1 The Honorable Harry F. Barnes, United St ates District Judge for the Western District of Arkansas. 

## United States Court of Appeals
FOR THE EIGHTH CIRCUIT

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Nos. 04-2405/2464

___________ Jet Asphalt & Rock Co., Inc., *

* Cross-Appellant/Appellee, * * Appeals from the United States v. * District Court for the * Western District of Arkansas. Angelo Iafrate Construction, LLC; * National Fire Insurance Company * of Hartford, *

* Appellants/Cross-Appellees. *

___________ Submitted: April 11, 2005 Filed: December 9, 2005

___________ Before COLLOTON, McMILLIAN, and BENTON, Circuit Judges.

___________ COLLOTON, Circuit Judge.

A jury found Angelo Iafrate Constructi on, LLC, and National Fire Insurance Company of Hartford (together, “Angelo Iafrate”) liable for breach of contract, awarding damages in the amount of $192,511.50 to Jet Asphalt & Rock Co., Inc. (“Jet Asphalt”). Angelo Iafrate appeals, contending that the district court 1 should have granted its motions for judgment as a matte r of law on Jet Asphalt’s breach of contract-2- claim and on Angelo Iafrate’s counterclai m for breach of contract. Jet Asphalt defends the district court’s judgment, but al so cross-appeals, arguing in the alternative that if the jury’s verdict is set aside, then the districtcourt’s judgment as a matter of law in favor of Angelo Iafrate on Je t Asphalt’s claim of common law fraud also should be reversed. We concl ude that the district court co rrectly determined that the resolution of this dispute turned on issues of fact that were properly submitted to a jury, and we therefore affirm the judgment.

I.

In 2000, Angelo Iafrate a nd Jet Asphalt were competi ng bidders for a contract with the State of Arkansas for work on a State Highway Commission (“Commission”) project known as the Bearden B ypass. Angelo Iafrate won the contract with a bid of approximately $6.4 million. Because the pr oject was funded partially by the federal government, Angelo Iafrate was require d to subcontract 10% of the work to disadvantaged business enterprises (“DBEs”) . DBEs are “for profit small business concern[s] . . . at least 51 percent owne d by one or more individuals who are both socially and economically disadvantaged” and managed by “one or more of the socially and economically disadvantaged i ndividuals who own it. ” (Appellant’s App. at 127).

Along with its bid, Angelo Iafrate submitted forms proposing the type and amount of work that would go to DBEs (“ DBE forms”). In its DBE forms, Angelo Iafrate proposed apportioning a total of $641,268.05 of work among several DBE
businesses. One of the DBEs named in Angelo Iafrate’s DBE forms was NKP Trucking (“NKP”), which was to perform hauling services valued at $361,727.00. According to the form, NKP was to haul construction materials, namely compacted embankment and mineral aggreg ate, at various stages of the project. The State approved Angelo Iafrate’s DB E forms, and Angelo Iafrate commenced work on the project.2 The parties agree that the provisi on was intended to read “$300,000,” not “$300,00,” and that the discrepancy was due to a typographical error.

-3- In April 2001, Angelo Iafrate subcontract ed a substantial portion of the Bearden Bypass work – about $2.6 million – to Je t Asphalt. The subcontract between Jet Asphalt and Angelo Iafrate incorporated by reference “all documents of the Prime Contract (including, but not limited to General, Supplementary, and Other Conditions).” ( Id . at 192). It also stipulated thatJet Asphalt “hereby affirms that [it] has examined all Contract Documents, and agrees that [it] will not plead unfamiliarity with any of said Documents in connec tion with any dispute which may arise hereunder or in connecti on with any claim for extra compensation.” (Id .). The subcontract provided that Jet Asphalt “shall be bound to the same extent that [Angelo Iafrate] is bound by each and ev ery covenant, obligation, and provision of the Prime Contract insofar as the same is appli cable to the work” of Jet Asphalt. ( Id .).

Two provisions of the subcontract addre ssed Jet Asphalt’s use of DBEs. In the sixth of a series of “Special Provisions” a ttached to the subcontract (“special provision six”), Jet Asphalt promised to “provide a minimum of $300,00[0] 2dollars of minority business enterprise participati on from certified companies.” ( Id . at 203). Additionally, section 103.08(b)(4) provided as follows:

No work shall be performed by the Contractor or any subcontractor on items originally committed to or included in a subcontract (including purchase orders or other written agr eements) with a DBE without prior written approval by the Department. Payments to the Contractor will be withheld or previous payments r ecovered by the Department in amounts equivalent to that portion of the s ubcontract with a DBE in which . . . [t]he Contractor or any subcontract or performs any portion of the work to be accomplished by a DBE without prior written approval by the Department.

( Id . at 126-27).3 The $5,000 discrepancy between the amountwithheld by the State in the change order ($290,367.70) and the amountwithheld from Jet Asphalt by Angelo Iafrate ($295,375.04) was explained, at leas t initially, by a modification to the change order. An earlier version of the changeorder had withheld $55,683.19 due to Angelo Iafrate’s failure to fully u tilize W Trucking. After Angelo Iafrate subsequently paid W Trucking $5,007.35 for additional work, the withheld amount was reduced to $50,675.84. Angelo Iafrate, however, still withheld the amount of the original change order from Jet Asphalt.

-4- At the time that Angelo Iafrate subc ontracted the remaining work on the Bearden Bypass to Jet Asphalt, NKP had performed only one of the hauling tasks that Angelo Iafrate’s DBE form had assigned to it. NKP had hauled compacted embankment but had not hauled mineral a ggregate. Jet Asphalt subcontracted with a different trucking company, Anders Trucking (“Anders”), to haul mineral aggregate for the project. Anders performed the hauling work, and th e Bearden Bypass was successfully completed.

On July 30, 2002, the Highway Department issued a change order deducting $290,367.70 from Angelo Iafrate’s compensation. The deduction was attributed to three causes. “Failure to use NKP Trucking” accounted for a deduction of $235,727.00; “[f]ailure to fully utilize W Trucking,” another DBE contractor, accounted for a deduction of $50,683.19; and the lack of a purchase order agreement or subcontract with a th ird DBE contractor, Camden Concrete, accounted for the remaining $3,964.86 of the deduction. ( Id . at 208). According to the change order, all of these deductions were due either to Angelo Iafrate’s failure “to utilize DBE’s on items originally committed to DBE’s w ithout prior written approval,” or to its failure to provide adequatedocumentation for work to be performed by a DBE. ( Id

. at 207). Angelo Iafrate then withhe ld $295,375.04 in payment from Jet Asphalt. 3

In November 2002, Jet Asphalt brought su it against Angelo Iafrate in the district court, alleging that the company had breached its contract with Jet Asphalt by withholding the $295,375.04. Jet Asphalt also alleged, in the amended version of its-5- complaint, that Angelo Iafrate committed the torts of deceit and fraudulent inducement. Angelo Iafrate answered a nd counterclaimed for breach of contract, alleging that Jet Asphalt had breached the subcontract by failing to use an approved DBE subcontractor, and that this breachhad caused the State to withhold the $295,375.04. These claims were tried to a ju ry on May 3-4, 2004. At the end of Jet Asphalt’s case, the district court granted Angelo Iafrate’s motion for judgment as a matter of law as to the tort claims, but de nied its motion as to the breach of contract claims. The district court similarly de nied Angelo Iafrate’s renewed motion for judgment as a matter of law. The jury return ed a verdict in favor of Jet Asphalt on Jet Asphalt’s breach of contract claim agains t Angelo Iafrate, and awarded damages of $192,511.50. The district court entered ju dgment for Jet Asphalt, and both parties appealed.

II.

Angelo Iafrate contends that the di strict court erred by submitting the breach of contract claims to the jury. Angelo Ia frate maintains that the contract between it and Jet Asphalt was unambiguous, and that its interpretation was therefore a question of law to be decided by the district court. We review a district court’s denial of a motion for judgment as a matter of law de novo , applying the same standard as the district court. Wash Solutions, Inc. v. PDQ Mfg., Inc. , 395 F.3d 888, 892 (8th Cir. 2005). Judgment as a matter of law is appropriate only when there is “no legally sufficient evidentiary basis” on which a r easonable jury could find for the non-moving party. Fed. R. Civ. P. 50(a)(1); Wash Solutions , 395 F.3d at 892. Under Arkansas law, the determination whether a contractis ambiguous is a question of law. Pittman
v. Pittman , 139 S.W.3d 134, 136-37 (Ark. Ct. App. 2003). Unambiguous contracts are construed as a matter of law, while the meanings of ambiguous contracts are determined by the finder of fact. Id

.-6- At trial, Angelo Iafrate argued that Je t Asphalt had failed to comply with two contract provisions. First, it urged that Jet Asphalt had breached special provision six, which specified that Jet Asphalt was to “p rovide a minimum of $300,00[0] dollars of minority business enterprise participati on from certified companies.” (Appellant’s App. at 203). We agree with the districtcourt that whether Jet Asphalt breached this provision was a question of fact properly submitted to the jury. To Angelo Iafrate, the term “certified companies” means minority or disadvantaged business enterprises approved by the Highway Department for work on the Bearden Bypass project. But the evidence revealed ambiguity. The Highway Department maintains a list of companies that are “certified” as minority business enterp rises, independent of any particular project. (Tr. 58). Any of th ese companies then may be approved for work on a specific project, and the Department’s w itness even testified that, “I don’t believe certified is a correct term” for this approval pr ocess. (Tr. 59). At best, therefore, it is unclear from the plain language of the contract whether Jet Asphalt was obliged to use companies certified from the State’s mast er list (which included Anders, Tr. 58), or companies approved or “certified” sp ecifically for the Bearden Bypass project ( i.e.
, NKP).

In addition, Jet Asphalt argued that even if “certified companies” in this prime contract meant only NKP Trucking, which ha d been approved by the State, then Jet Asphalt’s obligation to use NKP had been excused by Angelo Iafrate’s failure to obtain approval from the Department to subs titute Anders for NKP. Special provision six did not expressly contemplate substitute DBEs, and the subcontract did not allocate to either party responsibility fo r obtaining approval of a substitute DBE. There was testimony at trial that the prime c ontractor is generally responsible for such tasks. There was also testimony that Je t Asphalt informed Angelo Iafrate of its intention to use Anders to satisfy its DBE requirement.

Noting the contract’s silence on the subj ect of which party was responsible for obtaining approval for Anders, the district court concluded that “there is a fact-7- question based on . . . whose responsibility it was to get Anders approved by the state.” ( Id . at 287). The court characterized this question as a possible “latent ambiguity.” ( Id . at 284). A latent ambiguity “arises from undisclosed facts or uncertainties of the written instrument,” Coble v. Sexton , 27 S.W.3d 759, 761 (Ark. Ct. App. 2000), and parol evidence is admissi ble under Arkansas law to “bring out [a] latent ambiguity” in a contract. Countryside Cas. Co. v. Grant , 601 S.W.2d 875, 877 (Ark. 1980). In light of the testimony at trial regarding industry practice and the circumstances surrounding the signing of the subcontract, we agree with the district court that the responsibility for obtaining th is approval may have resided with Angelo Iafrate, and that Angelo Iafrate’s failure to do so might have excused Jet Asphalt’s performance under special provision six. Whether Jet Asphalt’s alleged noncompliance with special provision six constitu ted a breach of contract, therefore, was a question for the jury.

Second, Angelo Iafrate argued that Jet Asphalt breached section 103.08(b)(4) of the prime contract, which instructs in relevant part that “[n]o work shall be performed by the Contractor or any subc ontractor on items originally committed to or included in a subcontract (including pur chase orders or other written agreements) with a DBE without prior wr itten approval by the Department .” (Appellant’s App. at 126). Insofar as this provision applie d to the work of Jet Asphalt under the subcontract, Jet Asphalt was bound by its require ments. Angelo Ia frate urges that by using Anders to haul mineral aggregat e, Jet Asphalt performed work on an item “originally committed to . . . a DBE” (in this case NKP), without prior written approval by the Department, and thus breached the contract.

The district court concluded that although the literal terms of the contract were unambiguous, the agreement did not address issues surrounding the use of a DBE that was not approved in the prime contract. The court observed there was “no question” that “Angelo knew that Jet was going to us e Anders,” and that a jury should decide “who was responsible under the c ontract to begin the process to qualify Anders.” (Tr.-8- 283-84). We take this to be an invocation of the rule, long recognized in Arkansas, that a party may waive a breach of a condition set forth in a written contract by permitting the other party to proceed w ith performance of the contract after discovering the apparent breach. Grayson-McLeod Lumber Co . v. Slack-Kress Tie &
Stave Co. , 143 S.W. 581, 583 (Ark. 1912). The rule , as stated by the Supreme Court of Arkansas, is that “one party to a contract who, with knowledge of a breach by the other party, continues to accep t benefits under the contract, and suffers the other party to continue in performance thereof, waiv es the right to insist on the breach.” Southern Pipe Coating Inc. v. Spear & Wood Mfg. Co. , 363 S.W.2d 912, 914 (Ark. 1963); see also Stephens v. West Pontiac-GMC, Inc. , 647 S.W.2d 492, 493 (Ark. Ct. App. 1983); Fielding & Shepley, Inc. v. Dow , 163 P.2d 908, 909 (Cal. Dist. Ct. App. 1945); E. Allan Farnsworth, Farnsworth on Contracts § 8.5 (2d ed. 1998).

There was testimony in this case from Je t Asphalt’s president that when the subcontract was negotiated, he informed th e president of Angelo Iafrate that Jet Asphalt intended to use Anders Trucking as a DBE contractor, and that Angelo Iafrate’s president raised no objection. (Tr. 218-19). As the district court remarked, this evidence supported a finding that Ange lo Iafrate knew throughout the project that Jet Asphalt was making use of Anders, rath er than NKP, for the disputed hauling work. This evidence was received along withother testimony showing that the prime contractor, in this case Angelo Iafrate , typically bore responsibility for gaining approval of DBE contractors from the Highway Department. Under these circumstances, a jury reasonably could c onclude not only that Jet Asphalt informed Angelo Iafrate about the use of Anders Trucking, but that Ange lo Iafrate led Jet Asphalt to believe that use of Anders was agreeable, and that Angelo Iafrate was in the best position to resolve any approval requi rements with the State. We thus find no error in the district court’s decision to submit to the jury the question whether Jet Asphalt’s compliance with section 103.08(b)(4 ) was excused by events subsequent to the formation of the contract.-9- For the foregoing reasons, the judgment of the district court is affirmed.

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