WEGCO, Incorporated v. Griffin Services Inc

job revenues all minus site costs with re- WILKINS, Before WIDENER and spect to this work.” J.A. 40. The Judges, ALARCON, Circuit Senior percentage a sliding increased on scale as Judge, Circuit of the United States Court profit amount of increased. Both Circuit, of Appeals for the Ninth sitting agreements provided that interest would designation. accrue on payments late at an annual rate percent. of 15 OPINION government Griffin was awarded the PER CURIAM. subject contracts that were the of the two Services, Griffin Incorporated appeals In calculating its “Net Prof- in this contract action it” for purpose making payments its WEGCO, brought by WEGCO, Incorporated. Grif- all Griffin identified revenues fin argues primarily that government Seventh from the contracts and then agreement, also executed a third to the issues before us. Agreement,” the "Parr which is not relevant costs, only argued than rather “Net Profit.” WEGCO deducted direct from rev- costs should be subtracted methodology, indirect direct costs. Under this itself and noted Griffin were not deducted. enues costs such overhead law- this before the employed methodology subsequently concluded Employing suit was commenced. perform had failed to some opined methodology, expert required by agreements, services “at least eventually that WEGCO was owed notified WEGCO that New terminating $144,404.97 plus on interest” under the “at Agreement, J.A. basis. $84,284.34 plus least interest” under termination challenged id. at 98. Agreement, and, diversity filed in March revenues evidence Griffin’s in Court action the United States District testimony expert’s and calcu- and costs the of Virginia. for Eastern District As is “Net that data account- lating Profit” here, alleged relevant that Griffin WEGCO period July 1998. ending ed for the to agreements failing pay the breached produced damage no evidence WEGCO sought the fees due. WEGCO mon- period, al- any subsequent calculations declaring, ey damages judgment and a in- the present it did evidence that though (a) alia, to pay ter that failure Griffin’s to in agreements continued be effect. agreements monies under due the consti- contract; (b) prelitigation tuted a was conduct notwithstand- breach Griffin Its obligated pay owing ing, position to the at trial that monies then took Griffin agreements the as well as monies that all costs—both direct and indirect—should (c) future; to would be due the and the from revenues order subtracted methodology Profit.” The agreements continued to be valid and bind- determine “Net yielded possible and could be terminated. advanced two WEGCO Griffin requested agree- agreement: also an the for each was accounting of results WEGCO answer, $16,124 $15,766 allegations ments. In its either for the overpaid Griffin’s or underpaid a claim included that WEGCO had breach- New Alexandria and $20,763.11 $18,962.30 the the agreements. ed Griffin also demanded either jury trial on all City Agreement. issues. Kansas trial, During discovery, sought conclusion of the WEGCO infor- At the the special finding, mation it in determining that would assist returned a here, the due under amount relevant that WEGCO had not Prior that discovery agreement; to the close of on October breached either Griffin 30, 1998, requested agreements by failing had produced Griffin breached both WEGCO; ending July period pay information sums due supplemented never its dis- damage Griffin “the total amount covery responses discovery after close of caused Griffin Services’ fail- WEGCO ure compel. pay and WEGCO never moved to to WEGCO what it was due” was $64,000 Agree- for the New Alexandria trial, ensuing jury During par- $75,000 ment and for the Kansas regarding ties introduced evidence wheth- 1099,1101. Agreement. Id. at had er Griffin breached the dismissed, damages if and how should be calculated After WEGCO Concerning dam- breached. moved for diverging ages, advanced theo- continued to be effect requested accounting ad- regarding interpret ries how to term to determine allegedly ditional due amounts WEGCO cember 1997 for New Alexandria agreements through Agreement) July under the the date of the auditor appropriate WEGCO’s motion. WEGCO further re- could not calculate the sliding- quested that this calculation be percentage made scale needed to calculate an independent using compensation. Accordingly, accountant the meth- WEGCO’s odology advocated at compensa- WEGCO had trial. auditor did not calculate the Finally, tion prayed Griffin be owed to ordered pay City Agreement, monies that and it calculated the the accounting determined to be amount due. owed WEGCO under New motion, opposed maintaining Agreement only for the period granting through additional relief would vio- from December November late its to a trial. period, 1999. As to this the auditor determined that the “Net Profit” was The district court determined that the $274,663.06and Griffin owed award included for the peri- $102,331.53 $4,134.34in plus interest. ending July od and therefore no period recalculation of for that adopted district court the findings However, was necessary. the district in the report supplemented auditor’s granted declaratory court a judg- findings those its own with determinations. ment that Griffin not terminated the The court that concluded Griffin owed they valid, and that were still $5,485.54 $1,371.39 in plus inter- binding, and in The district effect. court est under Alexandria Agreement the New accounting also ordered an of profits 1,1998 net period August for through the by government received Griffin for the 30, November 1998. The district court agreements. underlying contracts the The further that determined Griffin owed district court directed that the method for $27,775.86 $6,131.14 plus in inter- in calculating “Net Profit” the accounting City est under Agreement the Kansas would be that at proposed by trial 1, period the August through of 1998 Feb- expert. The district 28, court stat- ruary 1999. A final was then receiving that upon ed and verifying $286,229.80, the against entered Griffin for accounting, results of $139,000 the it would order represented of which the declaratory relief in the amount due. $147,229.80 The verdict and of which represent- court also ordered Griffin allow ed the supplemental awarded concerning WEGCO access to its records the district court. underlying year

the twice a contracts

the duration of the II. accounting The the ordered district argues Griffin first the district encompassed period from August the court erred in supplementing WEGCO’s 1, 28, February 1998 through 1999 for the damage its breach award on of contract City Agreement August and from failure-to-pay agree. We claims. 1, 30, through 1998 November 1999 for the pro Amendment Seventh New Agreement. Because the vides that auditor could not determine how much of law, damage [i]n the awards the allocated to Suits at common where the controversy in period beginning twenty between the of value shall exceed (March dollars, 1, respective years right by jury of trial shall be contract 1998 preserved, jury, fact tried for the Kansas and De- and no a

73 Wood, 469, 476-77, Queen, Inc. v. 369 shall otherwise reexamined U.S. be (1962); States, Wyler 8 L.Ed.2d 44 the United than accord- 82 S.Ct. Court of Sys., Broad. P’ship Summit v. Turner ing to the rules of common law. (9th Cir.2000) Inc., F.3d 235 1194 Const, protection VII. This U.S. amend. (“In instances, seeking money a claim most applies legal, in which rather suits is an action damages for breach of contract equitable, rights than are at issue. See law.”). “ac party requests at That Loether, 415 U.S. Curtis counting” to determine amount of dam (1974). S.Ct. 39 L.Ed.2d 260 Wheth- ages be itself awarded does right er trial exists is a nature of change legal breach question of law we de review novo. Queen, Dairy contract claim.2 See Educ., v. Va. Bd. See Pandazides notion that a (rejecting U.S. at 477-78 (4th Cir.1994). F.3d If a denial of money equitable claim for payment occurred, trial we must solely is cast “complaint decide whether the denial constituted ‘accounting,’ of an rather than terms id. harmless error. See The error or of an action ‘debt’ ‘dam terms if only harmless the district court would ”). And, ages’ fact the claim is granted judgment have as matter law not affect one for relief does defendant, i.e., if “the evidence is equitable character of such, credibility weighing without The issues to decided. See Beacon witnesses, there is one con- Westover, atres, Inc. v. 359 U.S. jurors clusion that reasonable could have (1959). S.Ct. L.Ed.2d 988 George’s reached.” Keller Prince Coun- Cir.1987). ty, 827 F.2d We conclude the district court cases, In diversity although right to a the violated Griffin’s constitutional rights jury supplemented substantive in a claim asserted arise trial when it law, failure-to-pay “the of damage state characterization award. WEGCO’S equita that state-created claim as a simply claims were claims on debt creat Therefore, right jury ble of whether ed a purposes by a contract. Griffin had is by right trial indicated must be made re Seventh Amendment have these Conner, adjudicated course to federal law.” aby jury, Simler v. claims and the dis 83 9 trict find making U.S. S.Ct. L.Ed.2d court erred its own (1963) curiam). (per Ordinarily, ings regarding an what monies were owed alleged action on a by supplementing debt be due under a and in Dairy jury findings.3 contract is action at law. See the on those award based may resulting edy” granted only 2. A claim for from breach when “more remedies, may equitable of contract be deemed when damages, are traditional such as plaintiff the demonstrates "that the accounts inadequate.” Archway unavailable or either complicated Herman, Motors, between the are of such a Md.App. Inc. v. equity can nature court satisfac- Here, (Md.Ct.Spec.App.1977). A.2d Queen, torily Dairy unravel them.” U.S. non-payment any by was remediable (internal omitted). quotation at 478 marks money damages, an award of and that showing. WEGCO has made no such remedy sought for its failure-to- the pay claims. argues partly suit was only remedy sought equitable Because the the sought equitable because the failure-to-pay legal, specific claims was WEGCO is performance. That is in- law, specific per- in its that Griffin correct. Under also incorrect contention equitable "extraordinary jury is an the formance rem- waived its trial on failure- maintains, however, argues WEGCO also that the dis possessed trict court inherent equitable district court did not make findings of fact authority necessary findings to make the itself, rather, simply applied but the law to supplement damage award with findings necessarily jury. made additional amounts not submitted all, That findings is incorrect. First of however, jury. authority, We know of no court regarding district the amount allowing district court to act as fact of Griffin’s revenue and indirect costs for regarding purely legal finder claim on period beginning August 1998 were party jury which a has demanded a trial. any findings not based on made We further conclude that the er Furthermore, jury. although WEGCO ar ror of the district in supplementing gues that a methodology calculating jury awarded was not jury “Net Profit” can from be derived regarding ap harmless. The evidence verdict, we not agree. do WEGCO main propriate methodology for net calculating tains accepted fig Griffin’s profits sharply was ures regarding the amount of revenue and juries conflicting, reasonable could indirect costs and used WEGCO’s method have reached different According results. ology doing produce so would total ly, supplemental damages we vacate the $139,802, damages of and the total verdict Pandazides, award.5 See 13 F.3d at 833 $139,000. persuaded We not are (holding that denial of trial was not the closeness of these numbers that when conflicting). harmless evidence was jury arrived at its the manner suggested by telling WEGCO. The most III. evidence that the did not do so is that argues Griffin next that the dis $64,000 it awarded in damages for Griffin’s trict court violated its Seventh Amend breach of the New Alexandria rights by declaring that Griffin had $75,000 for Griffin’s breach of the terminated the and that City Agreement; these awards they remained effect.6 We conclude $54,230 $85,572, would have been re Although error was harmless. spectively, were WEGCO correct about explicitly did not find that jury Any the basis for the verdict.4 at force, reject remained in it did tempt part on our to divine the methodolo terminating Griffin’s basis for gy jury employed to reach its verdict namely, agreements, its contention that speculation. agreements. would amount to rank had WEGCO breached the to-pay failing plead argument cross-appeal claims to the defense reach WEGCO’s on of election of remedies. judgment that the final did not include the prejudgment exact amount of contractual in- discrepancy 4. WEGCO attributes to judgment terest due on the date of the final argument "Griffin's that loss under one supplemental for the award. during particular Services a against any gain month should be offset in the partial dissent that the de- The concludes Appellee/Cross Appellant other one.” Br. of However, improper claratory award un- was regarding at 31. no calculations Maryland presented der state law for several reasons. jury. offsets were ever to the We do not address these state-law issues be- 5. Because we vacate the dam- they cause were not raised Griffin on its award, ages argu- we do not address Griffin’s appeal to us. See Golds- Edwards regarding ments the correctness of the find- boro, Cir.1999). F.3d 241 n. 6 ings underlying the award. We also do not thereof, it as affirms paragraph that it was first prejudiced Griffin maintains declaratory judgment. To continuing of its obli- district court’s the declaration The district respectfully I dissent. jury al- that gation pay to because award judgment should be va- future, court’s ready damages for as well included thus, grants it to essentially con- cated past, as nonpayments; perfor- remedy specific declaratory judg- tends without the that services, ment, personal for no further mance of a contract obligation it have would law, Maryland remedy reject long repugnant a We Griffin’s and, well, of action. splits as a cause premise jury award included dam- that ages nonpayments. Nothing in for future followed func- Maryland have Courts special jury instructions deciding approach tional when whether form allowed assume Grif- that, nominally while dif- award agree- fin continue to breach the would ferent, specific per- has the same effect permitted after trial or ments Leo Ltd. Part- formance. In M. Storch damages for breaches that award Erol’s, Inc., Md.App. nership v. yet The occurred. instructed (1993), 620 A.2d placed was “entitled to treated Special Appeals Court of a re- if the the same situation as contract had injunction prevent de- quest broken,” not been J.A. which would breaching a continuous oper- fendant from not have allowed the to award request ations of a lease as clause yet to which it payments was not specific performance. plaintiff asked special verdict entitled. The form asked order simple that the court “enter a the jury to find the total result- says, you not continue to breach the may to pay from Griffin’s failure what continuous clause.” 620 A.2d operations due,” again indicating “was stating at 412. to do so The court refused resulting from Griffin’s failure to “Maryland have in- Courts allowed pay yet monies not due were not to be junctive equiv- ... as the functional relief 1099,1101. at awarded. Id. However, specific performance. alent of injunction suit for an seeks which to ac- IV. complish purposes of a decree reasons, foregoing supple- For the subject specific performance is damage mental award is vacated and principles apply application to an which declaratory judgment is affirmed. remedy.” for the latter 620 A.2d at 411 IN PART AFFIRMED AND VACAT- (internal quotation marks and alterations ED IN PART. omitted). The District court’s order the instant case declared services WIDENER, Judge, concurring Circuit in effect remained and or- dissenting and in part: comply dered that parties “shall with I II parts majori- in I and of compensation provisions concur of two ty opinion perform and the decision that the district Services Agreements as re- (italics in quired supplied). award of to It court’s addition the future.” those awarded violated Grif- is evident that the district court’s declara- fin’s tory judgment nearly Amendment to a here is Seventh identical trial. join I its decision vacate the the relief that the M. Leo Storch court However, disagree award. I denied it was the functional ana- part opinion, except logue performance. with III of the of Because specific declaratory judgment operates here longer Griffin no wants the advice and grant specific performance, the Dis- services and it formally has severed the trict court should have inquired into contractual relation for which breach of whether the latter remedy appropri- contract has sued. The declara ate. tory judgment awarded the district require would Griffin to continue to

Maryland will not “ordinarily enforce a service,” receive unwanted personal contract for advice and services and the reason being that to maintain a likely relationship “the mischief that would result him, from the enforced continuance of the rela especially obnoxious to considering tionship incident to the service when it has present hostility. A contract for pro personally become obnoxious to one of advice, viding personal whether it be for or great is so that the best interests purposes, business will long abide so society require be re as confidence and trust remain. When Michael, fused.” Fitzpatrick See vanish, aspects these possibility (1939). Md. 9 A.2d Fitz successful enforcement a relationship patrick refused to enforce a contract based on them also vanishes specific which an man elderly whimsically, arbi performance is inappropriate. therefore “ trarily unjustly refused to honor a ‘It is not for the society interest of contract to provide a home in return for persons who are not desirous of maintain personal long services of a time nurse personal continuous relations with one companion. The court reasoned that compelled another should be so to do.’”1 specific performance personal of the ser Fitzpatrick, 9 A.2d at 641. vices contract should be denied because “it peculiar Aside from the difficulties compel

would him to accept personal personal contracts, specific perfor service employee service of an against his wish will,” mance and equivalents inappropri are and his Fitzpatrick, 9 A.2d at judicial ate because exactly supervision per pertained situation which here. required formance agree Under the terms of the these services services ments, provide is to long business ad would be of duration and vice and services to Griffin. It is clear potential becoming quite has the diffi 1. This excep- example, contract does not fall under the tracts. For the New allowing specific performance tion Agreement of some states that “this shall personal party service contracts where the any gov- remain in effect for the duration of contract, rendering substantially fully the service including any has or ernment and all ex- less, tensions, performed. modifications, Ledingham Bay options, change See extra (1958) orders, novations, (enforcing Md. 145 A.2d or follow-on con-tracts.” contract example, to make will to devise one half inter- For should Griffin seek an extension contract, plaintiff fully est in land where government rendered or renewal personal agree- required Agree- services in accordance with WEGCO would be ment); Stubbs, Snodgrass v. negotiating op- 189 Md. to “assist renewal (Md.1947). circumstances, A.2d See also Stama- Under tions.” these " Service, '[cjontracts tiades v. Merit Music 210 Md. follows the Illinois rule that (1956) (granting injunction stipulate 124 A.2d 829 which their terms for a succes- acts, prevent removing performance restaurant owner from sion of whose cannot be transaction, disconnecting provider's vending service consummated one but will be machines). continuous, require protracted supervi- The contracts at issue in the in- direction, contemplate continuing perfor- spe- stant case sion and with the exercise of WEGCO; skill, part knowledge, mance on the of it must render cial in such not, rule, oversight, specifically business advice and other to Griffin are en- services as ” Storch, underlying government for the life of the con- forced.’ M. Leo 620 A.2d at 413.

77 Estate, 526, 129 212 Md. Storch, In In re Carlin’s 620 A.2d at 413. cult. M. Leo (1957), 827, Maryland Court Furthermore, is de A.2d 831 specific performance case, is well estab- when, “[i]t Appeals of stated particularly nied or an le cause of action single available. WEGCO’s that a lished up or divided damages split for total gal remedy was entire claim cannot contract, vari- including future dam for the of suits maintained separate breach Katzner, Md. v. Friedman v. 139 Levin ages. See See also parts ous thereof.” (1921) 831, (recognizing 438, Friedman, 114 A 317 A.2d 271 Md. anticipatory repudiation (1974). and hold suit for this rule is policy behind “excused the vendor ing litigation that such suit multiplicity of prevention of 13 Williston performance.”); vexation, from further costs and of the and avoidance 2000) (rely § 39:37 Ed. on Contracts suit on to more than one expenses incident (2nd) Contracts, § ing Restatement on Speed, the same cause of action. Jones b) (stating comment that “a breach (1990). Yet, A.2d 320 Md. gives rise to a claim for dam repudiation Any exactly what will occur here. this is breach.”). Rozay also ages for total See govern- extension or modification Products, Inc., 37 Misc.2d Hegeman Steel contracts, entitle example, will (N.Y.Sup.Ct. 234 N.Y.S.2d to services WEGCO 1962) anticipatory that “suit for (stating may It payment from Griffin. executory personal service breach of an doubted, that under the de- not even be ... recognized contract is a cause of action received, WEGCO has claratory judgment contract, breach of a [and] material advice and services will receive begun, justi of which will performance has wants, sufficiency perfor- longer no fy damages, past, action for all immediate part will arise mance on both future”). present, and WEGCO asked future, and the court will become damages complaint future in its but failed dispute again. in this once entangled fu present evidence about what those I would va- foregoing For the reasons damages ture would be. WEGCO did grant declarato- cate the district court’s request determining instructions on ry judgment that the services object damages. future Nor did WEGCO in force. are still to the absence of an instruction on future therefore, damages. appears, It any may has waived claim it have 51.2 damages.

had to future Fed.R.Civ.P. recognizing its mistake fail-

Perhaps argue for future prove, or even preserve seeks to

damages, WEGCO although split it has its cause

position Maryland prohibited

action as law. excluding by the court as and B-16 which was treated district Instructions number B-15 given objection, un- jury, proof were without if future certain reading any ordinary law der either future it has damages. contemplate the award of future waived them or received them. Micrographics Systems, Inc. v. See National and cold at not be allowed to blow hot should Inc., OCE-Industries, Md.App. time, same indeed it offered instructions (1983). special The fact that A.2d 862 B-15 and B-16. form, to, objected which also was not

Case Details

Case Name: WEGCO, Incorporated v. Griffin Services Inc

Court Name: Court of Appeals for the Fourth Circuit

Date Published: Sep 19, 2001

Citation: 19 F. App'x 68

Docket Number: 00-2053, 00-2123

Court Abbreviation: 4th Cir.