Opinion ID: 516924
Heading Depth: 1
Heading Rank: 4

Heading: Consequences of Contract and Negligence Determinations

Text: 86 We have concluded that under Delaware law Nemours has neither a third party beneficiary claim nor a negligence claim against Pierce. As a result, paragraph 1 of the final judgment which awards Nemours $19,045,982 plus post-judgment interest against Pierce must be reversed. This determination governs the disposition of certain other issues on these appeals. 87 Paragraph 1 of the final judgment also awards Nemours a similar recovery against Pierce's surety, Federal. Since Federal's liability to Nemours, if any, is completely derivative of Pierce's liability, the conclusion that Pierce is not liable to Nemours on a contract or tort theory relieves Federal of liability to Nemours. 4 88 The performance bond issued by Federal which named Pierce as principal and Gilbane as sole obligee provided as follows: 89 No right of action shall accrue on this bond to or for the use of any person or corporation other than the Obligee named herein or the heirs, executors, administrators or successors of the Obligee. 90 Federal argues persuasively on this appeal that the district court erred by holding that even in the face of this language Nemours was an intended third party beneficiary of the bond with enforceable rights thereunder. See, for example, Rush Presbyterian St. Luke's Med. Center v. Safeco Ins., 825 F.2d 1204 (7th Cir.1987). It would follow, Federal contends, that even if Pierce were held liable to Nemours on a third party beneficiary or negligence theory, Federal would not be liable to Nemours on the bond. However, in view of our finding with respect to Pierce's liability to Nemours, it is unnecessary to decide this issue. 91 Pierce and Federal contend that the jury's compensatory damage award was against the weight of the evidence and contrary to the trial court's instructions in that the award represented the exact amount which Nemours claimed for completion costs and failed to give Pierce any credit for its unpaid contract balance. Since the award in its entirety will be set aside, this contention need not be addressed. 92 During the trial Pierce offered as an expert witness its President and majority shareholder, Lewis Pierce. His expert testimony would have been directed to the issue of the reasonableness of Nemours' cost of completing the mechanical work. Nemours objected to this testimony, asserting that Mr. Pierce could not qualify as an expert under the Federal Rules because he is so biased, so partial. The court sustained the objection on that ground, although later in the proceedings the court noted that Mr. Pierce would not be of assistance to the trier of fact ... and any probative value would be outweighed given his position as a principal. This ruling is troublesome whether it is viewed as a holding that Mr. Pierce, because of his position as a principal, was not qualified to testify or whether it is viewed as an exercise of discretion under Evid. Rule 403. Again, in view of our previous determinations, it is not necessary to decide this question. 93 Paragraph 3 of the final judgment awards Nemours $1,000,000 in punitive damages against Pierce plus post-judgment interest. In view of our rulings on the liability issues, this award must be reversed. 94 In addition to punitive damages Paragraph 4 of the final judgment awards Nemours $1,042,311 for attorneys' fees and expert witnesses' and consultants' costs against Pierce plus post-judgment interest. Our rulings on the liability issues require that this award be reversed. Further, in a diversity case state law ordinarily governs the award of attorneys' fees. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 259 n. 31, 95 S.Ct. 1612, 1622 n. 31, 44 L.Ed.2d 141 (1975). We discern nothing in Delaware law which would permit recovery of attorneys' fees in the circumstances of this case. Stephenson v. Capano Development, Inc., 462 A.2d 1069 (Del.1983); Casson v. Nationwide Ins. Co., 455 A.2d 361 (Del.Super.1982). Even though this is a diversity case, the recovery of fees which a prevailing party pays to its expert witnesses and consultants is governed by federal law, namely, 28 U.S.C. Secs. 1821 and 1920. Dominic v. Hess Oil V.I. Corp., 841 F.2d 513, 517 (3d Cir.1988). The award of expert witness fees in this case was in excess of the amounts permitted by the statute.