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

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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m 99-30012
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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.
GARZA, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Having won its Miller Act claim1 against
federal contractor The Famous Construction
Corporation (“Famous”) and its surety, Capi-
tol Indemnity Corporation (“Capitol”), for
amounts owing on unpaid construction and re-
pair work, subcontractor Cal’s A/C and
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).

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claim for attorney’s fees.2 Because the district
court incorrectly concluded that the Miller Act
precludes supplemental jurisdiction over Cal’s’
related state claim for fees, we vacate and
remand, noting that, because the district court
rendered its decision on November 30, 1998,
it could not have taken into account this
court’s opinion announced the next day in
United States ex rel. Varco Pruden Bldgs. v.
Reid & Gary Strickland Co., 161 F.3d 915,
918-19 (5th Cir. 1998).
I.
Federal district courts can exercise
supplemental jurisdiction “over all . . . claims
that are so related to claims in the action
within such original jurisdiction [of the district
court] that they form part of the same case or
controversy under Article III of the United
States Constitution.” 28 U.S.C. § 1367. The
parties do not contest that Cal’s’ state law
action for fees is sufficiently related, for §
1367 purposes, to its Miller Act claim. The
district court read F.D. Rich Co. v. United
States ex rel. Indus. Lumber Co., 417 U.S.
116 (1974), however, as construing the Miller
Act to bar supplemental jurisdiction over
otherwise related state law claims for
attorney’s fees.
F.D. Rich did no such thing; it stated that
the Miller Act does not “explicitly provide for
an award of attorneys’ fees to a successful
plaintiff.” Id. at 126. The Court further held
that “[t]he Miller Act provides a federal cause
of action, and the scope of the remedy as well
as the substance of the rights created thereby
is a matter of federal not state law.” Id.
at 127.
F.D. Rich thus announced only that Miller
Act claims themselves do not incorporate state
law remedies such as attorney’s fees; it did not
read the Act to preclude the pursuit of state
causes of action for fees in addition to Miller
Act claims.3 As we announced in Varco Pru-
den, “[w]e do not read F.D. Rich to prohibit
an award of attorneys’ fees under a state claim
over which the court has exercised
supplementary jurisdiction in a Miller Act
case.” 161 F.3d at 918-19.4 We therefore
2 See LA. REV. STAT. ANN. § 9:2784(C) (“If the
contractor or subcontractor without reasonable
cause fails to make any payment to his
subcontractors and suppliers within fourteen
consecutive days of the receipt of payment from the
owner for improvements to an immovable, . . . the
contractor or subcontractor shall be liable for
reasonable attorney fees for the collection of the
payments due the subcontractors and suppliers.”).
3 Indeed, the plaintiff in F.D. Rich did not even
seek a state law-based claim for attorney fees, for
California law did not provide such an action. In-
stead, the plaintiff sought to incorporate California
state policy into the federal Miller Act. See F.D.
Rich, 417 U.S. at 126-18 (“Looking to California
law, the Court of Appeals found an award of at-
torneys’ fees proper because [California law] al-
lowed for the recovery of attorneys’ fees in state
actions on the bonds of contractors for state and
municipal public works projects . . . [though that
statute was] inapplicable to construction projects
of the United States. The Court of Appeals
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,
and not the Miller Act, for relief.
4 See also United States ex rel. Garrett v.
Midwest Constr. Co., 619 F.2d 349, 352-53 (5th
Cir. 1980) (“Under [F.D. Rich], federal common
law governs the claim for attorney’s fees in Miller
Act cases. . . . F.D. Rich proscribes attorney’s
fees in Miller Act cases absent a controlling
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vacate, concluding that Cal’s may pursue
attorney’s fees under Louisiana law.
This result is not, however, mandated by
the Prompt Payment Act Amendments of
1988.5 The Prompt Payment Act, 31 U.S.C.
§ 3901 et seq., confers additional rights and
duties on federal contractors and
subcontractors. The 1988 amendments
additionally provide that
this section [of the Prompt Payment
Act] shall not limit or impair any
contractual, administrative, or judicial
remedies otherwise available to a
contractor or a subcontractor in the
event of a dispute involving late
payment or nonpayment by a prime
contractor or deficient subcontract
performance or nonperformance by a
subcontractor.
31 U.S.C. § 3905(j). Cal’s would have us
recognize that § 3905(j) effectively overrules
the construction of the Miller Act offered by
F.D. Rich,6 but the text plainly limits itself to
one particular section of the Prompt Payment
Act. Any bars to additional remedies erected
by the Miller Act are left untouched by
§ 3905(j). We therefore do not rely on the
Prompt Payment Act, but instead conclude
that F.D. Rich found no such barrier in the
Miller Act in allowing Cal’s to proceed on its
Louisiana claim.
Finally, because we follow the lead of Var-
co Pruden in holding that F.D. Rich did not
preclude state-based actions for attorney’s fees
to accompany Miller Act claims, we need not
entertain Cal’s alternative argument that
§ 1367 implicitly overrules F.D. Rich.
Because F.D. Rich did not bar supplemental
jurisdiction over state law claims, there was
nothing in that opinion for § 1367 to overrule.
II.
Famous and Capitol argue that the district
court should be affirmed, notwithstanding Var-
co Pruden, because Cal’s’ Louisiana claim fails
on the merits. Louisiana law states:
If the contractor or subcontractor
without reasonable cause fails to make
any payment to his subcontractors and
suppliers within fourteen consecutive
days of the receipt of payment from the
owner for improvements to an
immovable, . . . the contractor or
(...continued)
contractual or statutory provision.”); but see
United States ex rel. Howell Crane Serv. v. U.S.
Fidelity & Guar. Co., 861 F.2d 110, 112 (5th Cir.
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
attorney’s fees are not generally available in a
Miller Act suit even when state law provides for
such an award.”).
5 See Pub. L. No. 100-496, 102 Stat. 2455,
2460-63, § 9 (codified at 31 U.S.C. § 3905).
6 A few district courts, in addition to the district
court in this case, have supported this approach.
(continued...)
(...continued)
See United States ex rel. Don Siegel Constr. Co.
v. Atul Constr. Co., 85 F. Supp. 2d 414, 416 n.1
(D.N.J. 2000) (stating that, though “at least one
federal district court has held that a
subcontractor’s supplemental state law claims
against a contractor or surety may be preempted by
the Miller Act . . . the holding in that case was
subsequently superseded by the Prompt Payment
Act”). We are aware of no courts of appeals that
have addressed the issue.

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subcontractor shall be liable for
reasonable attorney fees for the
collection of the payments due the
subcontractors and suppliers.
LA. REV. STAT. ANN. § 9:2784(C) (emphasis
added).
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 to 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.”).

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

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

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