Petition — United States ex rel. Johnston v. General Insurance Co. of America

Sup me Count y. — |

™- FILER .

| ANG 24 1977 |

| |

aK, JR., CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1977 {

)

mm F9-307

THE UNITED STATES OF AMERICA for the use of

JOHNSTON, L. R. d/b/a L. R. JOHNSTON COMPANY.

Petitioner.

versus

GENERAL INSURANCE COMPANY OF AMERICA,

a corporation,

Respondent,

versus

BECKMAN CONSTRUCTION COMPANY, a corporation,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

| UNITED STATES COURT OF APPEALS

; FOR THE FIFTH CIRCUIT

MAURICE A. DOWNING

Counsel for Petitioner

Of Counsel

MOORE AND DOWNING

920 DAUPHIN STREET

P. O. BOX 1261

MOBILE, ALABAMA 36601

SCOFIELDS’ QUALITY PRINTERS. P O BOX 53096.N 0. LA 70153 504 822 1611

o>

FCR ; Aberthnar hea tdatieeee taketh en sii u

BRIEF

the=prisc-cowerecter® (3) Whether the sutcontractor would be entitled to

damages for the injury to machinery caused by the negligence of the prime contrac

| recovery

=. CMe? aE eS. ee ee

SSG To Sie OR SS Es Og ee RR tor when ‘kmcmom is provided for in the subcontract? (4) Whether the subcontractor

, a eT :

Supreme Court Review would be entitled to attorneys' fees when the daily worksheets submitted by the

subcontractor and sidgfd by the prime state that the prime agrees to pay attorneys?

fees in the even! of default in payment of the amounts shown and where State lew

cae | | provides for attorneys' fees in similar contracts with the State? Se ee

Petition Filed Relwkemlte (U.S. f£/u/o Johnston, L.R., v. General Insurance °o. of “nerica,

Sup. Ct. No. 77-307, 8/24/77)

\ Subcontract Milder _Actr—Rul.ing Below ( CA 5; 3/23/77):_/

Sctanutaiianiaatittnsial epee furnishing the labor and

A

materials for construction of a well under a Government prime contract who,

after the first well had stopped producing water, was directed by the prime

contractor to #x drill a second one isn't entitled to payment under the Miller

Act for work performed on the second well since the Government refused to. pay for

the work and the ‘subcontract aia not obligate the prime to pay for any work until , | REST COPY AVAILABLE

the prime had been paid themedie&e by the Government. Further, the sub's request

were

for damage s to its aquiguan, claimed to have been caused by the negligence of the

prime is one for extraordinary damages by reason of tortious conduct, rather than

a claim for materials or labor » and therefore demx is not appropriate in a Miller

Act suit.

Questions presented: (1) Is the subcontractor entitled to be paid under the

Miller Act by the prime contract) for verk anf lebor done unter oréers/of the prin

where the Corps of Engineers had not issued a change order of the contract for

additional sums to pay for such work and labor? (2) Under the Miller Act, is a sub

entitled to be paid for drilling esastional well not called for in the prime

contract when the subcontract calls for $40 per how for work and labor and machinery

end

furnished, when the failure of the first well was due to the negligence of the prime 2

Sater

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Appendix

A — Memorandum Opinion and Judgment

ED cnn bdo ads cdamdueewesdediced la

B — Appeal to United States Court of

Appeals for the Fifth Circuit ............. lla

C — Court of Appeals Rehearing .............. 12a

D — Supreme Court Extension of time ........ 12a

E — Kenneth MclIntyre’s letter ................ 13a

Fe ee ED TP da Was cdwEd baw cases veces 15a

G — 40 U.S.C. 270(a), (b), (c), (d) ............... 18a

ii

CITATIONS

CASES:

Arnold vs. United States for the use of Bow-

man, 470 F. 2d. 343, (1972) 2... cccccccccces

Title 50, Section 16, Code of Alabama, 1940, as

Recompiled 1958 (Appendix F) ............

United States of America for the use and

benefit of Weyerhaeuser Company vs.

Bucom Construction Company and

Traveler’s Indemnity Company, 430 F. 2d.

GRD, (2GTE) oc cccccccccccesesenesucesesucweel

United States Fidelity and Guaranty Com-

pany vs. Hendry Corporation, 391 F. 2d. 13

United States vs. F. D. Rich Company, 434

DP. 28. GSB, (2BVE) c ccccccccssobevscssuseuenen

STATUTES:

40 U.S.C. § 270 (a), 270 (b), 270 (c) and 270 (d)

ON gd ee eee

SB UO.BG. OSBRS oc ccvscccsvscanesseneeesneae

ADMINISTRATIVE HEARING

Corps of Engineers, Beckman Construction

Company, Ruling on appeal 30 July 1976,

ON SS Sa.

Page

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No.

THE UNITED STATES OF AMERICA for the use of

JOHNSTON, L. R. d/b/a L. R. JOHNSTON

COMPANY,

Petitioner,

versus

GENERAL INSURANCE COMPANY OF AMERICA,

a corporation,

Respondent,

versus

BECKMAN CONSTRUCTION COMPANY,

a corporation,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioner, THE UNITED STATES OF AMERICA

for the use of JOHNSTON, L. R. d/b/a L. R.

JOHNSTON COMPANY, prays that a Writ of Cer-

2

tiorari issue to review a judgment of the United States

Court of Appeals for the Fifth Circuit, affirming a

judgment rendered by the United States District Court

for the Middle District of Alabama against your

Petitioner. ™~

OPINIONS BELOW

District Court entered a judgment on the 17th day of

June, 1976 (R. 49) in favor of the Defendant, General! In-

surance Company of America, a corporation, and

Third-Party Defendant, Beckman Construction Com-

pany, a corporation, wherein the Court ruled in its

opinion that “Plaintiff take nothing by his complaint

herein, and that the above-styled cause be, and the

same is hereby, dismissed with costs taxed against the

Plaintiff’. (Appendix A) In a summary judgment, un-

der Local Rule 21, without opinion, the United States

Court of Appeals for the Fifth Circuit (case no. 76-3033)

affirmed the District Court on March 23, 1977. (Appen-

dix B) On April 27, 1977, an Order was entered by the

United States Court of Appeals for the Fifth Circuit

(case no. 76-3033) denying the petition for rehearing.

This is not reported. (Appendix C).

The Supreme Court by Order dated the 19th day of

July, 1977, extended the time to file Petition for Writ of

Certiorari to and including August 25, 1977. (Appen-

dix D)

JURISDICTION

The jurisdiction of this Court is invoked under 28

U.S.C., § 1254. The basis for federal jurisdiction in the

Court of first instance, United States District Court for

3

the Middle District of Alabama, is that this is a case

under the “Miller Act”, Title 40, U.S.C., Section 270 (a),

(b), (c), and (d).

STATUTES INVOLVED

The statute involved is 40 U.S.C., § 270 (a), 270 (b), 270

(c) and 270 (d). This statute is printed in Appendix G

hereto (pp. 18a-22a).

QUESTIONS PRESENTED

1. Is the sub-contractor entitled to be paid under 40

U.S.C., § 270 (a), (b), (c) and (d) by the prime contractor,

for work and labor done under orders of the prime con-

tractor where the Corps of Engineers had not issued a

change order or modification of the contract for ad-

ditional sums to pay for such work and labor?

2. Under the “Miller Act”, 40 U.S.C. § 270 (a), (b), (c),

and (d), is a sub-contractor entitled to be paid for the

drilling of additional water well not called for in the

general contract when the contract between the prime

contractor and the sub-contractor calls for $40.00 per

hour for work and labor and machinery furnished,

when the failure of the first well was due to the negli-

gence of the prime contractor in failing to supply elec-

trical power to the first well for more than one year

from time original well was drilled and accepted by

Corps of Engineers and prime contractor?

3. Whether under asub-contract the sub-contractor

would be entitled to damages for the injury to

machinery caused by the negligence of the prime con-

tractor when same is provided for in the sub-contract?

4

4. Whether the sub-contractor would be entitled to

attorney fees when on the daily tickets or worksheets

submitted by sub-contractor and signed by the super-

intendent of the prime contractor it is stated that the

prime contractor agrees to pay attorney fees in the

event of default in the payment of the amounts shown

on the work sheets and where State law provides for

attorney fees in like contracts with the State?

5. Does the sub-contractor have to wait until the

Corps of Engineers agrees to a change order or

modification of the original contract before being paid

for work and labor performed and machinery fur-

nished where the prime contractor authorized the sub-

contractor to do the work?

STATEMENT

The basis of federal jurisdiction in the court of first

instance, the United States District Court for the Mid-

dle District of Alabama is 40 U.S.C., § 270 (a), 270 (b).

270 (c) and 270 (d) dealing with a federal contract for

the building of recreation facilities at Jones Bluff,

Autauga County, Alabama. On the 25th day of July,

1975, the Plaintiff, United States for the use of L. R.

Johnston, doing business as L. R. Johnston Company,

filed a suit against the Defendant, General Insurance

Company cf America, as surety on the bond of

Beckman Construction Company, general contractor,

for work and labor performed under a sub-contract, for

damages caused by the prime contractor by negligent-

ly causing injury to machinery of the Plaintiff,

Johnston Company, and for attorney fees. Ail of said

damages being sustained under a sub-contract with

the Corps of Engineers for the erection or building ofa

5

recreation center at Jones Bluff, Autauga County,

Alabama. The Plaintiff, hereinafter called Johnston,

claims that he entered into an agreement with the

prime contractor, Beckman Construction Company,

Third-Party Defendant, hereinafter called Beckman, a

copy of which sub-contract is attached to the original

complaint and is also Plaintiff's Exhibit 6 (R. 370); that

under said contract Johnston agreed to furnish all the

labor, tools, machinery, taxes and insurance to drilla

water well and to drill and place grout piling and

Beckman was to furnish the materials and super-

vision. Under Section 4 (R. 371) of the contract,

Beckman agreed to pay Johnston $40.00 per hour for

actual working time and the same rate for travel time,

and that payments partial or final were to be made on

the same basis that the owner, U. S. Corps of Engi-

neers, hereinafter called the Corps, pays Beckman;

that under the contract Corps agreed to pay Beckman

each month for work completed or at more frequent in-

tervals as determined by the contracting officer (see

Section 7 (b), last page of Plaintiff's Exhibit 7 (R. 386);

that under said contract Johnston did furnish the

labor, tools and machinery and insurance as agreed,

did drill two wells and place grout piling and that

Beckman failed to pay the Plaintiff $17,003.00 due him

under said sub-contract. The Plaintiff also claims at-

torney fees in the amount of $3,400.00. Work tickets or

order tickets were issued by Johnston and signed by

Beckman Company each day. (Plaintiff's Exhibits 1

and 4) (R. 310 and 348) The Plaintiff filed his claim

against General Insurance Company of America, a

corporation, as surety on Beckman’s payment bond

and the surety, with leave of the Court, brought in

Beckman as Third Party Defendant.

On pre-trial hearing, the Defendant (surety) admit-

ted that its principal (Beckman) entered into the con-

tract sued on, admitted that it was subject to the

provisions of Title 40, U.S.C., § 270 (a), et seq. and ad-

mitted that General Insurance Company was surety

for Beckman Construction Company under the federal

construction project referred to in the contract.

The defenses were:

1. The general issue.

2. That the contract provided that payment would

not be made to Johnston until the progress on work

done and services furnished was satisfactory to

Beckman and that said work was not satisfactory.

3. That Johnston failed to perform work and com-

plete all work covered by the sub-contract to the satis-

faction of Beckman as provided in the contract and -

failed to secure and protect his work as required.

4. That Johnston was to be paid on the same basis

as Beckman was paid by the Corps and that Johnston

has been paid on this basis and that Beckman has no

further obligation to make payment to Johnston.

5. That Johnston agreed tocomply with the general

contract between Beckman and the Corps of Engi-

neers and failed to do so.

6. That the amount claimed by Johnston was the

amount incurred in drilling a well which the Defen-

dant and Corps of Engineers claimed were defective

and that Plaintiff drilled another well which was ap-

proved and paid for after the first well had been

declared defective.

7

7. Beckman claims that Johnston agreed to per-

form his work in a workmanlike manner which would

be satisfactory to the contracting officer of the Corps

of Engineers, but that the first well was not accepted

by the Corps of Engineers, who refused to pay

Beckman for Johnston’s work done and hence

Johnston is not entitled to recover.

8. Defendant says that attorney fees are not

recoverable in this action.

9. That Defendant (surety) is entitled to judgment

over against Beckman for any amount for which it

may have to pay under its bond.

The case came on to be heard at a formal hearing

before the Honorable Robert L. Varner, United States

District Judge for the Middle District of Alabama,

Northern Division, and all parties were represented

by counsel and were given full opportunity to be

heard, and a Memorandum Opinion and Judgment was

rendered by the Court on the 17th day of June, 1976, by

which Judgment the Court dismissed the complaint of

the Plaintiff with costs taxed against Plaintiff.

The Plaintiff filed timely notice of appeal to the Unit-

ed States Court of Appeals, Fifth Circuit, pursuant to

the rules of appellate procedure.

The United States Court of Appeals for the Fifth Cir-

cuit, in case no. 76-3033, Summary Calendar, without

opinion, affirmed the lower court on March 23, 1977.

Said judgment was not published.

On the 27th day of April, 1977, a petition for rehear-

ing was denied by the United States Court of Appeals

for the Fifth Circuit.

8

REASONS FOR ISSUING WRIT

During the entire course of the trial in the Court of

first instance, the United States District Court for the

Middle District of Alabama, the defense of Beckman

Construction Company, Defendant, and General In-

surance Company of America, Defendant, was, that

since the Defendant, Beckman Construction Com-

pany, was not paid by the Corps of Engineers for the

second well drilled by the Petitioner, Johnston Com-

pany, that the prime contractor, Beckman Construc-

tion Company, did not have to pay Johnston for the

work done on the second well. In fact, the Court stated

(R. 125) as follows:

“THE COURT: I think your defense has not

been an itemized defense. Your defense up to

this point has been that you simply weren't

paid by the engineers, therefore you don’t owe

him.

MR. MILLING: Yes, sir.”

Section 4 of the sub-contract (R. 371) between

Appellant, Johnston and Beckman Company sets out

that Johnston, the sub-contractor, was to be paid $40.00

per hour for men, machinery, work and insurance, and

under Section 2 of the sub-contract (R. 370), Johnston

was to drill a water well and to drill holes for piling, all

of which he did in a workmanlike manner.

Also, in Section 4, the following will be found:

“Payments, partial and final, will be made on

the same basis that the owner pays Beckman

Construction Company. The sub-contractor

will submit an estimate of its completed work

each month before the 20th of the month. If not

received, Beckman Construction Company

will make an estimate for this sub-

contractor.” (R. 371)

The entire contention of Beckman Construction

Company is that the Corps of Engineers did not pay for

the second well, therefore, under said paragraph of the

sub-contract, Beckman was not obligated to pay the

sub-contractor for doing the work.

At paragraph 7 of the prime contract with the Corps

of Engineers, (R. 390) the following will be found:

“7. (b) The government will pay progress

payments monthly as the work proceeds or at

more frequent intervals as determined by the

contracting officer on estimates approved by

the contracting officer.” .

Therefore, considering both paragraphs, that in the

prime contract and that in the sub-contract, it is ob-

vious that what was meant in the sub-contract is that

the prime contractor would pay the sub-contractor as

the government or owner paid him which was on a

monthly basis on estimates of work submitted. It does

not mean that if there is extra work done by the sub-

contractor and the Corps of Engineers fails to issue

change orders for the extra work done by the sub-

contractor, then the prime contractor is not obligated

to pay the sub-contractor. | do not believe that the par-

ties understood this to be the case when they entered

10

into the contract. In addition, since the trial] in the Dis-

trict Court of the Middle District of Alabama, the

Corps of Engineers on appeal by Beckman ruled as

follows:

“I find that you let the well sit idle for over one

year. Therefore, I find that you did not develop

the well properly.” (Appendix E)

_So, it is plain that the engineers have ruled both at

the Mobile level and at the Appellate level that the

prime contractor, Beckman, was at fault in allowing a

well to sit idle without electrical power and no way to

activate a pump to keep said well clean for over a year,

thereby allowing the well to clog and corrode and be

inoperable.

The District Court held in its order or memorandum

opinion that there was no order slips or daily work

slips signed for the $3,600.00 for work and labor done

and the use of machinery in trying to revive the first

well (R. 42). Daily work slip #6770, dated 1/10/75,

shows. the costs and hours worked on washing and

blowing the well and at the bottom states, “Cost work-

ing on well #1 $3,600.00” (R. 360). This ticket was

signed by John Morgan, who was superintendent for

Beckman.

As for the charge of $1,100.00 for damages negligent-

ly done by Beckman to Johnston’s machinery, I refer

the court to Section 21, of the sub-contract wherein it

states that, “the sub-contractor shall effectually

secure and protect his material and work and shall

bear and be liable for all loss and/or damages of any

kind in connection therewith at any time prior to the

11

final completion and acceptance thereof, unless said

loss or damage is caused by direct negligence of the

company’. (R. 408)

As to attorney fees in ‘“‘Miller Act” cases, there are

many cases throughout the United States which hold

that said fees are collectable. In the case of Arnold vs.

United States for the use of Bowman, 470 F.2d. 243,

(1972) the Court stated:

“There is substantial authority for a trial

court to award attorney fees in Miller Act

cases if such fees are allowable by state law.”

Title 50, Section 16, Code of Alabama, 1940, Recom-

piled 1958, provides for payment bonds on state public

work projects which carries with it a provision for at-

torney fees (Appendix F).

In the case of United States of America for the use

and benefit of Weyerhaeuser Company vs. Bucom

Construction Company and Traveler’s Indemnity

Company, 430 F. 2d. 420, (1970) the Fifth Circuit _—

of Appeals ruled as follows:

“In accordance with our holding in a United

States Fidelity and Guaranty Company vs.

Hendry Corporation, 5th Circuit, 391 F. 2d. 13,

we grant the Appellee’s unopposed motion for

attorney fees on this appeal pursuant to Flori-

da statute 627.0127, as amended in 1967, E.S.A.

The clerk is directed to fix saff fee in the

amount of $2,112.08 in taxing costs upon this

appeal.”

12

In the case of United States vs. F. D. Rich Company,

434 F. 2d. 855, (1970) the Court stated:

“It was held that allowance of attorney fees

against prime contractor and its surety in ac-

tion under Miller Act by sub-contractor with

respect to construction project in Alaska was

not improper.”

Therefore, we submit to the Court that attorney fees

in this case is proper and should be awarded to

petitioner.

Every allegation of the complaint as originally

filed, which was admitted to be in good form and prop-

erly before the trial court, was proved by the Plaintiff

through written exhibits and testimony and the only

defense was that Beckman would pay Johnston when

the Corps paid Beckman, which the Corps refused to

do because Beckman was negligent in allowing the

well to sit idle for more than one year (Appendix E).

CONCLUSION

For the foregoing reasons, it is respectfully sub-

mitted that this Petition for a Writ of Certiorari should

be granted and that the judgments of the United States

District Court of the Middle District of Alabama and

the United States Court of Appeals for the Fifth Circuit

of Alabama should be reversed.

Respectfully submitted,

Maurice A. Downing

Counsel for Petitioner

13

Of Counsel:

MOORE AND DOWNING

920 Dauphin Street

P. O. Box 1261

Mobile. Alabama 36601

PROOF OF SERVICE

I, Maurice A. Downing, the attorney for the

Petitioner herein and a member of the Bar of the

Supreme Court of the United States, hereby certify

that on the ____ day of August, 1977, I served a copy of

the foregoing Petition for Writ of Certiorari to the

United States Fifth Circuit Court of Appeals on

General Insurance Company of America, a corpora-

tion, and Beckman Construction Company, acorpora-

tion, Respondents herein, by mailing a copy of the

same in a duly addressed envelope, with first class

postage prepaid to Harry Cole and John M. Milling, Jr.

of the firm of Hill, Carter, Franco, Cole and Black, at

Post Office Box 116, Montgomery, Alabama 36101, At-

; torneys for Respondents.

Maurice A. Downing

Counsel for Petitioner

920 Dauphin Street

P. O. Box 1261

Mobile, Alabama 36601

la

APPENDIX A

MEMORANDUM OPINION

Filed: Jun 17, 1976

In the United States District Court for

The Middle District of Alabama

Northern Division

THE UNITED STATES OF AMERICA, Etc.,

Plaintiff,

versus CA NO. 75-356-N

GENERAL INSURANCE COMPANY OF AMERICA,

A Corporation,

Defendant and

Third-Party Plaintiff,

versus

BECKMAN CONSTRUCTION COMPANY,

A Corporation,

Third-Party Defendant.

This cause being submitted for final judgment on the

pleadings, evidence submitted in open Court, and

briefs filed by the parties, the Court now enters the

following findings of fact and conclusions of law.

FINDINGS OF FACT

This is an action by a subcontractor [Johnston]

proceeding against the surety [General Insurance] of

a general contractor [Beckman] on a federal construc-

tion project in this district. Plaintiff seeks recovery of

$20,503.00 from Defendant General Insurance, which

sum, according to the evidence herein, consists of $15.-

903.00 claimed for work done pursuant to Johnston's

contract with Beckman, $1,100.00 damages to

Johnston's equipment allegedly due to Beckman’s

negligence, and $3,500.00 attorneys’ fees.

The Court finds that Johnston knowingly entered

into the contract herein attached to the complaint and

that General Insurance entered into the suretyship

agreement also attached to the said complaint. The

Court notes that, although some of Johnston's

testimony apparently attempts to suggest that he did

not believe himself to be operating under the said con-

tract, the pleadings show clearly that he is now suing

solely upon that agreement as secured by the sur-

etyship agreement. Each party has admitted the

proper execution of the same.

The Court finds that sometime in 1973 Plaintiff com-

menced drilling a water well at the project site as

called for in the aforesaid contract. On September 6,

1973, Plaintiff turned over to Beckman a producing

well from which acceptable drinking water was flow-

ing. Sometime during the following month, the Army

Corps of Engineers paid Beckman for the well, and

Beckman, in turn, paid Plaintiff for the same well. At

some time subsequent to the payment to Plaintiff for

the well, it stopped producing water in significant

quantity. The evidence presented to the Court is in

conflict as to the cause of this cessation of flow. Plain-

tiff contends it was caused by Beckman’s failure to

continue pumping the well after Plaintiff's departure

from the job site, while Defendant claims that the well

was negligently dug. For reasons stated below, the

Court finds it unnecessary to decide the issue of the

cause of the cessation of flow.

3a

The Court finds that, regardless of when Plaintiff

was first informed of the failure of the well, he was not

asked to return to the job site until late November or

December, 1974. After attempting without success to

revive the flow of water from the well, Plaintiff in-

formed Beckman that it would be necessary to partial-

ly destroy a concrete house erected by Beckman over

the well, in order to perform further operations on the

well. Beckman refused this plan and proposed instead

that Plaintiff dig a new well. Plaintiff accepted this

plan and set to work, completing the second well in

1975.

The Court finds that the contract herein calls for

Plaintiff's work to be compensated at the rate of $40.00

per hour and that a practice was followed at the job site

whereby during the digging of both wells Plaintiff's

agent presented a ticket setting out each day’s work

time and charges at the end of the day, the same being

accepted by Beckman through its on-the-job agent,

who was supposed to sign the ticket. Plaintiff produc-

ed a series of such tickets signed by an agent of Beck-

man and dated from December 17, 1974, amounting toa

total charge of $5,760.00. Plaintiff also claims $3,600.00

for work performed in an effort to resuscitate the first

well, as to which he has produced no signed tickets

and, indeed, no tickets at all. The remaining $6,543.00

of Plaintiff's claim consists of-miscellaneous ex-

penses and “rig rent” incurred at various times from

December 16, 1974, until April 4, 1975, all of which the

Court finds to be referrable to the drilling of the second

well. None of the expenditures, except the time

charges during digging of the second well, are sub-

stantiated by work tickets.

4a

The Court finds that, at the time of the decision to

drill the second well, no written authorization was ob-

tained by Plaintiff before proceeding with the work,

although, as aforesaid, Plaintiff did obtain signed

work tickets each day after completion of the day’s

work. The Court also finds that Beckman told Plaintiff

that Beckman would apply for a change order on the

original contract to allow for this second well but that

the Corps of Engineers rejected the application.

CONCLUSIONS OF LAW

In resolving Plaintiffs claims, the Court is mindful

both that “[t]he Miller Act provides a federal cause of

action, and the scope of the remedy as well as the sub-

stance of the rights created is a matter of federal not

state law,” F.D. Rich Co., Inc. v. United States for the

use of Industrial Lumber Co., 417 U.S. 116, 127 (1974),

and that the Act, being “highly remedial’, should be

given a liberal construction so as to give effect to the

intention of Congress to give security to those who

furnish materials or labor on government construc-

tion projects. Clifford F. MacEvoy Co. v. United States,

322 U.S. 102 (1944); Glassell-Taylor Co. v. Magnolia

Petroleum Co., 153 F.2d 527 (5th Cir. 1945); Coffee v.

United States ex rel Gordon, 157 F.2d 968 (5th Cir.

1946). In order for Plaintiff to recover, however, he

must prove that the charges he seeks to enforce come

within the terms of the Act; the charges must be for

“labor or material done or performed by him” or “fur-

nished or supplied by him in the prosecution of the

work provided for in such contract.’”’ 40 U.S.C.

§ 270b(a). It is particularly to be noted that the “such

contract” referred to is manifestly the prime contract

between the United States and the prime contractor

(Beckman).

—

5a

Referring to the terms of Genera] Insurance's sur-

etyship agreement, we find that it provides that:

“* ** if the Principal shall promptly make

payment to all persons supplying labor and

materials in the prosecution of the work

provided for in said contract, and any and all

duly authorized modifications of said contract

that may hereafter be made, notice of which

modifications to the Surety(ies) being hereby

waived, then the above obligation shall be

void and of no effect.”’

Nowhere in the suretyship is any contract referred to

other than the prime contract, which carried the

numerical designation DACW01-73-C-0099. The Corps

of Engineers explicitly declined to alter that contract

to provide for the drilling of a second well. It follows,

therefore, that the terms of the subcontract between

Beckman and Plaintiff could not be controlling unless

the charges Plaintiff seeks to recover were properly

incurred under the subcontract as originally entered

into or as modified.

Eleven Hundred Dollars of the sum claimed by

Plaintiff is for damage to Plaintiff's equipment claim-

ed to have been caused by the negligence or fault of

Beckman. It is clear that this claim is not one for in-

cidental damage or ordinary wear and tear. Instead, it

is a claim for extraordinary damage alleged to have

occurred by reason of tortious conduct by Beckman.

Such aclaim is not one for materials or labor, even un-

der the most expansive reading of these terms and has

no place in a Miller Act suit. United States ex rel Gib-

son v. Harmon, 192 F.2d 999 (4th Cir. 1951); United

6a

States ex rel Spencer v. Massachusetts Bonding & Ins.

Co., 18 F.2d 203 (6th Cir. 1927).!

As to Plaintiff's claim of $3,600.00 for work done in

an attempt to revive the first well, it is this Court's

opinion that the parties’ rights are determinable under

§ 20 of the subcontract which provides as follows:

“The Subcontractor shall promptly amend

or make good any defective materials and/or

workmanship to the entire approval and

acceptance of the Owner and/or Architect or

their authorized representatives. Should the

Subcontractor refuse or neglect to proceed at

once with the correction of rejected or defec-

tive materials and/or workmanship after

receiving notice to do so, it is agreed that the

Company shall have the right and power to

have the defects remedied or changes made at

the expense of the Subcontractor, and the Sub-

contractor agrees to pay to the Company on

demand any and all loss and/or expense paid

or incurred by the Company in remedying

such defects and/or making such changes,

together with interest thereon at the rate of 6%

per annum until paid.”

1 The Court expresses no opinion as to the effect of § 21 of

Beckman’s subcontract with Plaintiff, as follows:

“* * * Subcontractor shall effectually secure and protect

his material, and shall bear and be liable for all loss and/or

damage to any kind [sic] in connection therewith * * * un-

less said loss or damage is caused by direct negligence of

the company.”

Whatever this may mean and to whatever extent this language

would affect Plaintiff's right to recover in tort, it does not affect

this suit. Even if this language did create a breach of contract

claim in Plaintiff, which it manifestly does not, it still would not

support a Miller Act recovery. United States ex re] Edward E.

Morgan Co. v. Maryland Casualty Co., 147 F.2d 423 (5th Cir. 1945).

7a

't is the opinion of the Court that both Beckman and

Plaintiff understood that the repairs charged herein to

the value of $3,600.00 were being undertaken pursuant

to this provision. There is no evidence before the Court

suggesting that there was any agreement, oral or

written, for the payment for repairs to the first well

that would amount to a modification of the contract or

the formation of a new contract, either implied or ex-

press. Particularly significant is the failure of Plain-

tiff to secure work tickets for this remedial work, con-

trasted with his careful accumulation of such tickets

for work on the second well. The Court finds that

Plaintiff has not met his burden of proof of es-

tablishing that these repair activities were expen-

ditures chargeable to Beckman. Since General In-

surance is surety only for Beckman, Plaintiff cannot

recover these charges.

It appears to the Court that the situation with

respect to charges for digging the second well may be

somewhat different. The Court has found that Plaintiff

and Beckman entered into an agreement for the dig-

ging and that this agreement was occasioned by

Beckman’s unwillingness to allow Plaintiff to proceed

with repairs as required of Plaintiff by the subcon-

tract. The Court, however, is not at liberty to award a

judgment to Plaintiff herein againgt the surety on the

basis of any new, oral contract that may have been

formed or on any theory of quantum meruit. The only

way in which Plaintiff can recover in this suit is ona

theory that this work was called for by a binding

modification of the subcontract. The Court finds it un-

necessary to determine whether the agreement, in

fact, created such a modification of the original sub-

contract for the reason that recovery on such a

modified contract is clearly barred by the simple

language of § 4 of the subcontract:

8a

“However, [Beckman] shall be under no

obligation to pay Subcontractor for any work

done hereunder, until [Beckman] has been

paid therefor by [the Corps].”’ (Bracketed ex-

pressions added)

Although Plaintiff testified that this language,

which the Court notes is slightly ambiguous, meant

only that payment would be made on a certain

schedule, the Court finds that this contention must be

rejected in view of language of § 4 and of the Court’s

finding that Beckman informed Plaintiff that he would

seek a change order to allow for the additional work.

The Court is of the opinion that the preponderance of

the evidence supports the conclusion that, under the

contract, Plaintiff's payment was conditional on

Beckman’s being paid. No evidence of any modifica-

tion of § 4 was introduced.

Of course, if the failure of the Corps to pay for the

second well resulted from Beckman’s own intentional

or negligent act or failure to act, ordinary contract

principles may foreclose Defendant’s attempt to de-

fend herein on the basis of the Corps’ failure to pay.?

Evidence was introduced at trial on this question,

relating to the alleged failure of Beckman to transmit

data concerning the first well test bore and water

analysis, as required by § 2 of the subcontract. The

Court, however, finds that Plaintiff has failed to meet

his burden of proof as to his allegation that Beckman

was the cause of the Corps’ adverse decision. Plain-

tiffs Exhibit 7, a copy of the decision of the ap-

propriate officer of the Corps relative to the additional

2 There may be a question whether that matter was adequately

pleaded.

claim, does not support Plaintiff's contention. While

the officer does state that Beckman “failed to promptly

notify the Contracting Officer in writing of an alleged-

ly differing site condition,” there is no evidence that

Beckman was aware of such a condition. Pages 2 and3

of the decision would appear to implicate Plaintiff, not

Beckman, as the party at fault.

The Court concludes that the terms of the written

subcontract, to which Plaintiff has expressly chosen

by counsel to confine this suit, do not authorize

recovery of charges for the second well even if, as the

Court need not decide, a valid modification of the con-

tract ever came into existence.’

Since the Court has concluded that Plaintiff may not

recover on any of his contract claims, it need not con-

sider Plaintiff's claim for attorneys’ fees. Such fees

would be barred by the holding in F. D. Rich Co., supra,

at 127-131.

Judgment will enter accordingly.

DONE this 17th day of June, 1976.

/s/ R. E. VARNER

UNITED STATES

DISTRICT JUDGE

3 See United States for the use of H. O. Kilsby v. George, 243 F.2d

82 (5th Cir. 1957). While in Kilsby there was “no contract hy * as to

[the] ‘extras’,” the fact that such a contract (i.e., a binding oral

modification) may exist herein does not distinguish the present

case, since the agreement, if any, contained a condition, namely

that Beckman be paid, that requires the same holding as in Kilsby,

that is that the subcontractor is barred by his agreement to be

bound by the determination of the Government on the prime con-

tract.

108

JUDGMENT

(Number and Title Omitted)

Filed: Jun 17, 1976

In accordance with the Memorandum Opinion

entered by the Court in the above-styled cause on the

17th day of June, 1976, it is

ORDERED, ADJUDGED and DECREED by the

Court that Plaintiff take nothing by his complaint

herein and that the above-styled cause be, and the

same is hereby, dismissed with costs taxed against the

Plaintiff.

DONE this 17th day of June, 1976.

/s/ R. E. VARNER

UNITED STATES DISTRICT

JUDGE

lla

APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 76-3033

Summary Calendar*

—

THE UNITED STATES OF AMERICA for the use of

JOHNSTON L.R., d/b/aL.R. JOHNSTON COMPANY,

Plaintiff-Appellant,

versus

GENERAL INSURANCE COMPANY OF AMERICA,

a Corporation,

Defendant-Third Party

Plaintiff Appellee,

versus

BECKMAN CONSTRUCTION COMPANY,

a Corporation,

Third Party Defendant.

Appeal from the United States District Court for the

Middle District of Alabama

(March 23, 1977)

BEFORE GOLDBERG, CLARK and FAY, Circuit

Judges.

PER CURIAM: AFFIRMED. See Local Rule 21.!

* Rule 18, 5 Cir.; See Isbell Enterprises, Inc. v. Citizens Casualty

Co. of New York, et al., 5 Cir. 1970, 431 F.2d 409. Part I.

1 See N.L.R.B. v. Amalgamated Clothing Workers of America, 5

Cir., 1970. 430 F.2d 966.

12a

APPENDIX C

ON PETITION FOR REHEARING

(Number and Title Omitted)

Filed: Apr 27, 1977

Before GOLDBERG, CLARK and FAY, Circuit

Judges.

PER CURIAM:

IT IS ORDERED that the petition for rehearing filed

in the above entitled and numbered cause be and the

same is hereby DENIED.

ENTERED FOR THE COURT:

/s/ IRVING L. GOLDBERG

United States Circuit Judge

APPENDIX D

ORDER EXTENDING TIME TOFILE PETITION FOR

WRIT OF CERTIORARI

Supreme Court of the United States

No. A-50

UNITED STATES FOR THE USE OF JOHNSTON,

L.R. d/b/a L.R. JOHNSTON COMPANY,

Petitioner,

versus

GENERAL INSURANCE COMPANY OF AMERICA,

ET AL.

13a

UPON CONSIDERATION of the application of

counsel for petitioner(s),

IT IS ORDERED thatthe time for filing a petition for

writ of certiorari in the above-entitled cause be, and

the same is hereby, extended to and including August

25, 1977.

/s/ LEWIS F. POWELL

Associate Justice of. the

Dated this 19th day Supreme Court of the United

of July, 1977. States

APPENDIX E

Department of the Army

South Atlantic Division, Corps of Engineers

310 Title Building, 30 Pryor Street, N.W.

Atlanta, Goorgia 30303

30 July, 1976

Beckman Construction Company

7201 West Vickery

Fort Worth, Texas 76116

Re: Appeal of Beckman Construction Com-

pany, Contract No. DACW01-73-C-0099,

Jones Bluff Lock and Dam, Alabama,

ENG BCA 3751

Gentlemen:

I have reviewed your appeal for an alleged en-

countering of a Differing Site Condition in the in-

stallation of a water well.

14a

From the present record, I find no proof of a condition

which wouid entitle you to an equitable adjustment in

the contract price. In addition, I find that you let the

well sit idle for over one year. Therefore, I find that you

did not develop the well properly.

Since I have found no basis for reversing the Find-

ings of Fact and decision of the Contracting Officer, it

is suggested that the appeal be submitted to the Board

of Contract Appeals. However, if you have additional

facts or arguments which you care to present to me, I

will be pleased to hear them at a mutually agreeable

date.

If I do not hear from you in 20 days, I will assume you

wish to have the appeal forwarded to the Board.

Sincerely yours,

/s/ KENNETH E. McINTYRE

KENNETH E. McINTYRE

Brigadier General, USA

Division Engineer

Copy furnished:

District Engineer, Mobile

(SAMOC)

I hereby certify that the foregoing is a true and correct

copy of the original letter signed by BG Kenneth E.

McIntyre. The underscoring has been added subse-

quent to signature.

/s/ LAURA R. SEAL

Notary Public, Georgia, State At

Large

15a

APPENDIX F

Tit. 50, § 16

CHAPTER 2.

Bonds of Contractors.

Sec.

16. Bonds required; suits thereon,

etc.

§ 16. Bonds required; suits thereon, etc. — Any per-

son, firm or corporation entering into a contract with

the state or any county or municipal corporation or

subdivision thereof in this state for the repair, con-

struction or prosecution of any public buildings or

public work, highways or bridges, shall be required,

before commencing such work, to execute a perfor-

mance bond, with penalty equal to fifty percent of the

amount of the contract price, and in addition thereto,

another bond with good and sufficient surety, payable

to the state, county or municipal corporation or sub-

division, letting the contract, in an amount not less

than fifty percent of the contract price, with the obliga-

tion that such contractor or contractors shall prompt-

ly make payments to all persons supplying him or

them with labor, materials, feedstuffs or supplies for

or in the prosecution of the work prc vided for in such

contract, and for ‘he payment of reasonable attorneys’

fees, incurred by successful claimants or plaintiffs in

suits on said bond; and any person, firm or corporation

that has furnished labor, materials, feed-stuffs or sup-

plies for or in the prosecution or repair of any public

building or public work, highways or bridges, and

payment for which has not been made, shall be

authorized to institute an action upon said bond in his

or their name or names and to have their rights and

claims adjudicated in such action and judgment

No

16a

rendered thereon; provided, however, that no suit

shall be instituted on said bond until after forty-five

days’ written notice to the surety thereon of the

amount claimed to be due and of the nature of the

claim. Such suit shall be commenced not later than

one year from the date of final settlement of said con-

tract. The giving of said notice by registered mail,

postage prepaid, addressed to the surety at any of its

piaces of business or offices shall be deemed sufficient

hereunder. In the event the surety or contractor fails to

pay such claim in full within forty-five days from the

mailing of such notice, then such person or persons

shall be entitled to recover of the contractor and sure-

ty, in addition to the amount of said claim, a

reasonable attorney’s fee, together with interest on

such claim from the date of such notice. Every person

or persons having a right of action on said last

described bond as herein provided shall, upon written

application to the authority under the direction of

whom such work has been prosecuted, setting out that

labor, material, feed-stuffs or supplies for such work

has been supplied by him or them and that payment

therefor has not been made, be promptly furnished a

certified copy of said additional bond and contract.

Such claimant shall be authorized to bring suit on said

bond in the county in which the work provided for in

said contract is to be performed, or in any county

where the contractor or his surety does business, for

his or their use and benefit against said contractor and

his surety or either of them. In addition to any other

legal mode of service, service of summons and other

process in suits brought in the county where the work

is let or done may be had on the contractor or the sure-

ty on the last described bond, by leaving a copy of the

summons and complaint or other pleading or process,

17a

with the director of the highway department if the con-

tract be a state highway contract or with the executive

officer of the city, town, board, commission or authori-

ty letting the contract, or charged with the payment of

the contract price, if the contract be not a state

highway contract. The bond last described shall have

a provision binding the principal contractor and sure-

ty to the mode of service above described; and consent-

ing that such service shal] be the same as personal

service on the contractor or surety. Immediately on

service being made on the director of the highway

department or executive office of a city, town, board,

commission or authority, it will be the duty of such

director or executive officer to immediately mail a

copy of such process to the contractor and surety, at

the address given in the bond.

This section shall nct require the taking of bond to

secure contracts of less than one thousand dollars in

amount.

The contractor shall immediately after the comple-

tion of the contract give notice of said completion by

an advertisement in some newspaper of general cir-

culation published within the city or county wherein

the work has been done for a period of four successive

weeks. In no instance shall a final settlement be made

upon the contract until the expiration of thirty days

after the completion of same. Proof of publication of

said notice shall be made by the contractor to the

authority by whom the contract was made, by affidavit

of the publisher and a printed copy of the notice

published. If no newspaper is published in the county

where the work is done, the notice may be given by

posting at the court house for thirty days and proof of

same shall be made by the probate judge or sheriff and

the contractor. (1927, p. 37; 1935, p. 70.)

18a

APPENDIX G

Title 40, Section 270(a), United States Code, page 397:

“(a) Before any contract, exceeding $2,000 in

amount, for the construction, alteration, or

repair of any public building or public work of

the United States is awarded to any person,

such person shall furnish to the United States

the following bonds, which shall become bind-

ing upon the award of the contract to such per-

son, who is hereinafter designated as “‘con-

tractor”’:

(1) A performance bond with a surety or

sureties satisfactory to the officer award-

ing such contract, and in such amount as

he shall deem adequate, for the protection

of the United States.

(2) A payment bond with a surety or sur-

eties satisfactory to such officer for the

protection of all persons supplying labor

and material in the prosecution of the

work provided for in said contract for the

use of each such person. Whenever the

total amount payable by the terms of the

contract shall be not more than $1,000,000

the said payment bond shall be in asumof

one-half the total amount payable by the

terms of the contract. Whenever the total

amount payable by the terms of the con-

tract shall be more than $1,000,000 and not

more than $5,000,000, the said payment

bond shall be in a sum of 40 per centum of

the total amount payable by the terms of

the contract. Whenever the total amount

payable by the terms of the contract shall

19a

be more than $5,000,000 the said payment

bond shall be in the sum of $2,500,000.

(b) The contracting officer in respect of any

contract is authorized to waive the require-

ment of a performance bond and payment bond

for so much of the work under such contract as

is to be performed in a foreign country if he

finds that it is impracticable for the contractor

to furnish such bonds.

(c) Nothing in this section shall be construed

to limit the authority of any contracting of-

ficer to require a performance bond or other

security in addition to those, or in cases other

than the cases specified in subsection (a) of

this section.

(d) Every performance bond required under

this section shall specifically provide

coverage for taxes imposed by the United

States which are collected, deducted, or

withheld from wages paid by the contractor in

carrying out the contract with respect to

which such bond is furnished. However, the

United States shall give the surety or sureties

on such bond written notice, with respect to

any such unpaid taxes attributable to any

period, within ninety days after the date when

such contractor files a return for such period,

except that no such notice shall be given more

than one hundred and eighty days from the

date when a return for the period was required

to be filed under the Internal Revenue Code of

1954. No suit on such bond for such taxes shall

be commenced by the United States unless

notice is given as provided in the preceding

20a

sentence, and no such suit shall be commenced

after the expiratign of one year after the day on

which such notice is given.”

Title 40, Section 270(b), United States Code, page 461:

“(a) Every person who has furnished labor

or material in the prosecution of the work pro-

vided for in such contract, in respect of which

a payment bond is furnished under Section 270

a of this title and who has not been paid

in full therefor before the expiration of a

period of ninety days after the day on which

the last of the labor was done or performed by

him or material was furnished or supplied by

him for which such claim is made, shall have

the right to sue on such payment bond for the

amount, or the balance thereof, unpaid at the

time of institution of such suit and to

prosecute said action to final execution and

judgment for the sum or sums justly due him:

Provided, however, That any person having

direct contractual relationship with a subcon-

tractor but no contractual relationship ex-

press or implied with the contractor furnish-

ing said payment bond shall have aright of ac-

tion upon the said payment bond upon giving

written notice to said contractor within ninety

days from the date on which such person did or

performed the last of the labor or furnished or

supplied the last of the material for which

such claim is made, stating with substantial

accuracy the amount claimed and the name of

the party to whom the material was furnished

or supplied or for whom the labor was done or

Zia

performed. Such notice shall be served by

mailing the same by registered mail, postage

prepaid, in an envelope addressed to the con-

tractor at any place he maintains an office or

conducts his business, or his residence, or in

any manner in which the United States

marshal of the district in which the public im-

provement is situated is authorized by law to

serve summons.

(b) Every suit instituted under this section

shall be brought in the name of the United

States for the use of the person suing, in the

United States District Court for any district in

which the contract was to be performed and

executed and not elsewhere, irrespective of

the amount in controversy in such suit, but no

such suit shall be commenced after the expira-

tion of one year after the day on which the last

of the labor was performed or material was

supplied by him. The United States shall not

be liable for the payment of any costs or ex-

penses of any such suit.”

Title 40, Section 270(c), United States Code, page 619.

“The Comptroller General is authorized and

directed to furnish, to any person making

application therefor who submits an affidavit

that he has supplied labor or materials for

such work and payment therefor has not been

made or that he is being sued on any such

bond, acertified copy of such bond and the con-

tract for which it was given, which copy shall

be prima facie evidence of the contents, execu-

tion and delivery of the original. Applicants

22a

shall pay for such certified copies such fees as

the Comptroller General fixed to cover the

cost of preparation thereof.”

Title 40, Section 270(d), United States Code, page 622:

“The term “person” and the masculine

pronouns as used in sections 270a-270c of this

title shall include all persons whether in-

dividuals, associations, copartnerships or

corporations.”