Court Opinion

ID: 8966910
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:09:57.348255+00
Date Added: 2024-06-11T17:10:20.315743
License: Public Domain

SLOYITER, Circuit Judge,
dissenting.
I.
Although I am in agreement with a substantial portion of the majority opinion in this complex appeal, I respectfully dissent because I disagree with the conclusion that under Delaware law the owner, Nemours, could not be considered to be a third party beneficiary of the subcontract for purposes of bringing suit for damages sustained when Pierce, the subcontractor, walked off the job. The effect of the majority’s decision is that while Nemours had a substantial dispute with general contractor, Gil-bane, over performance and payment, which resulted in litigation, Nemours was nonetheless required either to depend on Gilbane to file and process Nemours’ claim for damages against Pierce or to sue Gil-bane for what the jury found was Pierce’s unjustifiable refusal to perform.
As the majority recognizes, this court sitting in diversity is bound to apply Dela*549ware law. Because I believe that a fair reading of the applicable Delaware case law supports the inference that Pierce and Gilbane intended to benefit Nemours, I conclude that Nemours could maintain a third party beneficiary suit against Pierce.
The majority correctly points out that under Delaware law the right to sue on a contract as a third party beneficiary is a function of the contracting parties’ intent to confer a benefit on the third party.1 As I read Delaware case law, contractual provisions in a subcontract such as those in the Gilbane-Pierce subcontract are sufficient to permit an inference of intent to benefit the owner. See Oliver B. Cannon & Sons, Inc. v. Dorr-Oliver, Inc., 336 A.2d 211, 215-16 (Del.1975); Oliver B. Cannon & Sons, Inc. v. Dorr-Oliver, Inc., 312 A.2d 322 (Del.Super.Ct.1973); see also Sears, Roebuck and Co. v. Jardel, 421 F.2d 1048 (3d Cir.1970) (applying Pennsylvania law but cited with approval by Delaware Supreme Court in Cannon).
Factors referred to in these cases as significant were that the subcontracts in question identified the .owner, specified that work was to be done on the owner’s premises, and contained provisions whereby the subcontractor undertook to indemnify the owner against certain losses arising out of the execution of the subcontractor’s work. Cannon, 312 A.2d at 327-28 & nn. 4-5 (Del.Super.Ct.); Jardel, 421 F.2d at 1054 & nn. 18-19. Additionally the Delaware Supreme Court, in affirming the Superior Court’s decision in Cannon, cited the existence of a warranty for defective workmanship running from the subcontractor to the owner. Cannon, 336 A.2d at 216 (Del.). Because the Gilbane-Pierce contract contains equivalent provisions, I believe that there was sufficient evidence under Delaware law to find that Gilbane and Pierce intended to make Nemours a beneficiary of the subcontract.
The majority declines to follow the Cannon courts’ rationale on the grounds that there is other evidence which negates the inferences of intent which are permissible under those decisions. Majority at 539. To the extent the majority relies on evidence gleaned from sources other than the Gilbane-Pierce contract itself, such as statements by Nemours'to the effect that there was no contractual relation between it and Pierce, the majority deviates from the acknowledged Delaware requirement that the intent to create a third party beneficiary must be ascertained from the language of the contract itself. See Cannon, 336 A.2d at 215 (Del.); Royal Indemnity Co. v. Alexander Industries, Inc., 211 A.2d 919, 920 (Del.1965); Crow v. Erectors Inc., 1988 Del.Super. LEXIS 18, 6 (Del.Super.1988) [1988 WL 7617, p. 2].
The majority’s conclusion that Pierce and Gilbane did not intend to benefit Nemours rests primarily on the incorporation of Article 1.1.2 of the AIA General Conditions of the Contract for Construction from the Nemours-Gilbane contract into the Gil-bane-Pierce contract. That clause, which states that nothing contained in the “Contract Documents” shall create any contractual relationship between the Owner and a Subcontractor, clearly expresses Nemours’ intent not to confer third party rights on Pierce. The “Contract Documents” as defined in the Nemours-Gilbane contract in which Article 1.1.2 is embedded do not include the Gilbane-Pierce contract; the Gil-bane-Pierce contract does not expressly preclude the formation of contractual relations between Pierce and Nemours. I am willing to assume arguendo that the relationship established by the scheme of incorporated provisions precluded the Owner and Subcontractor from asserting contractual claims against each other arising in the ordinary course of the construction, such as claims for additional payment due or failure to follow the contract speeifica-*550tions, and required that such claims be tunneled through the prime contractor. I believe, however, that Delaware would require a more explicit preclusion of Nem-ours' right to sue the subcontractor for total failure of performance than the mere inclusion of this standard clause in the form contract, particularly in light of the indemnity and warranty provisions in the Gilbane-Pierce contract that were designed to benefit Nemours. Therefore I would affirm the district court’s ruling that this case could proceed to the jury on a third party beneficiary theory.
II.
Because I reach this conclusion, I must also consider the propriety of the district court’s exclusion of the expert testimony of Lewis Pierce, president of the company, on the reasonableness of Nemours’ completion costs. In light of its disposition, the majority does not reach this issue, although it expresses its concerns with that ruling.
The district court originally sustained the objection to Pierce’s testimony on the ground that Pierce was disqualified under Fed.R.Evid. 702 because of his interest in the outcome of the litigation, and thereafter stated that it would exclude Pierce’s expert testimony under Fed.R.Evid. 403, on the ground that the probative value of such testimony would be outweighed by its prejudice. The rationale of the latter ruling was the same as its rationale under Rule 702, i.e., that Pierce had too much motivation to lie and that the jury would attach too much weight to his testimony if he were labelled an expert.
Even under the deferential abuse of discretion standard applied to evidentiary rulings, I could not sustain the exclusion of Pierce’s testimony. The district court found that Pierce was fully qualified as an expert. The Federal Rules of Evidence have greatly relaxed the standards for the admissibility of expert testimony. While the district court may have been relying on the prohibition against using witnesses who are paid on a contingent basis, see Model Code of Professional Responsibility, DR 7~109(C) (1980), the rule as applied by the district court would disqualify as experts all parties and many employees of parties, a position which has no support under current principles of evidence. See Manufacturing Research Corp. v. Graybar Electric Co., 679 F.2d 1355, 1366 n. 21 (11th Cir.1982); Dunn v. Sears, Roebuck & Co., 639 F.2d 1171, 1174 (5th Cir.), modified on other grounds, 645 F.2d 511 (1981).
Pierce’s possible bias was merely a matter affecting credibility and went to the weight not the admissibility of the evidence. See Universal Athletic Sales Co. v. American Gym, Recreational & Athletic Equipment Corp., 546 F.2d 530, 539-40 (3d Cir.1976) (error for trial judge sitting as trier of fact to accord too much weight to testimony given by lawyer as expert witness on his client’s behalf, but not error to permit lawyer to testify), cert. denied, 430 U.S. 984, 97 S.Ct. 1681, 52 L.Ed.2d 378 (1977).
Since Pierce was the last witness for the Company in an extremely lengthy trial, I cannot say that the exclusion did not affect the outcome of the trial. Pierce had little or no time to procure another expert, and was thus prevented from putting an important aspect of its case before the jury. The issue of completion costs was one on which expert testimony could assist the trier of fact because the court had permitted Nem-ours’ expert to testify on that subject. The district court did permit Pierce to give lay opinion testimony under Fed.R.Evid. 701, but his opinion was limited to facts which he had actually perceived, and he was prevented from stating his opinion of the analysis of Nemours’ completion costs as presented by their expert. Thus, I would view the exclusion as warranting a remand for a new trial.

. The district court determined that Nemours was a third party beneficiary of the Gilbane-Pierce contract as a matter of law, and did not submit the issue of the parties’ intent to the jury. The parties have not argued otherwise on this appeal. But see STV Engineers, Inc. v. Greiner Engineering Inc., 861 F.2d 784 (3d Cir.1988) (Sloviter, dissenting) (question of the intent of contracting parties with respect to ambiguous term is issue of contract interpretation and hence a matter of fact).