Eagle Supply & Manufacturing, L.P. v. Bechtel Jacobs Co.
868 F.3d 423
| 6th Cir. | 2017Background
- DOE hired Bechtel to remediate and convert the Oak Ridge uranium-enrichment site; Bechtel subcontracted demolition and decontamination work to Eagle.
- Eagle won a fixed-price subcontract after agreeing to a substantial price reduction; work proved far more difficult and costly than forecast (extra sediment, higher security requirements, asbestos/fluorine hazards, numerous site-condition changes and many contract modifications by Bechtel).
- Contract included a "Changes" clause (GC-18) requiring equitable adjustments for cost/time impacts; Eagle submitted two Requests for Equitable Adjustment (REAs): the Combined Changes REA (K-1004-L overruns) and the Waste Generation REA (excess waste volumes).
- Bechtel initially paid only immediate labor/materials, disputed further adjustments, and took actions (threatened termination, assigned a cost-reduction manager, suggested a DOE fraud probe) that delayed payment; Eagle sued eight years after completing work.
- The district court awarded Eagle the full amounts requested for both REAs, plus interest under the Tennessee Prompt Pay Act and attorney’s fees for bad faith; on appeal the Sixth Circuit affirmed damages and fees but remanded to recalculate interest under the amended Tennessee statute.
Issues
| Issue | Eagle's Argument | Bechtel's Argument | Held |
|---|---|---|---|
| Amount of equitable adjustment for K-1004-L overruns | Eagle proved actual costs with payroll, invoices, logs; entitled to full REA | Award was excessive; reliance on certain witnesses was improper; Eagle was inefficient | Affirmed: factual findings supported by substantial evidence; no clear error |
| Liability & damages for excess waste (Waste Generation REA) | Excess waste resulted from changed site conditions; used total-cost method with available records | Eagle failed to give required notice; damages calculation was unreliable | Affirmed: no applicable contractual notice requirement; total-cost approach supported by evidence |
| Interest rate under Tennessee Prompt Pay Act | Eagle sought interest; argued pre-amendment rate | Bechtel argued post-amendment formula applies; dispute which statutory rate governs | Remanded: Act is remedial; post-amendment statutory rate (5.5% for judgment date) applies to award period |
| Attorney's fees under Prompt Pay Act (bad faith) | Bechtel acted in knowing or reckless disregard (delay, nitpicking, threats, interfering manager, instigated DOE probe) | Bechtel contended dispute over amount isn't bad faith; relied on government stop-payment defense | Affirmed: district court's bad-faith finding supported; fee award not an abuse of discretion |
Key Cases Cited
- United States v. Callahan Walker Constr. Co., 317 U.S. 56 (equitable-adjustment factfinding standard)
- Anderson v. City of Bessemer, 470 U.S. 564 (deference to trial court credibility findings)
- Canderm Pharmacal, Ltd. v. Elder Pharms., Inc., 862 F.2d 597 (discretion in damages calculation)
- Hi-Shear Tech. Corp. v. United States, 356 F.3d 1372 (reasonable basis for approximate damages computation)
- Thos. J. Dyer Co. v. Bishop Int'l Eng'g Co., 303 F.2d 655 (pay-if-paid/pay-when-paid clause analysis)
- Griffin Indus., Inc. v. U.S. E.P.A., 640 F.3d 682 (standard of review for attorney-fee/bad-faith findings)