Opinion ID: 380487
Heading Depth: 1
Heading Rank: 3

Heading: the adequacy of the evidence.

Text: 15 The Board next challenges three major conclusions of the district court as unsupported by the evidence introduced at trial. We will address each contention in turn. 16 At trial, the issue which consumed the greatest amount of time was the Board's contention that MBM's billing of 22% of its salary expense as fringe benefit costs overstated the actual amount of these costs, and thus violated the contract provision that the bills were to include mandatory employment costs . . . and no other expenses. MBM presented substantial evidence that it was the established custom and usage in the construction industry throughout the United States, including Chicago, to bill fringe benefit costs as a set percentage of salary expense. This is done because of the impossibility of accurately computing the actual costs until well, often years, after the construction project is completed and the expenses have accrued. The district court agreed that this was a well established custom which must be read into the contract in light of the fact that the contract contained no contrary computation method, and that 22% was a fair and reasonable percentage to apply. We agree. 17 MBM's evidence concerning the custom and usage, some of which was from a study done for the Board by Arthur Anderson & Co., went, except for an unsupported and summary allegation, uncontested by the Board. MBM revealed, in fact that the 22% amount was approved by the Board's own representative, Mattox. 6 The Board's proof on the other hand, went to show that the actual costs to MBM of fringe benefits were closer to 19% of MBM's salary expense and, thus, the Board had been overbilled. MBM replied showing inconsistencies in the Board's computations and asserting that even utilizing the Board's formula the actual fringe benefit costs exceeded 22%. Given this conflicting evidence and realizing that the computation of actual expenses need not have been involved due to the lack of a Board response to MBM's custom and usage argument, we hold that the district court was not in error when it concluded that MBM did not violate the contract by billing in this manner, and that 22% was a fair and reasonable percentage to apply. The Omnidata Personnel 18 The Board next contends MBM violated the contract by billing as its own employees computer personnel who were actually employees of a separate corporation, the Omnidata Corporation. At the time of the negotiation of the contract, MBM informed the Board that it was going to acquire Omnidata as a wholly-owned subsidiary. The contract provides, in fact, that MBM may bill for its own employees and those of wholly-owned subsidiaries, but no others. Due to technicalities and difficulties apparently surrounding Omnidata's outstanding debt, the merger between it and MBM did not take place. However, Omnidata personnel and its computer shared office space with MBM in New York and were treated by all parties, for practical purposes, as a division of MBM. Eventually, after the time period relevant here. Omnidata went out of business and MBM formally hired the Omnidata employees and purchased its computer. 19 The Board may well be correct in pointing out that the billing of Omnidata personnel as MBM employees technically violated the contract provisions. However, we disagree that this technical violation is of any consequence for the record demonstrates that the parties knew the use of the computer was a practical necessity for MBM to meet its contract obligations. 7 Had MBM not billed the Omnidata personnel as its own, it would have had to have made other arrangements for the performance of these necessary services, i. e.. formally hiring Omnidata or equivalent personnel. We fail to see how the Board was damaged by the failure of MBM to go through the technical step of actually hiring the Omnidata employees when the record is clear that both parties thought that Omnidata would function as a subsidiary, that the merger was held up due to circumstances totally unrelated to the rehabilitation project, and where there is no allegation that MBM charged an unreasonable amount for the computer services. Furthermore, there was evidence submitted that the use of Omnidata personnel was known to the Board's representative, Maddox, and that he approved this procedure. In light of these considerations, we hold that the district court did not commit error in its decision on this matter. Senior Staffing Decisions 20 The Board next complains that MBM overbilled by employing a greater number of senior staff personnel than provided for in the contract. MBM answered that the contract nowhere states that the listed positions were to be a limitation on the maximum number of employees MBM was allowed to employ, and that all staffing decisions and changes, including additions, were submitted to and approved by Mattox. MBM also points out that the Board paid all bills submitted to it which clearly delineated the employees' names whose work was included in the bill as well as the employees' positions, hours worked, and hourly rate. The Board replies that Mattox had no authority to approve additions to the senior staff, only replacements, and suggests that Mattox's approval of these decisions was obtained only after undue influence was exercised by MBM over Mattox at various business lunches. 21 We agree with the plaintiffs and the district court that the contract does not state that the listed positions were intended to serve as the maximum number of such positions allowable, or that MBM was precluded from using additional staff. The record also demonstrates that all additions to the staff were approved, and sometimes even requested by the Board through Mattox. Although the Board is correct in pointing out that the contract explicitly grants Mattox only the power to approve replacements in the senior staff, the Board apparently ignores the fact that Mattox was the third highest ranking individual in the Board's hierarchy and the one individual who was primarily responsible for the performance of the contract and of the rehabilitation program as a whole. Mattox clearly was clothed with the apparent authority to act for the Board in these ongoing personnel decisions in addition to his other duties explicitly mentioned in the contract. Nothing in the contract indicates otherwise. 8 22 Furthermore, the record does not support the Board in its broad and summary accusations that MBM exercised undue influence over Mattox, even assuming such an occurrence could somehow allow the Board to escape liability for the acts of its agents and officials occurring in the performance of their apparent duties. In sum, the record is clear that all staffing decisions were made with the approval and even at the request of the Board's agent, Mattox, and there has been no showing that such additions violated the express terms of the contract. Moreover, all bills setting forth the amounts charged for these additional individuals were paid by the Board after the approval of at least three Board officials. We, therefore, hold that the district court committed no error in finding that MBM properly received payment for these additional senior management personnel. 23