UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 99-60747

SHACKELFORD PLUMBING CORPORATION,

Plaintiff-Appellee,

versus

SIEBE GOVERNMENT CONTRACTS DIVISION, A SIEBE ENVIRONMENTAL CONTROLS GROUP, DIVISION OF BARBER-COLMAN COMPANY,

Defendant-Appellant.

Appeal from the United States District Court for the Southern District of Mississippi (3:98-CV-463(B)(N))

November 7, 2000

Before WOOD,1 DAVIS, and BARKSDALE, Circuit Judges.

PER CURIAM:2

At issue is waiver vel non of contractual requirements for

written change orders and timely claim submittals. Shackelford

Plumbing Corporation filed this diversity action against Siebe

Government Contracts Division of the Barber-Colman Company for 14

claims arising at eight military facilities in the United States.

The district court granted Siebe summary judgment on one claim. A

jury found for Siebe on two claims and for Shackelford on the

1 Harlington Wood, Jr., Circuit Judge of the Seventh Circuit, sitting by designation. 2 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 R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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. remaining 11. Siebe contests the denial of judgment as a matter of

law as to five claims involving four sites. Alternatively, it

challenges a jury instruction and requests a new trial for all but

one of those five claims. We AFFIRM in PART, REVERSE and RENDER in

PART, and REMAND FOR ENTRY OF AN AMENDED JUDGMENT.

I.

Siebe contracted with the Government to perform work at

military installations (FORSCOM contracts) and hospitals (MEDCOM

contracts). Shackelford was a subcontractor for those contracts.

The contracts were “indefinite quantity contracts”, meaning the

master subcontracts had zero dollars value. As the Government and

Siebe agreed on delivery orders, Siebe issued delivery orders,

complete with pricing, to Shackelford. Shackelford completed over

$4 million in work for Siebe on 11 delivery orders.

The two master subcontracts between Siebe and Shackelford

contained identical provisions regarding changes in the work

required by the delivery orders. Prior to the beginning of such

changed work, Siebe was required to give Shackelford written notice

of the change; Shackelford, to submit a written estimate to Siebe.

Paragraph 5.2 provided:

The Subcontractor [Shackelford] may be ordered in writing by the Contractor [Siebe] without invalidating this Subcontract, to make changes in the Work within the general scope of this Subcontract consisting of additions, deletions, or other revisions,.... [Shackelford], prior to the commencement of such changed or revised Work, shall submit promptly to [Siebe] written copies of an estimate for adjustment to the Subcontract Sum and Subcontract Time for such revised Work in a manner consistent with requirements of the Subcontract Documents.

2 (Emphasis added; footnotes omitted.) Testimony at trial focused

not on Shackelford’s failure to submit a prior estimate but on work

done without a prior written change order.

Shackelford’s contracts with Siebe incorporated provisions of

Siebe’s contracts with the Government. Under them, Siebe had

specified times within which to submit a claim to the Government

after the cost was incurred. Along this line, Shackelford was

required to provide timely claim submittal to Siebe for additional

costs, including claims for delay damages. Paragraph 5.3 provided:

The Subcontractor [Shackelford] shall make claims promptly to the Contractor [Siebe] for additional cost, extensions of time and damages for delays or other causes in accordance with the Subcontract Documents. A claim which will affect or become part of a claim which [Siebe] is required to make under the Prime Contract within a specified time period or in a specified manner shall be made in sufficient time to permit [Siebe] to satisfy the requirements of the Prime Contract. Such claims shall be received by [Siebe] not less than two working days preceding the time by which [Siebe’s] claims must be made. Failure of [Shackelford] to make such a timely claim shall bind [Shackelford] to the same consequences as those to which [Siebe] is bound.

(Emphasis added.) The parties do not dispute that the post-work

claim submittal had to be in writing.

II.

In defense of its refusal to pay Shackelford’s claims, Siebe

points to the absence of prior written change orders and to

Shackelford’s failure to submit several claims in the time and

manner required. Shackelford counters that Siebe waived those

requirements.

3 Pursuant to the choice of law clauses in the contracts,

Illinois law governs. Under it, and regarding paragraph 5.2

(changes in the work), a provision in a construction contract that

requires change orders to be in writing is valid. Watson Lumber

Co. v. Guennewig,

(Ill. 1967). To prove a

waiver of a writing requirement for such changes, Shackelford must

demonstrate by clear and convincing evidence: “(a) the work was

outside the scope of [the] contract promises; (b) the extra items

were ordered by [Siebe], (c) [Siebe] agreed to pay extra, either by

[] words or conduct, (d) the extras were not furnished by

[Shackelford] as [a] voluntary act, and (e) the extra items were

not rendered necessary by any fault of [Shackelford]”.

(emphasis added and citations omitted);

(“Where the contract

provides that there shall be no charge for extra work unless a

written agreement is made therefor, the builder cannot recover

compensation as for extra work on account of alterations made at

the oral request or consent of the owner but for which no agreement

to pay additional compensation is made.” (emphasis added; internal

quotation marks and citation omitted)).

“Clear and convincing evidence is that quantum of proof that

leaves no reasonable doubt in the mind of the fact finder as to the

truth of the proposition [stated].” City of Chicago v. Boulevard

Bank Nat’l Assoc.,

(Ill. App. Ct. 1997)

(emphasis added; internal quotation marks and citation omitted).

The Watson court also stated:

Illinois cases allow recovery for extra compensation only when the contractor has made his claim for an extra, clear and certain,

4 before furnishing the item, not after.... If he does expressly contend that work demanded is extra, the owner certainly cannot be said to be taken unawares, and if orders are given to go ahead it is with full knowledge of the possible consequences.

(emphasis added; internal quotation marks and

citation omitted).

Although Watson stated the claim must be “clear and certain”,

the contract at issue in Watson simply required that, pre-work, the

fact of the change be in writing, not addressing whether the amount

likewise must be in writing.

. In Bulley & Andrews,

Inc. v. Symons Corp.,

(Ill. App. Ct. 1975), an

Illinois court applied Watson to a contract with a clause similar

to paragraph 5.2, which required written notice of the value of the

claim, not only of the change itself:

It is incumbent upon the owner to enforce the “extras” provision in his contract, or it is waived by him. By allowing work on extras to proceed before securing a memorandum signed by [the contractor, the owner] waived his right to enforce the provision. A contractual provision such as in this case prevents the contractor from proceeding with extra work on his own initiative, while allowing the owner to control his liabilities. When an owner orders work to proceed, he cannot claim to be taken unaware, nor can he require the contractor to bear the cost of the work he has so ordered.

(internal quotation marks omitted); see

(finding

even though “[t]he estimate [for work ordered by the owner] was not

submitted ... until three months after the ... work was completed”,

because owner allowed work to proceed before securing necessary

writing, it waived contractual provision (emphasis added)).

5 We construe Bulley & Anderson to mean that, if Siebe by words

or conduct ordered extra work and agreed to pay for it, Siebe

waived both of paragraph 5.2's requirements: it not only waived the

requirement that Siebe’s change order be in writing but also waived

the requirement that Shackelford submit a written estimate prior to

beginning that work.

Paragraph 5.3's requirement of timely claims for additional

costs, including delay damages, is another matter. As discussed in

part II.A.2 infra, neither Watson nor Bulley & Anderson apply to

timely claim submittals.

A.

Siebe moved for judgment as a matter of law (JMOL) at the

close of Shackelford’s evidence and at the close of all the

evidence. The denial of JMOL is reviewed de novo, applying the

standards used by the district court. E.g., Hill v. International

Paper Co.,

(5th Cir. 1997).

Such judgment “is appropriate if, after viewing the trial

record in the light most favorable to the non-movant, there is no

‘legally sufficient evidentiary basis’ for a reasonable jury to

have found for the prevailing party”.

(quoting FED. R. CIV. P.

50(a) (emphasis added)). For such evaluation, all inferences are

drawn in favor of the non-movant. E.g., Omnitech Int’l, Inc. v.

Clorox Co.,

(5th Cir.), cert. denied,

(1994).

Three witnesses testified on behalf of Shackelford: Lanny

Shackelford, president and part-owner of Shackelford; Michael

Pitts, part-owner and former vice-president of Shackelford; and

6 Aaron Terry, former account manager for Siebe. Siebe offered only

one witness: Jerry Joyner, Siebe’s director of operations and

assistant treasurer when the claims at issue arose.

Although the parties at trial, in their appellate briefs, and

at oral argument did not address paragraphs 5.2 and 5.3

separately, the provisions raise distinct questions. The contracts

between Siebe and Shackelford contained writing requirements,

quoted above, for two different time periods: (1) prior written

order for the change and a written estimate (¶ 5.2), and (2) timely

claim submittal after the cost was incurred (¶ 5.3). The first

requires Siebe’s written order and Shackelford’s written estimate

before work begins; the second, submittal of the claim at least two

days before Siebe was required to submit the claim to the

Government.

In the light of this distinction, we first turn to whether a

reasonable jury could find Siebe waived the requirement of a prior

written change order and written estimate; second, to whether a

reasonable jury could find Shackelford met, or Siebe waived, the

requirement of timely claim submittal after the cost was incurred.

1.

The record is replete with instances in which Siebe gave oral

directives to Shackelford to perform work not covered by a delivery

order. Witnesses for both parties admitted that often Siebe did

not and could not comply with the requirement to give written

orders.

Joyner admitted: Siebe had actual notice of all the work;

and, when Siebe received the claims at issue, it simply ignored

7 them. Testimony by Shackelford’s witnesses established it was

“standard operating procedure” for Shackelford to proceed with

extra work at Siebe’s directive, and Shackelford would still

receive payment even without first giving a written estimate.

Exhibits submitted by Shackelford showed several occasions on which

delivery orders were signed after the work began or even after the

work was complete.

We therefore conclude that a reasonable jury, applying Watson,

could find that Siebe, by its course of conduct, waived the

requirement for a written change order. As discussed infra, a

reasonable jury likewise could find that Siebe, not only by its

conduct but also by its words, waived the pre-work writing

requirements.

a.

Regarding Shackelford’s claim for the extra cost of installing

more expensive furnaces than specified at Fort Drum, Siebe

contends: the furnaces were bought at the direction of the

Government, not at Siebe’s direction; and, because the claim was

made nine months later, Siebe could not pass it along to the

Government. As noted, the timeliness vel non of the claim is

discussed infra in part II.A.2.

Lanny Shackelford testified: at a January 1997 meeting he

attended with the Government and Siebe, a Government representative

ordered the more expensive furnaces; and Siebe’s project manager

agreed and asserted Siebe would either work it out or pay. Joyner

testified he knew from experience the brand of furnaces requested

was more expensive than originally planned.

8 The district court did not err in concluding that a reasonable

jury could find by clear and convincing evidence that Siebe had

ordered the work and agreed to pay for it, thereby waiving the

contract’s pre-work writing requirements.

b.

Prior to establishing Shackelford, Mr. Shackelford had been

part-owner of another subcontractor for Siebe. That entity, now

named C.C.I. Industrial, Inc., had installed gas pipes at Fort

Gillem. A warranty covered the pipes and meters, but when Siebe

had difficulty getting C.C.I. to repair them, Shackelford performed

the work. Shackelford completed the job on 23 November 1996 and

submitted its claim ten days later.

The work was not part of a delivery order, because Shackelford

had no delivery order at Fort Gillem. Because the parties have

done so, we will treat this as a paragraph 5.2 dispute. Siebe

asserts there was no proof it ordered the work or agreed to pay for

it.

Joyner testified he knew the distinction between Shackelford

and C.C.I., yet he assumed Mr. Shackelford would complete the work

free of charge because of his former association with C.C.I. In

contrast, Mr. Shackelford testified he thought Joyner was joking

when he insinuated Mr. Shackelford was responsible because of that

previous association.

Siebe requested Shackelford to send someone to Fort Gillem to

discuss the work with a Siebe manager, and Siebe knew Shackelford

was doing the work. Mr. Shackelford testified that, on the day the

Siebe manager asked him to do the work, the manager also stated

9 that either Siebe or the company holding the warranty would pay

Shackelford for it.

The district court did not err in concluding that a reasonable

jury could find that Siebe waived the requirement of a written

change order.

c.

Because the delivery order at Tripler Medical Center exceeded

$1 million, Siebe’s contract was with James Lane A.C. and Plumbing,

Inc.; and Lane subcontracted with Shackelford. Prior to suing

Siebe, Shackelford obtained an assignment of Lane’s rights.

Siebe does not contend that it did not order the work or agree

to pay for it; nor does Siebe assert the submission of the claim

did not comply with the timeliness requirement. (Indeed, this

dispute does not appear to fall under the Shackelford-Siebe

contract, because Shackelford’s contract at Tripler was not with

Siebe.) Instead, Siebe asserts the timing of the claims did not

meet the requirement of the termination letter it issued to Lane.

On 19 February 1997, Joyner, by letter to Lane, terminated the

contract for convenience and required that all claims be submitted

to Siebe within ten days. However, Shackelford had made two claims

directly to Siebe prior to the termination. Although Joyner

acknowledged this timing of the receipt of the claims from

Shackelford, Siebe contends these claims should have been submitted

through Lane, because Shackelford’s contract was with it, and Lane

had the right to adjust the costs.

Shackelford’s delivery order at Tripler did not include

supplying a generator or completing electrical work, but Mr.

10 Shackelford testified that Siebe’s on-site manager requested that

Shackelford both obtain a generator and perform some electrical

work. Ample evidence, including an admission by Joyner, shows that

Siebe and Shackelford dealt directly with each other regarding

extra work. The most telling evidence of the direct relationship

is that Siebe terminated its contract with Lane as a result of a

conversation between Mr. Shackelford and Joyner.

The district court did not err in concluding that a reasonable

jury could have found that Siebe did receive timely notice of the

claims through the direct submission. In the alternative, if the

requirements of paragraph 5.2 did apply, as discussed below, a

reasonable jury could have found Siebe waived the writing

requirement.

i.

Mr. Shackelford testified that, when power was lost for Siebe

and Shackelford’s work trailers, Siebe’s on-site manager asked

Shackelford to supply a generator. By asking what the cost would

be, the manager allegedly implied Siebe would pay for the

generator. Mr. Shackelford testified that Joyner admitted Siebe

owed this claim. Joyner testified he merely agreed to pay half the

cost; and, at trial, he maintained he would have paid, had the

contract with Lane not been terminated.

The jury found for Shackelford in the amount of $4,600.80,

approximately half the amount claimed. Because Joyner admitted to

having agreed to pay half the cost, we conclude that a reasonable

jury could have found by clear and convincing evidence that Siebe

waived the requirement of a written change order. Moreover, even

11 if Siebe is correct that waiver must precede the work, see infra

part II.B, the jury’s finding was not unreasonable in the light of

Siebe’s course of conduct and the manager’s statements.

ii.

As also noted, Shackelford’s delivery order at Tripler did not

include electrical work, but Mr. Shackelford testified that Siebe’s

on-site manager requested that Shackelford do the work and assured

Shackelford it would be paid. Moreover, Joyner said he agreed to

be billed for the electrical work. Therefore, the district court

did not err in concluding that reasonable jurors could find for

Shackelford.

In sum, in the light of the above analysis of the claims at

Fort Drum, Fort Gillem, and Tripler, the district court properly

denied JMOL regarding the requirements for a written change order

and written estimate prior to beginning the work. Accordingly, we

turn to whether, after the cost was incurred, Shackelford was

required to timely submit its claim.

2.

As noted, the timeliness requirement of Siebe’s contract with

the Government was incorporated into its subcontract with

Shackelford, and Shackelford was held to the same consequences as

Siebe. Siebe contests the timeliness of claims made after

completion of the work at Fort Drum and the delay at Walter Reed

Medical Center. Siebe raised this issue in its motion for JMOL at

the close of the evidence.

As also noted, the Watson line of cases addresses the waiver

of a writing requirement before beginning extra work, not of timely

12 subsequent submittal of a claim. Needless to say, a waiver under

Watson of the requirement that changes be in writing does not

constitute waiver of other contract provisions as well.

Although, even in their appellate briefs, the parties have not

clearly distinguished their contentions as to the two separate

paragraphs (5.2 and 5.3), we find that, because there is no

evidence in the record Siebe agreed to waive the requirement of

timely claim submittal and the evidence clearly shows the claims

for Fort Drum and Walter Reed were not timely, the denial of JMOL

was improper for those two claims. (In this regard, the error by

the district court is most understandable. For example, Siebe did

not object to this issue not being included in the jury

instructions. Of course, because Siebe had earlier raised the

issue in its JMOL, it was preserved concerning whether JMOL should

have been granted. E.g., Deffenbaugh-Williams v. Wal-Mart Stores,

Inc.,

, 284 n.5 (5th Cir. 1999).)

a.

As discussed above, on 12 February 1997, at the Government and

Siebe’s instruction, Shackelford ordered more expensive furnaces

for Fort Drum than those originally specified. Shackelford

installed the furnaces in April or midsummer, but the claim was not

submitted to Siebe until 24 November 1997.

Mr. Shackelford testified that, at the end of the job, the

parties had been unable to delete enough work to cover the extra

cost of the furnaces, so Shackelford had no other choice but to

bill Siebe for it. Joyner testified: he knew the furnaces

installed were more expensive; but because Shackelford did not

13 timely submit the costs, Siebe could not submit the claim to the

Government.

Shackelford maintains that the extra cost was incurred because

of defective specifications submitted by Siebe and therefore the

requirement of timely submission of the claim did not apply

pursuant to an exception in the contract. Because this argument

was raised for the first time on appeal, we do not reach it.

Shackelford also contends that timely claim submittal was not

required because Siebe had actual knowledge of the claim. This

argument is unpersuasive because, even though Siebe knew that a

different brand of furnaces would be installed and that they were

more expensive, Siebe had no actual knowledge of the amount of the

claim. Therefore, even though, as discussed, a reasonable jury

could have found by clear and convincing evidence that the

requirement of a prior written change order had been waived, a

reasonable jury could not find that the timely claim requirement

had subsequently been either complied with or waived.

b.

Shackelford asserted it incurred extra costs for a job at

Walter Reed, because Siebe instructed Shackelford to have its

superintendent stay on-site, even though the start of the project

was delayed. The delay costs arose between 2 February 1997 and 8

March 1997. Shackelford did not submit the claim until 28 August

1997. Siebe asserts that, because the claim was over five months

late, it could not pass it along to the Government.

Shackelford again contends that Siebe caused the delay and

therefore the timely claim provisions did not apply. However, no

14 proof on this point was offered at trial other than that problems

were associated with the work plan; no one addressed the question

of fault.

Shackelford also asserts that, because Siebe had actual

knowledge of the presence of Shackelford’s supervisor at the site

during the delay, no need for a timely claim existed. Although

Siebe had notice of the supervisor’s presence, there is no evidence

it had actual notice of the amount of the corresponding claim.

Moreover, at trial, the parties disputed whether the supervisor was

unproductive during this time (in which case, Shackelford would be

entitled to submit a claim for an extra) or whether he did other

work for Shackelford.

Construing all evidence in favor of Shackelford, no reasonable

jury could have found Shackelford complied with the claim

requirements or that Siebe waived them.

In sum, for the reasons given above, the district court erred

in denying JMOL on the issue of timely claim submittal for Fort

Drum and Walter Reed.

B.

Seeking a new trial on all the claims except the one for

Walter Reed, Siebe challenges the district court’s refusal (over

Siebe’s objection) to instruct the jury that, in order to return a

verdict for Shackelford on its claims for extras, the jury must

find that, prior to Shackelford’s commencing work, Shackelford made

its claim clear and certain and Siebe agreed to pay. In order to

prevail in challenging a jury instruction:

15 First, the challenger must demonstrate that the charge as a whole creates substantial and ineradicable doubt whether the jury has been properly guided in its deliberations. Second, even if the jury instructions were erroneous, we will not reverse if we determine, based upon the entire record, that the challenged instruction could not have affected the outcome of the case. Johnson v. Sawyer,

(5th Cir. 1997) (emphasis

added; internal quotation marks and citation omitted).

The district court’s instruction included the five essential

elements of waiver set out by Watson. See Watson,

. Our review of the instructions as a whole does not create a

substantial and ineradicable doubt that the jury was properly

guided in its deliberations. Illinois cases that apply Watson do

not require a specific finding that the agreement to pay preceded

the start of the work. See, e.g., A.W. Wendell & Sons, Inc. v.

Qazi,

(Ill. App. Ct. 1993); Duncan v. Cannon,

(Ill. App. Ct. 1990); Bulley & Andrews,

.

III.

Because we conclude there was a legally sufficient evidentiary

basis for a reasonable jury to have found by clear and convincing

evidence that Siebe waived the requirements for a prior written

change order and an estimate, we AFFIRM the district court’s denial

of judgment as a matter of law as to the claims at Fort Gillem and

Tripler. However, we REVERSE the denial of judgment as a matter of

law as to the claims at Fort Drum and Walter Reed, because a

reasonable jury could not find that the timely claim submittal

requirement either was met or did not apply. Finally, we AFFIRM

16 the refusal to grant a new trial. This matter is REMANDED for

entry of an amended judgment.

AFFIRMED IN PART; REVERSED and RENDERED IN PART; and REMANDED

17