Court Opinion

ID: 2966403
Source: CourtListenerOpinion
Date Created: 2015-09-22 00:31:05.714526+00
Date Added: 2024-06-11T15:27:07.294216
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GILBANE BUILDING COMPANY, a
Corporation; APPLIED RETRIEVAL
TECHNOLOGY CORPORATION,
Plaintiffs-Appellees,

and

HOLLAND GLASS COMPANY,
INCORPORATED; METROMONT
MATERIALS; LANDMASTERS, INC.;
B&B CONTRACTING COMPANY,
INCORPORATED; CACI, INCORPORATED
- FEDERAL; PETTIT CONSTRUCTION
COMPANY, INCORPORATED,
Plaintiffs,
                                     No. 93-2448

v.

FEDERAL RESERVE BANK OF
RICHMOND, Charlotte Branch,
Defendant-Appellant,

INTERNATIONAL FIDELITY INSURANCE
COMPANY,
Defendant & Third Party Plaintiff-
Appellee,

and

ELECTRICON, INCORPORATED,
Defendant & Third Party Plaintiff.
APPLIED RETRIEVAL TECHNOLOGY
CORPORATION,
Plaintiff-Defendant & Third Party
Defendant-Appellant,

and

HOLLAND GLASS COMPANY,
INCORPORATED; METROMONT
MATERIALS; LANDMASTERS, INC.;
B&B CONTRACTING COMPANY,
INCORPORATED; CACI, INCORPORATED
- FEDERAL; PETTIT CONSTRUCTION
COMPANY, INCORPORATED;
Plaintiffs,

GILBANE BUILDING COMPANY, a
Corporation;
                                     No. 93-2449
Plaintiff-Third Party Defendant-
Appellee,

v.

FEDERAL RESERVE BANK OF
RICHMOND, Charlotte Branch,
Defendant & Third Party
Defendant-Appellee,

INTERNATIONAL FIDELITY INSURANCE
COMPANY,
Defendant & Third Party Plaintiff-
Appellant,

and

ELECTRICON, INCORPORATED,
Defendant & Third Party Plaintiff.

                    2
Appeals from the United States District Court
for the Western District of North Carolina, at Charlotte.
Robert D. Potter, Senior District Judge.
(CA-90-374-C-C-P, CA-90-274-C-C-P, CA-91-99-C-C-P,
CA-91-237-C-C-P, CA-91-281-C-C-P, CA-91-293-C-C-P,
CA-91-384-C-C-P, CA-90-318-C-C-P)

Argued: January 29, 1996

Decided: April 1, 1996

Before MURNAGHAN, ERVIN, and WILKINS, Circuit Judges.

_________________________________________________________________

Affirmed in part and reversed in part by published opinion. Judge
Ervin wrote the opinion, in which Judge Murnaghan and Judge Wil-
kins joined.

_________________________________________________________________

COUNSEL

ARGUED: George Verner Hanna, III, MOORE & VAN ALLEN,
Charlotte, North Carolina, for Appellant. Robert Lewis Burchette,
JOHNSTON, TAYLOR, ALLISON & HORD, Charlotte, North Car-
olina, for Appellee Gilbane; Mitchell Allen Stein, STEIN & ASSO-
CIATES, P.C., New York, New York, for Appellee Applied
Retrieval. ON BRIEF: Randel E. Phillips, Mary Elizabeth Erwin,
MOORE & VAN ALLEN, Charlotte, North Carolina, for Appellant.
Patrick E. Kelly, Greg C. Ahlum, Gary J. Welch, JOHNSTON, TAY-
LOR, ALLISON & HORD, Charlotte, North Carolina, for Appellee
Gilbane.

_________________________________________________________________

                   3
OPINION

ERVIN, Circuit Judge:

This case arose from construction in Charlotte, North Carolina, of
a branch of the Federal Reserve Bank of Richmond ("FRB"). By
agreement of the parties, the claims at issue in this appeal were tried
initially before a court-appointed special master. The district court
awarded damages to FRB against general contractor Gilbane Building
Company. Gilbane does not appeal. The district court also awarded
damages against FRB in favor of Gilbane, and trebled the entire
amount for unfair or deceptive trade practices under North Carolina's
Unfair Trade Practices Act ("UTPA"), N.C. Gen. Stat. § 75-1.1 et seq.
Some of the trebled damages were to pass through Gilbane to various
subcontractors, including Applied Retrieval Technology Corp.
("ART"), but the district court ruled that the trebling would benefit
Gilbane only. FRB appeals only the trebling of the award. Finally, the
district court awarded damages to FRB against ART and its surety--
International Fidelity Insurance Company ("IFIC").1 ART appeals that
award, and contests the district court's refusal to treble the damages
it received from FRB through Gilbane.

We disagree with the district court's decision to treble FRB's lia-
bility. But we find no error in its awards to FRB against ART. Thus
we reverse the finding of unfair and deceptive trade practices, and
affirm on all remaining issues.

I.

Litigation of these disputes began in North Carolina state court,
and North Carolina substantive law controls. But the case properly
was removed to federal district court under 12 U.S.C. § 632, which
establishes federal subject matter jurisdiction over any civil suit in
which a Federal Reserve Bank is a party. Appellate jurisdiction is
appropriate under 28 U.S.C. § 1291, because the parties' appeals are
from final judgments.
_________________________________________________________________
1 The interests of ART and IFIC are equivalent in this appeal, so we
hereinafter refer to them collectively as "ART."

                    4
II.

On October 3, 1986, FRB and Gilbane entered into a contract
under which FRB would pay Gilbane an amount greater than $32 mil-
lion to serve as general contractor and project manager for construc-
tion of FRB's Charlotte branch. In 1990, several subcontractors
initiated lawsuits against Gilbane and FRB for failing to pay for the
subcontractors' work. Gilbane crossclaimed against FRB for with-
holding payment.

On April 16, 1991, FRB and Gilbane entered into the"Dooley
Agreement," which suspended the litigation and appointed contractor
R. T. Dooley to judge performance under the contract. To settle dis-
putes not resolved by the Dooley Agreement, Gilbane and FRB
moved the district court for appointment of a special master. The
court appointed Walter L. Hannah, a North Carolina construction
attorney, to hear both the construction disputes between Gilbane and
FRB ("the construction cases") and a dispute between FRB, ART,
CACI, Inc., and IFIC regarding the project's Automated Storage and
Retrieval System ("the retrieval cases"). The parties agreed to be
bound by the special master's findings of fact, and that the district
court would make all conclusions of law.

During the construction hearings, Gilbane moved the special mas-
ter to add an unfair or deceptive trade practices claim. After the hear-
ings ended, the district court ruled that the UTPA claim was
supported by the special master's findings of fact, and it trebled the
damages awarded to Gilbane. FRB moved the court to amend the
judgment as unfairly prejudicial and abusive of the court's discretion,
arguing that the court should either vacate the treble damages award
or submit the issue to the special master to determine whether it was
properly tried during the hearings. The court did the latter, and the
special master responded that Gilbane had raised the issue properly
and that FRB had consented impliedly to trial of the issue by failing
to show how it would be prejudiced by amendment of Gilbane's
crossclaim. The court denied FRB's motion to amend the judgment,
and FRB appeals.

The retrieval cases arose from ART's installation of an automated
vault storage and retrieval system. Relying on the special master's

                     5
report, the district court awarded ART $102,000 from Gilbane, "rep-
resenting the balance due to ART under its contract." But it held ART
liable to FRB, through Gilbane, for a total of $359,842.21: $325,000
for the difference between the actual value of the completed retrieval
system and its reasonably expected value under the contract, $6,000
for wiring that failed to meet specifications, and $28,842.21 for
"maintenance labor costs" above those normally expected for such a
system.

ART appeals the award to FRB, protesting (1) that FRB waived
any damages by accepting ART's substantial performance, (2) that
the special master violated Fed. R. Civ. P. 53(e)(1) by failing to file
with the district court the exhibits introduced at the hearing, (3) that
the special master's findings regarding the system's useful life were
not supported by the evidence, and (4) that it was not given an oppor-
tunity to cross-examine the expert consulted by the special master.
Additionally, ART contests the district court's refusal to treble the
damages awarded to ART through Gilbane. Like Gilbane, and based
on the same acts by FRB, ART moved the district court for leave to
amend its pleadings to include a claim for treble damages. Unlike Gil-
bane, however, ART had not raised its UTPA claim before the special
master, and the district court denied its motion. ART contends on
appeal that the justification for its claim is not materially different
from that for Gilbane's.

III.

A.

1.

FRB contends that the district court abused its discretion by allow-
ing a post-trial amendment of Gilbane's pleadings to include an unfair
or deceptive trade practices claim. FRB acknowledges that Fed. R.
Civ. P. 15(b) allows such an amendment when the issue actually has
been tried by the consent of the parties. It argues, however, that the
special master's findings do not support the conclusion that FRB
impliedly consented to trial of the UTPA issue. Gilbane responds that
FRB had sufficient notice of the UTPA claim and the opportunity to
present evidence to rebut the claim, and that FRB neither claimed nor

                    6
proved that it would be prejudiced by the amendment until after the
district court entered its judgment.

FRB and Gilbane agree that whether the district court could con-
sider the UTPA issue is controlled by Rule 15(b), which provides:

          (b) Amendments to Conform to the Evidence. When
          issues not raised by the pleadings are tried by express or
          implied consent of the parties, they shall be treated in all
          respects as if they had been raised in the pleadings. Such
          amendment of the pleadings as may be necessary to cause
          them to conform to the evidence and to raise these issues
          may be made upon motion of any party at any time, even
          after judgment; but failure so to amend does not affect the
          result of the trial of these issues. If evidence is objected to
          at the trial on the ground that it is not within the issues made
          by the pleadings, the court may allow the pleadings to be
          amended and shall do so freely when the presentation of the
          merits of the action will be subserved thereby and the
          objecting party fails to satisfy the court that the admission
          of such evidence would prejudice the party in maintaining
          the party's action or defense upon the merits. The court may
          grant a continuance to enable the objecting party to meet
          such evidence.

Despite the parties' agreement, this is not a Rule 15(b) situation. It is
governed instead by Rule 54(c), which authorizes recovery under any
theory supported by the facts proven at trial: "[E]very final judgment
shall grant the relief to which the party in whose favor it is rendered
is entitled, even if the party has not demanded such relief in the
party's pleadings."

The distinction between Rule 15(b) and Rule 54(c) is grounded in
the fundamental structure of the Federal Rules' pleading system. The
introduction of the Rules in 1938 eliminated the murky code-pleading
requirement that a claimant plead ultimate facts and avoid pleading
evidence and conclusions of law. See 5 Charles A. Wright et al.,
Federal Practice and Procedure § 1218, at 178-80 (2d ed. 1990).
Code pleading needlessly emphasized the form of a complaint over
its substance, as an excerpt from a 1929 treatise illustrates:

                     7
          Every attempt to combine fact and law, to give the facts a
          legal coloring and aspect, to present them in their legal bear-
          ing upon the issues rather than in their actual naked simplic-
          ity, is so far forth [sic] an averment of law instead of fact,
          and is a direct violation of the principle upon which the
          codes have constructed their system of pleading.

John N. Pomeroy, Code Remedies § 423, at 640 (5th ed. 1929),
quoted in 5 Wright, et al. § 1218 at 179 n.1. The "notice-pleading"
scheme of the Rules has eliminated code pleading's formalistic,
purely factual approach. Courts now deem a claim sufficient if it con-
tains a "`short and plain statement of the claim' that will give the
defendant fair notice of what the plaintiff's claim is and the grounds
upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957) (quot-
ing Rule 8(a)(2)). Nevertheless, despite the more forgiving pleading
standards, the essence of a claim remains its factual elements. See 5
Wright, et al. § 1215 at 145 ("The rules do contemplate a statement
of circumstances, occurrences, and events in support of the claim
being presented."). Thus, under Rule 8(a)(2), a"statement of the
claim" is sufficient "so long as a plaintiff colorably states facts which,
if proven, would entitle him to relief," Adams v. Bain, 697 F.2d 1213,
1216 (4th Cir. 1982), and the claimant "need not set forth any theory
or demand any particular relief for the court will award appropriate
relief if the plaintiff is entitled to it on any theory." New Amsterdam
Casualty Co. v. Waller, 323 F.2d 20, 24-25 (4th Cir. 1963), cert.
denied, 376 U.S. 963 (1964).

Rule 15(b) is an exception to the general rules of pleading. As its
heading suggests, it is designed to allow amendment of a pleading
when the facts proven at trial differ from those alleged in the com-
plaint, and thus support a cause of action that the claimant did not
plead. Because notice to the defendant of the allegations to be proven
is essential to sustaining a cause of action, Rule 15(b) applies only
when the defendant has consented to trial of the non-pled factual
issues and will not be prejudiced by amendment of the pleadings to
include them.

Rule 54(c), in contrast, is not an exception to the general rules. It
is, instead, a clarification of the fundamental point that we noted in
New Amsterdam Casualty--that the relief to which a claimant is enti-

                     8
tled is not limited to the relief it requested in its original demand for
judgment. 323 F.2d at 24-25. Thus Rule 54(c) contains no express
requirements of consent or lack of prejudice,2 but commands that the
trial court "shall grant the relief to which the party in whose favor it
is rendered is entitled, even if the party has not demanded such relief
in the party's pleadings." Fed. R. Civ. P. 54(c) (emphasis added).

Gilbane does not contend, as Rule 15(b) requires, that its evidence
at the hearing proved facts not encompassed by its initial pleadings.
Nor does FRB question whether the facts Gilbane proved were within
the scope of its original allegations. Instead, to show that it did not
consent, FRB argues the opposite: "The Federal Reserve did not
object to any of the evidence presented by Gilbane during the Hear-
ings because this evidence related to issues within Gilbane's plead-
ings." It follows that the issue framed by the parties on appeal is not
whether the evidence differed from Gilbane's initial allegations, but
whether the allegations properly pled and proven support a theory and
type of relief not specified in Gilbane's demand for judgment. That
issue is controlled by Rule 54(c).

2.

We previously addressed a plaintiff's post-verdict request for
UTPA damages in Atlantic Purchasers, Inc. v. Aircraft Sales, Inc.,
705 F.2d 712 (4th Cir.), cert. denied, 464 U.S. 848 (1983). We
affirmed the district court's denial of the motion, holding that alterna-
tive relief under Rule 54(c) is unavailable when granting it would be
unjust. Id. at 716 (citing United States v. Marin, 651 F.2d 24, 31 (1st
Cir. 1981)); accord Albemarle Paper Co., 422 U.S. at 424 ("[A] party
may not be `entitled' to [Rule 54(c)] relief if its conduct of the cause
has improperly and substantially prejudiced the other party."). Tre-
bling a defendant's exposure after trial, we determined, would be
unfairly prejudicial:
_________________________________________________________________
2 Case law has carved out an exception where alternative relief would
be unfairly prejudicial. See Albemarle Paper Co. v. Moody, 422 U.S.
405, 424 (1975); see also infra part III.A.2. On its face, however, Rule
54(c) is compulsory.

                     9
          [A] substantial increase in the defendant's potential ultimate
          liability can constitute specific prejudice barring additional
          relief under Rule 54(c). We believe that this exception to the
          Rule is applicable in the present case.

          [The plaintiff]'s complaint gave no warning to[the defen-
          dant] that successful prosecution of the action could result
          in an award to [the plaintiff] of three times[its] actual dam-
          ages. This default denied [the defendant] and its counsel the
          opportunity to make a realistic appraisal of the case, so that
          their settlement and litigation strategy could be based on
          knowledge and not speculation.

Id. at 716-17 (quotation marks and citations omitted).

The instant case, like Atlantic Purchasers, involves a post-trial
motion for treble damages under the UTPA. But it is factually distin-
guishable. The Atlantic Purchasers plaintiff moved for UTPA dam-
ages only after the jury already had rendered its verdict. 705 F.2d at
714-15. Gilbane, in contrast, moved to add its UTPA claim at the
beginning of the construction hearings, so the district court ruled that
FRB was not unfairly prejudiced. The district court's ruling is review-
able only for abuse of discretion, Albemarle Paper Co., 422 U.S. at
424; Atlantic Purchasers, 705 F.2d at 717, and the district court did
not abuse its discretion by determining that Gilbane's motion at the
beginning of the hearing provided adequate warning to FRB. Accord-
ingly, Gilbane is entitled to any UTPA relief supported by the special
master's findings of fact.

B.

Whether facts support a cause of action involves application of law
to the facts. South Carolina State Ports Auth. v. Lykes, 67 F.3d 59,
61 (4th Cir. 1995). Thus we review de novo whether the special mas-
ter's factual conclusions satisfy the elements of the UTPA.

1.

To recover under the UTPA, a plaintiff must prove (1) that the
defendant engaged in conduct that was in or affecting commerce, (2)

                    10
that the conduct was unfair or "had the capacity or tendency to
deceive," and (3) "that the plaintiff suffered actual injury as a proxi-
mate result of defendant's deceptive statement or misrepresentation."
Pearce v. American Defender Life Ins. Co., 343 S.E.2d 174, 179-80
(N.C. 1986). Occurrence of the alleged conduct, damages, and proxi-
mate cause are fact questions for the jury, but whether the conduct
was unfair or deceptive is a legal issue for the court. Hardy v. Toler,
218 S.E.2d 342, 346-47 (1975); accord United Laboratories, Inc. v.
Kuykendall, 370 S.E.2d 375, 389 (N.C. 1988) ("[I]t is a question of
law for the court as to whether these proven facts constitute an unfair
or deceptive trade practice."); see also James McGee Phillips, Jr.,
Note, Consumer Protection--Hardy v. Toler: Applying the North
Carolina Deceptive Trade Practices Legislation--What Role for the
Jury?, 54 N.C. L. Rev. 963, passim (1976) (discussing Hardy's reso-
lution of the issue). In this case the factfinder was a special master
instead of a jury, but the same division of responsibility applies.

The standard of review of a special master's findings, however, is
different from the formidable standard applied to jury verdicts. A spe-
cial master's factual conclusions normally are reviewable for clear
error. Fed. R. Civ. P. 53(e)(2); Henry A. Knott Co. v. Chesapeake &
Potomac Telephone Co., 772 F.2d 78, 85 n.11 (4th Cir. 1985). But
they are unreviewable if the parties so stipulate, Rule 53(e)(4), as they
did in this case. Because the special master's factual findings are con-
clusive, and because Rule 54(c) applies only where the existing find-
ings of fact are entirely sufficient for the court to award alternative
relief, we can affirm the district court's trebling of damages only to
the degree that the special master's report includes all of the findings
necessary for a UTPA award: (1) conduct or statements that this court
determines to have been unfair or deceptive within the meaning of the
UTPA, (2) damages to Gilbane as a proximate result of the conduct
or statements, and (3) the dollar amounts of the damages.

What constitutes an unfair or deceptive trade practice is a some-
what nebulous concept. North Carolina courts base their determina-
tions on the circumstances of each case, Goodrich v. Rice, 331 S.E.2d
195, 198 (N.C. App. 1985), acknowledging that no precise definition
is possible, Harrington Mfg. Co. v. Powell Mfg. Co., 248 S.E.2d 739,
746 (N.C. App. 1978), disc. rev. denied, 251 S.E.2d 469 (N.C. 1979).
The courts' opinions do offer guidance, however. In Harrington, the

                     11
North Carolina Court of Appeals described unfairness under the
UTPA as

          conduct "which a court of equity would consider unfair."
          Extract Co. v. Ray, 20 S.E.2d 59, 61 (N.C. 1942). Thus
          viewed, the fairness or unfairness of particular conduct is
          not an abstraction to be derived by logic. Rather, the fair or
          unfair nature of particular conduct is to be judged by view-
          ing it against the background of actual human experience
          and by determining its intended and actual effects upon oth-
          ers.

Id. at 744. To be actionable under the statute, conduct must be "im-
moral, unethical, oppressive, unscrupulous, or substantially injurious
. . . ." Branch Banking & Trust Co. v. Thompson, 418 S.E.2d 694, 700
(N.C. App.), disc. rev. denied, 421 S.E.2d 350 (N.C. 1992) (internal
quotation and citation omitted). Acts are deceptive when they "pos-
sess[ ] the tendency or capacity to mislead, or create[ ] the likelihood
of deception." Chastain v. Wall, 337 S.E.2d 150, 154 (N.C. App.
1985), disc. rev. denied, 342 S.E.2d 891 (N.C. 1986), quoted in
Bartolomeo v. S.B. Thomas, Inc., 889 F.2d 530, 534-35 (4th Cir.
1989). Either unfairness or deception can bring conduct within the
purview of the statute; an act need not be both unfair and deceptive.
Rucker v. Huffman, 392 S.E.2d 419, 421 (N.C. App. 1990).

In practice, courts have applied the statute liberally. See Robert G.
Byrd, Misrepresentation in North Carolina, 70 N.C. L. Rev. 323, 372
(1992). Fraud is covered, of course, Hardy v. Toler, 218 S.E.2d 342,
346 (N.C. 1975), and negligent misrepresentation also has been
deemed sufficient. Forbes v. Par Ten Group, Inc. , 394 S.E.2d 643,
651 (N.C. App. 1990), disc. rev. denied, 402 S.E.2d 824 (N.C. 1991).
Even failure to disclose information has been considered deceptive
when tantamount to misrepresentation. Kron Medical Corp. v. Collier
Cobb & Assocs., 420 S.E.2d 192, 196 (N.C. App.), disc. rev. denied,
424 S.E.2d 910 (N.C. 1992); accord Leake v. Sunbelt Ltd., 377 S.E.2d
285, 288 (N.C. App.), disc. rev. denied, 381 S.E.2d 774 (N.C. 1989).
A simple breach of contract is not unfair or deceptive, however,
absent "substantial aggravating circumstances." Branch Banking &
Trust Co., 418 S.E.2d at 700 (quoting Bartolomeo v. S.B. Thomas,
Inc., 889 F.2d 530, 535 (4th Cir. 1989)). And a broken promise is

                    12
unfair or deceptive only if the promisor had no intent to perform when
he made the promise. See Kent v. Humphries, 275 S.E.2d 176, 182-83
(N.C. App.), modified, 281 S.E.2d 43 (N.C. 1981); Overstreet v.
Brookland, Inc., 279 S.E.2d 1, 6 (N.C. App. 1981).

What constitutes proximate cause between a deceptive act and a
plaintiff's damages remains ambiguous. Dicta indicates that reliance
is unnecessary, Rucker v. Huffman, 392 S.E.2d 419, 421-22 (N.C.
App. 1990), but no cases have permitted recovery without reliance.
Byrd, supra, at 367. Nevertheless, it is well-established that when the
plaintiff's reliance is the causal link between the violative conduct
and the damages, the reliance need not be reasonable:

          If unfair trade practitioners could escape liability upon
          showing that their victims were careless, gullible, or other-
          wise inattentive to their own interests, the Act would soon
          be a dead letter.

Winston Realty Co. v. G.H.G., Inc., 320 S.E.2d 286, 290 (N.C. App.
1984), aff'd, 331 S.E.2d 677 (N.C. 1985). But cf. Opsahl v. Pinehurst,
Inc., 344 S.E.2d 68, 77 (N.C. App. 1986) (holding that in the con-
struction context, where completion dates are subject to factors
beyond the control of the parties, a misrepresentation that projected
completion dates are firm is not actionable under the UTPA), disc.
rev. dismissed as improvidently allowed, 353 S.E.2d 400 (N.C. 1987);
accord Bolton Corp. v. T.A. Loving Co., 380 S.E.2d 796, 809 (N.C.
App.), disc. rev. denied, 385 S.E.2d 496 (N.C. 1989).

2.

The special master did not believe that his findings supported a
UTPA claim. That is an issue of law, however, so we review it de
novo. To do so, we look directly to the special master's binding fac-
tual findings to determine whether they establish the elements
required for UTPA relief.

Gilbane points to findings of several acts that it believes constituted
unfair or deceptive trade practices by FRB. They include: (1) ordering
extra work when it lacked authority and ability to pay, (2) represent-

                    13
ing to Gilbane that it had "unlimited" authority to pay for the work,
(3) intentionally delaying payment, (4) arbitrarily reducing Gilbane's
compensation without regard to what actually was owed, and (5) vio-
lating the contract by assuming the role of Project Architect. Motion
to Amend or Modify the Special Master's Findings of Fact and Con-
clusions of Law at 11-12. Except for the representation of unlimited
authority, the acts were mere breaches of contract. In each case FRB
failed to satisfy obligations to which it had agreed, but the special
master's findings do not indicate either that FRB did not intend to
perform when it made the agreements or that there were other sub-
stantial aggravating circumstances. The special master's opinion,
while entitled to no deference, is instructive on the issue of substantial
aggravating circumstances:

          The Special Master, in considering the Findings of Fact to
          be submitted to the Court, did not make findings which he
          considers as rising to the level of those which would be
          unfair or deceptive trade practices. . . . [O]nly one individual
          with FRB guided or committed the acts which Gilbane now
          contends entitle it to damages for unfair and deceptive trade
          practices. It was and is the opinion of this court that this
          individual was "over his head" in the administration of the
          building contract and in attempting to make decisions which
          should have been made only after receiving instructions in
          consultation with more experienced management.

Special Master Report--Clarifications at 13-14.

The misrepresentation of authority to pay did constitute an unfair
or deceptive trade practice. FRB delayed processing change orders
until the work on them had been completed, and then refused to pay
the costs submitted by Gilbane. In response to this ongoing problem,

          Gilbane asked the FRB to identify the FRB representative
          with authority to approve change orders and to state the dol-
          lar limitation of that approval authority. On or about May 4,
          1987, the FRB representative, Powell, [inaccurately] con-
          firmed that he had "unlimited" authority to approve change
          orders. Gilbane relied upon FRB's representation and con-
          tinued to work.

                     14
Special Master's Findings of Fact and Conclusions of Law--
Construction at 23. But the report does not differentiate between work
that was done as a proximate result of Powell's misrepresentation and
work that already had been done or would have been done anyway.

Rule 54(c) allows alternative relief only where all factual conclu-
sions necessary for the relief sought have been found by the trier of
fact. See Cioffe v. Morris, 676 F.2d 539, 541 (11th Cir. 1982) ("Rule
54(c) creates no entitlement to relief based on issues not squarely
presented and litigated at trial."). It may be, and in fact is likely, that
Gilbane worked on some change orders as a proximate result of Pow-
ell's misrepresentation. But whether that is true, and if so what dam-
ages were incurred, was not included in the special master's findings.
Thus Gilbane is not entitled to alternative relief under Rule 54(c).

IV.

A.

ART contends that the special master erred by awarding damages
against it for obvious defects in the retrieval system. It argues that
FRB waived any such damages by accepting substantial performance
in the system's installation. As FRB points out, however, that it occu-
pied the building and used the system does not constitute acceptance
of the system as conforming to the contract. See Kandalis v. Paul Pet
Constr. Co., 123 A.2d 345, 347 (Md. 1956) ("[t]he mere fact that the
purchasers take possession when the building is completed does not
necessarily constitute a waiver of defects or an acceptance of the con-
tractor's workmanship."); Hall v. McLeod, 62 S.E.2d 42, 46 (Va.
1950); Robert F. Cushman & David A. Carpenter, Proving and Pric-
ing Construction Claims 388-89 (1990). The special master found as
a matter of fact that "FRB has refused to acknowledge the function-
ality and reliability of the automated storage and retrieval system."

ART challenges the assumption that acceptance is an issue of fact,
and tries to convert it into a legal question:

          [T]he Court and the Special Master erred in not determining
          the scope of the performance of the parties, the consequence

                     15
          of the subsequent Agreement in May of 1990, the conse-
          quence of the start of the Warranty Periods, and the conse-
          quence of the completion of the Warranty Periods. Such
          determinations involve issues of law, and were simply not
          considered by the District Court, thus rendering the findings
          and conclusion erroneous as a matter of law.

ART is correct that those determinations involve issues of law, but the
determinations are important only for their probity on the factual
question of whether FRB accepted ART's performance. Because the
parties agreed that the special master's factual findings are final, we
cannot review his conclusion that FRB did not accept the retrieval
system as conforming to the contract.

B.

ART also complains that the Special Master did not file with the
District Court the exhibits he used in the hearings:

          The judgment must be reversed, and the case remanded,
          because the Special Master failed to file the original exhib-
          its, as required by Fed. R. Civ. P. 53(e)(1), thereby prevent-
          ing the district court from reviewing the Special Master's
          determinations on mixed questions of fact and law for
          abuses of discretion.

ART is correct that Rule 53(e)(1) requires filing with the district court
of evidence and exhibits. But that requirement was designed to com-
plement Rule 53(e)(2)'s default standard of review for special mas-
ters' findings of fact--clear error. In this case, the parties agreed that
the special master's findings of fact would not be subject to review
for clear error, but would be final.

ART suggests that the parties' agreement encompassed mixed
questions of law and fact, and that we should review the district
court's findings on such questions for abuse of discretion. But we do
not review mixed questions for abuse of discretion. We review them
under a hybrid standard, applying to the factual portion of each
inquiry the same standard applied to questions of pure fact and exam-

                     16
ining de novo the legal conclusions derived from those facts. See
United States v. Han, 74 F.3d 537, 540 & n.1 (4th Cir. 1996). In this
case, therefore, we accept the special master's findings of fact as final
and review the conclusions based on those facts de novo.

The exhibits are relevant only to factual portions of the inquiry--
portions that were conclusively decided by the special master. Filing
the exhibits would serve no purpose. Moreover, the exhibits constitute
only a fraction of the evidence that was before the special master. The
bulk of the evidence was testimony, but the parties agreed that the
hearings would not be recorded or transcribed. A review of the exhib-
its without the testimony would be incomplete and inconsistent with
the parties' agreement. Thus the special master's failure to file the
exhibits with the district court did not violate Rule 53(e)(1).

C.

ART argues next that the evidence did not support the special mas-
ter's findings regarding the useful life of the retrieval system:

          [T]he exhibits presented to the Special Master show that his
          finding that the Vault Retrieval System should have had a
          useful life of 15 years, but only had a useful life of 10 years,
          was not supported by a sufficient quantum of evidence, and
          his calculation of damages is erroneous as a matter of law.

The sufficiency of the evidence is entirely unreviewable, because the
parties agreed that the special master's factual findings are final. The
calculation of damages argument is based on objections to the factual
findings from which the calculations were made, so it also is an
improper subject for review.

D.

ART also contends that it was denied the opportunity to cross-
examine the expert consulted by the special master, in violation of
Fed. R. Evid. 706(a). It objects to the special master's adoption of the
expert's opinion in the special master's findings regarding the useful
life of the retrieval system. Rule 706(a) provides:

                     17
          The court may on its own motion or on the motion of any
          party enter an order to show cause why expert witnesses
          should not be appointed, and may request the parties to sub-
          mit nominations. . . . A witness so appointed shall advise the
          parties of the witness' findings, if any; the witness' deposi-
          tion may be taken by any party; and the witness may be cal-
          led to testify by the court or any party. The witness shall be
          subject to cross-examination by each party, including a
          party calling the witness.

That ART never asked to cross-examine the expert during the special
master's hearings is irrelevant, it argues, because it entered its request
"at the earliest possible time, i.e., immediately upon first receipt of the
Expert's Findings."

ART agreed to the informal procedures used in the special master
proceedings. It knew that the expert's opinions would influence the
special master's findings, and that those findings would be conclu-
sive. Had it so requested, it would have been entitled to review the
expert's findings and cross-examine him before the special master's
report was filed. But it did not. We will not construe Rule 706(a) to
allow a party to undo the informal procedures to which it agreed sim-
ply because it is dissatisfied with the result.

E.

ART's final argument is that it should have been permitted to
amend its pleadings to include a UTPA claim. Any UTPA damages
awarded to Gilbane that involve the retrieval system, ART contends,
should pass through Gilbane to ART, which "stands in the shoes of
its general contractor." Because we have determined that Gilbane is
entitled to no award of treble damages, supra part III.B.2, there is
nothing to pass through to ART. Thus we consider neither the timeli-
ness of ART's motion nor the merits of whether pass-through treble
damages would be appropriate.

V.

The special master's findings of fact are insufficient to support Gil-
bane's claim of unfair or deceptive trade practices. Thus Gilbane is

                     18
not entitled to treble damages under the UTPA. ART's agreement to
the finality of the special master's factual findings bars its contentions
that FRB waived its claims for defects in the retrieval system, that the
special master should have filed his exhibits with the district court,
and that there was insufficient evidence to support the special mas-
ter's findings regarding the useful life of the system. ART's objection
that it had no opportunity to cross-examine the expert is precluded by
its agreement to the informal procedures used by the special master.
Finally, we do not reach the merits of ART's treble damages claim
because it depends on a UTPA award to Gilbane. Accordingly, we
reverse the district court's award of treble damages to Gilbane, and
affirm its resolution of all remaining issues.

AFFIRMED IN PART AND REVERSED IN PART

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