N0. 01-2740 Diversified Packing and Development Corporation v. Dore & Associates Contracting, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
N0. 01-2740
DIVERSIFIED PACKING AND DEVELOPMENT CORPORATION
v.
DORE & ASSOCIATES CONTRACTING, INC.;
INTEGRA METALS TECHNOLOGY, INC.;
ANDREW A. DENUZZIO; ALEX SIMKOVICH; HARRY LAUGHERY;
OREGON STEEL MILLS, INC.
Dore & Associates Contracting, Inc.
Appellant
On Appeal From The United States District Court
For the Western District of Pennsylvania
(D.C. Civil No. 97-cv-01375)
District Judge: Honorable Donald E. Ziegler
Argued May 3, 2002
BEFORE: ROTH and STAPLETON, Circuit Judges, and POLLAK,* District Judge
(Opinion filed: September 17, 2002 )
________________________________________________________________________
*Honorable Louis H. Pollak, United States District Judge for the Eastern District of
Pennsylvania, sitting by designation. Victor P. Stabile (Argued)
Dilworth Paxson
305 North Front Street - Suite 403
Harrisburg, PA 17101
Attorney for Appellant Dore & Associates
Contracting, Inc.
John P. Borowski
DeZao & DiBrigida
322 Route 46 West - Suite 120
Parsippany, NJ 07054
Attorney for Appellee Diversified Packing &
Development Corporation
Mark D. Feczko (Argued)
Kirkpatrick & Lockhart
535 Smithfield Street
Henry W. Oliver Building
Pittsburgh, PA 15222
and
Robert B. Sommer

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Hergenroeder, Rega & Sommer
332 Fifth Avenue - Suite 610
Pittsburgh, PA 15222
Attorneys for Appellee Oregon Steel Mills, Inc.
OPINION OF THE COURT
STAPLETON, Circuit Judge:
I.
This action arises out of a complex set of commercial relationships among
appellant Dore & Associates Contracting, Inc. ("Dore"), appellee Oregon Steel Mills, Inc.
("Oregon Steel"), non-party Integra Metals Technology, Inc. ("Integra"), and appellee
Diversified Packing & Development Corporation ("Diversified").
In early 1996, Andrew Denuzzio and Alex Simkovich incorporated Integra with
the goal of locating a steel mill in Washington, Pennsylvania. At the same time, Oregon
Steel wanted to sell certain equipment from its mill site in Fontana, California, because its
lease was about to expire and it planned to shut down the mill. In order to accommodate
these complementary needs, on April 3, 1996, Integra and Oregon Steel entered into a
Capital Contribution Agreement ("CCA"). Under the CCA, Integra was to receive the
Fontana mill assets, and Oregon Steel was to receive 13% of Integra’s stock and a cash
payment of $1,000,000. The transfer of title was to take place upon the equipment’s
delivery to Integra in Pennsylvania. In order to secure certain rights of Oregon Steel as a
shareholder of Integra, Integra and Oregon Steel also entered into a Shareholder
Agreement on the same day they entered into the CCA.
Integra was responsible for dismantling and transporting Oregon Steel’s mill assets
to Pennsylvania at its own expense. The CCA expressly states that Integra will contract
with a third party to transport the assets. The relevant paragraph states in part:
3.4 Fontana Dismantling Contract. [Integra], as a
licensee from [Oregon Steel], shall contract (the "Fontana
Dismantling Contract") with a third party (the "Fontana
Dismantler") to, on behalf of [Oregon Steel], dismantle,
package, load onto a common carrier and deliver to [Integra]
in Pennsylvania (or to an alternate location as designated by
[Integra]) the Fontana Mill Assets . . . . [Oregon Steel] agrees
to deliver possession of the Fontana Mill Assets to Dismantler
in California for Delivery to [Integra] in Pennsylvania.
App. at 75 ( 3.4).
After signing the CCA and Share Purchase Agreement, Integra solicited bids for
the dismantling work. Dore and Diversified each submitted proposals to Integra. Integra
selected Dore. Pursuant to the Dismantling Contract, dated May 3, 1996, Integra agreed
to pay Dore $1,037,500 plus a percentage of the proceeds from the sale of the scrap to
serve as the general contractor for the job. The first page of the Dismantling Contract
states, "Whereas Integra is the licensee and agent of Oregon Steel Mills, Inc. pursuant to
that certain Capital Contribution Agreement dated April 4, 1996 between Integra and
Oregon Steel Mills, Inc . . . ." App. at 120.
Dore kept the demolition and scrapping work for itself and subcontracted with
Diversified for the dismantling portion, which requires the precise disassembly of
component parts for future reuse. On May 5, 1996, Dore and Diversified signed an
agreement by which Dore agreed to pay Diversified $715,000 for its part of the job--10%
in the form of a mobilization fee.
Diversified in turn subcontracted with Sydel Corp., t/a Jopac, Inc. ("Jopac"), to
provide certain necessary labor in the form of millwrights and riggers to disconnect and
dismantle the designated steel mill equipment and to remove it with cranes or other

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special equipment. Diversified agreed to pay Jopac $580,000 for this labor, 10% of
which was paid up front as a mobilization fee.
Integra contracted directly with Diversified for transportation of the dismantled
equipment. Integra agreed to pay $730,000 for Diversified’s services. This agreement
was signed on June 21, 1996.
On May 3, 1996, the day the Integra-Dore Dismantling Contract was executed, a
pre-construction conference was held at the Fontana site. Representatives of Integra,
Dore, and Oregon Steel were all present. Dore claims that it was unaware, until arriving
at the Fontana site, that Integra had to obtain additional financing for the project.
Therefore, in a series of letters between Dore and Integra, which were not copied to
Oregon Steel, Dore repeatedly sought assurances of payment from Integra. This issue
was settled in a May 29, 1996, letter agreement which permitted the imposition of liens
upon Oregon Steel’s equipment to secure payment for Dore’s work. Dore did not
communicate with Oregon Steel about this letter agreement.
Work began at the Fontana site on May 13, 1996. Dore and Diversified shut down
work at the site on two occasions. First, on May 28, 1996, Dore and Diversified shut
down work as a result of concerns about financial assurances. This shutdown was
resolved by the May 29, 1996, letter agreement discussed above. The second and final
shutdown occurred on July 3, 1996, as a result of nonpayment by Integra, which was
unable to obtain construction financing.
Diversified filed a complaint in the Western District of Pennsylvania against Dore,
Oregon Steel, Integra and Denuzzio and Simkovich seeking damages in the amount of
$121,500 for breach of the Dismantling Subcontract. Diversified also filed suit in the
Western District of Pennsylvania against Oregon Steel and Integra seeking damages of
$146,000 for breach of the Transportation Contract. These two cases were consolidated.
The individual defendants, Denuzzio and Simkovich, were dismissed prior to trial;
Integra was dropped as a defendant at trial. Dore subsequently asserted a cross-claim
against Oregon Steel for breach of the agreement to pay for the dismantling of the
equipment.
The District Court held a jury trial beginning on April 2, 2001, on all claims. The
Court finished its charge and reviewed the verdict slip with the jury at around 9:30 on the
morning of Tuesday, April 10. Thereafter, the jury submitted three questions for the
Court: a) "If we deem Integra as being the agent of Oregon Steel, does Oregon
automatically have to pay on the contract?" b) "They can be an agent, but under what
terms?" and c) "What is the definition of licensee?" App. at 1036. The court informed
the jury, "you must decide these issues based on the instructions of the Court. I’ve
already covered all aspects of these questions in the instructions of the Court." App. at
1038.
The jury asked another question even later that day: "can we have the Judge
recharge the jury? Some of the definitions and terms need [to be] reexplained to us."
App. at 1038-39. The court decided not to recharge the jury explaining "the jury has
failed to itemize any specific concepts, and until it does that, I’m not going to recharge
the jury ab initio." Id.
At 2:00 P.M., the jury returned with two further questions: a) "Do we have to
award the amounts based on breach of contract laws of profit, cost, or can we pick any
figure we choose for settlement?" and b) "When was the lawsuit filed? We need this to
determine the amount of interest owed, if any." App. at 1040. The court directed the jury
to decide the case on the facts in the record and the law as explained by the judge.
The next day, on April 11, 2001, the jury presented the court with its last request:
"We are at a standstill in deliberations. The only way to clarify and resolve any further is
to have the law explained again by the Judge. Can we please have the law re-explained?"
App. at 1044. In response to this, the court indicated to the jury that it was going to re-
explain the law of agency and the contentions of the parties.
The court reinstructed the jury on three principles of agency: actual authority,
apparent authority, and agency by estoppel. Counsel for Dore requested that the court
also recharge on the rule of liability set forth in 258 of the Restatement of Agency
(Second). Dore’s request was denied.
Later that day, the jury, finding no agency relationship, returned a verdict in favor
of Oregon on both Diversified’s claim and Dore’s cross-claim. However, the jury
returned a verdict in favor of Diversified and against Dore for breach of the Dismantling

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Subcontract. The jury awarded Diversified the full amount of its requested damages on
that claim, $121,500.
Both Dore and Diversified filed post trial motions seeking judgment as a matter of
law or new trials with respect to the verdicts in favor of Oregon Steel. Dore also filed a
motion challenging Diversified’s award of $121,500, alleging that the jury ignored the
court’s instruction that it had to deduct from any award the costs saved by Diversified by
not having to complete work under its subcontract. The District Court denied all post-
trial motions.
Dore is the only party to appeal from the judgments entered by the District Court.
Dore contends that the District Court erred by refusing to recharge the jury on the theory
of liability in Restatement (Second) of Agency 258; by refusing to provide separate jury
interrogatories on the verdict slip to determine whether Dore and Diversified each met
their separate burdens of proving agency on Dore’s dismantling and Diversified’s
transportation contracts; and by denying Dore’s post trial motion for a new trial on
Diversified’s claim of damages due to a lack of evidence.
II.
A. Supplemental Jury Charge
The form and extent of supplemental jury instructions are matters for the sound
discretion of the Court. See Riley v. K Mart Corp., 864 F.2d 1049, 1054 n.6 (3d Cir.
1988). As the Supreme Court has stated:
Once the judge has made an accurate and correct charge, the
extent of its amplification must rest largely in his discretion.
The trial judge in the light of the whole trial and with the jury
before him may feel that to repeat the same words would
make them no more clear, and to indulge in variations of
statement might well confuse.
United States v. Bayer, 331 U.S. 532, 536-37 (1947). Here, the appellant does not argue
that the initial jury charge was incorrect, merely that the District Court deemphasized an
important legal argument by failing to give a supplemental charge on 258. We must
consider all the court’s instructions as a whole, including the supplemental instructions, to
determine whether they are misleading or inadequate to explain the law. See Bhaya v.
Westinghouse Elec. Corp., 922 F.2d 184, 191 (3d Cir. 1990); see also Time, Inc. v.
Petersen Publ’g. Co., 173 F.3d 113, 119 (2d Cir. 1999).
Actual authority, apparent authority, and agency by estoppel are methods of
establishing the authority of the purported agent, to bind the purported principal. Section
258 provides a rule of liability governing a principal’s tort liability for certain
misstatements of one who has been shown to be his agent. Section 258 of the
Restatement states:
In the absence of an exculpatory agreement, a principal
authorizing a servant or other agent to enter into negotiations
to which representations concerning the subject matter thereof
are usually incident is subject to liability for loss caused to the
other party to the transaction by tortious misrepresentations of
the agent upon matters which the principal might reasonably
expect would be the subject of representations, provided the
other party has no notice that the representations are
unauthorized.
Restatement (Second) of Agency 258 (1958). Under this section, the precondition for
application of liability is an agent/principal relationship. That is, prior to applying this
section, the factfinder must determine that an agency relationship exists.
The role of 258 and the role of the principles governing the creation of agency
authority are sufficiently different in this litigation that the District Court’s decision to
reexplain the latter and not the former was well within its discretion. Moreover, that
decision could not have affected the ultimate result. The jury here found that neither
Dore nor Diversified carried their burden of proving that Integra had agency authority
and, therefore, the jury had no occasion to reach the theory of liability embodied in 258.
B. Special Interrogatory
The District Court submitted the following interrogatory to the jury in its verdict

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slip:
1. Did plaintiffs, Diversified Packing and Dore &
Associates, prove, by a preponderance of the evidence, that
Integra Metals was the agent of Oregon Steel Mills with the
authority to execute contracts that required Oregon Steel to
pay the dismantling and transportation costs at the steel plate
mill in Fontana, California?
_________________ _______________
Yes No
App. at 33. According to Dore, the court’s interrogatory is infirm because it fails to
distinguish between Dore and its situation with the dismantling contract and Diversified
and its situation with the transportation contract. It insists that the jury should have been
afforded the opportunity to determine that Dore had carried its burden with respect to the
dismantling contract even if it believed Diversified had not carried its burden with respect
to the transportation contract. We review the construction of special verdict
interrogatories to the jury for abuse of discretion. See Merritt Logan, Inc. v. Fleming Co.,
Inc., 901 F.2d 349, 367 (3d Cir. 1990) ("The question of how special interrogatories are
to be framed is committed to the discretion of the trial judge." ).
We conclude that any error was harmless on this record. The evidence offered by
Dore and Diversified relevant to the agency issues was not materially different, the
arguments they made in their closings were not materially different, and the court,
without objection from the parties, explained their contentions to the jury as being
identical. We are confident that the jury would not have made a distinction between the
two even if that opportunity had been afforded them.
With respect to the agency issue, the court instructed the jury on "actual authority,"
"apparent authority" and "agency by estoppel." App. at 1010-11. Understandably given
the provisions of the CCA, both Dore and Diversified placed primary reliance on "actual
authority." Actual authority requires a manifestation by the principal to the agent that the
agent is to act on his account. Restatement (Second) of Agency 26. The evidence
relied upon by both Dore and Diversified to so prove was the same - i.e., the CCA.
Apparent authority can, of course, be conferred on an agent only by actions of the
principal and not by actions of the agent. Restatement (Second) of Agency 27. Dore’s
and Diversified’s evidence with respect to this issue was substantially the same.
Responsible officials of both testified that they had been assured by Royce Edgington,
Oregon Steel’s site representative, that Oregon Steel and Integra were in "a joint
venture." While Integra made additional representations with respect to its relationship
with Oregon Steel, the only relevant evidence about Oregon Steel’s conduct was
Edgington’s representation that there was a joint venture. While no one asked the court to
explain to the jury the relationship between a joint venture and an agency, assuming that
the Edgington evidence is relevant, it was materially the same with respect to both Dore
and Diversified.
Agency by estoppel, too, can arise only from the conduct of the purported
principal. Restatement (Second) of Agency 8B. If the purported principal becomes
aware that others are dealing with the purported agent in the mistaken belief that he is the
agent of the purported principal and does not take reasonable steps to correct the mistake,
the purported principal is responsible for damages suffered when the third party thereafter
relies and changes position to his detriment.
Dore asserts that it had a stronger case of agency by estoppel than Diversified had
because, in connection with a preconstruction meeting on the site on May 2, 1996,
Oregon Steel’s Project Manager, Mr. Bird, received a copy of Dore’s dismantling
subcontract with Integra which contained a "Whereas" clause referring to Integra as the
"licensee and agent of Oregon Steel . . . as more fully described in the Capital
Contribution Agreement." According to Dore, the delivery of this document to Oregon
Steel’s Project Manager alone put Oregon Steel on notice that Dore was relying on
Oregon Steel to make the payments called for in the Integra contract.
As Oregon Steel’s counsel stressed to the jury in closing, however, Mr. Bird was
present at this meeting for purposes wholly unrelated to an analysis of the legal
implications of the recitals of the contract between Integra and Dore, an analysis that he
was not qualified to conduct, and it would hardly be reasonable to expect him to have

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drawn the inferences that Dore now claims he should have drawn. In short, we conclude
that delivery of this contract document to Mr. Bird would not support a finding of agency
by estoppel. Since this is the only evidence to which we have been referred in support of
this theory, it follows that Dore’s agency by estoppel argument does not make it
reversible error for the District Court to fail to distinguish between Dore and Diversified
in Interrogatory 1.
C. Sufficiency of the Damages Evidence
Lastly, Dore contends that it is entitled to a new trial on damages against
Diversified because the amount of the jury’s damage award was not supported by the
evidence. Dore raised this same claim in post trial motions. The District Court held that
there was sufficient evidence to sustain the jury’s verdict. In reviewing a District Court’s
decision to grant or deny a motion for a new trial, we look to see whether the court abused
its discretion. See Olefins Trading, Inc. v. Han Yang Chem Corp., 9 F.3d 282, 289 (3d
Cir. 1993).
The District Court correctly charged the jury as follows with respect to the
measure of damages for a breach of contract:
The preferred method under the law of contract
damages is to protect the injured party’s expectation. This
means that damages should be designed to place the party in
the same position it would have been if the contract had been
performed. To this end, expectation damages are measured
by the losses caused and the gains prevented by a defendant’s
breach of contract, to the extent that they are in excess of any
savings made by possible nonperformance.
App. 926-27. See Atacs v. Trans World Communications, 155 F.3d 659, 669 (3d Cir.
1998) (explaining the measure of expectation damages).
In the context of a construction contract where the builder is precluded from
completing his performance by a material breach of the owner, this means that the builder
is entitled to receive the "contract price (or so much as remains unpaid) less the amount it
would cost the builder to complete the job." Charles T. McCormick, Handbook on the
Law of Damages 164 (1935).
The following portions of Diversified’s brief describe the scope of Diversified’s
subcontract with Jopac and the state of the dismantling project when Dore ordered a work
stoppage on July 3, 1996:
On May 5, 1996 Richard Masco, president of Diversified,
signed a subcontract with Dore for a contract price of
$715,000. . . . Diversified was a particular subcontractor
with extensive dismantling experience, international in scope,
and they were a perfect fit to work on a fast track basis which
was required because of the tight deadlines. . . .
Pursuant to the subcontract Diversified agreed to
dismantle, remove and load designated equipment at the
Fontana plant. Specifically, it agreed "to furnish all labor,
materials, tools, equipment, transportation." . . . The
subcontract specifically stated that Diversified shall "perform
any and all necessary work to complete all rigging,
dismantling, removing and loading as [Dore] is required to
perform under The Principal Contract." . . .
Diversified thereafter contracted with Jopac to provide
the necessary labor in the form of millwrights and riggers to
disconnect and dismantle the designated steel mill equipment
and remove it through cranes or other special equipment to
designated lay down areas on site. . . . Dore and Diversified
agreed that Masco would be on site at all times while the
work was being performed to act as project manager. . . .
. . .The plant which housed the equipment was about 300

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yards long. . . . The objective was to dismantle 3,300 tons of
processing equipment that included, but was not limited to,
one furnace, one four high mill, a two-high mill, one 10,000
horsepower GE motor, two 7,500 horsepower GE motors and
small equipment that connects everything together. . . .
At trial the jury was made aware of the enormity of the
dismantling project by the characterization of certain aspects
of the job by witnesses from Diversified as well as Dore. The
jury was apprized of the fact that the subject pieces were large
and difficult to remove. . . .
. . .
. . .Diversified had supervised the breakdown and removal
from their respective locations of 69% of the scheduled units
designated for reuse by the time work shut down. . . . While
the transportation was pursuant to a separate agreement
between Diversified and Integra, nonetheless, loading was
part and parcel of the Dore-Diversified subcontract. . . .
Richard Masco was involved in the plan to transport the
equipment by truck and rail, along with the necessary prep
work of fashioning crates, boxes, and skids to package parts
and, in some instances, direct supervision of the loading. . . .
Appellee Diversified’s Br. at 6-11.
The testimony most helpful in understanding Diversified’s role on the site was
provided by Richard Masco, its site supervisor:
Q. . . . Could you just give us a brief overview of what the
dismantling, or how the dismantling occurred from when you
first mobilized up until when you stopped work in July of
1996?
A. Okay. We started to mobilize on the 13th, which means
that we brought our supervision in, our foreman to look over
the job, go from Point A to Point B on the job explaining what
had to be done. In that time frame we also contracted and
contacted any vendors that we may need for specialized
equipment that may have been required to go on the job. And
then we began to bring in our crew. We brought a basic crew.
Jopac brought a basic crew from Philadelphia to the site, and
then, we hired additional labor there, primarily people that
had worked in the mill prior to the mill closing down, so that
we had good, experienced people, preferably maintenance
people, and we began to dismantle. And in the dismantling
process we, we remove it from Point A to a staging area, what
we call the lay-down area, where it’s ready to load or be
prepared to load.
Q. Was it part of your contract to dismantle, remove, and
then load onto the common carriers at the time when it was
arranged?
A. Yes. Yes, it was.
App. at 221-22.
If the Diversified/Dore contract had been fully performed, Diversified would have
received the contract price of $715,000. In the course of the performance necessary to

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entitle it to that compensation it would have had to pay Jopac $580,000 for the labor it
provided. This leaves a balance of $135,000. The parties further agree that this figure
must be reduced by the $13,500 Diversified’s portion of the mobilization fee received
from Dore which it expended on startup costs. This is the basis for Diversified’s damage
demand of $121,500, the figure that the jury awarded.
Dore points out, however, that Diversified did not have to fully perform the
Dore/Diversified contract. Dore ordered a work stoppage on July 13, 1996, when
Diversified had completed only 69% of its work. It stresses that the remaining
performance would obviously have required Diversified to incur costs that it saved from
being relieved of the duty of full performance. Since Diversified would have had to incur
those costs in order to be entitled to the $715,000 contract price, Dore argues, a damage
award based on the contract price that does not take those saved costs into account puts
Diversified in a better position than it would have been in had there been no breach. Dore
correctly points out that Diversified provided the jury with no basis for estimating those
saved costs.
When one of Diversified’s principals, John Colaiacovo, explained its $121,500
damage claim to the jury, he was asked about saved costs. He did not deny that
Diversified, by being relieved of the duty of full performance, saved money it would
otherwise have had to expend. Rather, he insisted that Diversified didn’t need to deduct
those saved costs because it was not responsible for the work stoppage:
Q. . . .My point is, Mr. Colaiacovo, you have not taken out of
that One hundred and twenty-one five what you saved by not
having to support Mr. Masco and the rest of your overhead
out there for the time that you didn’t have to stay there to
complete the job.
. . .
A. Ah, yes, right. You’re saying is because we didn’t stay
until the project was 100 percent complete, okay, but that’s
you know, I’m, I felt I’m entitled to that because we weren’t
able to complete the contract.
Q. Right.
A. I’m entitled to the benefit of my bargain.
Q. Are you, you entitled to get the costs you didn’t incur?
A. Yes.
Q. Why?
A. Because I didn’t stop the job. I wasn’t the one who
stopped the job.
Q. All right. Now. Mr. Colaiacovo, then if I understand you
correctly, you’re asking this jury to award you in your number
of $121,500 costs that you didn’t incur for the time that you
didn’t have to stay out there to finish the job; is that right?
A. Yes.
App. at 635-36.
Mr. Colaiacovo held an erroneous view of the law. Not taking saved costs into
account puts Diversified in a better position than it would have been absent the breach
and, accordingly, the law requires that these saved costs be taken into account in
determining expectation damages in a situation of this kind.
Diversified’s brief also seeks to sustain its $121,500 award by pointing to the fact

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that it "maintained an office on site to keep secure equipment, records, and dismantled
equipment that had not been transported off site." Appellee Diversified’s Br. at 11.
While there is evidence to this effect in the record, given the evidence regarding
Diversified’s responsibilities under the contract, it will not support a finding that there
were no saved costs.
The $121,500 verdict is not supported by the evidence. Dore is entitled to a new
trial on damages. See New Orleans & Northeast R.R. Co. v. Hewlett Oil Co., 341 F.2d
406 (5th Cir. 1965).
III.
The judgment of the District Court in favor of Oregon Steel and against Dore will
be affirmed. Its judgment in favor of Diversified against Dore will be reversed and this
matter will be remanded to the District Court for a new trial on damages.
TO THE CLERK:
Please file the foregoing Not Precedential Opinion.
/s/ Walter K. Stapleton
Circuit Judg

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