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,
Capitol Indemnity Corporation (“Capitol”), for
amounts owing on unpaid construction and
repair work, subcontractor Cal’s A/C and
Electric (“Cal’s”) appeals a partial summary
judgment dismissing its Louisiana state law
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,
* 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determined that this opinion should not be
published and is not precedent except under the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.
1 See 40 U.S.C. § 270a et seq. (imposing
bonding requirements for federal contracts and
establishing federal cause of action to recover on
such bonds).
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.”).

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2
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
Pruden, “[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
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
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.
Instead, 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 attorneys’ fees proper because [California
law] allowed for the recovery of attorneys’ fees in
(continued...)
(...continued)
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
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).

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3
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
Varco 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
Varco 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
subcontractor shall be liable for
reasonable attorney fees for the
collection of the payments due the
subcontractors and suppliers.
6 A few district courts, in addition to the district
court in this case, have supported this approach.
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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4
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
asserts 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
therefore cannot be made to pay fees under
§ 9:2784(C). Famous and Cal’s disputed the
amount owed. In fact, the district court
granted less than what Cal’s originally had
requestedSSfurther evidence that the dispute
was 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
attorney’s fees only “[i]f the contractor or
subcontractor . . . 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 added). The VA made a series of
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.”).
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
(continued...)
(...continued)
payments. . . . [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
remand for further proceedings is warranted is
reflected in the paucity of record references by
either side.

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5
payments to Famous, including compensation
for part of the work performed by Cal’s.
Cal’s, however, also did work for Famous that
the VA never paid for.
That is, the VA never paid for work
ordered by Famous, despite Cal’s repeated
warnings that such work did not comply with
Famous’s contract with the VA and thus
would not be eligible for federal
reimbursement. Therefore, if, on remand,
Famous does not establish 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
Cal’s claims that Famous should be
estopped 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
remand it will have its first opportunity to
address 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
“order 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 order 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 proceedings 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
Capitol with its transcript order and with its
notice of appeal, which adequately articulated
a “statement of the issues that the appellant
intends to present on the appeal.” Id. The
appellate rules do not require, as Famous and
Capitol seem to suggest, that an appellant
specifically 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.
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
contractor to the sub-contractor in the absence of
specific language in the contract providing for that
contingency.”).

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