UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-60747
SHACKELFORD PLUMBING CORPORATION,
Plaintiff-Appellee,
versus
SIEBE GOVERNMENT CONTRACTS DIVISION, A SIEBE ENVIRONMENTAL
CONTROLS GROUP, DIVISION OF BARBER-COLMAN COMPANY,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Mississippi
(3:98-CV-463(B)(N))
November 7, 2000
Before WOOD,1 DAVIS, and BARKSDALE, Circuit Judges.
PER CURIAM:2
At issue is waiver vel non of contractual requirements for
written change orders and timely claim submittals. Shackelford
Plumbing Corporation filed this diversity action against Siebe
Government Contracts Division of the Barber-Colman Company for 14
claims arising at eight military facilities in the United States.
The district court granted Siebe summary judgment on one claim. A
jury found for Siebe on two claims and for Shackelford on the
1
Harlington Wood, Jr., Circuit Judge of the Seventh Circuit,
sitting by designation.
2
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
remaining 11. Siebe contests the denial of judgment as a matter of
law as to five claims involving four sites. Alternatively, it
challenges a jury instruction and requests a new trial for all but
one of those five claims. We AFFIRM in PART, REVERSE and RENDER in
PART, and REMAND FOR ENTRY OF AN AMENDED JUDGMENT.
I.
Siebe contracted with the Government to perform work at
military installations (FORSCOM contracts) and hospitals (MEDCOM
contracts). Shackelford was a subcontractor for those contracts.
The contracts were “indefinite quantity contracts”, meaning the
master subcontracts had zero dollars value. As the Government and
Siebe agreed on delivery orders, Siebe issued delivery orders,
complete with pricing, to Shackelford. Shackelford completed over
$4 million in work for Siebe on 11 delivery orders.
The two master subcontracts between Siebe and Shackelford
contained identical provisions regarding changes in the work
required by the delivery orders. Prior to the beginning of such
changed work, Siebe was required to give Shackelford written notice
of the change; Shackelford, to submit a written estimate to Siebe.
Paragraph 5.2 provided:
The Subcontractor [Shackelford] may be ordered
in writing by the Contractor [Siebe] without
invalidating this Subcontract, to make changes
in the Work within the general scope of this
Subcontract consisting of additions,
deletions, or other revisions,....
[Shackelford], prior to the commencement of
such changed or revised Work, shall submit
promptly to [Siebe] written copies of an
estimate for adjustment to the Subcontract Sum
and Subcontract Time for such revised Work in
a manner consistent with requirements of the
Subcontract Documents.
2
(Emphasis added; footnotes omitted.) Testimony at trial focused
not on Shackelford’s failure to submit a prior estimate but on work
done without a prior written change order.
Shackelford’s contracts with Siebe incorporated provisions of
Siebe’s contracts with the Government. Under them, Siebe had
specified times within which to submit a claim to the Government
after the cost was incurred. Along this line, Shackelford was
required to provide timely claim submittal to Siebe for additional
costs, including claims for delay damages. Paragraph 5.3 provided:
The Subcontractor [Shackelford] shall make
claims promptly to the Contractor [Siebe] for
additional cost, extensions of time and
damages for delays or other causes in
accordance with the Subcontract Documents. A
claim which will affect or become part of a
claim which [Siebe] is required to make under
the Prime Contract within a specified time
period or in a specified manner shall be made
in sufficient time to permit [Siebe] to
satisfy the requirements of the Prime
Contract. Such claims shall be received by
[Siebe] not less than two working days
preceding the time by which [Siebe’s] claims
must be made. Failure of [Shackelford] to
make such a timely claim shall bind
[Shackelford] to the same consequences as
those to which [Siebe] is bound.
(Emphasis added.) The parties do not dispute that the post-work
claim submittal had to be in writing.
II.
In defense of its refusal to pay Shackelford’s claims, Siebe
points to the absence of prior written change orders and to
Shackelford’s failure to submit several claims in the time and
manner required. Shackelford counters that Siebe waived those
requirements.
3
Pursuant to the choice of law clauses in the contracts,
Illinois law governs. Under it, and regarding paragraph 5.2
(changes in the work), a provision in a construction contract that
requires change orders to be in writing is valid. Watson Lumber
Co. v. Guennewig, 226 N.E.2d 270, 276 (Ill. 1967). To prove a
waiver of a writing requirement for such changes, Shackelford must
demonstrate by clear and convincing evidence: “(a) the work was
outside the scope of [the] contract promises; (b) the extra items
were ordered by [Siebe], (c) [Siebe] agreed to pay extra, either by
[] words or conduct, (d) the extras were not furnished by
[Shackelford] as [a] voluntary act, and (e) the extra items were
not rendered necessary by any fault of [Shackelford]”. Id.
(emphasis added and citations omitted); id. (“Where the contract
provides that there shall be no charge for extra work unless a
written agreement is made therefor, the builder cannot recover
compensation as for extra work on account of alterations made at
the oral request or consent of the owner but for which no agreement
to pay additional compensation is made.” (emphasis added; internal
quotation marks and citation omitted)).
“Clear and convincing evidence is that quantum of proof that
leaves no reasonable doubt in the mind of the fact finder as to the
truth of the proposition [stated].” City of Chicago v. Boulevard
Bank Nat’l Assoc., 688 N.E.2d 844, 852 (Ill. App. Ct. 1997)
(emphasis added; internal quotation marks and citation omitted).
The Watson court also stated:
Illinois cases allow recovery for extra
compensation only when the contractor has made
his claim for an extra, clear and certain,
4
before furnishing the item, not after.... If
he does expressly contend that work demanded
is extra, the owner certainly cannot be said
to be taken unawares, and if orders are given
to go ahead it is with full knowledge of the
possible consequences.
226 N.E.2d at 279 (emphasis added; internal quotation marks and
citation omitted).
Although Watson stated the claim must be “clear and certain”,
the contract at issue in Watson simply required that, pre-work, the
fact of the change be in writing, not addressing whether the amount
likewise must be in writing. Id. at 274. In Bulley & Andrews,
Inc. v. Symons Corp., 323 N.E.2d 806 (Ill. App. Ct. 1975), an
Illinois court applied Watson to a contract with a clause similar
to paragraph 5.2, which required written notice of the value of the
claim, not only of the change itself:
It is incumbent upon the owner to enforce the
“extras” provision in his contract, or it is
waived by him. By allowing work on extras to
proceed before securing a memorandum signed by
[the contractor, the owner] waived his right
to enforce the provision. A contractual
provision such as in this case prevents the
contractor from proceeding with extra work on
his own initiative, while allowing the owner
to control his liabilities. When an owner
orders work to proceed, he cannot claim to be
taken unaware, nor can he require the
contractor to bear the cost of the work he has
so ordered.
Id. at 811-12 (internal quotation marks omitted); see id. (finding
even though “[t]he estimate [for work ordered by the owner] was not
submitted ... until three months after the ... work was completed”,
because owner allowed work to proceed before securing necessary
writing, it waived contractual provision (emphasis added)).
5
We construe Bulley & Anderson to mean that, if Siebe by words
or conduct ordered extra work and agreed to pay for it, Siebe
waived both of paragraph 5.2's requirements: it not only waived the
requirement that Siebe’s change order be in writing but also waived
the requirement that Shackelford submit a written estimate prior to
beginning that work.
Paragraph 5.3's requirement of timely claims for additional
costs, including delay damages, is another matter. As discussed in
part II.A.2 infra, neither Watson nor Bulley & Anderson apply to
timely claim submittals.
A.
Siebe moved for judgment as a matter of law (JMOL) at the
close of Shackelford’s evidence and at the close of all the
evidence. The denial of JMOL is reviewed de novo, applying the
standards used by the district court. E.g., Hill v. International
Paper Co., 121 F.3d 168, 170 (5th Cir. 1997).
Such judgment “is appropriate if, after viewing the trial
record in the light most favorable to the non-movant, there is no
‘legally sufficient evidentiary basis’ for a reasonable jury to
have found for the prevailing party”. Id. (quoting FED. R. CIV. P.
50(a) (emphasis added)). For such evaluation, all inferences are
drawn in favor of the non-movant. E.g., Omnitech Int’l, Inc. v.
Clorox Co., 11 F.3d 1316, 1323 (5th Cir.), cert. denied, 513 U.S.
815 (1994).
Three witnesses testified on behalf of Shackelford: Lanny
Shackelford, president and part-owner of Shackelford; Michael
Pitts, part-owner and former vice-president of Shackelford; and
6
Aaron Terry, former account manager for Siebe. Siebe offered only
one witness: Jerry Joyner, Siebe’s director of operations and
assistant treasurer when the claims at issue arose.
Although the parties at trial, in their appellate briefs, and
at oral argument did not address paragraphs 5.2 and 5.3
separately, the provisions raise distinct questions. The contracts
between Siebe and Shackelford contained writing requirements,
quoted above, for two different time periods: (1) prior written
order for the change and a written estimate (¶ 5.2), and (2) timely
claim submittal after the cost was incurred (¶ 5.3). The first
requires Siebe’s written order and Shackelford’s written estimate
before work begins; the second, submittal of the claim at least two
days before Siebe was required to submit the claim to the
Government.
In the light of this distinction, we first turn to whether a
reasonable jury could find Siebe waived the requirement of a prior
written change order and written estimate; second, to whether a
reasonable jury could find Shackelford met, or Siebe waived, the
requirement of timely claim submittal after the cost was incurred.
1.
The record is replete with instances in which Siebe gave oral
directives to Shackelford to perform work not covered by a delivery
order. Witnesses for both parties admitted that often Siebe did
not and could not comply with the requirement to give written
orders.
Joyner admitted: Siebe had actual notice of all the work;
and, when Siebe received the claims at issue, it simply ignored
7
them. Testimony by Shackelford’s witnesses established it was
“standard operating procedure” for Shackelford to proceed with
extra work at Siebe’s directive, and Shackelford would still
receive payment even without first giving a written estimate.
Exhibits submitted by Shackelford showed several occasions on which
delivery orders were signed after the work began or even after the
work was complete.
We therefore conclude that a reasonable jury, applying Watson,
could find that Siebe, by its course of conduct, waived the
requirement for a written change order. As discussed infra, a
reasonable jury likewise could find that Siebe, not only by its
conduct but also by its words, waived the pre-work writing
requirements.
a.
Regarding Shackelford’s claim for the extra cost of installing
more expensive furnaces than specified at Fort Drum, Siebe
contends: the furnaces were bought at the direction of the
Government, not at Siebe’s direction; and, because the claim was
made nine months later, Siebe could not pass it along to the
Government. As noted, the timeliness vel non of the claim is
discussed infra in part II.A.2.
Lanny Shackelford testified: at a January 1997 meeting he
attended with the Government and Siebe, a Government representative
ordered the more expensive furnaces; and Siebe’s project manager
agreed and asserted Siebe would either work it out or pay. Joyner
testified he knew from experience the brand of furnaces requested
was more expensive than originally planned.
8
The district court did not err in concluding that a reasonable
jury could find by clear and convincing evidence that Siebe had
ordered the work and agreed to pay for it, thereby waiving the
contract’s pre-work writing requirements.
b.
Prior to establishing Shackelford, Mr. Shackelford had been
part-owner of another subcontractor for Siebe. That entity, now
named C.C.I. Industrial, Inc., had installed gas pipes at Fort
Gillem. A warranty covered the pipes and meters, but when Siebe
had difficulty getting C.C.I. to repair them, Shackelford performed
the work. Shackelford completed the job on 23 November 1996 and
submitted its claim ten days later.
The work was not part of a delivery order, because Shackelford
had no delivery order at Fort Gillem. Because the parties have
done so, we will treat this as a paragraph 5.2 dispute. Siebe
asserts there was no proof it ordered the work or agreed to pay for
it.
Joyner testified he knew the distinction between Shackelford
and C.C.I., yet he assumed Mr. Shackelford would complete the work
free of charge because of his former association with C.C.I. In
contrast, Mr. Shackelford testified he thought Joyner was joking
when he insinuated Mr. Shackelford was responsible because of that
previous association.
Siebe requested Shackelford to send someone to Fort Gillem to
discuss the work with a Siebe manager, and Siebe knew Shackelford
was doing the work. Mr. Shackelford testified that, on the day the
Siebe manager asked him to do the work, the manager also stated
9
that either Siebe or the company holding the warranty would pay
Shackelford for it.
The district court did not err in concluding that a reasonable
jury could find that Siebe waived the requirement of a written
change order.
c.
Because the delivery order at Tripler Medical Center exceeded
$1 million, Siebe’s contract was with James Lane A.C. and Plumbing,
Inc.; and Lane subcontracted with Shackelford. Prior to suing
Siebe, Shackelford obtained an assignment of Lane’s rights.
Siebe does not contend that it did not order the work or agree
to pay for it; nor does Siebe assert the submission of the claim
did not comply with the timeliness requirement. (Indeed, this
dispute does not appear to fall under the Shackelford-Siebe
contract, because Shackelford’s contract at Tripler was not with
Siebe.) Instead, Siebe asserts the timing of the claims did not
meet the requirement of the termination letter it issued to Lane.
On 19 February 1997, Joyner, by letter to Lane, terminated the
contract for convenience and required that all claims be submitted
to Siebe within ten days. However, Shackelford had made two claims
directly to Siebe prior to the termination. Although Joyner
acknowledged this timing of the receipt of the claims from
Shackelford, Siebe contends these claims should have been submitted
through Lane, because Shackelford’s contract was with it, and Lane
had the right to adjust the costs.
Shackelford’s delivery order at Tripler did not include
supplying a generator or completing electrical work, but Mr.
10
Shackelford testified that Siebe’s on-site manager requested that
Shackelford both obtain a generator and perform some electrical
work. Ample evidence, including an admission by Joyner, shows that
Siebe and Shackelford dealt directly with each other regarding
extra work. The most telling evidence of the direct relationship
is that Siebe terminated its contract with Lane as a result of a
conversation between Mr. Shackelford and Joyner.
The district court did not err in concluding that a reasonable
jury could have found that Siebe did receive timely notice of the
claims through the direct submission. In the alternative, if the
requirements of paragraph 5.2 did apply, as discussed below, a
reasonable jury could have found Siebe waived the writing
requirement.
i.
Mr. Shackelford testified that, when power was lost for Siebe
and Shackelford’s work trailers, Siebe’s on-site manager asked
Shackelford to supply a generator. By asking what the cost would
be, the manager allegedly implied Siebe would pay for the
generator. Mr. Shackelford testified that Joyner admitted Siebe
owed this claim. Joyner testified he merely agreed to pay half the
cost; and, at trial, he maintained he would have paid, had the
contract with Lane not been terminated.
The jury found for Shackelford in the amount of $4,600.80,
approximately half the amount claimed. Because Joyner admitted to
having agreed to pay half the cost, we conclude that a reasonable
jury could have found by clear and convincing evidence that Siebe
waived the requirement of a written change order. Moreover, even
11
if Siebe is correct that waiver must precede the work, see infra
part II.B, the jury’s finding was not unreasonable in the light of
Siebe’s course of conduct and the manager’s statements.
ii.
As also noted, Shackelford’s delivery order at Tripler did not
include electrical work, but Mr. Shackelford testified that Siebe’s
on-site manager requested that Shackelford do the work and assured
Shackelford it would be paid. Moreover, Joyner said he agreed to
be billed for the electrical work. Therefore, the district court
did not err in concluding that reasonable jurors could find for
Shackelford.
In sum, in the light of the above analysis of the claims at
Fort Drum, Fort Gillem, and Tripler, the district court properly
denied JMOL regarding the requirements for a written change order
and written estimate prior to beginning the work. Accordingly, we
turn to whether, after the cost was incurred, Shackelford was
required to timely submit its claim.
2.
As noted, the timeliness requirement of Siebe’s contract with
the Government was incorporated into its subcontract with
Shackelford, and Shackelford was held to the same consequences as
Siebe. Siebe contests the timeliness of claims made after
completion of the work at Fort Drum and the delay at Walter Reed
Medical Center. Siebe raised this issue in its motion for JMOL at
the close of the evidence.
As also noted, the Watson line of cases addresses the waiver
of a writing requirement before beginning extra work, not of timely
12
subsequent submittal of a claim. Needless to say, a waiver under
Watson of the requirement that changes be in writing does not
constitute waiver of other contract provisions as well.
Although, even in their appellate briefs, the parties have not
clearly distinguished their contentions as to the two separate
paragraphs (5.2 and 5.3), we find that, because there is no
evidence in the record Siebe agreed to waive the requirement of
timely claim submittal and the evidence clearly shows the claims
for Fort Drum and Walter Reed were not timely, the denial of JMOL
was improper for those two claims. (In this regard, the error by
the district court is most understandable. For example, Siebe did
not object to this issue not being included in the jury
instructions. Of course, because Siebe had earlier raised the
issue in its JMOL, it was preserved concerning whether JMOL should
have been granted. E.g., Deffenbaugh-Williams v. Wal-Mart Stores,
Inc., 188 F.3d 278, 284 n.5 (5th Cir. 1999).)
a.
As discussed above, on 12 February 1997, at the Government and
Siebe’s instruction, Shackelford ordered more expensive furnaces
for Fort Drum than those originally specified. Shackelford
installed the furnaces in April or midsummer, but the claim was not
submitted to Siebe until 24 November 1997.
Mr. Shackelford testified that, at the end of the job, the
parties had been unable to delete enough work to cover the extra
cost of the furnaces, so Shackelford had no other choice but to
bill Siebe for it. Joyner testified: he knew the furnaces
installed were more expensive; but because Shackelford did not
13
timely submit the costs, Siebe could not submit the claim to the
Government.
Shackelford maintains that the extra cost was incurred because
of defective specifications submitted by Siebe and therefore the
requirement of timely submission of the claim did not apply
pursuant to an exception in the contract. Because this argument
was raised for the first time on appeal, we do not reach it.
Shackelford also contends that timely claim submittal was not
required because Siebe had actual knowledge of the claim. This
argument is unpersuasive because, even though Siebe knew that a
different brand of furnaces would be installed and that they were
more expensive, Siebe had no actual knowledge of the amount of the
claim. Therefore, even though, as discussed, a reasonable jury
could have found by clear and convincing evidence that the
requirement of a prior written change order had been waived, a
reasonable jury could not find that the timely claim requirement
had subsequently been either complied with or waived.
b.
Shackelford asserted it incurred extra costs for a job at
Walter Reed, because Siebe instructed Shackelford to have its
superintendent stay on-site, even though the start of the project
was delayed. The delay costs arose between 2 February 1997 and 8
March 1997. Shackelford did not submit the claim until 28 August
1997. Siebe asserts that, because the claim was over five months
late, it could not pass it along to the Government.
Shackelford again contends that Siebe caused the delay and
therefore the timely claim provisions did not apply. However, no
14
proof on this point was offered at trial other than that problems
were associated with the work plan; no one addressed the question
of fault.
Shackelford also asserts that, because Siebe had actual
knowledge of the presence of Shackelford’s supervisor at the site
during the delay, no need for a timely claim existed. Although
Siebe had notice of the supervisor’s presence, there is no evidence
it had actual notice of the amount of the corresponding claim.
Moreover, at trial, the parties disputed whether the supervisor was
unproductive during this time (in which case, Shackelford would be
entitled to submit a claim for an extra) or whether he did other
work for Shackelford.
Construing all evidence in favor of Shackelford, no reasonable
jury could have found Shackelford complied with the claim
requirements or that Siebe waived them.
In sum, for the reasons given above, the district court erred
in denying JMOL on the issue of timely claim submittal for Fort
Drum and Walter Reed.
B.
Seeking a new trial on all the claims except the one for
Walter Reed, Siebe challenges the district court’s refusal (over
Siebe’s objection) to instruct the jury that, in order to return a
verdict for Shackelford on its claims for extras, the jury must
find that, prior to Shackelford’s commencing work, Shackelford made
its claim clear and certain and Siebe agreed to pay. In order to
prevail in challenging a jury instruction:
15
First, the challenger must demonstrate that
the charge as a whole creates substantial and
ineradicable doubt whether the jury has been
properly guided in its deliberations. Second,
even if the jury instructions were erroneous,
we will not reverse if we determine, based
upon the entire record, that the challenged
instruction could not have affected the
outcome of the case.
Johnson v. Sawyer, 120 F.3d 1307, 1315 (5th Cir. 1997) (emphasis
added; internal quotation marks and citation omitted).
The district court’s instruction included the five essential
elements of waiver set out by Watson. See Watson, 226 N.E.2d at
276. Our review of the instructions as a whole does not create a
substantial and ineradicable doubt that the jury was properly
guided in its deliberations. Illinois cases that apply Watson do
not require a specific finding that the agreement to pay preceded
the start of the work. See, e.g., A.W. Wendell & Sons, Inc. v.
Qazi, 626 N.E.2d 280, 287 (Ill. App. Ct. 1993); Duncan v. Cannon,
561 N.E.2d 1147, 1149 (Ill. App. Ct. 1990); Bulley & Andrews, 323
N.E.2d at 809.
III.
Because we conclude there was a legally sufficient evidentiary
basis for a reasonable jury to have found by clear and convincing
evidence that Siebe waived the requirements for a prior written
change order and an estimate, we AFFIRM the district court’s denial
of judgment as a matter of law as to the claims at Fort Gillem and
Tripler. However, we REVERSE the denial of judgment as a matter of
law as to the claims at Fort Drum and Walter Reed, because a
reasonable jury could not find that the timely claim submittal
requirement either was met or did not apply. Finally, we AFFIRM
16
the refusal to grant a new trial. This matter is REMANDED for
entry of an amended judgment.
AFFIRMED IN PART; REVERSED and RENDERED IN PART;
and REMANDED
17
Shackelford Plumbing v. Siebe Govt Contr Div
Combined Opinion