1Roger L. Wollman became Chief Judge of the United States Court of Appeals

for the Eighth Circuit on April 24, 1999.

2The Honorable Charles R. Wolle, United States District Judge for the Southern

District of Iowa, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 98-3626

___________

R. M. Taylor, Inc., a Missouri *

corporation, *

*

Appellee, *

* Appeal from the United States

v. * District Court for the

* Western District of Missouri.

General Motors Corporation, a *

Delaware corporation, *

*

Appellant. *

___________

Submitted: April 21, 1999

Filed: August 13, 1999

___________

Before RICHARD S. ARNOLD and WOLLMAN,1 Circuit Judges, and

WOLLE,2 District Judge.

___________
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WOLLMAN, Chief Judge.

General Motors Corp. (GM) appeals from the denial of its motion for judgment

as a matter of law following a jury verdict in favor of R.M. Taylor, Inc. (RMT), which

found that GM had impliedly abandoned construction contracts with RMT. We reverse

and remand.

I.

RMT entered into contracts to design and construct conveyor systems at several

GM plants. Each contract contained the following provision:

The Owner (GM) shall have the right at any time to require alterations in,

additions to and deductions from the work shown on the Drawings or

described in the Specification without rendering void the Contract. . . . All

changes shall be described in an Emergency Field Order or Bulletin issued

by the Owner. Receipt of Drawings or verbal orders shall not constitute

authority to proceed with changes in the work. An Emergency Field

Order authorizes the Contractor to proceed immediately with the work

described therein with the price to be determined. A BULLETIN IS A

REQUEST FOR QUOTATION. The Contractor shall not proceed with

the work described in the bulletin until the work is authorized by [a]n

Emergency Field Order, [a] Contract Supplement, or [a] Contract Change

Order.

GM Construction General Conditions (GM 1638) § 46.1, Appellant’s Appx. at 204.

The contracts also contained detailed provisions on the pricing of emergency field order

work. See id. §§ 46.2-46.4, Appellant’s Appx. at 204-08. Because RMT placed the

bids based on general drawings rather than customized designs for each plant, the

provisions regarding changes in the work were particularly important. 
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To receive periodic payments under the contracts, RMT was required to inform

GM of the status of its payments to subcontractors. See id. § 44.12, Appellant’s Appx.

at 203. This requirement was included because the subcontractors could file

mechanic’s liens against GM’s property if they were not paid by RMT. The contracts

allowed GM to withhold payments from RMT and make payments directly to the

subcontractors in the event RMT did not submit lien waivers showing that the

subcontractors had been paid. Id.

During the construction of the conveyor systems, GM ordered many changes

from the general drawings originally submitted by RMT. These changes were

implemented through bulletins and emergency field orders. The number of changes

ordered and overall increased costs of the projects were as follows:

Location Original Price Changes Final Price Increase

Arlington, TX $5,100,000 15 $5,949,173 16.7%

Bowling Green, KY $14,265,815 42 $16,935,183 18.7%

Doraville, GA $11,754,000 64 $24,308,493 106.8%

Pontiac East, MI $4,500,000 44 $5,540,506 23.1%

Shreveport, LA $2,710,089 5 $3,200,498 18.1%

Wentzville, MO $7,787,845 3 $9,600,000 23.3%

See Trial Tr. at 541 (Wentzville final price), 1246-50 (Arlington original price,

changes, and final price; Bowling Green original price, changes, and final price;

Doraville original price, changes, and final price; Pontiac East original price, changes,

and final price; Shreveport final price; Wentzville changes), 1578 (Shreveport original

price), 2372 (Shreveport changes); Def. Ex. 958A (Wentzville original price). 

Because bulletins were simply requests for quotations, RMT did not proceed

with additional work described in bulletins unless it chose to submit a quotation and

was awarded the additional work at that rate by GM. For emergency field orders,

however, the contracts required RMT to perform the additional work immediately and
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then negotiate with GM to obtain payment. The negotiation process required RMT to

provide GM’s local contract manager a quote for the emergency field order work. The

contract manager would then submit the quote to GM’s plant engineer and overall

project engineer for approval. GM could accept the quote or reject it and propose a

different amount for payment. If GM rejected the quote, the contract manager and

RMT’s project manager would meet to discuss the discrepancy and agree on a price,

which would be submitted to GM’s plant engineer and overall project engineer for

approval. This initial quotation process usually lasted between four and ten days. 

After the parties agreed on a quote, RMT would submit a formal invoice, a

sworn statement detailing the amounts to be paid to subcontractors, and the lien

waivers to GM’s contract manager. This documentation would then be submitted to

the GM engineers for approval. It would then be forwarded to GM’s accounting

department, whereupon the first official “receipt” of the invoice would be generated.

The documentation would then be returned to the contract manager for submission to

the local GM finance department, resulting in the issuance of a second receipt, which

would be sent to the GM disbursement department for payment. This process usually

lasted between two and four weeks from the time the parties agreed on a quote.

If the invoice was for more than $100,000, it would pass through the audit

department. If that department approved the invoice, the contract would be formally

amended and RMT would be paid. In such a case, the total processing time for the

invoice was three to six weeks from the time RMT provided GM’s local contract

manager with a quote for the emergency field order work. If the audit department

found a problem with the invoice or its supporting documentation, however, it would

return the materials to RMT for resubmission. In such a case, the total processing time

might extend to more than ten weeks. Once the invoice was formally approved and the

contract amended, GM had until the 25th of the following month to pay RMT.
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This negotiation process, as opposed to the bidding process used for bulletins,

required RMT to cover the additional expenses resulting from emergency field orders.

The longer GM negotiated the price of the field orders, the longer RMT was forced to

cover these expenses. As a result of these delays in payment, RMT was unable to pay

its subcontractors, and it ultimately brought suit against GM, alleging excessive

changes in the contracts and excessive delays in payment.

Count I of RMT’s complaint alleged that GM’s actions constituted a breach of

the contracts; Count II alleged that GM impliedly abandoned the contracts. Although

the jury heard evidence on both counts, the district court severed Count I “for separate

resolution” and submitted only Count II to the jury. The jury found implied

abandonment and awarded RMT quantum meruit damages of $21.5 million. The court

entered judgment on the verdict and denied GM’s renewed motion for judgment as a

matter of law.

II.

We review the denial of a motion for judgment as a matter of law de novo. See

Arthaud v. Mutual of Omaha Ins. Co., 170 F.3d 860, 862 (8th Cir. 1999). GM is

entitled to judgment as a matter of law “only if there was insufficient evidence to

support the jury verdict.” Id. We view all facts and resolve all conflicts in favor of

RMT in making this determination, giving it the benefit of all reasonable inferences.

See Varner v. National Super Markets, Inc., 94 F.3d 1209, 1212 (8th Cir. 1996). If the

evidence is such that no reasonable juror could have inferred an intent to abandon the

contracts, however, GM is entitled to judgment as a matter of law and we must reverse.

See id.

Because our jurisdiction is premised on diversity, we apply state substantive law

to RMT’s claim. See Zunamon v. Brown, 418 F.2d 883, 889 (8th Cir. 1969) (citing

Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). The district court correctly
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concluded that Michigan law controls under the choice-of-law provision agreed to by

the parties in the contracts. See Moses v. Union Pac. R.R., 64 F.3d 413, 418 (8th Cir.

1995) (holding that district courts must apply the choice-of-law rules of forum states);

Consolidated Fin. Inv., Inc. v. Manion, 948 S.W.2d 222, 224 (Mo. Ct. App. 1997)

(stating that Missouri courts defer to parties’ contractual choice-of-law provisions). 

“The abandonment of a contract is a matter of intention to be ascertained from

the facts and circumstances surrounding the transaction from which the abandonment

is claimed to have resulted.” Dault v. Schulte, 187 N.W.2d 914, 915 (Mich. Ct. App.

1971) (quoting 17 Am. Jur. 2d Contracts § 484 (now 17A Am. Jur. 2d Contracts § 543

(1991))). A party displays an intent to abandon if it “positively and absolutely refuses

to perform the conditions of the contract, such as a failure to make payments due,

accompanied by other circumstances, or where by [its] conduct [it] clearly shows an

intention to abandon the contract.” Collins v. Collins, 83 N.W.2d 213, 216-17 (Mich.

1957) (internal quotations omitted). Abandonment must be mutual, however; if one

party continues to perform under the contract after the other party exhibits an intent to

abandon, there has been no abandonment. See 17A Am. Jur. 2d Contracts § 543; see

also S. S. Silberblatt, Inc. v. Seaboard Sur. Co., 417 F.2d 1043, 1054-55 (8th Cir.

1969) (holding that abandonment requires mutual consent of the parties); Dault, 187

N.W.2d at 915-16 (finding that the parties abandoned the contract because one party

ordered work not contemplated in the contract and the other party “acquiesced” by

performing the non-contractual work rather than performing under the contract).

In support of the verdict, RMT argues that GM exhibited an intent to abandon

the contracts by ordering too many changes, using emergency field orders when it

should have used bulletins, and abusing the negotiation process to intentionally delay

payment of field orders and leverage RMT into accepting less for its work. We address

each argument in turn.
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A.

RMT contends that an intent to abandon the contracts can be inferred from GM’s

excessive and untimely use of emergency field orders. According to RMT, it “was

forced, by use of an economic hammer, to acquiesce to GM’s abandonment, not only

to its detriment but to its actual destruction.” Appellee’s Br. at 16. At trial, RMT’s

construction consultant Michael Callahan testified that change orders that raise project

costs by more than ten percent are typically considered unreasonable in the

construction industry. See Trial Tr. at 1253-56. In addition, Callahan stated that the

timing of GM’s field orders harmed RMT. See id. at 1257. 

RMT failed, however, to demonstrate that GM’s use of field orders evinced an

intent to abandon the contracts. To the contrary, because the contracts included

change-order clauses, GM acted in conformance with the terms of the contracts in

issuing field orders. The Michigan cases cited by RMT that find implied abandonment

are distinguishable because they did not involve contracts that included such clauses.

See Dault, 187 N.W.2d at 915; H.O. Brackney & Son v. Ryniewicz, 78 N.W.2d 127,

130 (Mich. 1956); Fenner v. Bolema Constr. Co., 47 N.W.2d 662, 664 (Mich. 1951).

Nonetheless, RMT maintains that GM abused the change-order provisions by

ordering changes outside the scope of the original contracts. RMT relies on cases from

jurisdictions that have expanded the abandonment doctrine to cases involving contracts

containing change-order clauses. See Peter Kiewit Sons’ Co. v. Summit Constr. Co.,

422 F.2d 242, 254-55 (8th Cir. 1969) (applying South Dakota law); C. Norman

Peterson Co. v. Container Corp. of Am., 218 Cal. Rptr. 592, 598 (Cal. Ct. App. 1985);

Bogert Constr. Co. v. Lakebrink, 404 S.W.2d 779, 782 (Mo. Ct. App. 1966); Schwartz

v. Shelby Constr. Co., 338 S.W.2d 781, 788-91 (Mo. 1960). The abandonment

doctrine has not been so expanded under Michigan law, and we will not expand an

equitable state law doctrine such as implied abandonment beyond the clear dictates of

state case law. See, e.g., Agrigenetics, Inc. v. Rose, 62 F.3d 268, 270-71 (8th Cir.
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1995) (refusing to apply an equitable doctrine in a diversity case because the state

courts had not recognized it); McIlheran v. Lincoln Nat’l Life Ins. Co., 31 F.3d 709,

711 (8th Cir. 1994) (same); cf. Adams Pub. Sch. Dist. v. Asbestos Corp., 7 F.3d 717,

719 (8th Cir. 1993) (applying an equitable doctrine even though the state courts had not

recognized it because the federal interest was “sufficiently strong”).

Even if it were held that excessive or untimely change orders could support a

finding of implied abandonment under Michigan law, the evidence does not support

such a finding in this case. The cases relied on by RMT involved far more egregious

facts. In Schwartz, changes were ordered nearly every day, including major structural

changes, and only once was a change order issued as required by the contract. See 338

S.W.2d at 788-89. In Bogert, there was no binding contract from the beginning

because the parties left material plans and specifications open for negotiation. See 404

S.W.2d at 781. Furthermore, the owner made extensive and frequent changes to the

plans without following contractual change-order procedures. See id. at 780-81. In C.

Norman Peterson “hundreds of changes” were ordered without following contractual

change-order procedures. See 218 Cal. Rptr. at 599.

Here, changes were contemplated from the beginning of the projects because

RMT placed the bids based on general rather than customized drawings. Further, GM

consistently followed the contractual procedure for ordering changes. Accordingly, the

changes did not go beyond the scope of the contracts. See Uhle v. Tarlton Corp., 938

S.W.2d 594, 597-99 (Mo. Ct. App. 1997) (finding no implied abandonment as a matter

of law because the contract contemplated changes and the parties followed contractual

change-order procedures); Oliver L. Taetz, Inc. v. Groff, 253 S.W.2d 824, 828 (Mo.

1953) (same).

In addition, RMT did not acquiesce in any attempt to abandon because it

believed the field order work was part of the contracts. Patrick Perry, RMT’s vice

president of sales and estimating, acknowledged that accepting bids based on general
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drawings was “inherently risky” because changes were always required in order to

customize the conveyor systems for each plant. See Trial Tr. at 1198-1200. Arthur

Bond, RMT’s vice president of system integration on the Shreveport project, testified

that “typically, in the course of a project, there are extras.” Id. at 2095. Bond also

stated that RMT knew about the need for changes and specifically requested “any and

all additional work that might be available.” Id. at 2120. According to Bond, RMT

placed attractive bids by using low profit margins and then recouped profits by doing

extra field order work that allowed for higher margins. See id. at 2095-97; see also

GM 1638 § 46.2, Appellant’s Appx. at 204 (allowing overhead and profit in the

payment of field orders). Unlike bulletins, which were competitively bid, RMT was

guaranteed to receive the emergency field order work. Accordingly, RMT may have

actually benefitted from GM’s use of field orders.

B.

Nor was there sufficient evidence to support RMT’s theory that GM exhibited

an intent to abandon the contracts by using emergency field orders in non-emergency

situations. An “emergency” is “an unforeseen combination of circumstances or the

resulting state that calls for immediate action,” “a pressing need,” or “a usually

distressing event or condition that can often be anticipated or prepared for but seldom

exactly foreseen.” Webster’s Third New Int’l Dictionary (1986). RMT does not cite

a different definition that is customary in the construction industry. Nor does the

evidence suggest that this definition was not met when GM issued emergency field

orders in this case. To the contrary, Mark Murray, RMT’s vice president of sales and

engineering on the Bowling Green project, testified that the forty-two change orders on

that project was not an unusually high number, “[e]specially since we were the only

conveyor contractor on the project.” Trial Tr. at 2277-78.
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C.

RMT also claims that GM’s delay in paying field orders constituted an implied

abandonment. It introduced evidence that John Gilpin, GM’s project director at

Doraville, believed that there were excessive payment delays for field orders on that

project. See id. at 399-406. GM argues that the district court erred by admitting the

Doraville evidence to show that it intended to abandon the contracts. 

Because the parties had settled the Doraville claim prior to trial, the court

granted GM summary judgment on that claim. See Order of Feb. 13, 1998, at 11. It

found that three small claims relating to the Doraville project had not been settled,

however, and preserved those claims for trial. See id. (discussing field orders 17A, 53,

and 54). The court proceeded to admit all of RMT’s Doraville evidence at trial on the

ground that it showed a pattern of conduct under Fed. R. Evid. 406. See Pre-Trial

Conf. Tr. at 37-38 (RMT’s counsel arguing for admission of the evidence under Rule

406 because it showed a habit or custom); Trial Tr. at 3-4 (court reiterating at the start

of trial that all Doraville evidence would be admitted to show a routine practice by

GM). We conclude that the court erred in admitting this evidence, for the record shows

that the three claims related to Doraville had all been settled and formally added to the

contract more than one year prior to trial. See Trial Tr. at 774, 1910; see also Def. Ex.

4330 (depicting the settlement amounts and contract revision numbers for field orders

17A, 53, and 54).

Even if it were held that the Doraville evidence was properly before the jury,

there would nonetheless be insufficient evidence of abandonment because RMT failed

to demonstrate that GM acted in a manner inconsistent with the terms of the contracts

in delaying payment on the field orders. The contracts did not require GM to pay for

emergency field order work immediately or within any specific amount of time. Rather,

they simply required GM to pay invoices by the 25th of the month following the month

in which they were formally approved. See GM 1638 § 44.14, Appellant’s Appx. at
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203. Scott Simkins, RMT’s accounts receivable manager, testified that GM

consistently abided by these payment terms. See Trial Tr. at 946-47. The only basis

for RMT’s claim, then, is that the lengthy negotiation process for approving invoices

was so excessive as to constitute an abandonment of the contracts.

We find this argument unpersuasive. RMT acknowledged that some of the delay

in approving invoices could have been due to its own delay in submitting quotes to

GM. See id. at 897-98. In addition, Simkins stated that the jury exhibits depicting the

time required for payment of field orders failed to account for the thirty to sixty day

“normal time lag” for approving invoices. Id. at 895.

Most importantly, the primary cause of the delay in payment was RMT’s own

failure to submit lien waivers from subcontractors. Simkins testified that on at least

three occasions RMT violated the contracts by failing to use the funds that GM had

provided to pay subcontractors. See id. at 944-45. As soon as RMT stopped paying

subcontractors, it was unable to send GM invoices because “there were no waivers of

lien.” Id. at 945. Under GM’s invoice-approval process, invoices that were not

accompanied by lien waivers were returned to RMT. Although this greatly increased

the time required for payment, the invoice-return policy was explicitly provided for in

the contracts, and RMT understood that lien waivers were required for payment under

the contracts and in the construction industry generally. See id. at 885-86. Thus, GM

was enforcing, rather than abandoning, the terms of the contracts in withholding

payments when RMT failed to provide lien waivers. 

Under Michigan law, courts are not to read out of contracts clauses that have

been freely negotiated and whose meaning is abundantly clear. See Whitaker v.

Citizens Ins. Co. of Am., 476 N.W.2d 161, 163 (Mich. Ct. App. 1991); General

Aviation, Inc. v. Cessna Aircraft Co., 915 F.2d 1038, 1041 (6th Cir. 1990) (applying

Michigan law). RMT was experienced in contract negotiation and had entered into

many contracts that contained change-order clauses. It could have avoided what it later
3

In light of our holding, GM’s motion to strike portions of RMT’s addendum and

brief is denied as moot.

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characterized as resulting unfairness by negotiating a different method of payment on

field orders. For example, RMT could have insisted on a provision requiring GM to

pay for “impact costs” caused by emergency field orders. See Uhle, 938 S.W.2d at

599 (stating that contractors can avoid inequity by including contractual provisions that

cover additional expenses caused by emergency field orders).

On the record before us, no reasonable juror could have found that GM intended

to abandon the contracts. Accordingly, GM was entitled to judgment as a matter of law

on Count II. The judgment is reversed, and the case is remanded for further

proceedings consistent with the views set forth in this opinion.3

A true copy.

Attest:

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