678 F.3d 115
1st Cir.2012Background
- Three contract adversaries with Puerto Rico Authority; delays and cost overruns across Patillas, Dorado-Toa Alta, and Mayagüez projects due to owner-caused changes and flawed designs.
- Debtor Redondo Construction completed all projects despite problems; sought extra compensation for extra work and for subcontractor costs.
- Bankruptcy court awarded about $12,028,311.92 in damages plus 6.5% prejudgment interest; later reduced by $69,792.26, judgment otherwise left intact.
- Authority appealed in district court; district court found error unpreserved and affirmed; this court reviews de novo with factual findings for clear error.
- Court addresses forfeiture, preserved claims on notice and extended overhead damages, and prejudgment interest; remands for recalculation of overhead and potential prejudgment-interest adjustment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Notice and waiver for Mayagüez project | Authority argues lack of written notice bars claims | Redondo failed written notice per contract | Not barred; substantial compliance suffices; notices found timely in court record. |
| Extended overhead damages calculation | Overhead damages were properly based on Eichleay across all delays | Use Eichleay only for true work stoppages; otherwise percentage of direct costs applies | Vacate Eichleay-wide award; remand for mixed method using percentage-of-direct-costs and Eichleay where appropriate. |
| Subcontractor damages standing | Redondo had standing to claim subcontractor costs | Authority argues lack of standing for subcontractor claims | Forfeiture; Severin-based argument not preserved; standing issues deemed unpreserved. |
| Prejudgment interest entitlement and rate | 41 U.S.C. § 7109(a)(1) or Puerto Rico Rule 44.3(b) may apply | Federal statute not applicable; contract lacks explicit prejudgment-interest clause | Remand to district court to determine availability and rate/periods of prejudgment interest. |
Key Cases Cited
- Davila v. Corporacion de P.R. para la Difusion Publica, 498 F.3d 9 (1st Cir. 2007) (forfeiture of unraised arguments; rare exceptions)
- United Elec., Radio & Mach. Workers of Am. v. 168 Pleasant St. Corp., 960 F.2d 1080 (1st Cir. 1992) (forfeiture and preservation principles)
- DiMarco-Zappa v. Cabanillas, 238 F.3d 25 (1st Cir. 2001) (sua sponte defenses and preservation)
- CMM Cable Rep., Inc. v. Ocean Coast Props., Inc., 97 F.3d 1504 (1st Cir. 1996) (Rule 59(e) and prejudgment interest interplay)
- Crowe v. Bolduc, 365 F.3d 86 (1st Cir. 2004) (state-law prejudgment interest considerations in federal cases)
- P.R. Laws Ann. tit. 31, § 3372, — (—) (contractual freedom on prejudgment-interest terms (statutory reference))