USA for u v.

Opinion

USCA1 Opinion

November 29, 1993     [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

____________________

          No. 93-1541

                            UNITED STATES OF AMERICA, for
                             u/b/o LUIS A. CABRERA, S.E.
                                A SPECIAL PARTNERSHIP,

                                 Plaintiff, Appellee,

                                          v.

                          SUN ENGINEERING ENTERPRISES, INC.,
                           AND CNA CASUALTY OF PUERTO RICO,

                               Defendants, Appellants.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                    [Hon. Jos  Antonio Fust , U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                 Breyer, Chief Judge,
                                         ___________

                            Coffin, Senior Circuit Judge,
                                    ____________________

                            and Torruella, Circuit Judge.
                                           _____________

                                _____________________

               Federico Lora-L pez for appellants.
               ___________________
               Thomas Doran-Gelabert, with whom Eduardo Castillo-Blanco was
               _____________________            _______________________
          on brief for appellee.

____________________

____________________

Per Curiam.  This case concerns an action brought under
                    __________

          the Miller  Act, 40 U.S.C.    270a-f (1986),  in the name  of the

          United States for  the use and  benefit of Luis A.  Cabrera, S.E.

          ("Cabrera"),   a   subcontractor,   against     Sun   Engineering

          Enterprises, Inc. ("Sun Engineering"), a general  contractor, and

          its  surety,  CNA  Casualty  of  Puerto Rico  ("CNA").    In  the

          complaint, Cabrera claimed  money it was due under  a subcontract

          with Sun Engineering.  After  a non-jury trial, the United States

          District Court for  the District of  Puerto Rico awarded  Cabrera

          $44,769.25.  Sun Engineering then filed this appeal claiming that

          the  district court  improperly amended  the  pre-trial order  at

          trial, and that  there was insufficient  evidence to support  the

          court's  findings of  fact.   For the  reasons stated  herein, we

          affirm.

                                I.  BACKGROUND
                                I.  BACKGROUND

                    We review the facts in favor of the prevailing party at

          trial,  Cabrera.   See  American  Title  Ins.  Co. v.  East  West
                             ___  __________________________     __________

          Financial  Corp.,  959  F.2d  345,  346 (1st  Cir.  1992).    Sun
          ________________

          Engineering  is  a  construction  company  which  was  the  prime

          contractor for  a federal project  involving partially renovating

          the United States  General Post Offices in San  Juan, Puerto Rico

          ("the Project").  Cabrera was a subcontractor on the Project.  On

          December 21, l989,  Mr.  Luis Cabrera submitted a price quotation

          to Mr. Francisco Jim nez, the president of Sun Engineering, which

          detailed, item by item, the work which the Project blueprints and

          specifications required with respect to supplying  and installing

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vinyl floors, dry wall partitions,  and acoustical ceilings.  The

          quotation estimated  the cost  of the work  to be  $106,707.35.1 

          Mr. Cabrera and  Mr. Jim nez then discussed the  precise terms of

          the quotation.  On January 8, l990, Sun Engineering sent a letter

          to  Cabrera  accepting  Cabrera's  December  21, l989  quotation.

          Although  the  parties had  negotiated some  changes to  the work

          specified  in the quotation,  and a reduced  "estimated" contract

          price of  $80,000, an absolute  price for the contract  was never

          agreed  upon.   Rather, Cabrera  and  Sun Engineering  informally

          agreed that Sun  Engineering would pay Cabrera based  on the work

          Cabrera actually performed.

                    After the contract was formed, Cabrera  commenced work.

          During the course of the Project,  Mr. Jim nez verbally requested

          that  Cabrera  perform  additional work  not  encompassed  by the

          original  contract.   This  work involved  floor underlays.   Mr.

          Ismael El as, the designer of the Project  who also served as the

          Project  inspector for the  Post Office, also  verbally requested

          Cabrera to  make changes with  respect to some partitions  it was

          installing.  Cabrera  completed all work required  on the Project

          by June 5, l99l.

                    Cabrera billed Sun Engineering $105,495.39 for the work

          it performed.  Sun Engineering made progress  payments to Cabrera

          totalling $60,726.14.  Sun Engineering refused to pay Cabrera the
                              
          ____________________

          1  At trial, there was some dispute  regarding the precise dollar
          figure of this initial quotation.  The present appeal does not in
          any way turn upon the exact figure of this initial quotation, and
          for the purposes of this opinion, we will assume that $l06,707.35
          was the correct figure.

                                         -3-

balance of $44,769.25.

                    Cabrera  then  filed   suit.    As  its   defense,  Sun

          Engineering claimed  that the contract  was for a total  price of

          $80,000,  and  therefore,  Sun  Engineering   only  owed  Cabrera

          $l9,273.86.     Sun   Engineering  also   claimed  that   Cabrera

          negligently performed its work, and delayed the completion of the

          Project.

                    After  trial, the district court found that the parties

          entered  into an  informal  contract.    In accordance  with  the

          contract,   Cabrera was entitled  to be paid $105,495.39  for the

          work  it had  performed  on the  Project.   The court  found that

          Cabrera was not responsible for  any Project delays.  Because Sun

          Engineering had only  paid Cabrera $60,726.14, the  court entered

          judgment in Cabrera's favor in the amount of $44,769.25.

                     Sun  Engineering   then  filed   this  appeal.     Sun

          Engineering makes  three arguments  on appeal.   Sun  Engineering

          contends  that 1)  by allowing  a modification  of the  pre-trial

          order at trial, the district court permitted Cabrera to introduce

          evidence  with  respect   to  the  cost  of   the  contract  that

          contradicted a stipulated  fact, and changed Cabrera's  theory of

          its case, in violation of Fed. R.  Civ. P. 16(e); 2) the evidence

          presented  at  trial   did  not  support  the   district  court's

          conclusion that valid change  orders were issued to Cabrera;  and

          3) the record does not  support the district court's finding that

          Cabrera   was  not   responsible  for   Project   delays.     Sun

          Engineering's arguments are meritless.

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II.  THE RULE 16 CHALLENGE
                              II.  THE RULE 16 CHALLENGE

                    In the final  pre-trial order,  the  parties stipulated

          that "the agreed  price on said  subcontract was $80,000."     At

          trial, Cabrera  introduced its  December 21,  l989 quotation  for

          $106,707.35  as an  exhibit.   Sun  Engineering  objected to  the

          introduction of this  exhibit on the ground that  the parties had

          stipulated that there  was a contract for $80,000,  and that this

          evidence, which  suggested a  different price  for the  contract,

          contradicted   that  stipulation.      The  court  overruled  Sun

          Engineering's objection  and permitted  Cabrera to  introduce the

          exhibit  because  the  court  believed  that  the  quotation  was

          relevant to the  negotiations between the  parties, and what  the

          parties intended to  be the terms of  the contract.    On appeal,

          Sun Engineering  argues that the  court violated Fed. R.  Civ. P.

          16(e)2 by effectively amending  the pre-trial order at  trial and

          permitting  Cabrera to  introduce evidence  which contradicted  a

          stipulated fact, and which changed Cabrera's theory of its case.

                    A  trial court  has broad  discretion  to preserve  the

          integrity  and purpose  of the  pre-trial  order.   Roland M.  v.
                                                              _________

          Concord School  Comm., 910 F.2d  983, 999 (lst Cir.  l990), cert.
          _____________________                                       _____

          denied, 499 U.S. 912 (1991).   An appellate court should exercise
          ______
                              
          ____________________

          2   Federal Rule of  Civil Procedure l6(e) provides  in pertinent
          part:

                      [A  pre-trial  order] shall  control  the
                      subsequent  course of  the action  unless
                      modified  by  a  subsequent order.    The
                      order   following   a    final   pretrial
                      conference  shall  be  modified  only  to
                      prevent manifest injustice.

                                         -5-

minimal interference  with a  trial court's  interpretation of  a

          pre-trial order and a court's decision to permit the introduction

          of evidence, or  exclude evidence, based on  that interpretation.

          See Ram rez Pomales  v. Becton Dickinson & Co., S.A., 839 F.2d 1,
          ___ _______________     ____________________________

          3 (1st Cir.  l988); Geremia v.  First Nat'l  Bank of Boston,  653
                              _______     ___________________________

          F.2d 1, 5 (lst Cir. l981); 6  Charles A. Wright, Arthur R. Miller

          &  Mary K. Kane, Federal Practice &  Procedure   1527, at 279-286
                           _____________________________

          (1990).   "Unless  there is  manifest injustice  or the  district

          court has abused its discretion to the point of being arbitrary,"

          the  court's ruling  will not  be disturbed.   Nickerson  v. G.D.
                                                         _________     ____

          Searle & Co., 900 F.2d 412, 422 (lst Cir. l990); Ram rez Pomales,
          ____________                                     _______________

          839 F.2d at 3.

                    Federal Rule of Civil Procedure l6 provides that at the

          final pre-trial  conference the  participants  shall formulate  a

          plan  for trial.  Ram rez Pomales, 839 F.2d at 3.  After the pre-
                            _______________

          trial conference, an  order shall be entered reciting  the action

          taken, and this order then  controls the subsequent course of the

          action,  unless modified by a subsequent order.   Fed. R. Civ. P.

          l6(d),(e); Ram rez Pomales, 839 F.2d at 3.  The interpretation of
                     _______________

          a  pre-trial order is the  responsibility of the  trial court.  A

          trial court should construe the pre-trial order liberally so that

          it  covers any  of the  possible legal  or factual  theories that

          might be  embraced by  its  language.   Geremia,  653 F.2d  at  5
                                                  _______

          (quoting Rodr gues v. Ripley Indus., Inc., 507 F.2d 782, 787 (lst
                   _________    ___________________

          Cir. l974) (citing  6 C. Wright  & A. Miller, Federal  Practice &
                                                        ___________________

          Procedure   l527, at 609 & n.47 (l971))).
          _________

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Contrary to Sun  Engineering's contention, the district

          court  did not  amend the  pre-trial  order.   Rather, the  court

          reviewed the pre-trial  order, and based on its interpretation of

          that order, found that the exhibit Cabrera  proposed to introduce

          was admissible.   The district court's actions were  not an abuse

          of  discretion.     After   Sun  Engineering   objected  to   the

          introduction  of  the  exhibit, the  court  reviewed  the factual

          stipulation in the  context of Cabrera's legal  theory, which was

          also set out  in the pre-trial order.   The court found  that the

          introduction of  the exhibit by  Cabrera was consistent  with its

          theory  of the  case.    Pursuant to  the  contract, Cabrera  was

          entitled  to  be  paid  on the  basis  of  the  work it  actually

          performed.   The December  21, l989 quotation  and the subsequent

          change orders established the work  that Cabrera was to perform. 

          While the factual stipulation did provide that the agreed cost of

          the contract was  $80,000, the court stated that  it would simply

          defy  logic to  find that  Cabrera stipulated  that the  absolute

          price of the contract was $80,000, in  light of its theory of the

          case.    Rather,  the  court   found  that  the  only  reasonable

          interpretation  of the  stipulation  was that  it referred  to an

          agreed "estimated"  contract cost  of $80,000.   The court  acted

          within  its discretion in  interpreting the stipulation  and pre-

          trial order in this manner, and we will not disturb its ruling.

                               III.  THE CHANGE ORDERS
                               III.  THE CHANGE ORDERS

                    Sun  Engineering  argues  that  in   light  of  federal

          regulations  which  purportedly  require  all  change  orders  on

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government   projects  to  be   in  writing,  the   evidence  was

          insufficient  to support a finding that  valid change orders were

          issued to Cabrera.

                    An  appellate  court  will  review a  district  court's

          findings of fact  in a bench trial for clear error.  Dedham Water
                                                               ____________

          Co. v. Cumberland Farms Dairy, Inc., 972 F.2d 453, 457 (lst  Cir.
          ___    ____________________________

          l992); Fed. R. Civ.  P. 52(a).3  A  finding is clearly  erroneous

          when  the reviewing  court is  left  with the  definite and  firm

          conviction that a mistake has  been committed.  See Dedham Water,
                                                          ___ ____________

          972 F.2d at 457.  Mixed questions of fact and law,  which require

          a court  to determine  if certain facts  possess, or  lack, legal

          significance in a given case,  are also reviewed for clear error.

          Roland M., 910 F.2d at 990.  Absent a showing that the court made
          _________

          a mistake  of law,  we  will give  effect to  the trial's  courts

          findings.  Id. at 990-91.
                     ___

                    The  record  supports   the  district  court's  factual

          findings that change orders were  issued to Cabrera.  Mr. Cabrera

          and  Mr. Jim nez  testified  that  after  Cabrera  submitted  the
                              
          ____________________

          3   Federal Rule of  Civil Procedure 52(a) provides  in pertinent
          part:

                      In  all  actions  tried  upon  the  facts
                      without a jury . . . the court shall find
                      the facts specially  and state separately
                      its  conclusions  of   law  thereon,  and
                      judgment  shall  be entered  pursuant  to
                      Rule  58  . .  .  .   Findings  of  fact,
                      whether  based  on  oral  or  documentary
                      evidence, shall  not be set  aside unless
                      clearly erroneous,  and due  regard shall
                      be  given to the opportunity of the trial
                      court to  judge  of  the  credibility  of
                      witnesses.

                                         -8-

original  quotation to  Mr. Jim nez  detailing  the work  Cabrera

          proposed  to do, Mr. Jim nez requested  that Cabrera make certain

          changes to the  quotation.  Mr.  Cabrera also offered  undisputed

          testimony  that after  the  parties  entered  into  the  original

          contract,  Mr. Jim nez orally requested that Cabrera perform work

          beyond that encompassed  in the  contract with  respect to  floor

          underlays.   Mr. Jim nez  and Mr. El as  both testified  that Mr.

          El as also  orally requested Cabrera  to do additional  work with

          respect  to  partitions,  that  Mr. Jim nez  was  aware  of  this

          request, and that Cabrera made those requested changes.

                    Cabrera claims that even if oral changes were issued to

          Cabrera,  they  were  of  no  legal consequence.    There  is  no

          requirement,  however, that  change  orders to  subcontractors on

          government projects  be in writing and approved by the government

          to be legally binding.   Despite Sun Engineering's  contention to

          the contrary,   48 C.F.R.   43.201 (1992)  does not impose such a

          requirement.4    Part  43  of the  Code  of  Federal  Regulations

          generally  addresses  government  policies   and  procedures  for

          preparing  and  processing  contract  modifications.   48  C.F.R.

            43.000  et  seq.  (1992).    The  regulations  are directed  to
                    __  ____
                              
          ____________________

          4  48 C.F.R.   43.201(a) (1992) provides in pertinent part:

                      Generally, Government contracts contain a
                      changes   clause    that   permits    the
                      contracting  officer  to  make unilateral
                      changes, in designated  areas, within the
                      general scope of the contract.  These are
                      accomplished  by  issuing  written change
                      orders on Standard Form  30, Amendment of
                      Solicitation/Modification   of   Contract
                      (SF 30), unless otherwise provided.    

                                         -9-

government contracting  officers and  those parties who  contract

          directly  with them.  Section 43.20l  is specifically directed at

          the procedures which the  government's contracting officer should

          follow  when issuing a  change order to  its contracting partner.

          Generally, the  relationship covered  by the  regulation is  that

          between  the  officer and  the prime  contractor on  a government

          project.  The  regulation does not apply to  more remote parties,

          such  as   subcontractors,  who contract  solely  with the  prime

          contractor.  We have  been unable to find any  other statutory or

          regulatory  requirement  which  purports  to  control  the  prime

          contractor's relationship with its subcontractors with respect to

          the logistics of contract modifications, such as change orders.5

                    The  prime  contractor/subcontractor   relationship  is

          governed by the terms of the contract between the parties.   See,
                                                                       ___

          e.g., United States for  Control Systems, Inc. v.  Arundel Corp.,
          ____  ________________________________________     _____________

          814 F.2d 193,  196-97 (5th Cir.), modified on  other grounds, 826
                                            __________________________

          F.2d 298 (5th Cir. 1987).   In the present case, the court  found

          that the contractual dealings between Cabrera and Sun Engineering

          were informal at best.  The parties never  signed a final written

          contract.   Moreover, there was  no oral  or written  contractual

          provision which required that any change orders issued to Cabrera

          had to be in writing, or approved by the  contracting officer, in

____________________

          5   In  its brief,  Sun Engineering  points to  the testimony  of
          Mr. El as and Mr.  Delgado, an architect who worked  for the Post
          Office,  who  both  stated  that  change  orders  were  generally
          accomplished  through  written  directives.     Their  testimony,
          however, also referred to the relationship between the government
          and the prime contractor.

                                         -10-

order to  be  valid.   Therefore, the oral change orders at issue

          were legally binding, and the district court properly  found that

          Cabrera was entitled  to be paid for the  work performed pursuant

          to  those orders.   This  finding is  in accord with  the general

          purpose of the Miller Act, 40 U.S.C.    270a-f (1986), a remedial

          statute, enacted to assure that all workers and subcontractors on

          government projects received compensation for their efforts.  See
                                                                        ___

          F.D. Rich Co.  v. United States for Use of Indus. Lumber Co., 417
          _____________     __________________________________________

          U.S. 116, 124 (l974).

                                   IV.  DELAY CLAIM
                                   IV.  DELAY CLAIM

                    Sun Engineering  contends  that  the  district  court's

          finding that Cabrera  was not responsible  for Project delays  is

          unsupported  by  the record.    We  disagree  and find  that  the

          evidence amply supports the court's  findings.  Mr. Cabrera,  Mr.

          Delgado  and Mr. El as all  offered uncontradicted testimony that

          Cabrera completed  all required work  on the Project.   There was

          evidence that Cabrera  did correct some deficiencies  in its work

          after the  scheduled completion  date of the  Project.   With the

          exception of the testimony of Mr. Jim nez, however, the record is

          void of  any  evidence  that  this "delay"  translated  into  any

          financial   penalty  to  Sun  Engineering.    While  Mr.  Jim nez

          testified  that  Sun  Engineering was  financially  penalized for

          delays which  were in fact  caused by Cabrera, Mr.  El as offered

          conflicting  testimony to  the effect  that  Sun Engineering  was

          solely responsible  for the delays.   The trial court  refused to

          credit Mr.  Jim nez' testimony.   It was well within  the court's

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discretion to determine whether or not it found Mr. Jim nez to be

          a credible witness.  See Dedham Water Co., Inc., 972 F.2d at 461.
                               ___ ______________________

          There was no error in the court's findings.

                                   V.  DOUBLE COSTS
                                   V.  DOUBLE COSTS

                    Because  Sun Engineering filed  a frivolous  appeal, we

          find it appropriate to assess  a monetary penalty of double costs

          against it.  Federal Rule of Appellate Procedure 38 provides that

          "[i]f  a court  of  appeals  shall determine  that  an appeal  is

          frivolous, it may  award just damages and single  or double costs

          to the  appellee."  Westcott  Constr. Corp. v. Firemen's  Fund of
                              _______________________    __________________

          New Jersey,  996  F.2d 14,  17 (lst  Cir. l993).    An appeal  is
          __________

          frivolous if  the  "result  was obvious"  or  the  arguments  are

          "wholly without merit."  Id.  "[I]t is enough that the appellants
                                   ___

          and their attorney should have been aware that the appeal  had no

          chance of  success."   E.H. Ashley  & Co.  v.  Wells Fargo  Alarm
                                 __________________      __________________

          Servs., 907 F.2d 1274, 1280 (lst Cir. l990).  Sun   Engineering's
          ______

          arguments on appeal are wholly without merit.  There is no  legal

          support for Sun Engineering's Fed. R. Civ. P. 16(e) challenge, or

          its contention that change orders issued to Cabrera  had to be in

          writing to  be legally binding.   The record also  amply supports

          the  trial  judge's factual  findings,  and there  are  simply no

          reasonable  grounds to challenge the sufficiency of the evidence.

          We therefore award Cabrera double costs.

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