Court Opinion

ID: 4196867
Source: CourtListenerOpinion
Date Created: 2017-08-17 17:01:12.523066+00
Date Added: 2024-06-11T14:40:20.937969
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                             Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                    File Name: 17a0185p.06

                   UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT

 EAGLE SUPPLY AND MANUFACTURING, L.P.,                 ┐
                              Plaintiff-Appellee,      │
                                                       │
                                                        >      No. 16-6428
        v.                                             │
                                                       │
                                                       │
 BECHTEL JACOBS COMPANY, LLC,                          │
                            Defendant-Appellant.       │
                                                       ┘

                         Appeal from the United States District Court
                      for the Eastern District of Tennessee at Knoxville.
                  No. 3:10-cv-00407—Pamela Lynn Reeves, District Judge.

                                  Argued: August 3, 2017

                            Decided and Filed: August 17, 2017

                  Before: SUTTON, McKEAGUE, and THAPAR, Circuit Judges.
                                _________________

                                        COUNSEL

ARGUED: Lochlin B. Samples, SMITH, CURRIE & HANCOCK, LLP, Atlanta, Georgia, for
Appellant. Brian G. Corgan, KILPATRICK TOWNSEND & STOCKTON, LLP, Atlanta,
Georgia, for Appellee. ON BRIEF: Lochlin B. Samples, Karl Frederick Dix, SMITH, CURRIE
& HANCOCK, LLP, Atlanta, Georgia, for Appellant. Brian G. Corgan, Ian M. Goldrich,
Reginald A. Williamson, KILPATRICK TOWNSEND & STOCKTON, LLP, Atlanta, Georgia,
for Appellee.
                                    _________________

                                         OPINION
                                    _________________

       THAPAR, Circuit Judge.      During World War II, the United States launched the
Manhattan Project—the military’s effort to build the world’s first atomic bomb. Building the
 No. 16-6428                  Eagle Supply & Mfg. v. Bechtel Jacobs Co.                     Page 2

bomb was a big project. Cleaning up afterward turned out to be a big one, too. Since the mid-
1980s, the Project’s original uranium-enrichment facilities in Oak Ridge, Tennessee, have been
inactive, and the Department of Energy (“DOE”) has worked to clean up the hazardous waste left
behind.

          This case arises out of that cleanup. To manage its effort, DOE hired Bechtel Jacobs
Company (“Bechtel”), a global engineering and construction firm. Bechtel, in turn, hired Eagle
Supply & Manufacturing (“Eagle”) to help decontaminate the complex. Circumstances changed,
and litigation ensued. Now, years after the work finished, Eagle and Bechtel continue to fight
over the payment owed for Eagle’s work, over the meaning of certain contractual provisions, and
even over what happened at the site. The district court found for Eagle, and Bechtel appealed.
We now affirm the district court’s award of damages and attorney’s fees to Eagle, but remand so
that the court can recalculate the interest to which Eagle is entitled under the Tennessee Prompt
Pay Act.

                                                  I.

          DOE hired Bechtel to clean up the uranium-enrichment site at Oak Ridge, with plans to
convert the area into a commercial industrial park. That required not only the demolition of
buildings and equipment across the 2,200-acre complex but also the careful removal of
radioactive nuclear waste. After removing the waste, the team would need to decontaminate the
soil and groundwater to ensure that the site would be safe for redevelopment. In short, the Oak
Ridge project was a massive undertaking. Accordingly, Bechtel sought additional manpower
and requested bids from potential subcontractors.

          Eagle submitted one of those bids. Eagle relied on Bechtel’s forecasts for the project but
also factored in administrative costs and profit. As it turned out, one of Eagle’s competitors
submitted a cheaper bid, and another received a higher technical rating. But Bechtel determined
that Eagle promised the right balance of merit and price.              Bechtel also considered it
“advantageous” that Eagle was a federally certified small business and a Historically
Underutilized Business Zone contractor. Still Bechtel haggled after deciding that it would likely
award the subcontract to Eagle. Bechtel convinced Eagle to accept a price reduction of over
 No. 16-6428                 Eagle Supply & Mfg. v. Bechtel Jacobs Co.                      Page 3

$444,000, implying that Eagle would otherwise lose the bid. The two companies eventually
agreed to a fixed-price subcontract for the full cost of performing the demolition and
decontamination work.

       Unfortunately, things did not go as planned. Soon after the work began, the parties
realized that the project would be much more challenging and costly than they had anticipated.
At the first set of facilities, Eagle discovered that it would need to remove a lot more sediment
than expected. More sediment meant more employees. And to get more employees, Eagle had
to reallocate employees from another area of the project. This staffing adjustment forced Eagle
to abandon its original plan to tackle multiple areas simultaneously and resulted in delays and
increased costs.

       Shortly after the sediment setback, Bechtel announced a change to the security clearance
requirements for the main facility at issue in this case—the K-1004-L facility. Workers at K-
1004-L would now have to carry a higher security clearance and contend with an additional
security perimeter. This caused two problems: (1) increased congestion meant the work took
longer, and (2) increased security meant that Eagle had to hire new workers and subcontractors
with the requisite security clearance. Not surprisingly, Eagle soon exceeded its projected costs.

       The problems were not over. When Eagle began work on K-1004-L, it discovered
substantial amounts of asbestos and fluorine gas. These unanticipated hazards sidelined Eagle’s
crews while the company hired remediation experts.            And the new dangers meant more
protective gear, which in turn slowed down Eagle’s work.

       Meanwhile, over an eight-month period, Bechtel made over sixty modifications to the
subcontract’s mandatory contractor procedures.        These modifications affected nearly every
aspect of Eagle’s work—from environmental-health-and-safety requirements to personnel-
change procedures. Apart from Bechtel’s modifications, Eagle catalogued thirty-nine separate
incidents of site conditions that differed from the initial forecast. All in all, Eagle’s work proved
significantly more challenging and expensive than either party had anticipated.

       Changes happen—especially in long-term construction projects.                   Bechtel and
Eagle planned for that eventuality by including a “Changes” provision in their contract (GC-18).
 No. 16-6428                        Eagle Supply & Mfg. v. Bechtel Jacobs Co.                                     Page 4

GC-18 allowed Bechtel to make changes. But if those changes caused Eagle’s costs to increase,
GC-18 required Bechtel to make appropriate “equitable adjustment[s]” in price and time for
performance.

         So when the changes occurred, Eagle requested equitable adjustments. Bechtel, however,
dragged its feet on compensating Eagle for the overruns. When the financial burden became too
great, Eagle objected to continuing the project. Bechtel, in turn, threatened to terminate Eagle,
but ultimately agreed to pay Eagle’s immediate labor and materials costs for the duration of the
project. This preliminary payment only covered Eagle’s labor and materials—not overhead,
administrative expenses, or profit. So Eagle submitted another two requests for adjustment to its
bid price to cover these outstanding expenses. Eight years after completing its work at K-1004-
L—and still waiting to be paid for its requested price adjustments—Eagle filed this suit.

         Eagle alleges breach of contract and seeks compensation for its extra work on the Oak
Ridge project.         Specifically, Eagle seeks damages for the two “Requests for Equitable
Adjustment” that it submitted to Bechtel. The first addressed the additional costs that Eagle
incurred at the K-1004-L site (the parties call this the “Combined Changes REA”). Bechtel
conceded some equitable adjustment for these additional costs, but the parties were unable to
settle upon an appropriate figure. The second request sought a price adjustment for excess waste
that Eagle removed across the project (the parties call this “Waste Generation REA”). Bechtel
contests liability for this excess waste.

         The district court awarded Eagle the full amount of each request, plus interest and
attorney’s fees. Bechtel now appeals.

                                                             II.

                                                            A.

         Both parties agree that some amount is due to Eagle for cost overruns at the K-1004-L
site; the question is how much.1 In general, a court’s determination of the amount of an

         1
          In its reply brief, Bechtel suggests for the first time that it “is relieved of liability” for the cost overruns at
K-1004-L because Eagle failed to provide notice under SC-37. Reply Br. 8. Bechtel contends that SC-37 required
Eagle to provide notice when the subcontract work reached 75% of allocated funds. But the reply brief contradicts
 No. 16-6428                      Eagle Supply & Mfg. v. Bechtel Jacobs Co.                                   Page 5

equitable adjustment is one of fact. See United States v. Callahan Walker Constr. Co., 317 U.S.
56, 61 (1942). So we review an equitable adjustment for clear error, while we review any
conclusions of law de novo. Pressman v. Franklin Nat. Bank, 348 F.3d 182, 185 (6th Cir. 2004).
Moreover, where a district court’s findings of fact involve credibility determinations about
witness testimony, we accord even greater deference. Anderson v. City of Bessemer, 470 U.S.
564, 575 (1985). Such a credibility finding, “if not internally inconsistent, can virtually never be
clear error.” Id. (emphasis added).

         Here, the district court heard four days of testimony and combed through hundreds of
exhibits before finding that Eagle was entitled to the full payment it requested. Among other
evidence, the court relied upon payroll reports from Eagle’s accounting system, copies of
invoices for every payment Eagle now claimed, and equipment logs reflecting use and resulting
charges. Substantial evidence in the record supported the district court’s factual findings, and
thus, the K-1004-L damages award was not clearly erroneous.

         Bechtel insists that the district court’s award was too large and that the court unduly
relied on the testimony of two Eagle witnesses. Bechtel first complains that the court should
have disregarded the testimony of an Eagle employee who was not involved in reconstructing the
company’s costs.         But who prepared the estimates is not material to the court’s holistic
assessment of the amount due. Bechtel’s next target is a competitor of Eagle—who, interestingly
enough, testified on Eagle’s behalf—and who Bechtel complains produced a “technically
inferior” bid proposal. Why it matters that the competitor’s proposal was “inferior” is anybody’s
guess. Just because Bechtel did not like the competitor’s bid does not mean that its testimony is
irrelevant or incorrect. Indeed, one thing is clear: A competitor has little incentive to overstate
Eagle’s costs. In any event, neither gripe demonstrates that the damages award was clearly
erroneous.

Bechtel’s statement in its opening brief that “Eagle provided notice pursuant to SC-37” for the K-1004-L work, and
it is inconsistent with Bechtel’s concession throughout this litigation that it owed some amount for these cost
overruns. Appellant Br. 10; R. 166, PgID #1802. Regardless, Bechtel did not raise this argument until its reply
brief, and thus it is waived. Kuhn v. Washtenaw County, 709 F.3d 612, 623 (6th Cir. 2013) (“This court does not
usually consider issues raised for the first time on appeal in a reply brief, whether or not they were previously raised
in the district court.”).
 No. 16-6428                  Eagle Supply & Mfg. v. Bechtel Jacobs Co.                   Page 6

          Finally, Bechtel questions why the district court did not reduce the K-1004-L damages
award to account for Eagle’s “inefficiencies.” According to Bechtel, (1) Eagle’s subcontractor
cross-contaminated the project with asbestos and (2) missing equipment delayed Eagle’s work.
And, Bechtel says, these mistakes increased Eagle’s costs by 10%. But Bechtel’s only evidence
of cross-contamination is testimony from one Bechtel employee—and that testimony conflicts
with another Bechtel employee’s praise for Eagle’s performance throughout the same incident.
Yet another Bechtel employee contradicted the equipment-delay claim: He testified that, in each
instance, alternate equipment was available or the absent equipment was unnecessary at that
point in the project. The district judge was present for this evidence. She reached a conclusion
based on it. And Bechtel’s mere distaste for that conclusion does not make it clearly erroneous.

                                                 B.

          Bechtel disclaims any liability to Eagle for excess waste on two grounds. First, Bechtel
argues that Eagle did not give adequate notice that it was handling excess waste. Second,
Bechtel challenges the district court’s method of calculating the cost of the excess waste
equitable adjustment.

1. Notice

          In general, a subcontractor cannot bring an adjustment claim if it fails to adhere to a
contractual notice requirement. Big Chief Drilling Co. v. United States, 15 Cl. Ct. 295, 303
(1988).     But Bechtel has not identified any applicable notice requirement in the parties’
subcontract. Sure, the provision on “Changes,” GC-18, required Eagle to promptly request any
equitable adjustment arising from a Bechtel-imposed change order. See Ex. J-1 (Subcontract) at
10 (“Subcontractor must assert its right to an adjustment under this clause in writing within 10
days from the date of receipt of the written order.”). But the excess-waste adjustment request
was not a response to a Bechtel-change order—it addressed cost overruns caused by higher-than-
expected waste volumes at the work site. So GC-18 is out, and we are left without a clause in
which to anchor Bechtel’s notice requirement. This omission speaks volumes: Even Bechtel
cannot find that obligation in the subcontract. Perhaps general principles of contract law might
 No. 16-6428                       Eagle Supply & Mfg. v. Bechtel Jacobs Co.                                   Page 7

have filled the gap; Bechtel just does not tell us how. Instead, it offers a conclusory assertion
that Eagle breached an obligation that does not appear to exist; hardly a winning proposition.

         Moreover, Bechtel must prove both that Eagle failed to provide timely notice and that
Bechtel suffered prejudice as a result.2 Big Chief Drilling Co., 15 Cl. Ct. at 303. Bechtel says
that Eagle’s untimely notice prevented it from tracking the actual amount of waste Eagle
removed and limited its options for minimizing the associated costs. But Bechtel refers to
nothing in the record that supports either assertion. The burden of showing prejudice cannot be
satisfied with such conclusory statements. It takes evidence. Cf. Bowerman v. UAW Local No.
12, 646 F.3d 360, 370 (6th Cir. 2011) (explaining that “[m]ere conclusory statements” do not
satisfy a party’s burden of proof). Bechtel provides none.

2. Calculation of Damages for Excess Waste

         Bechtel also challenges the district court’s method of calculating Eagle’s excess-waste
damages. Calculation of damages is a determination of fact, subject to “the discretion and good
judgment of the fact finder as guided by the facts of the particular case.” Canderm Pharmacal,
Ltd. v. Elder Pharms., Inc., 862 F.2d 597, 606 (6th Cir. 1988) (citation omitted). We thus review
damages awards for clear error. Id.

         The district court failed to specify which method it used to calculate Eagle’s damages for
clearing excess waste. Courts generally have two options for calculating damages for equitable
adjustments where the actual costs cannot be documented: the “total-cost” method and the “jury-
verdict” method. Cavalier Clothes, Inc. v. United States, 51 Fed. Cl. 399, 417 (2001). Although
the court did not specify its methodology, both parties addressed the total-cost method in their
briefs. So we will too.

         2
           Bechtel suggests that, for contracts (like this one) with limitation-of-funds clauses, the subcontractor bears
the burden of proving that the contractor was not prejudiced by the untimely notice. The authority that Bechtel cites
does not support its position. Titan Corporation v. West never mentions the prejudice requirement. 129 F.3d 1479
(Fed. Cir. 1997). And International Science and Technology Institute, Inc. v. United States discusses whether
failure to provide notice can be excused if the government would likely have allowed the work to continue after
receiving notice. 53 Fed. Cl. 798, 807 (2002). But Bechtel never suggests that the government (or Bechtel) would
have directed Eagle to stop working, so this exception does not apply here. And the law is established that, outside
of that exception, the burden of proving prejudice sits with the contractor. See Big Chief Drilling Co., 15 Cl. Ct. at
303 (citing cases).
 No. 16-6428                 Eagle Supply & Mfg. v. Bechtel Jacobs Co.                     Page 8

       Under the total-cost method, damages are estimated according to “the difference between
[the] total costs incurred in performance of the contract and [the] bid price.” Id. Because this is
only an approximation, courts “require[] four indicia of reliability to be present before a
contractor may recover.” Id. at 418. The plaintiff must prove that “(1) the nature of the
particular losses make it impossible or highly impractical to determine them with a reasonable
degree of accuracy; (2) the plaintiff’s bid or estimate was realistic; (3) its actual costs are
reasonable; and (4) it was not responsible for the added expenses.” Id. (citation omitted).
Bechtel argues that Eagle came up short on each measure.

       First, Eagle had to show that it is “impossible or highly impractical” to prove the actual
amount of its losses. Throughout the project, Bechtel prescribed the waste-volume tracking
procedures. Initially, those procedures did not require Eagle to record actual waste volumes, so
Eagle did not. Later, Bechtel modified the procedures to require that Eagle track actual waste
volumes, so Eagle did. As a result, when it came time to calculate damages, Eagle could only
supply averages—not the actual volumes of waste that it removed throughout the project.
Bechtel suggests that Eagle theoretically could have tracked its actual volumes by employing a
different tracking method. But it is hard to fault Eagle for following the tracking procedures that
Bechtel prescribed. The district court apparently did not. And neither will we.

       Second, Eagle had to show that its original bid for the subcontract was realistic. The
purpose of this factor is to prevent a subcontractor from “get[ting] the benefit of increased
damages merely because it submitted an unreasonably low bid[.]” Id. Courts therefore assess
whether a bid is realistic by comparing it with its competition. Id. Here, Eagle’s bid was higher
than the lowest—and slightly higher than the government’s estimate for the project. It is true, as
Bechtel notes, that Eagle relied on Bechtel’s Waste General Forecasts, which Bechtel warned
bidders were provided for informational purposes only. But Eagle’s bid still fell comfortably
within the range of its competitors’. It was therefore not unrealistic.

       Third, Eagle had to show that its actual costs were reasonable. Eagle provided the district
court with substantial evidence to support its costs, including affidavits from truck loaders,
invoices, and employee timesheets.        Bechtel challenges Eagle’s calculation as “inherently
inaccurate,” because it relied in part on Eagle’s previous visual estimates of waste volume.
 No. 16-6428                 Eagle Supply & Mfg. v. Bechtel Jacobs Co.                       Page 9

Appellant Br. 47. But the district court needed only a “reasonable basis for computation,” even
if “approximate.” Hi-Shear Tech. Corp. v. United States, 356 F.3d 1372, 1381 (Fed. Cir. 2004)
(citation omitted). And the records Eagle provided were more than sufficient for that purpose.
Bechtel’s challenge is again little more than a disagreement with the district court’s conclusion.

       Finally, Eagle had to show that it was not responsible for the added expenses. The
district court found that increased performance costs were solely attributable to changed site
conditions, and it noted that one of Bechtel’s own employees praised Eagle for overcoming those
conditions. Bechtel, on the other hand, cites no evidence suggesting that Eagle contributed to the
excess waste or the costs associated with it.

       Neither of Bechtel’s challenges to the excess-waste damages holds water. Substantial
evidence supported the district court’s award, and we have no reason to displace it now.

                                                 III.

       Along with the two equitable adjustments, the district court awarded Eagle interest and
attorney’s fees under the Tennessee Prompt Pay Act. Under the Prompt Pay Act, a court must
award interest on overdue contractual payments. Tenn. Code. Ann. § 66-34-601. The Act also
permits a court to award attorney’s fees where one party acts in bad faith. Id. § 66-34-602(b).
Bechtel challenges the district court’s award of interest, the interest calculation, and the award of
attorney’s fees.

                                                 A.

       The Tennessee Prompt Pay Act requires a court to award interest on overdue payments
under a contract. Tenn. Code. Ann. § 66-34-601. This interest accrues from the date the
payment came due until the date the offending party finally pays up. Id. Bechtel challenges the
interest rate that the district court applied. Unless a contract requires the use of a different rate,
the Tennessee Prompt Pay Act instructs courts to apply the interest rate specified in Tennessee
Code § 47-14-121. Id. Neither party disputes that the statutory interest rate applies here. But in
the years between the formation of the parties’ subcontract and the start of this litigation,
Tennessee amended that rate. The question is therefore whether the original or amended rate
 No. 16-6428                     Eagle Supply & Mfg. v. Bechtel Jacobs Co.                                Page 10

applies. We review this statutory-interpretation question de novo. United States v. Parrett,
530 F.3d 422, 429 (6th Cir. 2008).

          From the time that the parties contracted until the commencement of this litigation,
the statutory interest rate was 10%.             Pre-amendment, the statute provided that “[i]nterest
on judgments, including decrees, shall be computed at the effective rate of ten percent (10%)
per annum, except as may be otherwise provided or permitted by statute[.]” Tenn. Code Ann.
§ 47-14-121 (1979). Tennessee amended the Prompt Pay Act in the middle of this litigation.
Tenn. Code Ann. § 47-14-121 (2012).                  The amended statute created a new formula for
calculating the applicable interest rate. Under the amended formula, the interest rate depends on
the date of the judgment’s entry. Id. § 47-14-121(a). The question here is how to determine the
interest on claims that accrued in the pre-amendment period when judgment was entered in the
post-amendment period. No Tennessee court has squarely addressed this question.3

          In general, “statutes are presumed to operate prospectively and not retroactively.” Kee v.
Shelter Ins., 852 S.W.2d 226, 228 (Tenn. 1993). But under Tennessee law, there is an exception
to this general rule for procedural and remedial statutes. Id. Such statutes apply retrospectively
both “to causes of action arising before such acts become law” and “to all suits pending when the
legislation takes effect.” Id. So if the Prompt Pay Act is remedial, it applies retrospectively.

          Remedial statutes provide a “means or method whereby causes of action may be
effectuated, wrongs redressed and relief obtained[.]” In re D.A.H., 142 S.W.3d 267, 273 (Tenn.
2004) (quoting State Dep’t of Human Servs. v. Defriece, 937 S.W.2d 954, 958 (Tenn. Ct. App.
1996)).       Simply put, remedial statutes provide a way to “redress injuries.”                     Black’s Law
Dictionary (10th ed. 2014) (found within definition of “remedial statutes”). Here, the Act’s
interest provision falls under the statutory heading of “Remedies for Delinquent Payment or
Nonpayment,” suggesting that Tennessee legislators considered the provision to be remedial.
Tenn. Code Ann. § 66-34-601. And the interest provision’s purpose is to redress the wrong of

          3
           Only one Tennessee case mentions the question of which interest rate applies when there is a post-
amendment judgment concerning a pre-amendment contract. There, the trial court applied the post-amendment
interest rate, reasoning that “allowance of prejudgment interest is an equitable measure to make the prevailing party
whole.” Classical City Mech., Inc. v. Potter S. E., LLC, No. E2015-01890-COA-R3-CV, 2016 WL 5956616, at *16
(Tenn. Ct. App. Oct. 14, 2016) (quoting from the trial court order). On appeal, however, the Tennessee Court of
Appeals did not address whether the pre-amendment or post-amendment rate applied.
 No. 16-6428                       Eagle Supply & Mfg. v. Bechtel Jacobs Co.                                 Page 11

delayed payment and set out the method for obtaining relief. So the Prompt Pay Act is properly
read as remedial.

         The district court therefore erred in applying the pre-amendment interest rate of 10%.
Since the district court entered judgment on August 19, 2016, the applicable interest rate should
have been 5.5%. See Tenn. Judgment Interest Rates, July 1, 2012 - July 1, 2017.

         Eagle offers two responses.             First, Eagle argues it had a vested right in the pre-
amendment interest rate. While vested rights cannot be taken away retrospectively, see Kee,
852 S.W.2d at 228, Eagle provides no legal support for its claim that its right to collect the pre-
amendment interest is a “vested right.” Nor have we found a Tennessee case suggesting that
these types of “rights” can vest at all.

         Second, Eagle believes that applying the amended Act retrospectively would be unjust.
Eagle offers no legal support for that argument. Nor does Eagle explain why a 5.5% interest
payment would not adequately redress the wrong of Bechtel’s overdue payments. Eagle is thus
entitled to interest on both damages awards, but only at a rate of 5.5%.

                                                           B.

         The Tennessee Prompt Pay Act also provides for the recovery of “[r]easonable attorney’s
fees” from a non-prevailing party who “has acted in bad faith.” Tenn. Code Ann. § 66-34-
602(b). A party acts in bad faith when it acts with “knowing or reckless disregard for contractual
rights or duties.” Madden Phillips Constr., Inc. v. GGAT Dev. Corp., 315 S.W.3d 800, 829
(Tenn. Ct. App. 2009). The district court found that Bechtel acted with “knowing or reckless
disregard” for Eagle’s contractual rights and awarded Eagle attorney’s fees. We review this
award for abuse of discretion but the underlying finding of bad faith for clear error. Griffin
Indus., Inc. v. U.S. E.P.A., 640 F.3d 682, 686 (6th Cir. 2011). Here, four grounds cited by the
district court support the award.4

         4
          In its bad-faith analysis, the district court relied in part on the parties’ pre-contract negotiations. R. 198,
PgID #3058. Bechtel argues that its behavior in negotiations preceding the existence of the subcontract cannot be
relied upon as evidence of bad faith in its later contractual dealings. Appellant Br. 50. This argument need not
detain us here, because the district court’s determination was not clearly erroneous on the weight of the remaining
evidence.
 No. 16-6428                 Eagle Supply & Mfg. v. Bechtel Jacobs Co.                      Page 12

       Ground one:      The court found Bechtel’s response to Eagle’s requests for equitable
adjustment to be “riddled with bad faith.”          R. 198, PgID #3059.         Even after Bechtel
acknowledged overruns of about $4.6 million at the K-1004-L site, Bechtel refused to pay Eagle,
bickering over the precise allocation of responsibility. Eagle repeatedly responded to Bechtel’s
gripes with revised requests, only to have Bechtel demand that Eagle compile data differently or
make additional revisions. Despite Bechtel’s “nitpicking,” its subcontract administrator admitted
he admonished Eagle for failing to provide comprehensive data without even reviewing the
documents that Eagle submitted.

       Ground two: When Eagle tried to modify the subcontract to ensure payment for its out-
of-scope work, Bechtel responded with a letter that the district court determined conveyed a
thinly veiled threat of termination. Bechtel quibbles with the district court’s reading of the letter.
But the district court had a vantage point we do not; it had the ability to hear witnesses on both
sides and see them testify. After the hearing, the district court agreed with Eagle—the letter
contained a threat of termination. That determination was reasonable based on the testimony at
the hearing. Madden v. Chattanooga City Wide Serv. Dept., 549 F.3d 666, 674 (6th Cir. 2008).

       Ground three: Bechtel assigned an employee to the project with the express task of
reducing subcontractor costs by $100 million. This employee, Eugene Glasbergen, repeatedly
interfered with Eagle’s ability to do its work. Glasbergen held frequent meetings with Eagle’s
subcontractors without Eagle’s knowledge or permission, causing confusion and tension. His
antics so interfered with Eagle’s ability to conduct its work and manage its own subcontractors
that Eagle sent several formal notices to Bechtel objecting to his conduct. One of Bechtel’s own
employees testified that he had never witnessed someone treat a subcontractor the way that
Glasbergen treated Eagle. At one point, Glasbergen even bragged that Eagle would not be paid
“a dime” for cost overruns, and that, if he had his way, Eagle would end up paying Bechtel. R.
168, PgID #2111.        The district court questioned Glasbergen’s motives, noting that his
compensation was directly tied to his ability to reduce Eagle’s requests for equitable adjustment.
Bechtel argues that the district court erroneously considered inadmissible testimony about
Glasbergen when making these findings. But Bechtel did not object to the testimony, so Bechtel
has waived that objection. See United States v. Martin, 757 F.2d 770, 771 (6th Cir. 1985).
 No. 16-6428                 Eagle Supply & Mfg. v. Bechtel Jacobs Co.                     Page 13

       Ground four: In an episode that the district court described as the “most disturbing,”
Bechtel instigated a DOE investigation of Eagle by suggesting that Eagle had defrauded the
government through overbilling. R. 198, PgID ##3058-59. The investigation required Eagle to
respond to a grand jury subpoena and further delayed Eagle’s efforts to collect from Bechtel.
DOE ultimately declined to take any action against Eagle. On appeal, Bechtel attempts to recast
its failed arguments about facts in the record, suggesting that the district court misunderstood the
events surrounding the DOE investigation. But again, the district court heard the testimony and
made a reasonable determination—one that was not clearly erroneous.

       Bechtel offers still more attacks on the district court’s finding of bad faith. First, Bechtel
suggests that it only refused to pay Eagle in order to comply with a government directive.
During DOE’s investigation into Eagle’s allegedly fraudulent billing, the government issued a
“Stop Payment Directive” that instructed Bechtel not to pay Eagle until further notice. Bechtel
now claims that this DOE directive remains in effect and that its failure to pay Eagle was
therefore justified.   Bechtel ignores the fact that DOE issued this directive during its
investigation into Eagle—an investigation that concluded years ago without any finding of
wrongdoing.     Moreover, Bechtel has paid Eagle for other settled claims in the interim,
contradicting its claim that it felt the government’s stop-payment order prevented it from paying
Eagle for its past work.

       Second, Bechtel argues that the district court applied the wrong standard, finding mere
“lack of good faith,” instead of the requisite “bad faith.” Appellant Br. 49. To be sure, the
district court’s order uses the phrase “lack of good faith.” But it also describes Bechtel’s conduct
as evincing “bad faith” three times, including once in a section header (“BJC’s Acts of Bad
Faith”). R. 198, PgID ##3058-59, 3068. Read in context, the phrase “lack of good faith” is
simply shorthand for “bad faith.”

       Finally, Bechtel argues that it was engaged in a dispute over the amount it owed to Eagle,
and courts have said that such disputes are not themselves evidence of bad faith. See Sun Splash
Painting, Inc. v. Homestead Vill., Inc., No. M2002-00853-COA-R3-CV, 2003 WL 22345482, at
*2 (Tenn. Ct. App. Oct. 15, 2003). Fair enough. But it is how Bechtel conducted itself during
 No. 16-6428                 Eagle Supply & Mfg. v. Bechtel Jacobs Co.                     Page 14

this dispute that led the district court to its finding of bad faith. A dispute over billing is not a
license to treat the other side however you want.

         In sum, Bechtel fails to demonstrate that the district court’s finding of bad faith was
clearly erroneous or that the district court abused its discretion in awarding attorney’s fees to
Eagle.

                                                IV.

         Finally, Bechtel offers two affirmative defenses to its nonpayment under the subcontract.
Bechtel first argues that the subcontract contains a “pay-if-paid” provision conditioning its
payment to Eagle on first receiving funds from the government. Bechtel also argues that Eagle
failed to comply with the Truth in Negotiations Act’s requirements for federal subcontractors.
The district court correctly rejected both defenses.

                                                 A.

         First, Bechtel argues that the subcontract includes a “pay-if-paid” provision, which
required Bechtel to pay Eagle only if and when the government paid Bechtel. Pay-if-paid
conditions shift the risk of nonpayment from the contractor to the subcontractor by requiring the
subcontractor to wait for payment until the contractor has been paid. Thos. J. Dyer Co. v. Bishop
Int’l Eng’g Co., 303 F.2d 655, 661 (6th Cir. 1962). In legalese, pay-if-paid clauses are a type of
condition precedent: One party is not obligated to perform until some condition is satisfied.

         Both parties agree that Tennessee law governs our interpretation of the contract in this
case. Tennessee has said little about pay-if-paid clauses, but some of its cases address a similar
type of condition: “pay-when-paid.” In form, there is a subtle difference. While pay-if-paid
clauses say the contractor does not have to pay unless it is paid, pay-when-paid clauses delay the
payment until the contractor is paid. Of course, practically they are the same: the contractor only
pays the subcontractor when and if it receives payment. Thus, we anticipate that Tennessee
would treat the clauses identically. And we know that Tennessee strongly disfavors pay-when-
paid clauses, only enforcing such conditions when “there is clear language to support them.”
Koch v. Constr. Tech., Inc., 924 S.W.2d 68, 71 (Tenn. 1996). Add the rule that the risk of
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nonpayment normally lies with the prime contractor, Dyer, 303 F.2d at 661 (applying Ohio and
Kentucky law), and Bechtel has a steep hill to climb.

          A pay-if-paid clause seems simple enough to write: “I will not pay you unless and until I
first get paid.” And the subcontract here does contain some language that sounds like a pay-if-
paid condition. For example, Clause GC-6 requires that Bechtel make payments “from funds
advanced by the Government” and “not from its own assets.” Ex. J-1 at 10. Likewise, SC-37
provides that Bechtel must perform its obligations only if the government first appropriates
funds. Id. at 53-54. That provision further provides that Eagle may stop any work that would
cause it to incur costs above the appropriated funds, rather than continuing on “at its own risk.”
Id. at 54.

          In context, however, both provisions are ambiguous. The relevant language of GC-6 is
sandwiched between two sentences that describe the process by which the government can
assume the subcontract from Bechtel. Id. at 10. The position of this language makes it unclear
whether this condition applies to the entire contract or is triggered only if the government
assumes the subcontract.          And although SC-37 contains some language suggesting
conditionality, it mentions neither DOE nor the government generally—only Bechtel’s
obligations under the subcontract. Plus, Bechtel seeks to establish an unambiguous pay-if-paid
provision by combining isolated clauses from disparate sections of the contract. That is not the
natural way to read this. We therefore cannot say that GC-6 and SC-37 are “clear,” Koch,
924 S.W.2d at 71, or “express,” Dyer, 303 F.2d at 661—let alone “unambiguous,” as Bechtel
claims.

          Even if GC-6 and SC-37 contain some conditional language, the subcontract’s provision
on “Invoicing and Payment,” SC-15, does not. Ex. J-1 at 41-43. This provision lists several
situations under which Bechtel can withhold payment, but the exceptions do not include
unavailability of funds or nonpayment by the government. Id. If the subcontract contains a pay-
if-paid condition, it seems odd not to mention it in the clause specifically addressing payment.
Furthermore, SC-15 explicitly creates a different “condition precedent” that requires Eagle to
waive claims against Bechtel prior to being paid. Id. at 42. The fact that the parties relied on the
phrase “condition precedent” there indicates that they knew how to create an explicit condition
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precedent when they wanted to. So if the parties had intended to condition Eagle’s payment on
the government’s appropriation of funds, they could have made that intention clear.

       Bechtel argues that SC-15 “has no bearing on the current dispute” because Eagle did not
invoice its two equitable adjustment requests. Reply Br. 11. Bechtel contends that SC-15 would
have become operative only if the parties had agreed upon a price, DOE had provided funding,
and Eagle had submitted an invoice. But even if SC-15 was not implicated here, the provision is
still relevant for interpretive purposes. This court must construe the parties’ contract as a whole.
In re Baxter, 104 F.2d 318, 320 (6th Cir. 1939) (“It is a settled rule in the construction of a
contract that the interpretation must be upon the entire instrument. It cannot be disjointed or
particular parts separated from the balance[.]”). So SC-37 and GC-6 must be read against the
backdrop of the entire subcontract, which includes SC-15.

       Regardless, this court has made clear that pay-if-paid conditions require absolute
precision of language. In Dyer, the contract provided that “no part of [the price to be paid to
Subcontractor] shall be due until five (5) days after Owner shall have paid Contractor therefor[.]”
303 F.2d at 656 (internal quotation marks omitted). That language was more explicit than the
subcontract here, yet this court determined that it was not “express” enough to create a pay-if-
paid condition. Id. at 661. If Dyer’s language was insufficient, the provision here proves even
more so.

       Read as a whole, the subcontract is unclear as to how it allocates the risk of nonpayment.
And under Tennessee law, ambiguity must be construed against Bechtel, the undisputed drafter
of the subcontract. Allstate Ins. Co. v. Watson, 195 S.W.3d 609, 612 (Tenn. 2006). Thus, the
district court rightly concluded that the subcontract contains no pay-if-paid condition.

                                                B.

       Bechtel also defends its nonpayment by arguing that Eagle failed to comply with the
federal Truth in Negotiations Act. Specifically, it suggests that Eagle failed to provide current,
complete, and accurate data at all times through trial and subsequent briefing.
 No. 16-6428                 Eagle Supply & Mfg. v. Bechtel Jacobs Co.                  Page 17

       The Truth in Negotiations Act requires federal contractors and subcontractors to make
full disclosure to the government during negotiations. Bechtel argues that Eagle violated these
disclosure requirements by failing to submit a signed “Certificate of Current Cost or Pricing
Data” to Bechtel when Eagle sought an adjustment to the subcontract. Reply Br. 12. Indeed, the
Act requires subcontractors to “submit cost or pricing data before the pricing of a change or
modification to [a] subcontract[.]” 41 U.S.C. § 3502(a)(4). But the subcontractor needs to
certify the data “[a]s soon as practicable after agreement on price[.]” 48 C.F.R. § 52.215-
20(b)(2) (emphasis added). In other words, the certification requirement does not apply until
after the parties conclude negotiations and reach a price agreement, 48 C.F.R. § 15.406-2 n.**, as
Bechtel concedes, Reply Br. 13. The record shows that Eagle and Bechtel never reached an
agreement on either of Eagle’s equitable adjustment requests. So Eagle could not have violated
the Act—the certification rule did not apply yet.

       Bechtel also argues that Eagle’s revisions to its equitable adjustment requests are
evidence of its noncompliance with the Act. But the district court found that Eagle provided
most of these revisions in response to Bechtel’s “nitpicking”—“nitpicking” that Bechtel offered
without reading Eagle’s initial requests. R. 198, PgID #3053. Bechtel cannot spin the revisions
it requested—and that Eagle provided in an effort to cooperate—into evidence that Eagle flouted
a federal disclosure law. Thus, Bechtel has failed to show that Eagle violated the Truth in
Negotiations Act.

                                                V.

       For the foregoing reasons, we affirm in part and reverse in part. We affirm the district
court’s damages award, as well as the award of attorney’s fees, but remand for the district court
to recalculate the interest owed to Eagle.