzpatrick.

The contract turned out to be a money-loser for Kolb. The contract

called for performance within thirty-five working days, but it actually

took Kolb more than 230 days to complete its work. Bad weather caused

delays. Terra Venture failed to get timely approvals from municipal and

sewer authorities and easements from neighboring landowners. Terra

Venture's engineer also made frequent changes in the plans. The delays

resulted in Kolb having to do site excavation while other contractors were

already building on the site, which made Kolb's job more time consuming.
-3-

During the course of Kolb's performance, the parties executed two

change orders for additional work by Kolb. The first change order was

executed in writing in advance of the work, as required by the contract.

Kolb then began a practice of filling out "hourly tickets" for work that

its job superintendent, Lee Moorman, considered to be "extra" or beyond the

scope of the contract. Moorman submitted these slips to Gene Bunton, who

represented Phillips Construction Company, the general building contractor.

Bunton had no authority to represent Terra Venture. Kolb then billed Terra

Venture for the work represented by the slips. Terra Venture objected that

the extra work had not been approved in advance, as the contract required,

and at first refused to pay the extra charges. However, Kolb threatened

to walk off the job if Terra Venture did not pay the charges, so Kevin

Fitzpatrick met with Kolb and agreed to pay a portion of the charges as

"change order two." At the meeting, Fitzpatrick warned Kolb that in the

future Terra Venture would not pay any extra charges that were not

authorized in advance in accordance with the contract. 

Nevertheless, after change order two was approved, Kolb continued to

do work it considered to be beyond the scope of its contract obligations

without getting authorization from Terra Venture. Kolb eventually billed

Terra Venture an extra $188,602.13. (The original contract plus change

orders one and two amounted to $501,499.10.) 

Terra Venture refused to pay for the extra work and also withheld

$88,112.81 of the amount due under the contract. Terra Venture had been

sued by a neighboring landowner for trespass; Terra Venture claimed that

the suit was the result of Kolb's activities on the neighbor's land and

relied on a clause in the contract giving it the right to indemnification

from any damages arising from Kolb's negligence. Terra Venture eventually

agreed to settle the trespass suit for $42,500, although the settlement had

not been consummated at the time of the trial in this case, because
-4-

Terra Venture had not fulfilled its obligations under the settlement

agreement. 

Kolb sued Terra Venture for the money due under the contract, as well

as for the work it claimed was outside the scope of the contract. Terra

Venture denied liability for the extra work, but on the first day of trial,

offered to pay $38,560.11, which was the amount Terra Venture admittedly

owed under the contract, less the settlement amount and expenses for the

trespass suit. 

The parties tried the case to the court. After Kolb closed its case,

the magistrate judge stated that Kolb had failed to put on any evidence

that Terra Venture had authorized the extra work. In its rebuttal Kolb

called a new witness, Jeff Kolb, whom it had not identified as a potential

witness in its pretrial list of witnesses. Kolb's lawyer asked Jeff Kolb:

Q: Well did you have any direct discussions or dealings with

Mr. Fitzpatrick regarding authorization to do extra work

sir?

A: Yes I did.

Q: Could you define when those occurred and where those

occurred? 

Terra Venture's lawyer objected that this was improper rebuttal, since Kolb

was trying to patch a hole in its case in chief. The court explored the

issue thoroughly and concluded that there was prejudice to Terra Venture

in letting Jeff Kolb testify when he had never been identified as a

potential witness and therefore had never been deposed. The court excluded

the rebuttal testimony. Kolb made no offer of proof on the subject of

Terra Venture authorizing the additional work. 

Since Kolb had failed to prove the extra work was authorized, the

court denied its claim for payment beyond the contract amount. 
-5-

The court found that Terra Venture objected to Kolb's practice of billing

for extras after it had already done the work, instead of getting advance

authorization. The court also found that much of the work Kolb

characterized as extra was actually within the scope of its obligations

under the lump sum contract, and that much of the work was properly

billable to other contractors, rather than to Terra Venture. 

On the other hand, the court rejected Terra Venture's counterclaim

for the costs resulting from the trespass claim. The court found Terra

Venture had not established that Kolb's activities were the basis of the

trespass claim. The court also found that Terra Venture was to blame for

failing to get an easement on the neighbor's property. 

Accordingly, the court entered judgment for Kolb in the amount of

$88,121.81, the amount owed under the contract. 

 The court supplemented this amount in a later order, awarding Kolb

attorneys' fees and prejudgment interest. Terra Venture claimed it did not

owe prejudgment interest because it had the right under the contract to

withhold payment until it had resolved the third-party trespass claim. The

court rejected this reading of the contract. The court reduced Kolb's

claimed attorneys' fees by 20% to eliminate fees attributable to the claim

for extra work, on which Kolb did not prevail. 

I.

Kolb argues that it did not have to prove Terra Venture authorized

it to do the extra work. Kolb contends that Terra Venture became obligated

to pay for the work because it knew the work was being performed and it

acquiesced. Kolb cites Winn-Senter Construction Co. v. Katie Franks, Inc.,

816 S.W.2d 943 (Mo. Ct. App. 1991); H. B. Deal Construction Co. v. Labor

Discount Center,
 The court stated: 2

Defendants' project manager, Kevin Fitzpatrick,

testified that he authorized payment for change order 2

only after Kolb had threatened to walk off the job and

had in fact not shown up on the job for two days. He

testified that he flew to St. Louis, met with

representatives at Kolb, and explained in detail that

any further work done without authorization by the

partnership would not be paid, but that he would at

this time agree to pay a portion of the extra work

already done. The Court finds this testimony credible. 

-6-

Inc., 418 S.W.2d 940 (Mo. 1967); and Julian v. Kiefer, 382 S.W.2d 723 (Mo.

Ct. App. 1964), in which parties waived the requirement in their contract

that change orders be written.

Two of the cited cases actually work against Kolb, because they

involve owners who explicitly gave oral change orders, Winn-Senter, 816

S.W.2d at 946; Julian, 382 S.W.2d at 729. Accord Gilmartin Bros., Inc. v.

Kern, 916 S.W.2d 324, 329 (Mo. Ct. App. 1995). Kolb failed to prove that

Terra Venture gave oral orders for the extra work. 

H. B. Deal does involve, in part, a bank and escrowee's implicit

waiver of contractually required formalities by habitually paying change

orders without protesting the lack of such formalities. 418 S.W.2d at 950

(alternative holding). But the district court's factual findings in this

case distinguish it from H. B. Deal. In contrast to the escrowee in H. B.

Deal, Terra Venture did not habitually ignore the requirements of advance

written authorization for change orders. The magistrate judge found that

Terra Venture protested Kolb's failure to comply with this formality and

warned Kolb that it would not pay such orders. Even if we accept Kolb's 2

argument that evidence of explicit authorization was not necessary to its

case, the magistrate judge's findings rule out implicit acquiescence by

Terra Venture. Kolb does not argue that the findings are clearly

erroneous, and we hold
-7-

the findings to be well supported in the record.

II.

Kolb's second argument is that the magistrate judge erred in

excluding Jeff Kolb's testimony. Kolb contends that Jeff Kolb would have

said Terra Venture orally authorized the extra work. There are three

reasons to affirm the court's exclusion of this evidence: Kolb made no

offer of proof, see Strong v. Mercantile Trust Co., 816 F.2d 429, 432 (8th

Cir. 1987), cert. denied, 484 U.S. 1030 (1988); the proposed testimony was

properly part of Kolb's case in chief, but it was offered as rebuttal, see

Gossett v. Weyerhaeuser Co., 856 F.2d 1154, 1156 (8th Cir. 1988); and Kolb

did not list Jeff Kolb as a potential witness in its pretrial filings, see

Marti v. City of Maplewood, 57 F.3d 680, 683-84 (8th Cir. 1995). The

magistrate judge heard argument and concluded that excusing Kolb from

compliance with its duty to disclose witnesses would prejudice Terra

Venture, since Terra Venture had never deposed Jeff Kolb. The ruling was

well within the court's discretion. 

III.

Terra Venture contends that the magistrate judge erred in awarding

Kolb attorneys' fees and prejudgment interest. Terra Venture argues that

the contract entitled it to withhold payment until it had resolved "claims

filed by third parties," that the trespass case was such a claim, and that

the trespass case was not finally settled at the time this case was tried.

Terra Venture argues that attorneys' fees and interest would only accrue

after payment was due. Since payment never became due, Terra Venture

asserts it should not be liable for fees and interest. 

This argument is disingenuous. Terra Venture admits there was a

settlement agreement in the trespass case about three months
-8-

before trial of this case, yet Terra Venture did not tender even the amount

it admitted it owed until the first day of trial. Terra Venture says there

was a settlement agreement, but the settlement had not become final. There

was evidence at trial that the delay was attributable to Terra Venture's

failure to perform its duties under the settlement agreement. If Terra

Venture could delay indefinitely its obligation to Kolb by merely failing

to fulfill its duties under the trespass settlement, Kolb's rights under

the contract would be illusory. Therefore, even assuming that the trespass

case would toll Terra Venture's payment obligation for some time, Terra

Venture cannot avoid liability for Kolb's collection expenses by simply

drawing out the settlement process in the trespass claim. 

Alternatively, Terra Venture argues that even if we conclude the debt

became due at some point, Terra Venture should only owe interest for the

three-month period after it reached a settlement agreement in the trespass

case. The magistrate judge rejected Terra Venture's argument that the

trespass suit was the kind of third-party claim that would entitle Terra

Venture to withhold payment. The court held that the trespass suit

resulted from Terra Venture's "haphazard conduct of its development"--that

is, its failure to obtain easements, as required by section 8.2 of the

contract. The contract language permitting Terra Venture to withhold

payment is vague, referring only to "claims filed by third parties,"

without specifying what kind of claims. On the other hand, the contract

elsewhere describes in detail the circumstances under which Kolb would be

required to indemnify Terra Venture. We construe the contract to allow

Terra Venture to withhold payment only in response to third-party claims

for which Terra Venture is entitled to indemnification from Kolb. Any

other reading would place Kolb entirely at Terra Venture's mercy by

permitting Terra Venture to withhold payment because of suits for which the

Kolb was not responsible. The court held that Kolb was not liable to

indemnify Terra Venture for the trespass suit. Terra Venture has
-9-

not appealed that ruling. Therefore, we hold that payment was due under

the contract despite the pendency of the trespass suit. We affirm the

magistrate judge's award of prejudgment interest and her conclusion that

Kolb was entitled to attorneys' fees.

Terra Venture also appeals the magistrate judge's determination of

the amount of attorneys' fees. Terra Venture argues that the court did not

properly reduce the requested fees to eliminate fees for the extra work

claim on which Kolb lost. To the contrary, the magistrate judge's opinion

shows that she did adjust the award to eliminate fees incurred on the extra

work claim. The court's factual findings are not clearly erroneous. 

We affirm. 

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.