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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA for

the use and benefit of GELCO

SERVICES, INC., an Oregon

Corporation,

Plaintiff,

v.

EAI INTERNATIONAL, INC., A

California Corporation; THE

REVEREND EDWARD V. HILL, aka

THE ESTATE OF REVEREND V. HILL;

THELMA MAGNO, an individual;

and DOES 2-50,

Defendants.

CIV S-04-0814 DFL PAN 

FINDINGS AND RECOMMENDATIONS

—NFN—

Pursuant to E. D. Cal. L. R. 72-302(c)(19), the Honorable

David F. Levi referred to this court for findings and

recommendations the calculation of plaintiff’s damages for

purposes of entering default judgment against defendant Thelma

Magno. Fed. R. Civ. P. 55(b)(2). 

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1 As the documents submitted by plaintiff are not clearly marked as

separate exhibits, the court references them by docket number.

2

In this action under the Miller Act, 40 U.S.C. § 270a et

seq., plaintiff seeks damages under a contract between the U.S.

Air Force and EAI International, Inc., pursuant to which

plaintiff subcontracted with EAI to perform sewer work at Travis

Air Force Base. EAI has filed Chapter 11 bankruptcy; plaintiff

and defendant surety Estate of Reverend Edward V. Hill settled

for $10,000.00; plaintiff proceeds against remaining defendant

and surety Thelma Magno, the Chief Financial Officer and majority

shareholder of EAI. 

Judge Levi found entry of judgment against Magno appropriate

but seeks this court’s assessment of plaintiff’s damages. 

Plaintiff has submitted additional documentation in support of

its claim.

This court makes the following findings:

1. On November 12, 2002, plaintiff subcontracted with EAI to

repair the sanitary service system at Travis Air Force Base.

See Standard Subcontract Agreement executed by EAI President Daniel S.

Esparza and Kelly Odell, Vice President of Gelco Services, Inc., citing

Contract No. FO4626-02-C-0107 (Docket Entry 33);1 Affidavit of Kelly

Odell (Docket Entry 35, pp. 8-9).

2. On February 7, 2003, defendant Thelma Magno agreed to act as

surety for EAI pursuant to its contract with Travis Air

Force Base.

See Payment Bond executed by EAI President Daniel S. Esparza and Thelma

Magno, citing Contract No. FO4626-02-C-0107 (Docket Entry 34, pp. 1-2).

3. Plaintiff fully performed its work at Travis Air Force Base

by May 22, 2003, but EAI failed to compensate plaintiff the

remaining principal amount of $195,179.35. 

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2 Plaintiff has submitted and this court has reviewed conforming

invoices and billing statements for Invoices 20317, 03-1049 and 03-179 (the

invoices that were not fully paid).

3

See Complaint filed April 23, 2004, paras. 9 & 10.

4. As a result of plaintiff’s $10,000.00 settlement with the

Estate of Reverend V. Hill (Hill was another surety for

EAI), plaintiff seeks damages from Magno in the amount of

$185,179.35. 

See Documents in Support of Entry of Judgment Against Defendant Thelma

Magno (Docket Entries 31 & 32, paras. 3, 4 & 5); Settlement of Claim

(Docket Entry 34, p. 5); Affidavit of Karen Wilcke, Controller for Gelco

Services, Inc. (Docket Entry 34, p. 6-7).

5. The principal amount of $185,179.35 is calculated as

follows:

2

Current Total

Date & Invoice # Billed Paid Balance Balance

12-2002 #20317 $30.296.00 

 ($20,000.00) 

 (1-13-03)

 ($10,000.00)

 (3-30-03 

 Settlement)

 $296.00 $296.00

2-2003 #03-1020 $93,697.00 

 ($93,697.00)

 (3-11-03)

 $296.00

3-2003 #03-1033 $213,048.00 

 ($213,048.00)

 (3-28-03)

 $296.00

4-2005 #03-1049 $228,654.35 

 ($130,000.00)

 (6-13-03)

 $98,654.35 $98,950.35

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3 “Allowance of pre-judgment interest to a Miller Act plaintiff is an

issue of federal law. However, since the Miller Act says nothing about

interest, we look to state law as a matter of convenience and practicality.” 

U.S. ex rel. Bartec Industries, Inc. v. United Pacific Co., 976 F.2d 1274,

1279 (9th Cir. 1992), as amended, 15 F.3d 855, 856 (9th Cir. 1994) (citations

and internal quotations omitted). “Under California law prejudgment interest

is available if the damages awarded are certain, or capable of being made

certain by calculation. Cal. Civ. Code § 3287(a). Certainty in this context

requires that (1) ... the debtor knows the amount owed or (2) ... the debtor

would be able to compute the damages.” Bartec, 15 F.3d at 856 (citations and

internal quotations omitted). Plaintiff’s invoices clearly state entitlement

to 1.5% interest per month for unpaid balances. Cf., U.S. for Use and Benefit

of Hawaiian Rock Products Corp. v. A.E. Lopez Enterprises, Ltd., 74 F.3d 972,

976 (9th Cir. 1996) (noting contract terms regarding past due interest were

clearly stated on invoices).

4 The “American Rule” provides that attorney’s fees are not ordinarily

recoverable in the absence of a statute or enforceable contract and this rule

governs the award of attorney’s fees in Miller Act cases. F .D. Rich Co. v.

United States ex. rel. Indus. Lumber Co., 417 U.S. 116, 126 (1974). The

parties contract provides for “full compensation” of attorney’s fees and costs

“incurred in good faith” pursuant to litigation. See Standard Subcontract

Agreement, § 24 (Docket Entry 33, at p. 9).

4

Current Total

Date & Invoice # Billed Paid Balance Balance

6-2005 #03-1079 $86,229.00 

 ($0)

 $86,229.00 $185,179.35

6. Plaintiff has demonstrated entitlement to an award of damages

in the principal amount of $185,179.35. 

Accordingly, the court recommends damages be awarded to

plaintiff in the principal amount of $185,179.35. The court

further recommends an award of prejudgment interest at the rate

of 1.50%3 and postjudgment interest pursuant to 28 U.S.C. § 1961

at the rate of 3.82%. The court also recommends an award of

reasonable attorney fees and costs4 although plaintiff has not

submitted those amounts.

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5

These findings and recommendations are submitted to the

Honorable David F. Levi, the United States District Judge

assigned to this case. 28 U.S.C. § 636(b)(l). Written

objections may be filed within ten days after being served with

these findings and recommendations. The document should be

captioned “Objections to Magistrate Judge’s Findings and

Recommendations.” The failure to file objections within the

specified time may waive the right to appeal the District Court’s

order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

Dated: September 29, 2005. 

 /s/ Peter A. Nowinski 

 PETER A. NOWINSKI

 Magistrate Judge

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