Contract Design Group, Inc. v. Wayne State University

635 F. App'x 222
CourtCourt of Appeals for the Sixth Circuit
DecidedDecember 16, 2015
DocketNos. 14-2148, 14-2206
StatusPublished
Cited by3 cases

This text of 635 F. App'x 222 (Contract Design Group, Inc. v. Wayne State University) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Contract Design Group, Inc. v. Wayne State University, 635 F. App'x 222 (6th Cir. 2015).

Opinion

OPINION

JANE B. STRANCH, Circuit Judge.

Plaintiffs Contract Design Group and Robert Murray sued Wayne State University and other defendants alleging violations of substantive and procedural due process and equal protection under the United States Constitution, pursuant to 42 U.S.C. § 1983, and — under the Michigan Constitution — claims for intentional interference with business relations; account stated; and breach of contract. A jury found for Plaintiffs on the procedural due process claim and on the account stated and breach of contract claims. Defendants appealed: the trial court’s denial of their post-trial motions for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) and for a new trial or remittitur pursuant to Rule 59; their motion in limine to exclude Plaintiffs’ expert witness; and the court’s grant of attorneys’ fees under 42 U.S.C. § 1988. Plaintiffs cross-appealed the court’s denial of court reporter fees, witness fees, and copying costs under 28 U.S.C. § 1920.

Because the district court erred in denying the motion for judgment as a matter of law on the claim for breach of contract and abused its discretion in denying the motion for a new trial or remittitur on the claims for breach of contract and account stated, we REVERSE IN PART with respect to those claims, VACATE the court’s award of attorneys’ fees and costs, and REMAND the case for further proceedings consistent with this opinion, including a recalculation of fees and costs. We AFFIRM the district court’s denial of Defendants’ motions regarding the remaining issues.

I. BACKGROUND

A. Facts

Plaintiff Robert Murray is the owner of Contract Design Group (CDG), a commercial and residential floor covering company located in Royal Oak, Michigan. (R. 178, PagelD 5669.) For over twenty years, Murray and CDG had an ongoing business relationship with defendant Wayne State University (WSU). (Id. at PagelD 5670-71.) Problems arose in 2008 and 2009, however, when WSU became concerned that CDG was not in compliance with Michigan’s prevailing wage law. (R. 20, PagelD 156-57.) In August 2009, WSU suspended CDG from further work and withheld payment for 29 invoices that CDG had submitted for completed work. In October 2009, WSU terminated its 2008 contract with CDG, and in December it formally debarred CDG from bidding on future WSU projects. (R. 20, PagelD 157-58; R. 179, PagelD 5776-77, 5791, 5794, 5798, 5802.) Defendants and WSU employees James Sears, Joan Gossman, and John Davis participated in these decisions, after determining that CDG had not complied with the terms of the 2008 Contract — specifically that CDG had failed to produce evidence that it paid employees at Michigan’s statutory prevailing wage rate. (R. 179, PagelD 5791-92, 5799.) They also cited evidence of fraud by CDG. (Id. at 5792.) CDG disputed these allegations and WSU’s actions, which severely impacted CDG’s business. (Id. at PagelD 5802.)

[225]*225CDG had worked for WSU for several years under various contracts, but in the early 2000s WSU began requiring blanket contracts for routine construction jobs. (R. 178, PagelD 5671.) The 2008 Contract at issue was signed in October 2008 by Murray and Davis, WSU’s Vice President for Finance and Facilities Management, and was valid through September 2011. (R. 236-12, PagelD 91.) It required CDG to work on a time and materials basis and to pay not less than the prevailing wage rate as set by the U.S. Department of Labor. (Id.) It required contractors and subcontractors to keep accurate records of wages paid and. provide them to WSU upon request. (Id.; R. 195, PagelD 6909.) The contract was open-ended, however, in that it lacked a specific scope of work or specifications for any particular project. (R. 236-12, PagelD 91.)

Murray testified that despite the issuance of such blanket contracts, actual practices between contractors and WSU functioned differently. On individual projects, contractors, including CDG, routinely submitted estimates for lump sum amounts to George Dorset, WSU’s Manager of Trades to the Facilities Department and later Director of Reimbursable Construction, who verbally approved such proposals. (R. 194, PagelD 6688-89; R. 178, PagelD 5683-90.) After the work was completed, the contractors submitted invoices, which were paid by WSU. (R. 178, PagelD 5683-87; R. 179, PagelD 5778-80.) Murray understood Dorset to function as WSU’s project manager and to have authority to make final decisions regarding contracts. (R. 178, PagelD 5695-97.) Dorset admitted that the use of such lump sum contracts was a long-term practice at WSU, despite the time and materials language in the 2008 Contract, because individual WSU clients wanted to know project costs beforehand. (R. 194, PagelD 6710, 6713-14, 6759, 6767-69.) Although in his trial testimony Dorset characterized these lump sum contracts as formed under the auspices of the general blanket contract, he also admitted that he was processing individual contracts for specific jobs in “the way it’s been done for a long time.” (Id. at PagelD 6769).

Sears, WSU’s Assistant Vice President for Facilities Planning and Management (id. at PagelD 6794), who directly oversaw Dorset, testified that Dorset ostensibly used the time and materials contracts but nevertheless persisted in receiving and paying invoices on a lump sum basis. (R. 196, PagelD 6992-93.) Sears also admitted that WSU had determined that some of its contracts with CDG were separate lump sum contracts not associated with the 2008 Contract. (Id. at PagelD 6992; R. 195, PagelD 6941.) Sears explained that only he or Davis had the authority to sign such contracts. (R. 194, PagelD 6801.) WSU eventually suspended Dorset in September 2009 and terminated him in November, for reasons including: mismanaging contracts, failing to require supporting documentation for invoices submitted, and soliciting kickbacks from contractors seeking WSU business. (R. 196, PagelD 6993, 6999; R. 195, PagelD 6923.)

In 2008, WSU became concerned that some of its contractors and subcontractors might not be complying with Michigan’s Prevailing Wage Act and other labor laws. (R. 194, PagelD 6812-13.) WSU began requiring contractors to submit certified payroll documentation before it would process their invoices. (Id. at 6815.) Sears had conversations with CDG and one other contractor, urging them to discontinue their use of subcontractors and to pay prevailing wage rates. (R. 195, PagelD 6915.)

Murray testified that in August 2008, Dorset called and told him that WSU was [226]*226not going to provide CDG with any more work because CDG had not been paying the employer’s matching Federal Insurance Contributions Act (FICA) contributions. (R. 179, PagelD 5740.) Murray requested a meeting, at which he stated that CDG was not required to pay FICA on behalf of subcontractors because independent contractors were not CDG employees, (id. at 5741), but nevertheless began to submit certified payrolls to WSU. (Id. at 5743.) Randall Flaherty — a former CDG employee who had been fired for attempting to violate his non-compete agreement, (R.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
635 F. App'x 222, Counsel Stack Legal Research, https://law.counselstack.com/opinion/contract-design-group-inc-v-wayne-state-university-ca6-2015.