Redondo Construction Corp. v. Puerto Rico Highway & Transportation Authority (In Re Redondo Construction Corp.), 678 F.3d 115

Three contracts between Redondo and the Puerto Rico Highways and Transportation Authority for Patillas, Dorado-Toa Alta, and Mayagüez projects; unanticipated site conditions and flawed design caused delays and cost overruns; debtor completed all projects and sought additional compensation including subcontractor costs; bankruptcy filings and adversary proceedings led to a $12,028,311.92 award plus prejudgment interest; authority challenged rulings on notice, extended overhead, subcontractor standing, and prejudgment interest; district court affirmed, and First Circuit reviewed de novo with some forfeiture determinations.
The bankruptcy court found Authority responsible for delays and site-condition-driven costs; it held Mayagüez notice satisfied by substantial actual notice despite lack of written notice; it awarded extended overhead using Eichleay broadly but did not separate compensated vs. uncompensated delays; it awarded prejudgment interest; the court remanded for recalculation of overhead and for prejudgment interest determinations; issues of standing and preservation were raised and evaluated on appeal.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Authority forfeited its challenges on appeal	Redondo argues claims forfeited	Authority contends not all issues were preserved	Only one claim forfeited; others preserved or timely raised under Rule 59(e)
Whether Mayagüez project damages were barred for lack of written notice	Redondo asserts substantial compliance with notice suffices	Authority argues strict Blue Book written-notice requirement	Substantial compliance/actual notice suffices; no waiver of subcontractor claims
Whether extended overhead damages were correctly awarded	Redondo contends Eichleay should apply to all delays; alternative methods for direct costs applicable	Authority argues Eichleay appropriate for all delays	Vacate Eichleay-based portions; remand for calculation using direct-cost percentage where applicable and Eichleay only for stoppages/delays as described
Whether prejudgment interest was properly awarded	Redondo seeks prejudgment interest under 41 U.S.C. § 7109(a)(1) or Puerto Rico Rule 44.3(b)	Authority argues no federal contract party; Puerto Rico choice law applies	Remand to district court to determine if prejudgment interest is appropriate and rate/duration; no clear entitlement
Whether debtor had standing to assert subcontractor claims	Redondo asserts entitlement to include subcontractor damages	Authority argues lack of standing under Severin doctrine	Severin-based challenge forfeited; standing issue treated as forfeited/not preserved

United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080 (1st Cir. 1992) (preservation/forfeiture principles in appeals)
DiMarco-Zappa v. Cabanillas, 238 F.3d 25 (1st Cir. 2001) (affirmative defenses and sua sponte error rules)
Crowe v. Bolduc, 365 F.3d 86 (1st Cir. 2004) (Rule 59(e) standards; prejudgment interest considerations)
Boston Gas Co. v. Century Indem. Co., 529 F.3d 8 (1st Cir. 2008) (prejudgment interest under Rule 59(e) and related procedures)
Crowe v. Bolduc, 365 F.3d 86 (1st Cir. 2004) (prejudgment interest and preservation)
P.J. Dick Inc. v. Principi, 324 F.3d 1364 (Fed. Cir. 2003) (Eichleay damages scope in federal contracts)
Freeman v. Package Mach. Co., 865 F.2d 1331 (1st Cir. 1988) (state-law prejudgment interest principles in federal cases)