Cal's A/C & Elec v. Famous Const Corp

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
_______________

m 99-30012
_______________

UNITED STATES ON BEHALF OF
CAL’S A/C AND ELECTRIC,

Plaintiff-Appellant,

VERSUS

THE FAMOUS CONSTRUCTION CORPORATION;
CAPITOL INDEMNITY CORPORATION,

Defendants-Appellees.

_________________________

Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________

May 16, 2000

Before REAVLEY, SMITH, and EMILIO M. federal contractor The Famous Construction
GARZA, Circuit Judges. Corporation (“Famous”) and its surety, Capi-
tol Indemnity Corporation (“Capitol”), for
JERRY E. SMITH, Circuit Judge: amounts owing on unpaid construction and re-
pair work, subcontractor Cal’s A/C and
Having won its Miller Act claim1 against Electric (“Cal’s”) appeals a partial summary
judgment dismissing its Louisiana state law
1
See 40 U.S.C. § 270a et seq. (imposing
bonding requirements for federal contracts and
establishing federal cause of action to recover on (...continued)
(continued...) such bonds).
claim for attorney’s fees.2 Because the district plaintiff.” Id. at 126. The Court further held
court incorrectly concluded that the Miller Act that “[t]he Miller Act provides a federal cause
precludes supplemental jurisdiction over Cal’s’ of action, and the scope of the remedy as well
related state claim for fees, we vacate and as the substance of the rights created thereby
remand, noting that, because the district court is a matter of federal not state law.” Id.
rendered its decision on November 30, 1998, at 127.
it could not have taken into account this
court’s opinion announced the next day in F.D. Rich thus announced only that Miller
United States ex rel. Varco Pruden Bldgs. v. Act claims themselves do not incorporate state
Reid & Gary Strickland Co., 161 F.3d 915, law remedies such as attorney’s fees; it did not
918-19 (5th Cir. 1998). read the Act to preclude the pursuit of state
causes of action for fees in addition to Miller
I. Act claims.3 As we announced in Varco Pru-
Federal district courts can exercise den, “[w]e do not read F.D. Rich to prohibit
supplemental jurisdiction “over all . . . claims an award of attorneys’ fees under a state claim
that are so related to claims in the action over which the court has exercised
within such original jurisdiction [of the district supplementary jurisdiction in a Miller Act
court] that they form part of the same case or case.” 161 F.3d at 918-19.4 We therefore
controversy under Article III of the United
States Constitution.” 28 U.S.C. § 1367. The
3
parties do not contest that Cal’s’ state law Indeed, the plaintiff in F.D. Rich did not even
action for fees is sufficiently related, for § seek a state law-based claim for attorney fees, for
1367 purposes, to its Miller Act claim. The California law did not provide such an action. In-
stead, the plaintiff sought to incorporate California
district court read F.D. Rich Co. v. United
state policy into the federal Miller Act. See F.D.
States ex rel. Indus. Lumber Co., 417 U.S.
Rich, 417 U.S. at 126-18 (“Looking to California
116 (1974), however, as construing the Miller law, the Court of Appeals found an award of at-
Act to bar supplemental jurisdiction over torneys’ fees proper because [California law] al-
otherwise related state law claims for lowed for the recovery of attorneys’ fees in state
attorney’s fees. actions on the bonds of contractors for state and
municipal public works projects . . . [though that
F.D. Rich did no such thing; it stated that statute was] inapplicable to construction projects
the Miller Act does not “explicitly provide for of the United States. The Court of Appeals
an award of attorneys’ fees to a successful nonetheless held that since federal law controls
Miller Act recoveries, it was free to look to ‘state
policy’ rather than state law . . . .”). Here, by
contrast, the plaintiff looks to Louisiana state law,
2
See LA. REV. STAT. ANN. § 9:2784(C) (“If the and not the Miller Act, for relief.
contractor or subcontractor without reasonable
4
cause fails to make any payment to his See also United States ex rel. Garrett v.
subcontractors and suppliers within fourteen Midwest Constr. Co., 619 F.2d 349, 352-53 (5th
consecutive days of the receipt of payment from the Cir. 1980) (“Under [F.D. Rich], federal common
owner for improvements to an immovable, . . . the law governs the claim for attorney’s fees in Miller
contractor or subcontractor shall be liable for Act cases. . . . F.D. Rich proscribes attorney’s
reasonable attorney fees for the collection of the fees in Miller Act cases absent a controlling
payments due the subcontractors and suppliers.”). (continued...)

2
vacate, concluding that Cal’s may pursue one particular section of the Prompt Payment
attorney’s fees under Louisiana law. Act. Any bars to additional remedies erected
by the Miller Act are left untouched by
This result is not, however, mandated by § 3905(j). We therefore do not rely on the
the Prompt Payment Act Amendments of Prompt Payment Act, but instead conclude
1988.5 The Prompt Payment Act, 31 U.S.C. that F.D. Rich found no such barrier in the
§ 3901 et seq., confers additional rights and Miller Act in allowing Cal’s to proceed on its
duties on federal contractors and Louisiana claim.
subcontractors. The 1988 amendments
additionally provide that Finally, because we follow the lead of Var-
co Pruden in holding that F.D. Rich did not
this section [of the Prompt Payment preclude state-based actions for attorney’s fees
Act] shall not limit or impair any to accompany Miller Act claims, we need not
contractual, administrative, or judicial entertain Cal’s alternative argument that
remedies otherwise available to a § 1367 implicitly overrules F.D. Rich.
contractor or a subcontractor in the Because F.D. Rich did not bar supplemental
event of a dispute involving late jurisdiction over state law claims, there was
payment or nonpayment by a prime nothing in that opinion for § 1367 to overrule.
contractor or deficient subcontract
performance or nonperformance by a II.
subcontractor. Famous and Capitol argue that the district
court should be affirmed, notwithstanding Var-
31 U.S.C. § 3905(j). Cal’s would have us co Pruden, because Cal’s’ Louisiana claim fails
recognize that § 3905(j) effectively overrules on the merits. Louisiana law states:
the construction of the Miller Act offered by
F.D. Rich,6 but the text plainly limits itself to If the contractor or subcontractor
without reasonable cause fails to make
any payment to his subcontractors and
(...continued) suppliers within fourteen consecutive
contractual or statutory provision.”); but see days of the receipt of payment from the
United States ex rel. Howell Crane Serv. v. U.S. owner for improvements to an
Fidelity & Guar. Co., 861 F.2d 110, 112 (5th Cir. immovable, . . . the contractor or
1988) (holding that no state law claim for
attorney’s fees should be inferred from pleadings
because “[t]he clear holding of F.D. Rich is that (...continued)
attorney’s fees are not generally available in a See United States ex rel. Don Siegel Constr. Co.
Miller Act suit even when state law provides for v. Atul Constr. Co., 85 F. Supp. 2d 414, 416 n.1
such an award.”). (D.N.J. 2000) (stating that, though “at least one
federal district court has held that a
5
See Pub. L. No. 100-496, 102 Stat. 2455, subcontractor’s supplemental state law claims
2460-63, § 9 (codified at 31 U.S.C. § 3905). against a contractor or surety may be preempted by
the Miller Act . . . the holding in that case was
6
A few district courts, in addition to the district subsequently superseded by the Prompt Payment
court in this case, have supported this approach. Act”). We are aware of no courts of appeals that
(continued...) have addressed the issue.

3
subcontractor shall be liable for LA. REV. STAT. ANN. § 9:2784(C) (emphasis
reasonable attorney fees for the added).
collection of the payments due the
subcontractors and suppliers. Thus, Louisiana law allows Cal’s to recover
attorney’s fees from Famous, the contractor,
though not from Capitol, the surety.7
Furthermore, as we have previously held,
“recovery on the bond must be under the
Miller Act.” Varco Pruden, 161 F.3d at 919.8
Cal’s therefore may proceed against Famous
but not Capitol.

Famous presents two arguments, under LA.
REV. STAT. ANN. § 9:2784(C), why it should
not be held liable for attorney’s fees and as-
serts that remand is inappropriate because
Cal’s failed to comply with FED. R. APP. P. 10.
We address each argument in turn.

A.
First, Famous claims that it had “reasonable
cause” to refuse t o make payment and there-
fore cannot be made to pay fees under
§ 9:2784(C). Famous and Cal’s disputed the
amount owed. In fact, the district court grant-
ed less than what Cal’s originally had re-
questedSSfurther evidence that the dispute was

7
See Howell Crane, 861 F.2d at 113 (“[Surety]
USF&G’s only involvement with [subcontractor]
Howell was its Miller Act bond. No state law
claim was asserted by Howell against USF&G.
Thus, there is no basis for a pendant jurisdiction
award of attorney’s fees against USF&G.”).
8
See also Bernard Lumber Co. v. Lanier-
Gervais Corp., 560 So.2d 465, 467 (La. App. 1st
Cir. 1990) (“While the Miller Act is not the
exclusive remedy available to suppliers in some
cases, it is the exclusive remedy available to a
supplier against a surety (or the surety’s guarantor
in this case) on a Miller Act payment bond.”).

4
joined in good faith on the part of Famous.9 Therefore, remand is necessary to determine
whether Famous had reasonable cause not to
Moreover, Famous had paid the undisputed pay Cal’s.
amounts in full; only the disputed amounts
were kept from Cal’s.10 Therefore, according B.
to Famous, Cal’s cannot prove that Famous Second, the statute allows recovery of at-
lacked reasonable cause not to make payment, torney’s fees only “[i]f the contractor or sub-
as required to obtain attorney’s fees under contractor . . . fails to make any payment to his
Louisiana law. subcontractors and suppliers within fourteen
consecutive days of the receipt of payment
We may affirm on any ground supported by from the owner.” § 9:2784(C) (emphasis add-
the record, even if it was not the basis for ed). The VA made a series of payments to Fa-
judgment.11 Nevertheless, rejection on the mous, including compensation for part of the
merits of Cal’s request for attorney’s fees work performed by Cal’s. Cal’s, however, al-
under § 9:2784(C) requires particular factual so did work for Famous that the VA never
findings that the district court did not paid for.
makeSSindeed, had no need to make.12
That is, the VA never paid for work or-
dered by Famous, despite Cal’s repeated warn-
9
See Contractors Supply & Eq-Orleans v. ings that such work did not comply with Fa-
J. Caldarera & Co., 734 So. 2d 755, 759 (La. mous’s contract with the VA and thus would
App. 5th Cir. 1999) (“The trial judge determined not be eligible for federal reimbursement.
that the amount demanded by the plaintiff was out Therefore, if, on remand, Famous does not es-
of proportion to the amount owed, therefore the tablish reasonable cause for failing to pay
defendant had reasonable cause to withhold pay- Cal’s, the district court is directed to award
ments. . . . [T]he trial court did not err in denying
Cal’s attorney’s fees, but only those fees that
the plaintiff attorney fees . . . .”).
were necessary to obtain payments for which
10
Cf. Unis v. JTS Constructors/Managers, Famous was previously compensated by the
Inc., 541 So. 2d 278, 281 (La. App. 3d Cir. 1989) VA.13
(reasoning that “because no disputes existed
between the parties over the Palmetto Creek
Project, it was unreasonable for JTS Constructors (...continued)
to withhold payment”). mand for further proceedings is warranted is re-
flected in the paucity of record references by either
11
See Zuspann v. Brown, 60 F.3d 1156, 1160 side.
(5th Cir. 1995) (“We are free to uphold the district
13
court’s judgment on any basis that is supported by See Gitz v. Quality Restorations
the record.”); Wooton v. Pumpkin Air, Inc., Contractors, Inc., 508 So. 2d 170, 172 (La. App.
869 F.2d 848, 850 n.1 (5th Cir. 1989) (stating that 4th Cir. 1987) (Ciaccio, J., concurring) (“[Section
judgment “may be affirmed on appeal for reasons 9:2784(C)] is a punitive statute that regulates the
other than those asserted or relied on below”). timely payment of the sub-contractor out of those
funds the contractor receives as progress payments
12
The intensely factual nature of this dispute is from the owner. It does not and cannot shift the
reflected in the briefs of both parties, and that re- risk of non-payment by the owner from the general
(continued...) (continued...)

5
 Cal’s claims that Famous should be es- must “file a statement of the issues that the
topped from asserting nonpayment by the VA appellant intends to present on the appeal and
as a defense, because Famous unreasonably must serve on the appellee a copy of both the
failed to request additional payments from the order or certificate and the statement.” FED.
VA to ensure full compensation for Cal’s. But R. APP. P. 10(b)(3)(A). The appellee then has
nothing in the text of § 9:2784(C) suggests the opportunity to order other parts of the pro-
any opportunity for relief where the contractor ceedings to be included in the record on
has not received payment from the owner, and appeal. FED. R. APP. P. 10(b)(3)(B)-(C).
Cal’s does not provide any alternative theory
under Louisiana law to justify recovery of Cal’s satisfied in toto the requirements of
attorney’s fees. rule 10(b)(3)(A). It served Famous and Capi-
tol with its transcript order and with its notice
C. of appeal, which adequately articulated a
Remand therefore is necessary, because the “statement of the issues that the appellant in-
record does not permit us to render judgment tends to present on the appeal.” Id. The ap-
on Cal’s claim under § 9:2784(C). The district pellate rules do not require, as Famous and
court erroneously dismissed this claim for lack Capitol seem to suggest, that an appellant spe-
of supplemental jurisdiction. Therefore, on re- cifically warn appellees that it is not ordering
mand it will have its first opportunity to ad- a complete transcript. Famous and Capitol
dress the claim on the merits. may regret failing to take the opportunity to
order additional parts of the transcript for
Famous and Capitol, however, blame any appealSSparticularly because Varco Pruden
deficiencies in the record not on the procedural has forced them to press alternative legal
posture of this case, but on Cal’s. They assert theoriesSSbut the fault lies with Famous and
that record omissions should be construed Capitol, and not Cal’s.
against Cal’s on the ground that Cal’s failed to
notify them that it ordered only an incomplete VACATED and REMANDED.
transcript, inadequate to support Famous and
Capitol’s merits defense.

It is the duty of the appellant either to “or-
der from the reporter a transcript of such parts
of the [district court] proceedings not already
on file as the appellant considers necessary,”
or “file a certificate stating that no transcript
will be ordered.” FED. R. APP. P. 10(b)(1).
Moreover, where the appellant decides to or-
der something less than the entire transcript, it

(...continued)
contractor to the sub-contractor in the absence of
specific language in the contract providing for that
contingency.”).

6