United States Ex Rel. Cal's A/C & Electric v. Famous Construction Corp., 220 F.3d 326

220 F.3d 326 | 5th Cir. | 2000

Before REAVLEY, SMITH, and EMILIO M. amounts owing on unpaid construction and

GARZA, Circuit Judges. repair work, subcontractor Cal’s A/C and Electric (“Cal’s”) appeals a partial summary JERRY E. SMITH, Circuit Judge: ^[*] judgment dismissing its Louisiana state law claim for attorney’s fees. ^[2] Because the district Having won its Miller Act claim ^[1] against court incorrectly concluded that the Miller Act federal contractor The Famous Construction precludes supplemental jurisdiction over Cal’s’ Corporation (“Famous”) and its surety, related state claim for fees, we vacate and Capitol Indemnity Corporation (“Capitol”), for remand, noting that, because the district court

rendered its decision on November 30, 1998, it could not have taken into account this Pruden, “[w]e do not read F.D. Rich to court’s opinion announced the next day in prohibit an award of attorneys’ fees under a United States ex rel. Varco Pruden Bldgs. v. state claim over which the court has exercised Reid & Gary Strickland Co. , 161 F.3d 915, supplementary jurisdiction in a Miller Act case.” 161 F.3d at 918-19. ^[4] We therefore 918-19 (5th Cir. 1998).

vacate, concluding that Cal’s may pursue I. attorney’s fees under Louisiana law. Federal district courts can exercise supplemental jurisdiction “over all . . . claims This result is not, however, mandated by that are so related to claims in the action the Prompt Payment Act Amendments of 1988. ^[5] The Prompt Payment Act, 31 U.S.C. within such original jurisdiction [of the district court] that they form part of the same case or § 3901 et seq. , confers additional rights and controversy under Article III of the United duties on federal contractors and States Constitution.” 28 U.S.C. § 1367. The subcontractors. The 1988 amendments parties do not contest that Cal’s’ state law additionally provide that action for fees is sufficiently related, for § 1367 purposes, to its Miller Act claim. The this section [of the Prompt Payment district court read F.D. Rich Co. v. United Act] shall not limit or impair any States ex rel. Indus. Lumber Co. , 417 U.S. contractual, administrative, or judicial 116 (1974), however, as construing the Miller remedies otherwise available to a Act to bar supplemental jurisdiction over contractor or a subcontractor in the otherwise related state law claims for event of a dispute involving late attorney’s fees. payment or nonpayment by a prime

F.D. Rich did no such thing; it stated that the Miller Act does not “explicitly provide for (...continued) an award of attorneys’ fees to a successful state actions on the bonds of contractors for state and municipal public works projects . . . [though plaintiff.” Id. at 126. The Court further held that statute was] inapplicable to construction that “[t]he Miller Act provides a federal cause

projects of the United States. The Court of Appeals nonetheless held that since federal law of action, and the scope of the remedy as well as the substance of the rights created thereby

controls Miller Act recoveries, it was free to look is a matter of federal not state law.” Id. to ‘state policy’ rather than state law . . . .”). Here, by contrast, the plaintiff looks to Louisiana state at 127. law, and not the Miller Act, for relief. F.D. Rich thus announced only that Miller Act claims themselves do not incorporate state ^[4] See also United States ex rel. Garrett v. law remedies such as attorney’s fees; it did not Midwest Constr. Co. , 619 F.2d 349, 352-53 (5th read the Act to preclude the pursuit of state Cir. 1980) (“Under [ F.D. Rich ], federal common law governs the claim for attorney’s fees in Miller causes of action for fees in addition to Miller Act claims. ^[3] As we announced in Varco

Act cases. . . . F.D. Rich proscribes attorney’s fees in Miller Act cases absent a controlling contractual or statutory provision.”); but see United States ex rel. Howell Crane Serv. v. U.S. ^[3] Indeed, the plaintiff in F.D. Rich did not even Fidelity & Guar. Co. , 861 F.2d 110, 112 (5th Cir. seek a state law-based claim for attorney fees, for 1988) (holding that no state law claim for California law did not provide such an action. attorney’s fees should be inferred from pleadings Instead, the plaintiff sought to incorporate because “[t]he clear holding of F.D. Rich is that California state policy into the federal Miller Act . attorney’s fees are not generally available in a See F.D. Rich , 417 U.S. at 126-18 (“Looking to Miller Act suit even when state law provides for California law, the Court of Appeals found an such an award.”). award of attorneys’ fees proper because [California law] allowed for the recovery of attorneys’ fees in ^[5] See Pub. L. No. 100-496, 102 Stat. 2455,

(continued...) 2460-63, § 9 (codified at 31 U.S.C. § 3905) . contractor or deficient subcontract owner for improvements to an performance or nonperformance by a immovable, . . . the contractor or subcontractor. subcontractor shall be liable for

reasonable attorney fees for the 31 U.S.C. § 3905(j). Cal’s would have us collection of the payments due the recognize that § 3905(j) effectively overrules subcontractors and suppliers. the construction of the Miller Act offered by F.D. Rich, ^[6] but the text plainly limits itself to one particular section of the Prompt Payment Act. Any bars to additional remedies erected by the Miller Act are left untouched by § 3905(j). We therefore do not rely on the Prompt Payment Act, but instead conclude that F.D. Rich found no such barrier in the Miller Act in allowing Cal’s to proceed on its Louisiana claim.

Finally, because we follow the lead of Varco Pruden in holding that F.D. Rich did not preclude state-based actions for attorney’s fees to accompany Miller Act claims, we need not entertain Cal’s alternative argument that § 1367 implicitly overrules F.D. Rich . Because F.D. Rich did not bar supplemental jurisdiction over state law claims, there was nothing in that opinion for § 1367 to overrule.

II.

Famous and Capitol argue that the district court should be affirmed, notwithstanding Varco Pruden , because Cal’s’ Louisiana claim fails on the merits. Louisiana law states:

If the contractor or subcontractor without reasonable cause fails to make any payment to his subcontractors and suppliers within fourteen consecutive days of the receipt of payment from the

L A . R EV . S TAT . A NN . § 9:2784(C) (emphasis Moreover, Famous had paid the undisputed added). amounts in full; only the disputed amounts

were kept from Cal’s. ^[10] Therefore, according Thus, Louisiana law allows Cal’s to recover to Famous, Cal’s cannot prove that Famous attorney’s fees from Famous, the contractor, lacked reasonable cause not to make payment, though not from Capitol, the surety. ^[7] as required to obtain attorney’s fees under Furthermore, as we have previously held, Louisiana law. “recovery on the bond must be under the Miller Act.” Varco Pruden , 161 F.3d at 919. ^[8] We may affirm on any ground supported by Cal’s therefore may proceed against Famous the record, even if it was not the basis for judgment. ^[11] Nevertheless, rejection on the but not Capitol.

merits of Cal’s request for attorney’s fees Famous presents two arguments, under L A . under § 9:2784(C) requires particular factual R EV . S TAT . A NN . § 9:2784(C), why it should findings that the district court did not make SS indeed, had no need to make. ^[12] not be held liable for attorney’s fees and asserts that remand is inappropriate because Therefore, remand is necessary to determine Cal’s failed to comply with F ED . R. A PP . P. 10. whether Famous had reasonable cause not to We address each argument in turn. pay Cal’s.

A.

B. First , Famous claims that it had “reasonable Second , the statute allows recovery of cause” to refuse to make payment and attorney’s fees only “[i]f the contractor or therefore cannot be made to pay fees under subcontractor . . . fails to make any payment to § 9:2784(C). Famous and Cal’s disputed the his subcontractors and suppliers within amount owed. In fact, the district court fourteen consecutive days of the receipt of granted less than what Cal’s originally had payment from the owner .” § 9:2784(C) requested SS further evidence that the dispute (emphasis added). The VA made a series of was joined in good faith on the part of Famous. ^[9]

(...continued) payments. . . . [T]he trial court did not err in denying the plaintiff attorney fees . . . .”). ^[7] See Howell Crane , 861 F.2d at 113 (“[Surety] USF&G’s only involvement with [subcontractor] Howell was its Miller Act bond. No state law claim was asserted by Howell against USF&G. ^[10] Cf. Unis v. JTS Constructors/Managers,

Inc. , 541 So. 2d 278, 281 (La. App. 3d Cir. 1989) (reasoning that “because no disputes existed Thus, there is no basis for a pendant jurisdiction award of attorney’s fees against USF&G.”). between the parties over the Palmetto Creek Project, it was unreasonable for JTS Constructors ^[8] See also Bernard Lumber Co. v. Lanier- to withhold payment”). Gervais Corp. , 560 So.2d 465, 467 (La. App. 1st Cir. 1990) (“While the Miller Act is not the ^[11] See Zuspann v. Brown , 60 F.3d 1156, 1160 exclusive remedy available to suppliers in some (5th Cir. 1995) (“We are free to uphold the district cases, it is the exclusive remedy available to a court’s judgment on any basis that is supported by supplier against a surety (or the surety’s guarantor the record.”); Wooton v. Pumpkin Air, Inc. , in this case) on a Miller Act payment bond.”). 869 F.2d 848, 850 n.1 (5th Cir. 1989) (stating that

judgment “may be affirmed on appeal for reasons ^[9] See Contractors Supply & Eq-Orleans v. other than those asserted or relied on below”). J. Caldarera & Co. , 734 So. 2d 755, 759 (La. App. 5th Cir. 1999) (“The trial judge determined ^[12] The intensely factual nature of this dispute is that the amount demanded by the plaintiff was out reflected in the briefs of both parties, and that of proportion to the amount owed, therefore the remand for further proceedings is warranted is defendant had reasonable cause to withhold reflected in the paucity of record references by

(continued...) either side. payments to Famous, including compensation Famous and Capitol, however, blame any for part of the work performed by Cal’s. deficiencies in the record not on the procedural Cal’s, however, also did work for Famous that posture of this case, but on Cal’s. They assert the VA never paid for. that record omissions should be construed

against Cal’s on the ground that Cal’s failed to That is, the VA never paid for work notify them that it ordered only an incomplete ordered by Famous, despite Cal’s repeated transcript, inadequate to support Famous and warnings that such work did not comply with Capitol’s merits defense. Famous’s contract with the VA and thus wo uld not be eligible for federal It is the duty of the appellant either to reimbursement. Therefore, if, on remand, “order from the reporter a transcript of such Famous does not establish reasonable cause parts of the [district court] proceedings not for failing to pay Cal’s, the district court is already on file as the appellant considers directed to award Cal’s attorney’s fees, but necessary,” or “file a certificate stating that no only those fees that were necessary to obtain transcript will be ordered.” F ED . R. A PP . P. payments for which Famous was previously 10(b)(1). Moreover, where the appellant compensated by the VA. ^[13] decides to order something less than the entire

transcript, it must “file a statement of the Cal’s claims that Famous should be issues that the appellant intends to present on estopped from asserting nonpayment by the the appeal and must serve on the appellee a VA as a defense, because Famous copy of both the order or certificate and the unreasonably failed to request additional statement.” F ED . R. A PP . P. 10(b)(3)(A). The payments from the VA to ensure full appellee then has the opportunity to order compensation for Cal’s. But nothing in the other parts of the proceedings to be included text of § 9:2784(C) suggests any opportunity in the record on appeal. F ED . R. A PP . P. for relief where the contractor has not received 10(b)(3)(B)-(C). payment from the owner, and Cal’s does not provide any alternative theory under Louisiana Cal’s satisfied in toto the requirements of law to justify recovery of attorney’s fees. rule 10(b)(3)(A). It served Famous and

Capitol with its transcript order and with its C. notice of appeal, which adequately articulated Remand therefore is necessary, because the a “statement of the issues that the appellant record does not permit us to render judgment intends to present on the appeal.” Id. The on Cal’s claim under § 9:2784(C). The district appellate rules do not require, as Famous and court erroneously dismissed this claim for lack Capitol seem to suggest, that an appellant of supplemental jurisdiction. Therefore, on specifically warn appellees that it is not remand it will have its first opportunity to ordering a complete transcript. Famous and address the claim on the merits. Capitol may regret failing to take the

opportunity to order additional parts of the transcript for appeal SS particularly because Varco Pruden has forced them to press alternative legal theories SS but the fault lies ^[13] See Gitz v. Quality Restorations with Famous and Capitol, and not Cal’s. Contractors, Inc. , 508 So. 2d 170, 172 (La. App. 4th Cir. 1987) (Ciaccio, J., concurring) (“[Section

VACATED and REMANDED. 9:2784(C)] is a punitive statute that regulates the timely payment of the sub-contractor out of those funds the contractor receives as progress payments from the owner. It does not and cannot shift the risk of non-payment by the owner from the general contractor to the sub-contractor in the absence of specific language in the contract providing for that contingency.”).

NOTES

[*] Pursuant to 5 TH C IR. R. 47.5, the court has determined that this opinion should not be

[2] See L A . R EV . S TAT . A NN . § 9:2784(C) (“If the published and is not precedent except under the contractor or subcontractor without reasonable limited circumstances set forth in 5 TH C IR . R. cause fails to make any payment to his 47.5.4. subcontractors and suppliers within fourteen consecutive days of the receipt of payment from the owner for improvements to an immovable, . . . the

[1] See 40 U.S.C. § 270a et seq. (imposing bonding requirements for federal contracts and contractor or subcontractor shall be liable for establishing federal cause of action to recover on reasonable attorney fees for the collection of the such bonds). payments due the subcontractors and suppliers.”).

[6] A few district courts, in addition to the district court in this case, have supported this approach. See United States ex rel. Don Siegel Constr. Co. v. Atul Constr. Co., 85 F. Supp. 2d 414, 416 n.1 (D.N.J. 2000) (stating that, though “at least one federal district court has held that a subcontractor’s supplemental state law claims against a contractor or surety may be preempted by the Miller Act . . . the holding in that case was subsequently superseded by the Prompt Payment Act”). We are aware of no courts of appeals that have addressed the issue.