March 25, 1994 NOT FOR PUBLICATION
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 93-1970
BROX INDUSTRIES, INC.,
Plaintiff, Appellee,
v.
H.J. STABILE & SONS, INC. ET AL.,
Defendants, Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Martin F. Loughlin, Senior U.S. District Judge]
Before
Torruella, Circuit Judge,
Bownes, Senior Circuit Judge,
and Selya, Circuit Judge.
James E. Owers, with whom Sulloway & Hollis was on brief for
appellant Reliance Insurance Company and Morgan A. Hollis, with whom
Gottesman & Hollis was on brief for appellant H.J. Stabile & Sons,
Inc.
Frank P. Spinella, Jr., with whom Hibbard & Spinella, P.A. was on
brief for appellee.
BOWNES, Senior Circuit Judge. This diversity
BOWNES, Senior Circuit Judge.
case requires us to rule on the timeliness of a notice of
claim under a payment bond. The district court, after an
evidentiary hearing, held that the notice was timely and
therefore granted judgment for plaintiff-appellee Brox
Industries in the amount of $178,155.86. We affirm.
I.
BACKGROUND
We set forth a summary of the pertinent facts found
by the district court. In June 1991 defendant-appellant H.J.
Stabile & Son, Inc. entered into a contract with Wal-Mart
Stores, Inc. to build a store in Seabrook, New Hampshire. In
July 1991 Stabile obtained a payment bond from co-defendant-
appellant Reliance Insurance Company. Reliance, of course,
is the real party in interest. Stabile subsequently
subcontracted with Atom Contracting Corp. to do work on the
Wal-Mart project. Atom then subcontracted with Brox to do
both on-site and off-site paving.
Under Stabile's contract with Wal-Mart all work was
to be completed on the project by December 3, 1991. By mid-
December Brox had not completed a substantial portion of the
paving work under its contract with Atom. On December 13
Stabile instructed Brox that it should cease operations on
the project due to the onset of winter. Because all of the
parties recognized that paving cannot be done properly in the
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winter, they agreed that Brox would return the following
spring to complete the work. Stabile fully expected that
Brox would return to the work-site in the spring, and Brox
anticipated doing so. On December 23, 1991 Brox notified
Stabile that substantial work remained for the spring,
provided Stabile with an estimate of the remaining work, and
stated that the total amount of the paving work performed to
date was $201,106.50. Brox invoiced Atom for this work in
December 1991.
In February and March 1992, in response to concerns
of Wal-Mart about the quality of Brox's paving, Brox
conducted tests of its work. Also in March 1992, a Brox
employee filled in several potholes at the worksite in
preparation for returning to the project.
By March of 1992 Stabile had paid Atom all sums due
for work performed by Atom and its subcontractors, including
Brox. Atom, however, still owed Brox $178,155.86 for work
done through December 13, 1991. On March 18, 1992 Brox sent
a notice of claim for that amount to Reliance as surety for
Stabile. Nonetheless, Brox anticipated that it would finish
the paving work in the spring under its contract with Atom.
On May 14, 1992 Atom informed Stabile that it
intended to honor their contract, and that the State of New
Hampshire wanted two roads, which were contiguous to the
planned store, to be paved by June 1. On June 4 Stabile
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agreed to the additional paving with a charge back to Atom.
Although the specifics are unclear, shortly thereafter
Stabile recognized that Atom would be unable to meet its
contractual obligations, and therefore it sought to engage a
new contractor to complete the paving work.
On June 11, after a brief bidding period, Stabile
and Brox entered into two contracts for the completion of the
paving at the project, one for on-site and one for off-site
work. On June 30 Stabile formally terminated its contract
with Atom. Brox finished the paving work at the project.
In August 1992 Brox commenced a diversity action in
the United States District Court for the District of New
Hampshire against Stabile and Reliance seeking payment under
the bond issued by Reliance as surety for Stabile. Under the
bond, a party not in direct privity with the principal, such
as Brox, must give notice of its claim to: the Principal,
the Surety, or the Owner, "within ninety (90) days after such
claimant did or performed the last of the work or labor, or
furnished the last of the materials for which said claim is
made." No claim is made that Brox failed to give notice as
required to the Principal, Surety or Owner.
The principal defense of Stabile and Reliance is
that Brox's March 18, 1992 notice was untimely under the
bond's requirements. Brox moved for summary judgment based
on two alternative theories. It argued first that, assuming
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arguendo that its notice was untimely, Reliance must show
prejudice from the tardiness in order to bar recovery under
the bond. According to Brox, no prejudice could be shown.
Alternatively, Brox maintained that its notice was timely
under the bond.
The district court, in an opinion dated August 18,
1993, found that Brox's notice was timely. According to the
district court, "[t]he crux of the case . . . appears to be
whether [Brox's] work [was] completed in December, 1991."
Brox Industries, Inc. v. H.J. Stabile & Son, Inc., No. 92-
426-L, slip op. at 6 (D.N.H. August 18, 1993). At the
evidentiary hearing the court stated that "[i]f . . . an
agreement [about a winter hiatus] was made then clearly
[Brox's] work under its subcontract with Atom was not
completed on December 13, 1991 and [Brox's] failure to give
notice within ninety days of that day would not bar recovery
under the bond." Because the court eventually found that
Brox still had substantial work to do on the contract as of
December 13, and that the parties agreed to a winter hiatus
of greater than ninety days, it held that Brox's notice was
not untimely. Id. at 7.
In response to Brox's argument that work done at
the project site in February and March 1992, i.e., quality
tests and pothole repairs, reset the ninety-day notice
period, the district court found that both the tests and the
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pothole repairs were remedial in nature and did not "advance
the completion of the project." Id. at 5. Accordingly,
under New Hampshire law, the district court found that the
above work had no effect upon the ninety-day notice period.
See Tolles-Bickford Co. v. School, 94 A.2d 374 (N.H. 1953).
This conclusion and its predicate factual findings have not
been appealed. The court entered judgment for Brox for the
full amount of its claim, and defendants appealed.
II.
DISCUSSION
The focus of this litigation has been twofold: (1)
whether, given the circumstances surrounding Brox's work on
the project, its notice of March 18, 1992 was timely under
the bond issued by Reliance; and (2) whether, if the notice
was not timely, Reliance must demonstrate prejudice from the
delay in order to bar Brox's recovery. Because the district
court ruled in the affirmative on the first issue, it never
reached the second.
Because this is a diversity action, the substantive
law of the forum attaches. Erie R.R. Co. v. Tompkins, 304
U.S. 64, 78 (1938). The parties' arguments as to the
timeliness of Brox's notice hinge upon two New Hampshire
Supreme Court cases.
In American Fidelity Co. v. Cray, 194 A.2d 763
(N.H. 1963) a claimant on a payment bond was precluded from
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recovering due to late notice of claim. The principal in
Cray was under a contract with the State of New Hampshire.
It was required by statute to obtain a contract bond, and the
bond's notice requirement was prescribed by statute. Under
the version of N.H. RSA 447:17 in effect at that time, in
order to obtain the benefit of the bond, a claimant for labor
performed or materials furnished "shall within ninety days
after said claimant ceases to perform said labor or furnish
said materials . . . file . . . with the department of public
works and highways . . . a statement of the claim." From May
to November 1958, Cray provided fuel and lubricants to the
principal on a highway construction project. In late 1958,
prior to the completion of the project, the principal shut
down the job for the winter. It never returned. In the
spring of 1959 the surety completed the project through
another construction company. In May 1959 Cray noticed a
claim with the proper authority for money owed to it by the
principal.
Although Cray did not provide any materials to the
principal after November 1958 -- more than ninety days prior
to its filing a claim under the bond -- Cray maintained that
it did not "cease" to furnish fuel and lubricants under the
bond at the time of the winter shutdown in November 1958.
Cray argued that its agreement with the principal was a
continuing one such that the ninety day notice requirement
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should have been tolled during the seasonal hiatus. After
reviewing the facts of the case, the New Hampshire Supreme
Court stated:
We cannot accept Cray's contention that
it ceased to furnish materials not in
November 1958, after which date no
materials were in fact furnished, but the
following spring when LaClair failed to
resume operations.
Id. at 766. Defendants argue that Brox is in the same
position as Cray was, and that its notice is therefore
untimely.
Defendants' position is substantially undercut by
the New Hampshire Supreme Court's subsequent opinion in New
England Metal Culvert Co. v. A.E. Williams Construction Co.,
196 A.2d 713 (N.H. 1963). In New England Metal Culvert the
contractor on a highway construction project placed a single
order with the plaintiff in January 1961 for various
materials, including a metal culvert and pipe. As was the
case in Cray, the contractor was under contract with the
State, and was required by statute to obtain a bond.1
Delivery of the pipe was to be "as required." Id. at 714.
On April 25, 26 and 27, 1961 a metal culvert was delivered,
but the contractor was not ready to receive the pipe, and it
was not delivered. In October 1961, after learning that the
1. On April 29, 1961 the notice requirement contained in RSA
447:17, see supra p. 7, was amended to require such a filing
"within ninety days after the completion and acceptance of
the project."
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contractor was in financial straits, the plaintiff filed a
notice of claim under the bond for payment of the materials
that it had delivered in April. The contractor subsequently
defaulted on the project, and the surety completed
construction through a different construction company. In
December 1961 a new construction company was hired by the
surety to finish the job. This new company ordered the exact
same pipe from the plaintiff that had been ordered by, but
never delivered to, the original contractor. Id. The pipe
was delivered by plaintiff to the new contractor on December
13 and 15, 1961 and was paid for in a timely manner.
The court ruled that plaintiff's October 27, 1961
notice was timely under the pre-amendment version of the
notice statute. Id. at 715. This conclusion was based on
two factors. First, the contract between plaintiff and the
original contractor "was a single contract although separable
or divisible as to deliveries." Id. And second, "[o]n
October, 27, 1961, when the plaintiff first gave notice of
its claim, although more than ninety days had elapsed since
delivery of the culvert it had not then ceased to furnish
materials, but was bound by its [original] contract to make
additional deliveries on request." Id. Moreover,
the remaining pipe was furnished to the
job on December 13 and 15, 1961 for use
in carrying out the contract with the
State. Thus the plaintiff did not cease
to furnish materials within the meaning
of RSA 447:17 until December 15, 1961 . .
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. . Unlike the situation in American
Fidelity Co. v. Cray, supra, the
plaintiff in this case had a single
contract for a series of deliveries of
specified materials.
Id. (citation omitted). The court concluded that "[a]
notice filed within ninety days of the last delivery on
December 15, 1961 would have constituted compliance with the
requirements of the statute before amendment, and permitted
recourse to the bond for recovery of the price of the culvert
delivered in April 1961." Id. The court further held that
although plaintiff's filing was premature, the premature
notice satisfied the notice requirement. Id. at 716.
Brox argues that it is similarly situated to the
plaintiff in New England Metal Culvert, and that its notice
was therefore timely. We agree. As in New England Metal
Culvert, Brox had a single contract with Atom. At the time
Brox gave notice of its claim, more than ninety days had
passed since its last paving work on the project.
Nevertheless, at the time Brox gave its notice, it was still
obligated to complete the paving work after the spring thaw.
Brox eventually completed the paving work necessary for
carrying out Stabile's contract with Wal-Mart. These
factors, we believe, place this case squarely under the
shadow cast by New England Metal Culvert.2
2. The district court also found, consistent with New
England Metal Culvert, that Brox's notice was, in effect,
prematurely filed. Brox Industries, Inc. v. H.J. Stabile &
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Accordingly, under the rule articulated by the New
Hampshire Supreme Court in New England Metal Culvert, if a
claimant is still obligated to perform additional work under
its original contract at the time notice is given under a
payment bond, such as the one at issue here, the notice is
not untimely even if more than ninety days have passed since
the last work was performed by the claimant under the
original contract. In effect, the claimant's notice can be
viewed as covering the claimant's prior work, for which it
has not been paid, as well as the work that it is obligated
to perform in the future -- work for which it has also not
yet been paid. The ninety-day notice period does not begin
to run until the claimant actually completes the work that it
was contractually obligated to perform at the time notice was
given. Thus, as the New Hampshire Supreme Court has noted,
although the claimant's notice is premature, it is valid.
At oral argument Reliance sought to distinguish New
England Metal Culvert on the ground that one contract was at
issue in that case whereas two contracts are implicated in
the present case. Defendants' contention is not persuasive.
It is clear, as in the present case, that the plaintiff in
New England Metal Culvert completed its performance, i.e.,
made the December 13 and 15 pipe deliveries, under a second
Son, Inc., slip op. at 7.
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contract which required completion of the performance called
for under the original contract. Id. at 714.
Although New England Metal Culvert involves a
statutory notice requirement, as opposed to a contractual
requirement, we can see no reason why the New Hampshire
Supreme Court's interpretation of the former would not apply
to the latter. See, e.g., Raitt v. National Grange Ins. Co.,
285 A.2d 799 (N.H. 1971) (contractual subrogation provision
construed consistently with identical statutory subrogation
right). In fact, the notice requirement at issue here is
identical to the Miller Act's ninety-day notice requirement,
and the New Hampshire Supreme Court has looked to Miller Act
cases in construing the pre-amendment version of RSA 447:17.
See New England Metal Culvert, 196 A.2d at 715 (citing
cases).
Aside from the two New Hampshire cases discussed
above, the parties have focussed their attention on cases
construing the ninety-day notice requirement in the Miller
Act, 40 U.S.C. 270b(a). Because we have found controlling
precedent under New Hampshire law, we need not delve into
these cases. Nevertheless, we note that the Miller Act cases
are not hostile to our holding.
On the question of ninety-day gaps between
performances, we have uncovered only a handful of cases.
Those cases have held, where there is a break of greater than
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ninety days between deliveries under a series of purchase
orders, that the last delivery does not resurrect claims for
payment for the earlier deliveries. See United States v.
Peter Reiss Constr. Co., 273 F.2d 880 (2d Cir. 1959)
(Friendly, J.). This was essentially the issue in Cray, and
the court there reached the same conclusion. Of course, in
Cray, the plaintiff never made any deliveries after the
ninety-day plus hiatus. On the other hand, where work is
performed under a contract, as opposed to a series of
purchase orders, a greater than ninety-day interval in
performances will not bar recovery on the earlier performance
despite the absence of immediate notice. See Id. at 882;
United States v. Chester Constr. Co., 104 F.2d 648 (2d Cir.
1939). This was the situation in New England Metal Culvert,
and the New Hampshire Supreme Court reached the same result.
The three Miller Act cases relied on by defendants
in their brief would not warrant a contrary conclusion. The
first case, United States ex rel. J.A. Edwards & Co. v.
Thompson Constr. Corp., 273 F.2d 873 (2d Cir. 1959),
concerned the substance of a notice of claim under the Miller
Act, not its timeliness under the ninety-day notice
requirement. And the last two cases, United States ex rel.
John D. Ahern Co. v. J.F. White Contracting Co., 649 F.2d 29
(1st Cir. 1981) and A.B. Cooley v. Barten & Wood, Inc., 249
F.2d 912 (1st Cir. 1956), although more closely analogous to
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the instant case, do not involve gaps in the claimant's
performance of greater than ninety days, and are therefore of
limited relevance. This is particularly true given the New
Hampshire Supreme Court's clear statement in this matter.
Defendants' have failed to identify, and we cannot
decipher, any substantive distinction between New England
Metal Culvert and the case at bar. Accordingly, the judgment
of the district court is Affirmed.
Affirmed
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