Court Opinion

ID: 3033546
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:49:41.131029+00
Date Added: 2024-06-11T11:48:24.274443
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                              ________________

                                 No. 02-3697
                              ________________

Lighting & Power Services, Inc., a    *
corporation, for the use and          *
benefit of United States of           *
America,                              *      Appeal from the United States
                                      *      District Court for the
            Appellant,                *      Eastern District of Missouri.
                                      *
      v.                              *
                                      *
Wayne M. Roberts, doing               *             [PUBLISHED]
business as Robinson Quality          *
Constructors, Inc.; United States     *
Fidelity and Guaranty Company, a      *
corporation,                          *
                                      *
            Appellees.                *
                                      *
                                      *
                                      *

                              ________________

                               Submitted: September 11, 2003
                                   Filed: January 13, 2004
                              ________________

Before LOKEN, Chief Judge, HEANEY and HANSEN, Circuit Judges.
                            ________________

HANSEN, Circuit Judge.
      Lighting & Power Services ("LPS") filed suit against Wayne M. Roberts, Inc.
("Roberts") to recover additional construction costs pursuant to the Miller Act, 40
U.S.C.A. §§ 3131-3133 (West Supp. 2003).1 A jury found in favor of Roberts. On
appeal, LPS argues that the district court erroneously instructed the jury on the total
cost method of recovery. We agree, we reverse the judgment of the district court, and
we remand for further proceedings.

                                  I. Background
      This dispute stems from a government construction project at Jefferson
Barracks in St. Louis, Missouri. Roberts was the general contractor for the United
States government; LPS was Roberts's electrical subcontractor. The construction
contract required Roberts to obtain a payment bond under the Miller Act to protect
subcontractors and suppliers.2 The renovation was scheduled for completion in six
months, but ultimately took over twenty-two months. Both parties conceded that the
government caused the delays.

      1
       Formerly codified at 40 U.S.C. § 270b (2000) (revised and recodified by Pub.
L. No. 107-217, 116 Stat 1062 (Aug. 21, 2002)).
      2
          40 U.S.C. § 3131(b):
      Type of bonds required. --Before any contract of more than $100,000 is
      awarded for the construction, alteration, or repair of any public building
      or public work of the Federal Government, a person must furnish to the
      Government the following bonds, which become binding when the
      contract is awarded:
              ...
              (2) Payment bond. --A payment bond with a surety
              satisfactory to the officer for the protection of all persons
              supplying labor and material in carrying out the work
              provided for in the contract for the use of each person.
Roberts furnished this bond through its surety United States Fidelity and Guaranty
Company.
                                           2
      LPS filed suit under the Miller Act, seeking to recover the additional costs it
incurred as a result of the delay.3 LPS used the total cost method to calculate its
damages and sought $110, 641.00. The district court instructed the jury as follows:

                                  Instruction No. 5

      In this case, the plaintiff seeks to prove its alleged damages by evidence
      of its total costs of performing its subcontract with Wayne M. Roberts,
      Inc. In order to establish damages in this way, the plaintiff must prove
      by a preponderance of the evidence that:

      1.     It is impracticable for the plaintiff to prove its actual losses
             directly;
      2.     The plaintiff's bid that was accepted by Wayne M. Roberts, Inc.
             was reasonable;
      3.     Plaintiff's actual costs were reasonable;
      4.     Defendant has some responsibility in causing plaintiff's actual
             losses; and
      5.     Plaintiff incurred damages as a consequence.

(Appellant's App. at 129.) The jury returned a verdict in favor of Roberts. On appeal,
LPS argues that subpart four of the instruction was given in error because the Miller
Act permits LPS to recover its additional costs of labor and materials regardless of

      3
        40 U.S.C.A. § 3133(b)(1) (West Supp. 2003):
      Every person that has furnished labor or material in carrying out work
      provided for in a contract for which a payment bond is furnished under
      section 3131 of this title and that has not been paid in full within 90 days
      after the day on which the person did or performed the last of the labor
      or furnished or supplied the material for which the claim is made may
      bring a civil action on the payment bond for the amount unpaid at the
      time the civil action is brought and may prosecute the action to final
      execution and judgment for the amount due.

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Roberts's responsibility for causing those costs. Roberts responds that subpart four
of the instruction was required by the law of this circuit because LPS chose to
calculate its damages using the total cost method.

                                II. Standard of Review
       A district court has broad discretion in formulating jury instructions.
Generally, we review jury instructions given by a district court for abuse of
discretion. Hartley v. Dillards, Inc., 310 F.3d 1054, 1058 (8th Cir. 2002). Our review
is limited to determining whether the instructions, when taken as a whole and in light
of the particular issues presented, fairly and adequately presented the evidence and
the applicable law to a jury. Id. at 1058-59. We will not reverse for instructional error
unless we find that the error affected the substantial rights of the parties. Id. at 1059.

        A litigant's objection to a jury instruction must comply with Federal Rule of
Civil Procedure 51 in order to be preserved for appellate review. At the time of this
trial, Rule 51 required a party to make objections to a jury instruction before the jury
retired. When a party fails to comply with Rule 51, we are limited to reviewing the
district court's decision for plain error. Jones Truck Lines, Inc. v. Full Serv. Leasing
Corp., 83 F.3d 253, 256-57 (8th Cir. 1996).

        After carefully reviewing the transcript, we hold that LPS's objections to
instruction five were sufficient for the purposes of Rule 51, as it existed at the time
of trial. During the instructions conference at the conclusion of evidence, LPS made
known on the record its precise objections to the court's proposed instruction,
particularly as to subpart four of instruction number five. (Tr. Vol. III, pp. 68, 69, 72,
74.) The trial court also clearly indicated that it was overruling the objections and
would give the objected-to instruction to the jury. (Id. at 82.) This court has held that
Rule 51 does not require rigid formality in making an objection, as long as the district
court was clearly aware of a litigant's objections. Brown v. Sandals Resorts Int'l, 284
F.3d 949, 953 n.6 (8th Cir. 2002) (citing Meitz v. Garrison, 413 F.2d 895, 899 (8th

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Cir. 1969)). We are convinced that the district court well understood the nature of
LPS's objection, and that it would have given the same instruction even if LPS's
counsel had restated the objection after the jury was instructed and before it
commenced deliberation. See Ross v. Garner Printing Co., 285 F.3d 1106, 1112
(8th Cir. 2002).

      We note that Rule 51 was substantially revised effective December 1, 2003.4

      4
          Federal Rule of Civil Procedure 51now states, in relevant part:
      (b) Instructions. The court:
             (1) must inform the parties of its proposed instructions and
             proposed action on the requests before instructing the jury and
             before final jury arguments;
               (2) must give the parties an opportunity to object on the record
               and out of the jury's hearing to the proposed instructions and
               actions on requests before the instructions and arguments are
               delivered; and
               (3) may instruct the jury at any time after trial begins and
               before the jury is discharged.

      (c) Objections.
            (1) A party who objects to an instruction or the failure to give
            an instruction must do so on the record, stating distinctly the
            matter objected to and the grounds of the objection.
               (2) An objection is timely if:
                      (A) a party that has been informed of an instruction or
               action on a request before the jury is instructed and before final
               jury arguments, as provided by Rule 51(b)(1), objects at the
               opportunity for objection required by Rule 51(b)(2); or
                      (B) a party that has not been informed of an instruction
               or action on a request before the time for objection provided
               under Rule 51(b)(2) objects promptly after learning that the
               instruction or request will be, or has been, given or refused.
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The Supreme Court's order of March 27, 2003, amending the Rule states that the
amended rule "shall govern in all proceedings in civil cases thereafter commenced,
and, insofar as just and practicable, all proceedings then pending." Applying new
Rule 51(b) and (c) to the record of the instruction conference held in this case, we
conclude that LPS's objection to instruction five was both adequate and timely.

                                III. Jury Instruction 5

      We first address the question of whether, in order to recover delay damages
under the Miller Act, a subcontractor is required to show that the general contractor
was at least partially to blame for the subcontractor’s actual losses. We hold that the
Miller Act does not require that the general contractor be at fault in order for the
subcontractor to recover on the Miller Act payment bond.

        This court first addressed this question in Consol. Elec. & Mech., Inc. v. Biggs
Gen. Contracting, Inc., 167 F.3d 432 (8th Cir. 1999). In Consolidated, an electrical
subcontractor sued a general contractor and a surety company on a payment bond
under the Miller Act. Consolidated, 167 F.3d at 433-34. During construction, the
contractors had experienced numerous and prolonged delays, and the district court
awarded Consolidated damages under the Miller Act. Id. at 434. On appeal, Biggs,
the general contractor, argued that the district court erred when it held Biggs liable
for all of Consolidated's Miller Act recovery, after the court had acknowledged that
Biggs had been only partially at fault. Id. First, this court noted that the general
contractor was, in fact, partially at fault. Id. Nevertheless, this court affirmed the
district court, holding that a subcontractor can recover regardless of the fault of the
general contractor. Id. at 435.

      Several circuits have interpreted the Miller Act to allow full recovery by
      a subcontractor when the general contractor is not wholly at fault for the
      delays . We agree with the reasoning of these circuits. The Miller Act
      favors allowing full recovery from a general contractor regardless of

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      fault because general contractors have privity of contract with the
      government and can thus recover delay damages directly from the
      government, while subcontractors cannot.

Id. at 434-35(citations omitted) (emphasis added). See also Mai Steel Serv. Inc. v.
Blake Constr. Co., 981 F.2d 414, 419 (9th Cir. 1992) ("The Miller Act does not limit
a subcontractor's recovery to situations where the general contractor is at fault.
Indeed, we have allowed a subcontractor to recover against a Miller Act surety for
labor and materials furnished to a subcontractor where the general contractor was
blameless."); United States ex rel T.M.S. Mech. Contractors, Inc. v. Millers Mut. Fire
Ins. Co. of Tex., 942 F.2d 946, 951(5th Cir. 1991) ("[A] subcontractor can recover
increased out-of-pocket costs for labor and materials furnished in the course of
performing its subcontract caused by contractor or government delay.").

       The second issue is whether the use of the total cost method to calculate
damages requires a showing that the general contractor was at least partially
responsible for the subcontractor's losses, even though the Miller Act does not require
such a showing. We also answer this question in the negative, and we hold that the
total cost method can be used to calculate damages under the Miller Act, regardless
of the fault of the general contractor.

      Under the total cost method, the "total cost" is defined as the actual cost minus
any cost already paid on the contract.5 Moorhead Constr. Co. v. City of Grand Forks,
508 F.2d 1008, 1015 (8th Cir. 1975). There is a four-part test for using the total cost
method.

      5
        In non-Miller Act cases, the “total cost” may generally include reasonable lost
profits. Neb. Pub. Power Dist. v. Austin Power, 773 F.2d 960, 965 (8th Cir. 1985);
Layne-Minnesota p. r., Inc. v. Singer Co., 574 F.2d 429, 434 (8th Cir. 1978).
However, the Miller Act does not encompass recovery for lost profits. Consolidated,
167 F.3d at 436.
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      The acceptability of the (total cost) method hinges on proof that (1) the
      nature of the particular losses make it impossible or highly impracticable
      to determine them with a reasonable degree of accuracy; (2) the
      plaintiff's bid or estimate was realistic; (3) its actual costs were
      reasonable; and (4) it was not responsible for the added expenses.

Id. at 1016 (citations omitted). In the present case, Instruction 5 did not require the
jury to find that LPS "was not responsible for the added expenses," as in Moorhead,
but instead required the jury to find that "[Roberts] ha[d] some responsibility in
causing plaintiff's actual losses." Relying on Neb. Pub. Power Dist. v. Austin Power,
773 F.2d 960 (8th Cir. 1985), Roberts argues that under the law of this circuit, the
application of the total cost method required the jury to find that Roberts had some
responsibility in causing LPS's losses. We find that Austin Power is distinguishable.

        In Austin Power, the Nebraska Public Power District contracted with Austin
Power, a subcontractor, for labor and construction equipment to build an electric
generating plant. Id. at 962. The project took eleven months longer to finish than
scheduled, at a substantially higher cost to both parties. Id. at 962-63. Nebraska
Power paid Austin half of the amount in excess of the projected costs (the "overrun"
costs) pursuant to the terms of the contract. Id. at 963. Nebraska Power then sued
Austin, saying that Austin had been primarily responsible for the delays, and
therefore Nebraska Power should not have been required to cover any of Austin's
overrun costs. Id. Austin counterclaimed for breach of contract and submitted its
damages calculations in three different ways, one of which was the total cost method.
Id. at 965. The jury instruction on total cost damages stated that in order to recover
the requested damages, Austin needed to prove the following:
             a.     The nature of the particular losses claimed by Austin
                    Power [made] it impossible or highly impracticable
                    to determine them with a reasonable degree of
                    accuracy;
             b.     The bid or estimate of Austin Power was realistic;
             c.     The actual cost incurred by Austin Power was

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                    reasonable;
             d.     Austin Power was not responsible for the amount
                    sought to be recovered above the amount previously
                    paid under the contract; and
             e.     The costs which make up the amount sought to be
                    recovered were proximately caused by [Nebraska
                    Power's] breaches of contract.

Id. 965-66. The jury awarded Austin breach of contract damages. Id. at 966. This
court affirmed, holding that the district court had properly submitted total cost
evidence to the jury. Id. at 968.

        Austin Power is readily distinguishable from the case at hand, principally
because Austin Power is not a Miller Act case. Austin Power involved state law
negligence and breach of contract claims. Id. at 963-64. The instruction given by the
trial court in Austin Power was suited to a breach of contract case where a jury must
also find cause in fact. Such an instruction would not fit a Miller Act claim because
the Miller Act does not govern actions by a subcontractor against a general contractor
for breach of contract. Consolidated, 167 F.3d at 435.

       There are cases that interpret the final factor of the total cost method to require
a subcontractor to prove not only that it was not responsible for the added expenses,
but also that the defendant was responsible for them. See, e.g., Youngdale & Sons
Constr. Co. v. United States, 27 Fed. Cl. 516, 546 (1993). We do not think that those
cases are applicable here. First, Instruction 5 did not require LPS to prove that it was
free from fault, and Roberts makes no claim that LPS caused its own delay damages.
Second, the cases containing such instructions are not Miller Act cases. They are
breach of contract cases, and the marshaling instructions used understandably
combined the necessary fault elements with the calculation of damages. Several
cases using the total cost method have recognized a distinction between finding fault
and calculating damages. "Difficulty in computing damages ought not to be confused

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with the requirement of proving damages as an essential element of recovery."
McKie v. Huntley, 620 N.W.2d 599, 604 (S.D. 2000). "Properly considered, [the
total cost] approach is not a substitute for proof of causation; it is simply a method
for calculating damages." Id. at 604. See also Amelco Elec. v. City of Thousand
Oaks, 38 P.2d 1120, 1130 (Cal. 2002) ("The total cost method is not a substitute for
proof and causation.") (citation and internal marks omitted). Because we have
already held that under the Miller Act a subcontractor can recover additional expenses
incurred because of delay regardless of the fault of the general contractor, the district
court erred when it required LPS to prove that Roberts had some responsibility for
causing LPS's losses.

       For the reasons stated, we reverse the judgment of the district court and remand
for further proceedings not inconsistent with this opinion.
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