FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

NOVEMBER 9, 2001

THOMAS K. KAHN

CLERK

*Honorable John R. Gibson, U.S. Circuit Judge for the Eighth Circuit, sitting by

designation.

 [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

_________________________

No. 00-10784

_________________________

D.C. Docket No. 95-00094-CV-WDO-5-3

ASSOCIATED MECHANICAL 

CONTRACTORS, INC.,

Plaintiff-Counter-Defendant-

 Appellant,

versus

MARTIN K. EBY CONSTRUCTION

COMPANY, INC.,

 Defendant-Counter-Claimant-

 Appellee.

_________________________

Appeal from the United States District Court for the

Middle District of Georgia

_________________________

(November 9, 2001)

Before EDMONDSON, HILL and GIBSON*

, Circuit Judges.

JOHN R. GIBSON, Circuit Judge:
2

Associated Mechanical Contractors, Inc., a subcontractor on a Georgia

prison construction project, appeals from the district court's entry of summary

judgment against it in its suit against the prime contractor on the project, Martin K.

Eby Construction Company, Inc. Associated attacks the district court's holding

that its claim for delay and inefficiency damages was barred because it failed to

give Eby timely notice of its intent to seek those damages. Associated also argues

that the district court should have awarded it interest on the final or "retainage"

payment under the subcontract. We reverse and remand as to the part of the claim

for delay damages caused by events occurring after July 1990, affirm as to the part

of that claim arising out of the events of May-July 1990, and affirm as to the

interest claim. 

 We state the facts in the light most favorable to Associated, the nonmovant. Associated and Eby signed a $3,150,000 subcontract under which

Associated was to perform the mechanical, heating, ventilation, air-conditioning,

and plumbing work in building the Dooly Correctional Center. The subcontract

specified that Associated's work would begin on or before May 2, 1990 and would

be complete by July 19, 1991. The subcontract contained the following provision

governing compensation for delays:
3

SECTION 11. DELAYS. . . . Any damages which

Subcontractor alleges that the Owner, Architect-Engineer, Contractor,

other Subcontractor, or any other party for whom Contractor may be

liable has caused him or is causing him must be filed in writing with

the Contractor within ten (10) days from the commencement of the

alleged damage and a full accounting filed within ten (10) days after

the extent of damage is known or the cause for damage ceases,

whichever is the sooner; otherwise, any such claims will be

considered void.

The subcontract also provided that Associated would be bound by the Prime

Contract documents, specifically Article E-37 of the Prime Contract's General

Conditions. Under Article E-37, the subcontractor agreed to make all claims for

damages against the prime contractor in the same manner provided in the Prime

Contract for claims by the prime contractor against the owner, which was spelled

out at Article E-16(b). That article provided: "No claim of the contractor for

damage shall be valid unless written notice thereof shall have been received by the

owner by registered mail within 15 days after occurrence of the event on which the

claim is based." 

From the beginning, the prison project was plagued by delays. Because the

footings for the buildings were not finished on time, Associated could not begin

work until June 18, 1990, in contrast to its scheduled start date of May 2.

According to Associated's project manager, Daniel Harrity, Eby acknowledged the
4

delay at project meetings on July 6 and 10, but announced at an August 7 meeting

that it would make up the lost time by revising the construction schedule. 

By letter of August 11, 1990, Associated complained to Eby that

Associated's excavation and backfilling work was being held up improperly by the

people who were supposed to supervise and inspect Associated's compaction for

the owner. 

The project continued to fall further behind schedule over the next month,

mainly due to problems with the masonry work, which affected Associated's work

schedule because Associated's work had to be imbedded in the masonry. By

September 4, Associated's work on two of the buildings had ground to a halt. The

next day, September 5, 1990, Associated wrote Eby complaining that it could not

be responsible for making sure the masonry contractor's work was up to

specifications. 

 On September 13, 1990, Associated wrote Eby complaining of delay from

yet another source–Eby's failure to transmit Associated's "submittal data" to the

project architect or engineer for approval. According to the letter, Associated had

just learned of the problem, although it had been going on since April.
5

Associated sent letters on October 1, 1990 and November 8, 1990, notifying

Eby that Associated was suffering delay damage from the project being twentynine days behind schedule. 

At the November 13 project meeting, Eby announced that the masonry

subcontractor had defaulted. Associated wrote Eby again on November 26, 1990,

saying that without any bricklayers on site, Associated would have to lay off

workers on November 30 because there was nothing for them to do. Associated

said it would incur expenses from this delay and would expect compensation. 

Again, on February 15, 1991, Associated wrote Eby complaining that the masonry

problem and other changes had delayed its own work, and that Eby's attempt to

make up lost time by accelerating the work was going to cost Associated money. 

From early 1991 through the end of 1992, when the project was finally

finished, there was a constant stream of correspondence between Associated and

Eby about the delays and problems on the project. Sometimes the letters showed

them negotiating a resolution of responsibility and costs for delays and the

consequent need to reschedule and accelerate remaining work, and sometimes they

were simply blaming each other for the problems. Associated cited a variety of

failures by other contractors that interfered with its ability to get its own work

done, including continuing problems with the masonry work (especially
6

condemnation of the walls on one building), problems with painting and flooring,

and unclear or inadequate specifications in the building plans. Associated

repeatedly described in its letters expenses it incurred from the rescheduling of its

work, which sometimes left it with idle hands and sometimes caused it to have to

pay overtime or to be short of workers. In November 1992 Associated presented

Eby with a Request for Equitable Adjustment, asking for compensation of

$737,343.96 and a 462-day time extension on its contract completion date

(originally July 19, 1991).

When Eby denied Associated's request, Associated brought this diversity

action for breach of contract, equitable adjustment, and quantum meruit. Two

years after filing suit, Associated amended its complaint to add a claim for unpaid

retainage. 

Eby moved for summary judgment four times on a variety of theories. First,

Eby argued that language in Associated's periodic applications for payment

released Eby from all claims relating to the work performed through the date of

each application. At that time Eby was being sued by another subcontractor on the

Dooly project, Allgood Electric Company, and Eby made a similar argument in the

Allgood case. The district court granted summary judgment in Allgood, but this

court reversed. Allgood Elec. Co. v. Martin K. Eby Construction Co., 85 F.3d
7

1547 (11th Cir. 1996) (Allgood I). Because of the similarity between Eby's

argument in Allgood I and its argument against Associated in this case, once we

handed down Allgood I, the district court in this case denied Eby's first motion for

summary judgment. 

In its second summary judgment motion, Eby argued that another provision

of the payment applications acknowledged that the payment received was the

"value" of the work Associated had performed for the time period covered by the

payment application, and therefore Associated had effectively admitted that it had

been paid all Eby owed it for the various periods. The district court rejected this

argument. It held that the word "value" had a special meaning under the contract

documents, referring only to accomplishment of certain tasks, rather than referring

to the actual monetary value of the work performed during the time period. 

Associated Mech. Contractors, Inc. v. Martin K. Eby Constr. Co., 964 F. Supp.

1576, 1581 (M.D. Ga. 1997) ("[T]he language refers to the value of

accomplishment under the contract and all authorized changes thereto."). 

Accordingly, Associated's statements in the payment applications did not release

Eby from Associated's claims for delay damages. Id. at 1582. 

Eby then filed a third summary judgment motion, contending that

Associated had failed to give timely notice of its intent to seek delay damages, as
8

required by section 11 of the subcontract and by the section incorporating notice

requirements of the prime contract. 

Eby had succeeded on this argument in its case against Allgood, where the

district court had granted Eby summary judgment, Allgood Elec. Co. v. Martin K.

Eby Constr. Co., 959 F. Supp. 1573 (M.D. Ga. 1997) (Allgood II), and this court

affirmed in an unpublished opinion. 137 F.3d 1356 (table), No. 97-8555 (11th Cir.

Feb. 24, 1998). Allgood had sent Eby seven letters, from September 1990 to

January 1993, complaining of delays. Allgood considered these letters sufficient

under the subcontract and the prime contract to give notice of delay claims. The

court assumed for the sake of argument that the content of the notices was

adequate, but focused on the timeliness of the notice. 959 F. Supp. at 1579.

Allgood 's evidence demonstrated that it was aware of delays from the very

beginning of the project, but Allgood did not give notice until six months later. Id.

at 1579-80. Allgood tried to excuse its failure to give notice by arguing that "there

could be no recovery for delays until after the contract completion date because

there was no delay until that time." Id. at 1579. The district court rejected this

reasoning as inconsistent with the two-tier notice plan in section 11 of the

subcontract, which requires notice within ten days of commencement of the

damage and then a full accounting within ten days of the time the extent of the
9

damage is known or the cause of the damages ceases. See id. at 1580. The court

held that it was obvious to Allgood from the beginning that the project was behind

schedule and that the delay would affect Allgood's performance of its duties under

the subcontract. Id. Allgood's failure to comply with the notice requirements of

the contract prevented it from recovering delay damages. Id. at 1581. This court

held that the district court did not err in concluding Allgood had failed to comply

with section 11 of the subcontract. No. 97-8555, slip op. at 2.

In the present litigation, Associated likewise maintained it had satisfied its

obligation to give notice by sending ten letters to Eby, ranging from August 11,

1990 to August 21, 1991. As in Allgood II, the district court assumed the

sufficiency of the content of the notices, but focused on the timing. Associated

Mech. Contractors , Inc. v. Martin K. Eby Constr. Co., 983 F. Supp. 1121, 1123

n.1 (M.D. Ga. 1997). The court held:

The complaint itself shows that [Associated] was aware of the

project delays from the very beginning, that is, from early May of

1990. Moreover, as shown by the minutes of the September 20, 1990,

Project Managers Meeting, as well as [Associated's] first letter to Eby,

[Associated] was able to estimate the length of the delay at 29

calendar days. Nevertheless, [Associated] did not provide Eby with

notice of an intent to seek damages on account of those delays until

August of 1990 at the very earliest, and most likely not until

November of 1990. This constitutes at least two months after the

beginning of delays--well beyond the ten day period provided for in

the subcontract for notice of delay claims--that [Associated] waited to

tell Eby of its intent to seek damages for the delays.
10

Id. at 1124. 

Associated argued that it did not give notice until August because until then

it had believed Eby's representations that the project would be brought up to

schedule. The court held that, under the two-tier notice scheme of section 11,

uncertainty about the amount of damages did not excuse Associated from the duty

of notifying Eby of delay within ten days of its commencement. Id. at 1124-25. 

Associated argued it should be given more time for discovery, but the court held

that "all facts relevant to the issue of whether notice was timely [were] already in

the record." Id. at 1124. Associated maintained that Eby had actual notice of the

delays without Associated giving notice, but the court held that the point of the

notice provision was not only to notify Eby of the fact of delay, but also of the fact

that Associated was incurring damages, for which it intended to hold Eby liable. 

Id. at 1125 (quoting Allgood II, 959 F. Supp. at 1581). The court held that nothing

in Eby's acts or omissions could have justified Associated in believing that Eby

excused it from complying with the subcontract's notice provisions. Id. The court

therefore granted summary judgment to Eby on Associated's delay claims. Id.

Associated still had pending its claim for retainage, so the judgment was not

yet final. In July 1999 Eby voluntarily paid $231,820.09 of the retainage, rendering

that much of Associated's claim moot. Associated's only outstanding claims then
11

were for $23,943.28 of principal, interest on that amount, and interest on the

$231,820.09 from May 20, 1997, when it filed the claim, to July 1999. Eby moved

for summary judgment on the interest claim. The district court granted the motion,

holding that Associated had failed to satisfy three conditions precedent to Eby's

duty to pay the retainage: (1) Eby had not been paid the retainage by the owner;

(2) Associated had not executed and filed a release with Eby; and (3) all disputes

between the parties had not been settled, as the pendency of this case demonstrated. 

The court held that under Georgia law, prejudgment interest does not accrue until

all conditions precedent are satisfied, because no payment is due until then. 

Therefore, no interest was due, and Eby was entitled to summary judgment on the

prejudgment interest claim. 

The parties stipulated to dismiss those claims and counterclaims on which

the court had not yet ruled, and the court at last entered a final, appealable

judgment. 

I.

We review de novo the district court's grant of summary judgment. Allgood

I, 85 F.3d at 1551. Georgia law applies to this diversity contract dispute. Id.

Associated's argument for reversal on its delay damages claim is very similar

to the argument Allgood made and lost before this court. Allgood argued that
12

section 11 of the subcontract required notice within ten days of the

"commencement of damages," not within ten days of an event that might later

cause damages. Allgood argued that while it knew there were delays from the very

beginning of the project, those delays could not amount to damages until expiration

of the scheduled completion date; therefore, there was no duty to give notice until

that time. The district court held that the two-tier notice requirements of section 11

required Allgood to give notice both at the time it began to incur damages and at

the time they became quantifiable, Allgood II, 959 F. Supp. at 1580, and we

affirmed, 137 F.3d 1356 (table), No. 97-8555 (11th Cir. Feb. 24, 1998). 

Associated relies on the same “commencement of damages” language and

also admits that it knew of certain delays as early as May and June 1990. See First

Amended Complaint ¶ 13 (detailing delay and disruption during start-up portion of

work in May-July). It argues the delays did not constitute damages because

Associated and Eby both hoped that the early schedule slippage might be recouped. 

This is just a variation on the argument rejected in Allgood II, that damages did not

commence until it was possible to quantify them. Associated is arguing that the

delays it admittedly endured from May through July might have been mitigated,

thus reducing or even eliminating the final bill it presented to Eby. Eby responds

that it was patently impossible for the damages to be eliminated, since once the
1

This document was an exhibit to the Second Affidavit of Associated's President Clement

Mitchell.

13

equipment had sat idle and the overhead had accrued, damages had commenced. 

But even without relying on Eby's reasoning, it is clear from the two-tier notice

scheme, as well as the short, ten-day time limit, that the subcontract required

Associated to give notice when it incurred damage, without waiting to see whether

mitigation efforts would be successful. 

But even assuming that Associated failed to give timely notice for the delays

suffered from May through July 1990 and that damages for such delays are not

recoverable, from the record before us it appears that those damages are a small

part of the total damages Associated claims for delay and disruption. By way of

illustration, the district court held that at the September 20, 1990 project meeting

the parties estimated the length of delay at twenty-nine days. 983 F. Supp. at 1124. 

In contrast, Associated's request for equitable adjustment,1

 filed at the end of the

project, sought a 462-day time extension and $737,343.96 in delay costs, which it

attributed to a myriad of things gone wrong on the project. Associated could not

have suffered 462 days of delay between May and July 1990. Associated

summarized the causes of the delays as (1) delays associated with the masonry

subcontractor; (2) inadequate specifications which required over 125 requests for
14

information and several change orders; (3) failure by the owner and by Eby to

grant time extensions and other directions by Eby that caused Associated to have to

accelerate some work and delay other work; and (4) scheduling problems that

caused Associated to have to perform out-of-sequence work in congested areas. 

It is obvious that many of these problems occurred after the May-July 1990 period. 

For example, the project meeting minutes for November 13, 1990 state: “Have

received receipt for notification for default to masonry subcontractor.” The

problems attributable to the defective work and eventual default of the masonry

subcontractor allegedly lasted well into 1991. The request for adjustment was

replete with copies of correspondence in which Associated notified Eby of ongoing

problems from November 8, 1990 to August 4, 1992. As Associated argued

below:

[Associated's] uncontroverted evidence is that the events which

resulted in damage to [Associated] were not those which initially

postponed [Associated's] mobilization, but rather those which

evidenced Eby's failure to fulfill its obligation (and repeated

commitment) to overcome the schedule slippage, to return the Project

to the planned sequencing of work, and to correct the problems which

arose on the Project in the course of construction due to Eby's and one

or more of its subcontractors' failure to perform. . . . The situation was

exacerbated in the fall of 1990 by the default of Eby's masonry

subcontractor and Eby's own failure to properly administer the

submittal process. 
2

Eby contends that the affidavits of Daniel R. Harrity, Associated's senior project

manager, and Kenneth Yakel, Associated's senior officer in charge of the Dooly project, are not

based on personal knowledge to the extent they discuss what occurred at project meetings they

did not attend. Both affiants appended to their affidavits project meeting minutes, apparently

prepared and distributed by Eby, which would seem to be admissions of a party. In any case, no

aspect of our holding depends upon any part of these affidavits that interprets the meeting

minutes. 

15

These events occurring after the May-July 1990 period were not related to those in

the earlier period. The language in section 11 of the subcontract states that to

preserve any claim for damage, the subcontractor must file its claim in writing

within ten days from the commencement of the alleged damage. The timeliness of

claims based not on the postponed mobilization, but on discrete events such as the

default of the masonry subcontractor, must be evaluated separately from those

based on the late start. Because the district court does not appear to have taken

into account these damages which were caused by events after July, we must

remand for the district court (or the trier of fact, if there is a disputed issue of fact)

to determine which claims were barred by failure to give timely notice and which

were preserved. 

 Associated contends that Eby’s actual knowledge of delays2

 in the May-July

period satisfies Associated’s contractual obligation to notify Eby under Georgia

law. Associated cites APAC-Georgia, Inc. v. Dep’t of Transp., 472 S.E.2d 97, 99-

100 (Ga. Ct. App. 1996), in which the court stated: “The key issue is whether DOT
16

had actual notice of the delays for which APAC seeks damages.” In this case,

however, actual knowledge of the fact of delay would not satisfy the purpose of the

notice provision in the contract. In contrast to the owner-prime contactor situation

in APAC, the contract in this case is a subcontract which explicitly takes into

account the prime contractor’s obligations under the prime contract. The

subcontract incorporated the prime contract, under which Eby was required to

notify the owner of any claim for damages within fifteen days of the occurrence of

the event on which the claim was based. Reading the two contracts together, it is

clear that one function of the notice provisions in the subcontract is to permit the

prime contractor to include subcontractors’ claims in its own notice to the owner. 

For this reason, the contract between Eby and Associated must be read to require

notice that the subcontractor intends to claim damages for the delay, rather than

simple notice of the fact of delay. Therefore, we must affirm the summary

judgment as to Associated’s claim for damages resulting from the delays during the

May-July period and reverse as to the claim for damages caused by events after

that period. 

II.

The district court held that no interest was due on the retainage Eby paid to

Associated in July 1999 because Associated had failed to satisfy three conditions
17

precedent to Eby's obligation to pay retainage, and therefore the claim had not

matured. Associated attacks the notion that any of the three clauses bars recovery,

but we need not deal with all these arguments, since we must affirm if the district

court was correct that even one clause was an unsatisfied condition precedent. 

Section 14(5) of the subcontract stated: "The retained percentage and/or

final progress payment shall be paid to the Subcontractor after . . . (5) all disputes,

claims, liens, causes of action and/or lawsuits which are related in any way to this

Subcontract or Subcontractor's performance of the Work are resolved." The

pendency of this appeal demonstrates that all lawsuits related to the subcontract

have not been resolved. The condition stated in the subcontract was not fulfilled

and payment of the retainage was not due. Therefore, interest did not accrue on it.

Associated argues that section 14(5) does not state a condition precedent, but

is only a timing provision. This does not gain Associated any ground because

whether it is a condition precedent or a timing provision, it points to payment at a

time that has not yet come, and interest would not accrue before payment is due. 

Associated's argumentation on this point is far too sketchy to establish a right to

interest. 

Associated also argues that, despite having pleaded failure to satisfy

conditions precedent as an affirmative defense, Eby waived this theory by failing
18

to plead it with particularity, as required by Fed. R. Civ. P. 9(c). The specific

denial of performance of conditions precedent may be raised by motion as well as

by answer. EEOC v. Klingler Elec. Corp., 636 F.2d 104, 107 (5th Cir. 1981) (per

curiam); 2 James Wm. Moore, Moore's Federal Practice § 9.04[3] (3d ed. 2001). 

There can be no doubt that Eby articulated the failure to satisfy section 14(5) in its

fourth summary judgment motion and memorandum in support. Eby did not waive

its rights under section 14(5). 

 * * *

 We REVERSE and REMAND the judgment of the district court as to

Associated's claim for delay damages based on events after the May-July 1990 period,

AFFIRM as to its claim for damages arising during that period, and AFFIRM as to

its claim for interest on the retainage.