Ramona Equipment Rental, Inc. Ex Rel. United States v. Carolina Casualty Insurance
755 F.3d 1063
9th Cir.2014Background
- Ramona Equipment Rental supplied rental equipment on open-account credit to subcontractor Otay for a federal project where Candelaria was the prime contractor and CCIC the surety.
- Otay rented equipment under 89 rental agreements (Dec 2007–Jun 2008) totaling about $235,447; Otay paid only about $17,659 on those invoices before termination.
- Candelaria terminated Otay’s subcontract on June 6, 2008; Ramona stopped rentals and served a Miller Act 90-day notice to Candelaria on July 25, 2008 (within 90 days of the last rental).
- Ramona sued under the Miller Act seeking unpaid rentals, contractual "service charges" (prejudgment interest), and fees; defendants contended the 90-day notice was untimely as to earlier deliveries, Ramona failed to mitigate, and service charges were waived.
- The district court held the 90-day notice covered all deliveries on the open account, limited recovery to amounts for rentals before June 10, 2008 (mitigation), and awarded simple contractual interest; defendants appealed.
Issues
| Issue | Plaintiff's Argument (Ramona) | Defendant's Argument | Held |
|---|---|---|---|
| Whether a 90-day Miller Act notice given within 90 days of the last delivery on an open-account covers earlier deliveries for the same project | One 90-day notice from last delivery suffices to cover all prior deliveries under the same open account/project | Notice must be given within 90 days of each separate delivery or invoice; otherwise prime/surety risk double or unforeseeable liability | Held: 90-day notice from the last delivery on an open-account for the same government project is timely as to all deliveries |
| Whether Ramona failed to mitigate damages by continuing credit and delaying notice | Ramona reasonably deferred because Otay and Candelaria were attempting to resolve payment and there was a longstanding relationship | Ramona should have alerted Candelaria earlier and ceased credit; mitigation duty arose sooner | Held: District court’s factual finding that mitigation duty arose June 10, 2008 (4 days after termination) was not clearly erroneous; damages for invoices on/after June 10 barred |
| Whether contractual "service charges" (compound prejudgment interest) are recoverable or waived | Service charges are contractual prejudgment interest and recoverable; no timely waiver was preserved by defendants | Ramona waived service charges by not assessing them earlier; defendants raised waiver post-trial | Held: Waiver argument was forfeited by defendants (raised too late); district court award of contractual service charges affirmed, but court rejected compound interest and awarded simple interest at contract rate |
| Whether equipment re-rented from third parties counts as "furnished or supplied" under the Miller Act | Re-rented equipment falls within ordinary meaning of "furnished or supplied" and is recoverable | Defendants argue re-rented items are not "furnished or supplied" | Held: Ordinary meaning covers re-rented equipment; such rentals included in Miller Act claim |
Key Cases Cited
- Noland Co. v. Allied Contractors, Inc., 273 F.2d 917 (4th Cir. 1959) (one 90-day notice from last delivery on an open account covers earlier deliveries)
- United States ex rel. A & M Petroleum, Inc. v. Santa Fe Engineers, Inc., 822 F.2d 547 (5th Cir. 1987) (favored interpretation: 90 days runs from last delivery on a project with multiple orders)
- United States ex rel. Water Works Supply Corp. v. George Hyman Constr. Co., 131 F.3d 28 (1st Cir. 1997) (where claims rest on an open account, the 90-day period begins with the last delivery)
- United States ex rel. Blue Circle West, Inc. v. Tucson Mech. Contracting, Inc., 921 F.2d 911 (9th Cir. 1990) (Miller Act notice helps general contractors avoid double liability)
- Apache Powder Co. v. Ashton Co., 264 F.2d 417 (9th Cir. 1959) (distinguished on form-of-notice grounds; not dispositive on timeliness across multiple deliveries)
- Woods Constr. Co., Inc. v. Pool Constr. Co., 348 F.2d 687 (10th Cir. 1965) (interpretation of "furnished or supplied"—statutory terms read by ordinary meaning)
- United States ex rel. J.A. Edwards & Co. v. Peter Reiss Const. Co., 273 F.2d 880 (2d Cir. 1959) (distinguishable; declined to decide whether sequential deliveries revive earlier liabilities)