Court Opinion

ID: 2964785
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:31:05.044217+00
Date Added: 2024-06-11T11:43:01.611471
License: Public Domain

USCA1 Opinion

	

                                [NOT FOR PUBLICATION]
                                ____________________
       No. 96-1465
                                  TABER PARTNERS I,
                           A NEW YORK GENERAL PARTNERSHIP,
                                Plaintiff, Appellant,
                                         v.
              MERIT BUILDERS, INC., A PUERTO RICO CORPORATION, ET AL.,
                               Defendants, Appellees.
                                ____________________
       No. 96-1466
                                  TABER PARTNERS I,
                           A NEW YORK GENERAL PARTNERSHIP,
                                Plaintiff, Appellant,
                                         v.
              MERIT BUILDERS, INC., A PUERTO RICO CORPORATION, ET AL.,
                               Defendants, Appellees.
                                ____________________
       No. 96-1467
                                  TABER PARTNERS I,
                           A NEW YORK GENERAL PARTNERSHIP,
                                Plaintiff, Appellee,
                                         v.
              MERIT BUILDERS, INC., A PUERTO RICO CORPORATION, ET AL.,
                               Defendants, Appellees,

                                ____________________
                          DESARROLLOS METROPOLITANOS, S.E.,
                          Third Party Defendant, Appellant.
                               _______________________
                    APPEALS FROM THE UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF PUERTO RICO
                    [Hon. Jaime Pieras, Jr., U.S. District Judge]
                                ____________________
                                       Before
                                Selya, Circuit Judge,
                      Coffin and Bownes, Senior Circuit Judges.
                                ____________________
            Arch Y. 
                    Stokes with whom Stokes 
                                            & Murphy, Ruben 
                                                            T. Nigaglioni and
       McConnell & Valdes
                          were on brief for plaintiff, appellant Taber Partners
       I.
             Eric 
                  A. 
                     Tulla with whom  Rivera, 
                                              Tulla 
                                                    & 
                                                      Ferrer,  Woods 
                                                                     & 
                                                                       Woods,
       Raffle F. Ojeda-Colon
                             were on brief for defendants, appellees and cross-
       appellants, Merit Builders, Inc., and Merit Builders, S.E.,  Harold 
                                                                           D.
       Vincente, with whom   Vincente  
                                      &  
                                         Cuebas, was on brief for appellee
       Insurance Company of North America.
            Humberto 
                     Guzman-Rodriguez with whom Fiddler, 
                                                         Gonzalez 
                                                                  & 
                                                                    Rodriguez
       were on brief for third-party defendant, appellant Desarrollos
       Metropolitanos, S.E.
                                ____________________
                                    JULY 31, 1997
                                ____________________

                      BOWNES, Senior  
                                      Circuit  
                                               Judge. This breach of
            contract case is a product of the renovation and expansion of
            the Ambassador Plaza Hotel and Casino (formerly a Howard
            Johnson Hotel) in San Juan, Puerto Rico. Plaintiff-appellant
            Taber Partners I is the owner of the hotel. Its two partners
            are A. Eugene Romano and his daughter, Linda Romano.
            Defendant-appellee and cross-appellant Merit Builders, Inc. was
            the general contractor. John Schlump, one of the two owners of
            Merit, directed the construction and reconstruction work on the
            hotel.
                      On January 18, 1989, Taber entered into a "cost-plus"
            construction contract with Merit whereby Merit became the
            general contractor for the renovation and expansion of the
            hotel. Prior to this, Schlump had been retained as a
            consultant by Eugene Romano to advise him how to proceed with
            the proposed reconstruction and expansion. The "cost-plus"
            contract was followed by a fixed price contract; both contracts
            were collectively called the Tower contract. A third contract
            was entered into by the parties for finish work on the casino,
            two restaurants, and the hotel lobby.
                      On February 20, 1991, Taber filed a complaint in the
            federal district court of Puerto Rico alleging breach of
            contract by reason of delay, defective performance, and
            negligent workmanship. There was also a claim for fraud and
            deceit. The complaint was amended twice; the causes of action
                                         -3-
                                          3

            remained essentially the same. At some point, it is not clear
            from the record just when, Taber sued the Insurance Company of
            North America under the performance bond INA issued for the
            Tower contract.
                      Merit brought a counterclaim against Taber alleging
            multiple breaches of contract, a claim based on Taber's alleged
            delays and changes in the scope and nature of the work
            contracted for, and fraud. Merit also brought a third-party
            action against Desarrollos Metropolitanos, S.E., the concrete
            subcontractor. It brought another third-party complaint
            against Victor Torres and Associates, the inspectors of the
            work, alleging breach of duty and tortious interference with
            the performance of the contracts between Taber and Merit.
                      After a fourteen-week trial, the jury returned a
            verdict finding that Merit was not liable to Taber. It further
            found that Taber owed Merit $1,597,414.00 for breach of
            contract. We consider Taber's appeal first.
                      At the close of the evidence, the district court
            dismissed Merit's claim against Victor Torres and Associates.
                                   TABER'S APPEAL
                      Taber forwards two issues on appeal: The ruling of
            the district court excluding evidence of the loss of value of
            the hotel due to defective construction work; and improper jury
            instructions.
                                         -4-
                                          4

            The Exclusionary Ruling
                      We start with the exclusionary ruling. In a pre-
            trial order the court ruled that it would not allow evidence as
            to the loss of value of the hotel. Taber had two expert
            witnesses who would have testified that the reconstruction and
            renovation work by Merit was done so incompetently and
            defectively that the hotel's value was considerably less than
            what it would have been had it been done properly.
                      At the start of its specific instructions the court
            told the jury:
                           Taber Partners I claims that Merit
                      Builders, Inc. breached all contracts
                      entered into for the renovation and
                      expansion of the Ambassador Plaza Hotel
                      and Casino by failing to properly
                      construct the building and by failing to
                      complete the project in time. As a
                      result, plaintiff claims that it suffered
                      damages suffered [sic] due to alleged
                      construction defects and time delays for
                      which it seeks to recover the total sum of
                      $3,730,995 from Merit.
            This was an accurate statement of Taber's claims.
                      The jury answered the following questions on Merit's
            liability:
                      PART A: Taber's claim against Merit for
                      breach of contract
                      Question 1A.
                           Do you find that under the Lump Sum
                      Tower Contract Merit failed to perform its
                      duties and obligations or in any other way
                      breached its contract with Taber by
                      failing to comply with the plans and
                      specifications?
                                         -5-
                                          5

                      . . . 
                      Question 3A.
                           Do you find that under the Specialty
                      Contract Merit failed to perform its
                      duties or in any other way breached its
                      contract with Taber by failing to comply
                      with the plans and specifications?
                      . . .
                      Question 5A.
                           Do you find that under the Cost Plus
                      Contract Merit failed to perform its
                      duties or in any other way breached its
                      contract with Taber by failing to follow
                      the plans and specifications?
                      These jury findings establish beyond peradventure
            that Merit was not liable to Taber for breach of contract,
            which was the basis of Taber's claims against Merit. 
                      We have read the transcript testimony of all
            witnesses who testified on behalf of Taber. The record shows
            that there was a plethora of evidence from which the jury could
            have found liability, if it believed any of the witnesses. But
            it chose not to do so. If any principle is embedded firmly in
            our law it is that the jury is the final arbiter of the facts
            and credibility decisions are exclusively within its domain.
                      Another firmly established legal rule is that a
            finding of liability must precede any finding of damages.
                                         -6-
                                          6

            Taber seeks to avoid this rule by arguing that "the Judge
            erroneously forced Taber to argue liability without being
            permitted to prove damages; it is the rare jury that will find
            liability when it cannot appreciate that the plaintiff has
            suffered damage." Taber's Brief at 20. This argument is
            belied by the record. The court allowed in evidence all
            damages claimed by Taber except that of the value of the hotel
            and those that were duplicative.
                      Randall Redman, an expert witness called by Taber,
            testified that, after inspecting the project, he told Eugene
            Romano that the only way to achieve a quality building that
            would last would be to tear the building down and start all
            over.
                      During the testimony of Eugene Romano it was
            stipulated as follows:
                           If the jury finds that there was a
                      delay by Merit in the performance of any
                      of the contracts, the parties agree that
                      there is a $2,000 liquidated damages
                      provision per day, per contract, which
                      includes the specialty contract. That is
                      to say, the work for the casino,
                      restaurant and lobby, plus and also the
                      tower contract.
                           The cost-plus contract is
                      specifically not made a part of this
                      stipulation as it had no time limit in
                      which it was supposed to be complete.
                      Eldon Gayle Tipping, another of Taber's experts,
            testified that the cost to repair this project would be in
            excess of the original contract price. He testified
                                         -7-
                                          7

            specifically that the damages due to defective concrete work
            were $1,353,703.00.
                      Victor Torres, a civil engineer, was retained to
            settle disputes between the parties and issue certificates of
            payment. He testified extensively about change orders and
            "deductive" change orders. A "deductive" change order results
            in a decrease of the amount due for a specific contract change.
            Torres testified that he allowed $856,944.90 in deductive
            change orders out of $3,938,228.64 claimed by Taber.
                      The most extensive testimony on damages came from
            Linda Romano, a partner, with her father, in Taber. She
            started her testimony by stating:
                           The Witness: We sued Merit Builders
                      because we paid Merit in excess of $12
                      million to build us a quality hotel within
                      a specified time and they didn't do it.
                      And we sued the Insurance Company of North
                      America because they promised the
                      performance, they secured the performance
                      of Merit under the performance bond.
                      By Mr. Stokes:
                      Q    Ms. Romano, what are you seeking by
                      this lawsuit?
                      A    I am asking the jury to find that the
                      Insurance Company of North America and
                      Merit Builders should pay us in excess of
                      three and a half million dollars.
                           In addition to that, I am asking the
                      jury to find that we have paid Merit in
                      full. I am seeking to be made whole,
                      although I don't believe I can be.
                                         -8-
                                          8

                      Linda Romano testified for four days on direct
            examination. She explained the defects in construction. This
            part of her testimony was amplified by numerous photographs,
            which were admitted in evidence. Ms. Romano took over 2,000
            photos of the work in progress. Romano gave specific costs of
            change orders and deductive change orders. She concluded her
            testimony by summarizing the amount due Taber for defective
            work and time delays -- $3,730,995.00. This was the figure
            given by the court in its instructions to the jury as to the
            amount Taber claimed in damages.
                      Despite the argumentative rhetoric in Taber's brief,
            the record makes it abundantly clear that the jury was fully
            informed as to the construction defects alleged by Taber and
            its claim for the costs of correcting them. The district court
            allowed 98% of the evidence offered by Taber to be presented to
            the jury. This is not a case of a trial judge being technical
            and limiting in his evidentiary rulings. Taber received an
            eminently fair trial. It cannot now seize upon one adverse
            ruling on the preclusion of certain evidence on damages to
            overturn the jury's findings that Merit was not liable to Taber
            for breach of contract. Such findings preclude, as a matter of
            law, any contention on damages.
            The Jury Instructions
                      We state this issue as it is worded in Taber's brief 
                                         -9-
                                          9

            at page 3:
                           The District Court, in this case
                      arising from faulty hotel construction,
                      reversibly erred by improperly instructing
                      the jury to presume as factually
                      legitimate the certificates for payment
                      issued by the inspecting engineer/
                      architect, Victor Torres, in direct
                      contravention of the contract language,
                      yet failing to instruct the jury to assume
                      as similarly legitimate the deductive
                      change orders and substantial completion
                      decisions certified by the same
                      individual.
                      This plaint founders on the same barrier reef as did
            Taber's argument excluding one of its claims for damages -- the
            jury findings of no liability.
                      We also point out that in this circuit objections to
            jury instructions cannot be properly preserved unless a party
            objects after the charge and before the jury has retired to
            consider the case. The mandate of Fed. R. Civ. P. 51 is stated
            as follows:
                      No party may assign as error the giving or
                      the failure to give an instruction unless
                      that party objects thereto before the jury
                      retires to consider its verdict,  stating
                      distinctly the matter objected to and the
                      grounds  
                              of  
                                  the  
                                      objection. Opportunity
                      shall be given to make the objection out
                      of the hearing of the jury. (Emphasis
                      added).
            We have construed this to mean what it says. Objections to
            jury instructions must be stated fully after the charge and
            before the jury retires regardless of any pre-charge
            objections. See 
                            Senra v. Cunningham
                                               , 9 F.3d 168, 171 (1st Cir.
                                        -10-
                                         10

            1993); Elgabri v. Lekas, 964 F.2d 1255, 1259 (1st Cir. 1992);
            Transnational 
                          Corp. 
                                v. 
                                   Rodio 
                                         & 
                                           Ursillo, 
                                                    Ltd., 920 F.2d 1066,
            1069 (1st Cir. 1990). Failure to follow our regime results in
            a plain error analysis.
                      After the charge the court invited counsel to the
            bench. All counsel except Taber's made detailed objections on
            the record. The only thing counsel for Taber said was: "Same
            comments as yesterday, Your Honor." This was not sufficient
            under Fed. R. Civ. P. 51 and our case law.
                      We have read the jury instructions carefully and find
            no plain error. In fact, we think the jury instructions
            explained this difficult, complex, and lengthy case clearly and
            fairly to the jury.
                                MERIT'S COUNTERCLAIM
            Fraud
                      Merit objects to the pre-trial dismissal of its fraud
            claim against Taber. The record discloses the following pre-
            trial order:
                           Finally, during the Pretrial
                      Conference, the parties discussed with the
                      Court the fraud claims presented by Taber
                      and Merit in the Second Amended Complaint
                      and the Counterclaim. Both parties agreed
                      that  
                           these  
                                  fraud  
                                         allegations  
                                                      lack  
                                                            the
                      requisite   
                                 specificity   
                                               detailed   
                                                          under
                      Rule 9(b) 
                                of 
                                   the 
                                        Federal 
                                                Rules 
                                                      of 
                                                          Civil
                      Procedure. However, neither party brought
                      this issue to the Court's attention before
                      the Pretrial Conference. In light of the
                      parties' admissions during the Conference,
                      and after close examination of the
                      complaint and the counterclaim, the Court
                                        -11-
                                         11

                      will not allow evidence or allegations of
                      fraud to be made during Trial by either
                      party. (Emphasis added).
            In light of Merit's agreement that its fraud allegations lacked
            the specificity required under Fed. R. Civ. P. 9(b), Merit is
            foreclosed from objecting to the exclusion of its fraud claim.
            Moreover, we have read the entire counterclaim carefully and it
            is obvious that Merit did not rely on any of the fraudulent
            acts alleged. Reliance was not alleged in the fraud claim.
            This was a breach of contract case. Merit's answer and
            counterclaim make it evident that its defense to the breach of
            contract claim was that it met its contract obligations and was
            owed money by Taber (which the jury found to be true).
            Dismissal of Merit's Contract Claims
                      Merit objects to two other pre-trial rulings:
            (1) the preclusion of damages compensable in the "construction
            context" of this case; (2) the preclusion of damages from
            Taber's delays and changes in the nature and scope of the work
            contracted.
                      As we understand it from Merit's brief at page 48,
            Merit claims that in addition to the amount awarded it by the
            jury for unpaid change orders and other specified claims, it
            has a claim for "disruptions and resulting damages" in the
            amount of two million dollars.  Id.
                      The answer to this claim comes from the record.
            During the trial, Merit attempted through a blow-up to
                                        -12-
                                         12

            introduce evidence of damages for general overhead, general
            field conditions, acceleration costs, and delay damages. The
            court excluded the claim for three reasons. We need go no
            further than the first:
                           First, for the pretrial conference on
                      February 28, 1995, the Court ordered the
                      parties to submit an itemization of all
                      damages to be claimed at trial. Merit
                      submitted its itemized list of damages by
                      motion dated February 28, 1995. During
                      said conference Merit discussed with the
                      Court all of the claims it wanted to
                      present at trial and never mentioned the
                      claims brought to the Court's attention
                      yesterday.
                      Merit waived its claim to the additional damages
            sought by its failure to submit them in accord with the pre-
            trial order of the court.
                      The jury's findings that Merit was not liable to
            Taber nullified the two third-party claims brought by Merit.
                      The judgment of the district court is     Affirmed.
            Costs on appeal are against Taber.
                                        -13-
                                         13