Raggianti Foundations III, LLC v. Peter R. Brown Construction, Inc. et al

Filing 169

ORDER: Defendant Peter R. Brown Construction, Inc.'s Motion to Conform the Pleadings to the Evidence 154 is DENIED. Peter R. Brown Construction, Inc.'s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) 139 and Pl aintiff Ragghianti Foundations III, Inc.'s Motion for Judgment on Partial Findings Pursuant to Fed. R. Civ. P. 52(c) 155 are GRANTED to the extent provided herein. The Clerk is directed to enter judgment in favor of Peter R. Brown Construc tion, Inc. in a sum of $435,457, and thereafter CLOSE this case. Peter R. Brown Construction, Inc. has until and including October 15, 2014, to file any motions for attorneys' fees or costs. Signed by Judge Virginia M. Hernandez Covington on 9/19/2014. (KNC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
UNITED STATES OF AMERICA,
for the use and benefit of
RAGGHIANTI FOUNDATIONS III, LLC,
Plaintiff,
v.

Case No. 8:12-cv-942-T-33MAP

PETER R. BROWN CONSTRUCTION,
INC., ET AL.,
Defendants.
________________________________/
ORDER
This cause came before the Court for a non-jury trial
commencing on February 24, 2014, and concluding on March 4,
2014. On April 23, 2014, the parties timely filed their
proposed

orders,

which

included

the

parties’

proposed

findings of fact and conclusions of law, (Doc. ## 161, 162,
163), as ordered by the Court at the conclusion of trial.
Also

before

the

Court

is

Defendant

Peter

R.

Brown

Construction, Inc.’s (PRBC) Motion for Judgment on Partial
Findings Pursuant to Fed. R. Civ. P. 52(c) (Doc. # 139), filed
on March 4, 2014; PRBC’s Motion to Conform the Pleadings to
the Evidence (Doc. # 154), filed on April 3, 2014; and
Plaintiff

Ragghianti

Foundations

III,

LLC’s

(Ragghianti)

Motion for Judgment on Partial Findings Pursuant to Fed. R.
Civ. P. 52(c) (Doc. # 155), filed on April 3, 2014.
Having considered the evidence, applicable law, and the
parties’ submissions, the Court (1) denies PRBC’s Motion to
Conform the Pleadings to the Evidence; (2) grants the parties’
Motions for Judgment on Partial Findings as set forth herein;
and

(3)

grants

judgment

in

favor

of

PRBC

and

against

Ragghianti.
The Court’s findings of fact and conclusions of law are
set forth below pursuant to Fed. R. Civ. P. 52(a).
I.

Findings of Fact
The Court makes the following findings of fact. To the

extent that any findings of fact might constitute conclusions
of law, they are adopted as such.
PBS&J

Constructors,

Inc.

—

registered

owner

of

the

fictitious name Peter R. Brown Construction, Inc.1 — entered
into a construction contract (Prime Contract) with the United
States of America, contracting through the Army Corps of
Engineers, on August 16, 2010. (JX-13). The Prime Contract
was for the project known as the Joint Intelligence Technical

1

As stated in the amended complaint, PBS&J and PRBC “are
treated as interchangeable in communications to [Ragghianti]
and others.” (See Doc. # 59 at 4). Accordingly, this Court
will refer to these entities collectively as “PRBC.”

2

Training Facility at Goodfellow Air Force Base in San Angelo,
Texas (Project). (Id.). Sureties Liberty Mutual Insurance
Company and Safeco Insurance Company of America issued a
Payment and Performance Bond (no. 6724282) on August 23, 2010,
in accordance with the Miller Act, 40 U.S.C. § 3131, naming
PRBC as principal. (JX-16).
On January 24, 2011, PRBC entered into a Subcontract
with Ragghianti to provide the building foundation, slab on
grade,

miscellaneous

concrete

and

site

concrete

to

the

Project for the original lump sum of $506,902. (JX-1). The
Subcontract - drafted by PRBC - expressly incorporates all
the terms of the Prime Contract. (Id.).
The Subcontract incorporated a schedule for its work
that

called

for

Ragghianti

to

mobilize

with

labor

and

supervision beginning on March 5, 2011. (Ragghianti Dep. Doc.
# 96-10 at 19-21). However, Ragghianti did not provide a bond
– issued by American Safety Casualty Insurance Company - until
March 23, 2011 (JX-4), and the Subcontract provided that
Ragghianti could not begin work on the Project until a bond
was provided (JX-1).
As PRBC was behind schedule on the Project, Ragghianti’s
commencement of performance of the Subcontract was delayed.
(Doc. # 148 at 42-3; Ragghianti Dep. Doc. # 96-10 at 19-21).

3

It was not until the first week in July of 2011, that PRBC
was prepared for Ragghianti to begin performance. (Ragghianti
Dep. Doc. # 96-10 at 20-21; PX-30; PX-33; PX-60).
However, during July and August of 2011, as a result of
unforeseen

soil

conditions,

drilling

on

the

Project

was

delayed. (PX-60; PX-61). In August of 2011, the pier drilling
operations got back on schedule, but Ragghianti was unable to
provide a sufficient number of local workers. (DX-18; DX-19;
DX-20).

Ragghianti

was

informed

that

failure

to

provide

sufficient workers was causing a delay to the Project. (DX20).

Therefore,

Ragghianti

entered

into

a

contract

with

subcontractor Jack Daniels Construction, Inc. to provide the
labor to excavate, backfill, form, and pour the grade beams
and to pour the slab on grade. (James Barlow Dep. Doc. # 985 at 24; Ragghianti Dep. Doc. # 96-10 at 22; Baron Steve White
Dep. Doc. # 99-1 at 66).
Jack Daniels worked on the Project from August 21, 2011,
through

September

21,

2011.

(PX-68).

However,

after

an

inspection by the Corps discovered that several of the piers
were slightly out of tolerance, the grade beam work on the
Project

was

halted.

(Id.).

Jack

Daniels

was

told

to

demobilize, and at that time, Jack Daniels advised PRBC and
Ragghianti that its crew was being moved to a different

4

project and all of its equipment would be off the Project by
September 23, 2011. (DX-21; DX-22).
During the pier shutdown, PRBC changed the sequence such
that the assembly of the steel would now come before the
concrete

slab

on

grade

activity.

(Doc.

#

162

at

6).

Furthermore, PRBC developed a grade beam sequence change that
would cause grade beams to be poured in quadrants instead of
south to north as previously scheduled. (Doc. # 149 at 140).
This

change

was

made

to

accommodate

PRBC’s

mechanical

contractor who requested access. (Doc. # 151 at 23-25). In
addition, the schedule was changed to double the duration of
the grade beam work. (PX-50). As a result, PRBC provided
Ragghianti twenty days to complete the grade beams. (Doc. #
151 at 30-31).
The pier tolerance issue was resolved by October 18,
2011, and PRBC directed Ragghianti to remobilize its forces
to begin work on October 21, 2011. (DX-24; PX-72). However,
because Jack Daniels’ forces and equipment were on another
project, Ragghianti was unable to return to the Project until
October 23, 2011. (PX-70; DX-51; Doc. # 151 at 27). In an
attempt

to

recover

the

schedule,

PRBC

offered

to

pay

Ragghianti acceleration monies if it worked overtime and
increased its forces on the Project. (Doc. # 151 at 25).

5

After the work recommenced, PRBC was issued an “interim
unsatisfactory” from the Corps in draft form, and the record
reflects that PRBC’s superintendent found that the Corps’
comments

were

accurate.

(PX-76;

Doc.

#

151

at

185-86).

Accordingly, PRBC was labeled unsatisfactory in every single
aspect of its work in compiled ratings of federal government
staff, including management of resources, coordination and
control of subcontractors, and effectiveness of job site
supervision. (JX-15).
In

November

of

2011,

PRBC

made

a

request

to

have

Ragghianti increase its forces, but Jack Daniels informed
Ragghianti that it had its workers on other projects and it
would be unable to provide the number of workers required.
(DX-21). Ragghianti did not seek to find additional workers,
and

as

a

consequence,

PRBC

hired

Dalcan

–

a

second

subcontractor - to work on the grade beams in order to
accelerate the Project schedule. (PX-113; Doc. # 147 at 105,
108).
Dalcan worked on the Project from November 17, 2011, to
December

14,

2011.

(PX-85).

According

to

PRBC’s

superintendent, Dalcan made the situation worse, impeding
Ragghianti’s progress. (Dave Barkolz Dep. Doc. # 118-4 at
146). Upon review of the negative impact Jack Daniels claimed

6

Dalcan was having on its productivity, PRBC removed Dalcan
from the Project. (Doc. # 147 at 105, 108). By December 14,
2011, Jack Daniels agreed to provide additional workers, and
PRBC terminated Dalcan’s contract. (PX-85; PX-86).
Ragghianti, through Jack Daniels, completed the grade
beams on or about January 5, 2012, and continued backfilling
the interior and exterior of a building on the Project. (PX31). In mid-January of 2012, however, Jack Daniels presented
PRBC with a series of claims totaling roughly $85,000, which
represented its alleged losses. (PX-15). By January 24, 2012,
Jack Daniels threatened to leave the Project if its claims
were not paid. (PX-110). When its claims were not paid, Jack
Daniels terminated its contract on January 27, 2012. (PX114).

After

Jack

Daniels

left

the

Project,

no

further

backfilling work was performed by Ragghianti. (Doc. # 163 at
¶ 43).
On February 14, 2012, Ragghianti was scheduled to place
the first section of a building’s 50,000 square foot concrete
slab on grade. (Baron Steve White Dep. Doc. # 99-1 at 26; PX32). Due to various changed considerations and other issues
that

arose

on

the

day

of

the

pour,

Ragghianti’s

sub-

subcontractor – at the time Ochoa - experienced difficulty in
pouring the slab. (Ragghianti Dep. Doc. # 96-10 at 101-07;

7

Joseph Williams Dep. Doc. # 99-5 at 23; PX-225). Specifically,
on

the

morning

of

February

14,

2012,

Ragghianti’s

superintendent changed the location of the pump truck, but
because Ragghianti had performed no exterior backfill after
Jack Daniels demobilized, the site for the pump truck had to
be leveled by hand and the placement on the slab on grade was
delayed. (Doc. # 150 at 16; PX-22; PX-32; PX-123). Further,
only 6 concrete finishers from Ochoa showed up on February
14, 2012, when 13 were expected to be present. (Doc. # 150 at
32-33).
Also on the day of the pour, Ragghianti failed to execute
the sequence of the concrete trucks in accordance with the
workforce it had and to ensure that it was within the contract
specifications. (Doc. # 162 at 11; Doc. # 150 at 33-34). The
maximum time the concrete was permitted to turn prior to pour
was 90 minutes, as a longer delay permits the concrete to set
up and become unworkable. (Doc. # 162 at 11; PX-303; David
Smith Dep. Doc. # 118-3 at 18). Ragghianti’s inadequate
workforce on the day of the pour was unable to keep up with
the pour. (PX-225). An analysis of the concrete truck tickets
showed that 8 out of the 14 trucks had concrete that exceeded
the 90 minute time limit, and as a consequence, the concrete

8

was too dry, too hot, and too hard to finish. (DX-64; Doc. #
150 at 34-35).
In all, 6,000 square feet of slab was poured on February
14, 2012, which was 13% of the slab concrete and 1-2% of the
total concrete called for under the Subcontract. (Samuel
Parker Dep. Doc. # 118-1 at 52; Ronald Harris Dep. Doc. #
118-6 at 18; Charles Diegel Dep. Doc. # 118-5 at 34-35).
However, it is undisputed that the finish on the 6,000 square
feet of slab was of “unacceptable quality.” (Ragghianti Dep.
Doc. # 96-10 at 100-101; Ronald Harris Dep. Doc. # 118-6 at
20; Charles Diegel Dep. Doc. # 118-5 at 35).
Dissatisfied with the pour, on February 16, 2012, PRBC
issued a Failure to Perform Letter – also known as RF001 - to
Ragghianti that stated:
In accordance with Article 10 (Subcontractor’s
Failure to Perform) of the Subcontract . . . this
letter serves as formal notice by [PRBC] that
[Ragghianti] has failed to complete its scope of
work in accordance with the contract documents.
* * *
In
accordance
with
the
provisions
of
the
[S]ubcontract, unless this condition is remedied
within 48 [hours] of this date [PRBC] shall take
steps as necessary to overcome the condition in
which case the Subcontractor shall be liable to
[PRBC] for all losses including general conditions
for supervision and loss of time.

9

* * *
Furthermore, Ragghianti is required to provide a
detailed plan of action prior to future concrete
placement . . . This plan must be submitted no later
than 1:00 P.M. on February 17, 2011 (sic).
(JX-34).

Ragghianti responded to the Failure to Perform

Letter by providing its action plan, which stated in relevant
part that the demolition of the defective concrete slab “will
be able to commence no later than Monday, February 20, 2012,”
and be completed “arguably” by February 27, 2012. (PX-126;
Ragghianti Dep. Doc. # 96-10 at 124, 127).
Ragghianti’s workers were on the Project February 1718, 20-21, 2012, but according to Ragghianti’s daily reports,
no action was taken to remove the slab on any of those days.
(PX-31). When no action was taken to remove the slab by
February 22, 2012, PRBC lost all faith that Ragghianti was
going to promptly remove the slab and made the decision to
exercise

its

rights

under

the

Subcontract

and

terminate

Ragghianti for default. (Doc. # 150 at 97-98; Doc. # 151 at
81-82).
On February 22, 2012, PRBC issued a Notice of Termination
Letter – also referred to as RF002 - which stated:

10

Ragghianti has failed to cure or otherwise have
(sic) been unable to eliminate the default as
outlined in [PRBC’s] February 12, 2012[,] letter.
* * *
[On] February 17, 2012, regarding Ragghianti’s
action plan to address [the deficiencies outlined
in PRBC’s February 12, 2012, letter, Ragghianti]
specifically stated that: “The demolition of the
existing [Slab on Grade] will be able to commence
no later than Monday, February 20, 2012[,] and can
arguably be completed in about a week’s time.” To
date, Ragghianti has not started this corrective
work . . . [PRBC] hereby terminates Ragghianti for
default
pursuant
to
Section
10
of
the
[Subcontract].
(JX-35). PRBC noted that the deficiencies giving rise to the
termination included, but were not limited to, failure to
provide sufficient manpower, failure to provide adequate
supervision, and work not in compliance with Subcontract
requirements. (Id.). PRBC delivered RF002 to Ragghianti on
February 23, 2012, via e-mail. (PX-32; Doc. # 150 at 19).
Although RF002 indicated that Ragghianti had not begun
removing the slab, Ragghianti did have one worker and one
piece of equipment that it borrowed from PRBC on the Project
on February 22-23, 2012, and there was some work performed in
an attempt to break up the slab. (Doc. # 147 at 99-100).
However, PRBC did not consider this to be a sufficient effort,

11

on behalf of Ragghianti, to begin removal of the slab as it
would take at least 10 days at that rate to remove the slab,
which would be outside Ragghianti’s own deadline of February
27, 2012. (Doc. # 162 at 13; Doc. # 147 at 98).
Thereafter, PRBC hired subcontractors Sack & Gorman to
remove the slab and haul away the debris and to complete the
interior and exterior backfilling and grading work that had
been abandoned by Jack Daniels at the end of January of 2012.
(Doc. # 162 at 13; DX-130). PRBC also hired another contractor
– Cantera – to complete the remaining work under Ragghianti’s
Subcontract. (Id.).
The crux of this action involves a dispute amongst the
parties

as

to

whether

Ragghianti

timely

started

the

corrective work. Therefore, there is a dispute as to whether
Ragghianti was properly terminated for default or terminated
for convenience. Pursuant to the Subcontract, a termination
for default requires certain notices and conditions precedent
that a termination for convenience does not.
Ragghianti initiated this action against PRBC, Liberty
Mutual and Safeco Insurance on April 27, 2012 (Doc. # 1), and
filed an amended complaint on April 26, 2013 (Doc. # 59). In
the amended complaint, Ragghianti alleges that although it
“has

repeatedly

demanded

payment

12

from

[PRBC]

for

labor,

material, and services provided pursuant to the [entities’]
Subcontract,” PRBC “has failed and refused to make payment in
breach of the Subcontract.” (Id. at ¶¶ 18-19). Ragghianti
filed suit for nonpayment of its contract balance, damages
due to its termination - claiming it was wrongful - and for
costs of delay and acceleration of its work. (See Doc. # 59).
Ragghianti also brings an alternative claim for its damages
based on the cardinal change doctrine. (Id. at 8). Ragghianti
further alleges a Miller Act breach of contract suit against
PRBC and against Liberty Mutual and Safeco Insurance as cosureties on the Miller Act bonds. (Id. at 7).
On

May

Ragghianti

10,

2013,

and

PRBC

American

filed

counterclaims

Safety:

(1)

against

Contractual

Indemnification (against both Ragghianti and American Safety)
and (2) Breach of Contract (against Ragghianti). (See Doc. #
64).

Subsequently,

the

parties

filed

cross

motions

for

summary judgment (Doc. ## 95, 96), and the Court denied both
motions on January 10, 2014 (Doc. # 114).
On February 19, 2014, PRBC filed a notice of settlement
and joint stipulation of dismissal with prejudice of its
claims against American Safety (Doc. # 127), and on February
20, 2014, this Court dismissed the claims with prejudice (Doc.

13

# 128). This Court held a bench trial in this case commencing
on February 24, 2014, and concluding on March 4, 2014.
II.

Conclusions of Law
The Court makes the following conclusions of law. To the

extent that any conclusions of law might constitute findings
of fact, they are adopted as such.
A. PRBC’s Motion to Conform the Pleadings to the Evidence
“[D]espite PRBC’s failure to comply with the technical
requirements of Federal Rule of [Civil] Procedure 8(c), which
governs the pleading of affirmative defenses, PRBC requests
that the Court apply the liberal standards of Rule 15(b) and
permit an amendment of the [c]ounterclaim to include the
affirmative defense of release.” (Doc. # 154 at 2-3).
To support this argument, PRBC submits that Ragghianti
was on notice that PRBC intended to assert the affirmative
defense of release seven months prior to trial, despite PRBC’s
failure to plead release as an affirmative defense in its
answer. (Id. at 2). Specifically, PRBC argues that it raised
the defense of release during James Barlow’s deposition on
July 19, 2013, in its motion for partial summary judgment
filed on September 23, 2013, and in the amended joint pretrial
statement filed on January 3, 2014. (Id.). Furthermore, PRBC

14

contends that, although arguing in the context of waiver,
Ragghianti responded to PRBC’s defense of release on the
merits in its response in opposition to PRBC’s motion for
partial summary judgment. (Id.).
According to PRBC, a party has notice of an affirmative
defense, and so no prejudice results to that party where, for
example, the affirmative defense has been raised during a
deposition or in a motion for summary judgment. (Id. at
3)(citing Hassan v. United States Postal Serv., 842 F.2d 260,
263 (11th Cir. 1988)(holding government’s failure to assert
an affirmative defense in its pleadings did not preclude
admission of evidence on the issue where government had
questioned plaintiff about issues relating to the affirmative
defense

during

a

deposition

and

in

an

interrogatory);

Hartwell v. City of Montgomery, Ala., 487 F. Supp. 2d 1313,
1329 (M.D. Ala. 2007)(finding that plaintiff was provided
with notice of affirmative defense because it was included in
a

motion

for

summary

judgment,

which

gave

plaintiff

an

opportunity to rebut the defense in his opposition brief)).
As evidenced above, PRBC contends that it has raised the issue
of release throughout the course of this litigation, and as
a result, argues that it is appropriate for the Court “to
utilize Rule 15(b) to ensure that the claims in this matter

15

are decided on their merits rather than procedural niceties
by amending the pleadings to conform to the evidence.” (Doc.
# 154 at 5).
Conversely, Ragghianti submits that PRBC never asked
Ragghianti’s two deposed witnesses a single question related
to the issue of release, nor did it inquire into the matter
in paper discovery. (Doc. # 157 at 1-2, 6). Additionally,
Ragghianti points out that its response in opposition to
PRBC’s motion for partial summary judgment first states that
PRBC may not argue the matter of release as PRBC never pled
the defense and therefore waived it. (See Doc. # 98 at 2-3,
17-18; Doc. # 157 at 2). Then, “in an abundance of caution,”
Ragghianti “briefly challenged the claim’s merit and objected
to it.” (Id.).
Ragghianti also argues that PRBC offers no authority
that supports its proposition that this Court should grant
leave to amend where the matter at issue was not tried by
consent, but instead was subject to continuous objection.
(Doc. # 157 at 5). Thus, Ragghianti submits that it has
adequately demonstrated that it was prejudiced in its ability
to show PRBC’s defense of release was unsustainable on the
facts and law.

16

“Release is an affirmative defense, and a party must
plead it or it is waived.” Rakip v. Paradise Awnings Corp.,
514 F. App’x 917, 920 (11th Cir. 2013); Latimer v. Roaring
Toyz, Inc., 601 F.3d 1224, 1239 (11th Cir. 2010) (finding
that

“Failure

to

plead

an

affirmative

defense

generally

results in a waiver of that defense.”).
Fed. R. Civ. P. 15 states, in relevant part:
(b) Amendments During and After Trial.
(1)

Based on an Objection at Trial. If, at
trial, a party objects that evidence is
not within the issues raised in the
pleadings, the court may permit the
pleadings to be amended. The court should
freely permit an amendment when doing so
will aid in presenting the merits and the
objecting party fails to satisfy the court
that the evidence would prejudice that
party's action or defense on the merits.
The court may grant a continuance to
enable the objecting party to meet the
evidence.

Fed. R. Civ. P. 15(b)(1).
As the Eleventh Circuit stated in Hassan:
Admittedly, the general rule is that, when a party
fails to raise an affirmative defense in the
pleadings, that party waives its right to raise the
issue at trial. However, the liberal pleading rules
established by the Federal Rules of Civil Procedure
apply to the pleading of affirmative defenses. We
must
avoid
hypertechnicality
in
pleading

17

requirements and focus, instead, on enforcing the
actual purpose of the rule.
The purpose of Rule 8(c) is simply to guarantee
that the opposing party has notice of any
additional issue that may be raised at trial so
that he or she is prepared to properly litigate it.
When a plaintiff has notice that an affirmative
defense will be raised at trial, the defendant's
failure to comply with Rule 8(c) does not cause the
plaintiff any prejudice. And, when the failure to
raise an affirmative defense does not prejudice the
plaintiff, it is not error for the trial court to
hear evidence on the issue.
842 F.2d at 263 (internal citations omitted).
It is undisputed that PRBC did not plead the affirmative
defense of release in its responsive pleadings and did not
seek to amend its pleadings throughout the duration of this
litigation

prior

to

the

present

Motion

to

Conform

the

Pleadings. Instead, PRBC argues that because it raised the
defense of release during James Barlow’s deposition, in its
motion for partial summary judgment, and in the amended joint
pretrial statement, filed on January 3, 2014 – roughly two
months before commencement of the trial - that this Court
should conform the pleadings to the evidence. The Court
declines PRBC’s request.
In its January 10, 2014, Order, the Court determined
that it was too late in the proceedings for PRBC to assert

18

the affirmative defense of release. (See Doc. # 114). Further,
in its response in opposition to PRBC’s summary judgment,
Ragghianti made it clear that it was only acknowledging the
matter of release in an abundance of caution, and even
prefaced its response by challenging whether PRBC had waived
the defense of release.
Moreover, the Court notes that the defense of release
was not tried by express or implied consent by Ragghianti. In
fact, the defense was subject to continuing objection by
Ragghianti during the course of the trial. The Court found
during

trial,

demonstrated
adequately

as

it

does

sufficient

defend

against

today,

prejudice
PRBC’s

that
in

Ragghianti
its

affirmative

ability
defense

has
to
of

release, due to PRBC’s failure to raise the affirmative
defense in a timely manner. (Doc. # 147 at 205, 234); see
Stewart v. Hooters of Am., Inc., No. 8:04-cv-40-T-17MAP, 2007
WL 3528685, at *6 (M.D. Fla. 2007) aff'd, 432 F. App'x 903
(11th Cir. 2011)(denying defendant’s motion to amend the
pleadings to conform to the evidence as plaintiff would suffer
“incurable prejudice . . . in the form of inability to depose
and call witnesses on the matter, and inability to conduct
discovery on the matter .”); see also Eugene v. 3Don & Partner
Estate Grp., LLC, No. 07-80439-CIV, 2009 WL 1810735, at *4

19

(S.D. Fla. June 24, 2009)(citing Browning Debenture Holder's
Comm., 560 F.2d 1078, 1086 (2d Cir. 1977) (affirming district
court's denial of post-trial motion to amend complaint which
sought to add new paragraphs, some of which raised new claims,
because the claims had never been tried by the express or
implied

consent

amendment

of

would

the
have

parties,

such

substantially

that

allowing

prejudiced

the
the

defendant)(emphasis added)). Accordingly, PRBC’s Motion to
Conform the Pleadings is denied.
B. Applicable Law Surrounding Contract Documents
The Subcontract – by way of Article 22.3 - provides for
the application of law as follows:
Unless
otherwise
provided
in
the
Contract
Documents, the terms and conditions of this
Subcontract shall be interpreted in accordance with
the laws of the jurisdiction where the Project is
located, exclusive of conflict of law provisions.
(JX-1). The Project was located in San Angelo, Texas. (Doc.
# 59 at ¶ 9).
Article

22.3

includes

the

caveat

“Unless

otherwise

provided in the Contract Documents.” The Contract Documents
encompass Exhibit K, which expressly incorporates the Federal
Acquisition Regulations (FAR). (JX-1; JX-12). According to
the Subcontract, in the event of a conflict between the FAR

20

provisions and the Subcontract, or any exhibits thereto, the
FAR provisions shall control. (Id.). As a result, this action
is governed by the Contract Documents, Texas state law, and
the FAR.
C. Ragghianti’s Breach of Contract Claim Against PRBC
1. Whether PRBC’s Termination of Ragghianti Was For
Default or Convenience
Ragghianti contends that the termination for default and
convenience provisions in the Subcontract are ambiguous.
(Doc. # 161 at 73). Therefore, Ragghianti submits that the
FAR requirements for termination control. (Id.).
Specifically, Ragghianti provides that Exhibit K of the
Subcontract incorporates FAR provisions into the Subcontract,
even those not explicitly referenced therein, by providing a
website address to the FAR provisions, and stating that in
the event of a conflict between the FAR and the Subcontract
or any exhibits thereto, the FAR provisions control. (Id.).
“Therefore,

because

the

Subcontract’s

provisions

for

termination for default and convenience are unclear, the
FAR’s clear requirements necessarily control. . . .” (Id.).
Exhibit K, section II, paragraph 3 states:
The
following
FAR
provisions
are
hereby
incorporated by reference into this Subcontract,
with the same force and effect as if set forth in
full text herein. The full text can also be accessed

21

electronically at http://farsite.hill.af.mil and
http://www.acqnet.gov/far. Under no circumstances
shall Subcontractor raise as a claim or defense its
failure to be aware of the application of, or
understand its obligations to comply with, the
requirements of the FAR.
(JX-12).
In essence, Ragghianti is attempting to incorporate all
of

the

FAR

provisions

listed

on

the

website

into

the

Subcontract; namely 48 C.F.R. § 49.402-3(d):
(d) Subdivisions (a)(1)(ii) and (a)(1)(iii) of the
Default clause cover situations when the contractor
fails to perform some of the other provisions of
the contract (such as not furnishing a required
performance bond) or so fails to make progress as
to endanger performance of the contract. If the
termination is predicated upon this type of
failure, the contracting officer shall give the
contractor written notice specifying the failure
and providing a period of 10 days (or longer period
as necessary) in which to cure the failure. When
appropriate, this notice may be made a part of the
notice described in subparagraph (e)(1) of this
section. Upon expiration of the 10 days (or longer
period), the contracting officer may issue a notice
of termination for default unless it is determined
that the failure to perform has been cured. A format
for a cure notice is in 49.607.
48

C.F.R.

§

49.402-3(d)

(emphasis

added).

Ragghianti’s

position is that it never received a 10-day notice, as
required under the FAR. (Doc. # 161 at 74).

22

However, according to PRBC, when Exhibit K is read
pursuant

to

its

incorporated

plain

into

the

terms,

the

Subcontract

only
are

FAR

provisions

those

expressly

provided in paragraph 5, which does not include the FAR
provision referenced by Ragghianti. (Doc. # 162 at 13-14).
The Court agrees.
Exhibit K, section II, paragraph 3, does not provide
that

all

FAR

provisions

are

incorporated

by

reference.

Instead, it provides that the FAR provisions listed within
Exhibit K are to be given the same effect textually as if the
full text – located on the supplied websites – was provided.
Therefore, the only incorporated FAR provisions are those
explicitly provided for in the Subcontract and corresponding
documents,

and

none

of

the

FAR

provisions

concern

termination. Therefore, no conflict exists, and as a result,
the Subcontract terms, specifically Article 10.1, control.
2. Whether PRBC Complied with Article 10.1
Article 10.1 of the Subcontract states in relevant part:
If, in the reasonable opinion of The Construction
Manager, Subcontractor shall at any time (1) refuse
or fail to provide sufficient properly skilled
workers, adequate supervision or material of the
proper quality; (2) fail in any material respect to
prosecute Subcontractor’s Work according to the
Project’s current schedule; (3) cause, by any
action or omission, the stoppage or delay of or

23

interference with the work of The Construction
Manager
or
of
any
other
contractor
or
subcontractor; (4) fail to comply with any
provision of this Subcontract or the Contract
Documents; (5) make a general assignment for the
benefit of its creditors; (6) have a receiver
appointed; (7) become insolvent; (8) fail to make
proper payments to its Lower-Tier Subcontractors;
or (9) fail to prosecute Subcontractor’s Work
according to the Schedule of Values or Subcontract
Price then, after serving two (2) days’ written
notice, unless the condition specified in such
notice shall have been eliminated within such two
(2) days or if not possible to have been eliminated,
the Subcontractor demonstrates in good faith that
it is attempting to expeditiously resolve the
condition, The Construction Manager, at its option,
without voiding the other provisions of this
Subcontract and without prejudice to other remedies
it may have under this Subcontract or law, and
without notice to the sureties, may . . . (ii)
terminate for default Subcontractor’s performance
of all or a part of the Subcontractor’s Work . . .
.
(JX-1 at 10-11).
After the February 14, 2012, pour, PRBC sent RF001
referencing Article 10 of the Subcontract and demanded the
slab be removed “immediately.” (JX-34). The evidence at trial
demonstrates that Ragghianti understood that RF001 was the
“48

hour

notice”

to

remedy

the

defective

condition,

as

required by Article 10.1 – “Your letter gives [Ragghianti] a
48 hour notice to remedy these issues.” (PX-121). In response,
Ragghianti presented an action plan on February 17, 2012,
which provided for the demolition of the slab to commence on

24

February 20, 2012, and be completed “arguably” by February
27, 2012. (PX-126; Ragghianti Dep. Doc. # 96-10 at 124, 127).
However, although Ragghianti had workers at the Project on
February 17-18, 20-21, 2012 (PX-31), no satisfactory action
was taken to remove the slab. Therefore, on February 22, 2012,
PRBC sent Ragghianti RF002 outlining several deficiencies
giving rise to the termination. (JX-35).
Baron

Steve

White

testified

that

the

decision

to

terminate Ragghianti was not based solely upon the defective
slab pour that occurred on February 14, 2014. (Doc. # 151 at
83). In fact, PRBC notified Ragghianti that there were several
additional “deficiencies related to the placement and finish
of

building

concrete:

(1)

failure

to

provide

sufficient

manpower; (2) failure to provide adequate supervision; and
(3) work not in compliance with contract documents.” (See JX35). Baron Steve White also testified that he did not approve
Ragghianti’s action plan submitted on February 17, 2012, and
thus, Ragghianti did not adequately respond to RF001 even
before failing to commence demolition prior to February 20,
2012, in accordance with that plan. (Doc. # 151 at 135).
Therefore, the evidence demonstrates that PRBC formed the
reasonable opinion that Ragghianti failed to comply with the

25

Subcontract

requirements.

Accordingly,

PRBC

could

invoke

Article 10.1’s procedures for termination.
As the evidence reveals that PRBC complied with the twoday

notice

requirement,

the

question

becomes

whether

Ragghianti demonstrated in good faith that it was attempting
to

expeditiously

concrete

resolve

pour.

demonstrate

in

PRBC
good

the

argues
faith

condition
that

that

it

–

the

Ragghianti
was

defective
did

attempting

not
to

expeditiously resolve the condition as it made no effort on
February 17-18, 20-21, 2012, to remove the slab. In fact,
Ragghianti disputed, and continued to do so at trial, that
the slab needed to be removed. (Doc. # 148 at 68-70).
The

evidence

reflects

that

Ragghianti

set

its

own

timetable to remove the slab stating that it would begin the
work on Monday, February 20, 2012, and have the slab removed
by February 27, 2012. (PX-126; Ragghianti Dep. Doc. # 96-10
at 124, 127). However, when no action was taken by February
22, 2012, and only one worker and one piece of equipment was
on the Project allegedly removing the slab, PRBC decided to
invoke its contractual rights and terminate Ragghianti. (Doc.
# 151 at 81-82). From the evidence presented, the Court
determines

that

Ragghianti

was

not

attempting

to

expeditiously resolve the deficiencies in good faith, and

26

instead, was continuously disputing the deficiencies set
forth in the termination notice.
3. Whether Ragghianti Was Provided An Opportunity to
Cure the Defective Condition
As

pointed

out

by

Ragghianti,

under

Texas

law,

“notification to terminate the [a]greement is effective only
if its initial notification of the alleged breach provided
[d]efendant[s] with an opportunity to cure.” Hydril Co., L.P.
v. Grant Prideco, L.P., No. CIV A H-05-0337, 2007 WL 1791663,
at *4 (S.D. Tex. June 19, 2007)(Texas requires opportunity to
cure)(quoting Am. Seating Co. v. Transp. Seating, Inc., 220
F. Supp. 2d 845, 848 (W.D. Mich. 2002)).
Ragghianti’s position is that it was never provided the
requisite notice required by the FAR or the Subcontract prior
to its termination, and as a result, it was afforded no
opportunity
Ragghianti

to

cure.

contends

(Doc.

that

#

PRBC

161

at

waived

75).
its

Accordingly,

opportunity

to

terminate Ragghianti as it was presumed to have accepted
Ragghianti’s action plan. (Id.)(citing Lyons v. Pollard, 87
U.S. 403, 406 (1874)(“Where by the terms of a contract a party
is bound to give thirty days’ notice of an intention to
terminate it, and having given the notice afterwards waives
it, he may in fact renew the notice [and] at the expiration

27

of the required time the second document will operate as a
notice.”)).
PRBC,

however,

contends

that

Article

10.1

of

the

Subcontract is devoid of any requirement that PRBC notify
Ragghianti that if it fails to cure the deficiency it can be
terminated for default. This Court adopts PRBC’s position.
PRBC sent Ragghianti RF001 (JX-34), which referenced
Article 10 of the Subcontract and directed Ragghianti “to
proceed immediately with removing the slab in its entirety.
. . .” (Doc. # 162 at 16-17). As RF001 referenced Article 10,
Ragghianti

was

on

notice

that

it

was

subject

to

being

terminated for default if it failed to comply with the cure
notice

directive.

(JX-34).

To

that

end,

the

evidence

demonstrates that Ragghianti understood that RF001 was the
“48 hour notice” to remedy the issues, as required by Article
10.1. (PX-121).
For the reasons set forth above, the Court finds that
PRBC’s

termination

of

Ragghianti

was

a

termination

for

default. PRBC was dissatisfied with the February 14, 2012,
pour, and provided Ragghianti with the requisite notice to
cure the defective condition. Ragghianti did not comply with
PRBC’s directive, and as a result, PRBC properly terminated
the Subcontract pursuant to Article 10.1.

28

As the Court finds that the termination was one for
default,

the

termination

Court

was

declines

wrongful

or

to

determine

improper,

as

whether
requested

the
by

Ragghianti.
4. Damages
At trial, Ragghianti testified that it suffered lost
profits on the work it was precluded from performing due to
PRBC’s termination in the amount of $97,206 (Doc. # 148 at
184; PX-6); unabsorbed home office overhead totaling $85,417;
and $51,806 in increased costs attributable to delay and
interference of PRBC ($43,172.10 plus standard markup of
$8,634.42 (20%)) (PX-6; Doc. # 148 at 184-85). Ragghianti
also testified that the claims of Jack Daniels were $143,761
($24,979 in lost profit, $12,090 in unabsorbed home office
overhead and $106,691 in outstanding claims or change order
requests), to which was added to Ragghianti’s standard markup
for a total of $172,514 (PX-6; V2 at 185). Ragghianti’s expert
–

Jens

Baker

–

testified

that

the

damages

suffered

by

Ragghianti and Jack Daniels total $520,735.23. (Doc. # 149 at
165).
To the extent Ragghianti seeks to obtain damages on
behalf of Jack Daniels, this Court notes that Jack Daniels
has an action currently before the Honorable Susan C. Bucklew:

29

Case No. 8:12-cv-2921-T-24TBM. Although Ragghianti seeks to
include Jack Daniels’ “pass through” claims in its damages
claim, which albeit may be standard practice, this Court
determines that Jack Daniels can adjudicate its own claims,
and seek its individual damages, by separate action.
a) Lost Profits
Ragghianti’s

claim

for

lost

profits

rests

on

two

alternative grounds. (Doc. # 161 at 80). First, Ragghianti
argues that PRBC’s termination was wrongful, in bad faith and
undertaken in PRBC’s own self-interest to the detriment of
Ragghianti. (Id.)(citing Cent. Marine Inc. v. United States,
153 F.3d 225, 230 (5th Cir. 1998)(“A contractor’s right to
recover

for

anticipated

profits

arises

only

if

the

termination of the contract is wrongful and constitutes a
breach.”)). This Court has previously declined to address
whether PRBC’s termination was wrongful or improper.
Alternatively, Ragghianti submits that under the express
terms of the Subcontract, Ragghianti has the same rights
against PRBC as PRBC has against the Owner.2 (Doc. # 161 at
80). Therefore, Ragghianti argues that its lost profit claim

2

According to the Subcontract, the “Owner” is defined as
the USACE Little Rock District. (JX-1 at 2).

30

on unperformed work is consistent with PRBC’s claim to the
Corps. (Id.).
Recovery for lost profits does not require that the loss
be susceptible to exact calculation. White v. SW Bell Tel.
Co., 651 S.W. 2d 260, 262 (Tex. 1983). In has been noted that
“in virtually all damages calculations, there is some degree
of subjectivity involved, especially when forecasting future
profits and losses.” SJW Prop. Com., Inc. v. SW Pinnacle
Props., Inc., 328 S.W. 3d 121, 162 (Tex. App. 2010). Estimates
of lost profits must be based on objective facts, figures, or
data from which the amount of lost profits can be ascertained.
Holt Atherton Indus., Inc. v. Heine, 835 S.W. 2d 80, 84 (Tex.
1992).

Although

supporting

documentation

may

affect

the

weight of the evidence, it is not necessary to produce the
documents supporting the opinions or estimates. Id.
Lost profits are recoverable “if the evidence shows that
the loss of profits was a material and probable consequence
of the breach complained of and the amount due is shown with
sufficient certainty.” Cmty. Dev. Serv., Inc. v. Replacement
Parts Mfg., Inc., 679 S.W. 2d 721, 725 (Tex. App. 1984).
Generally, lost profits are properly calculated by deducting
from the actual contract price the costs of the injured
party's

performance

supported

31

by

data.

Id.

“However,

a

witness may also prove lost profits by testifying as to what
his profit would have been, based on his knowledge of the
cost of performance of each element of the contract and
subtracting the total of such costs from the contract price.”
B & W Supply, Inc. v. Beckman, 305 S.W. 3d 10, 17 (Tex. App.
2009).
According

to

PRBC,

Article

33

-

Mutual

Waiver

of

Consequential Damages - bars Ragghianti’s claimed damages for
unearned profits:
Except as provided in Exhibit G, Section 2,
Liquidated Damages, The Construction Manager and
Subcontractor waive all claims against each other
for indirect or consequential damages arising out
of or relating to this Subcontract or the Contract
Documents, including without limitation, loss of
anticipated profit, business interruption, loss of
use or loss of opportunity.
(JX-1 at 17-18)(emphasis added).
Exhibit

G,

Section

2,

Liquidated

Damages

states

relevant part:
If [PRBC] is required to pay liquidated damages as
set forth in the Prime Contract on account of
Subcontractor’s failure to perform Subcontractor’s
Work in strict accordance with the Schedule, such
liquidated damages shall be deemed to be actual
damages owed by Subcontractor to [PRBC] under
Section 8 of the Subcontract, and shall not be a
limit on damages owed by Subcontractor to [PRBC].

32

in

(JX-8).
Ragghianti

contends

that

Exhibit

G,

Section

9

–

Limitation of Remedies; No Damages for Delay - modifies
Article 33 to permit lost anticipated profit:
The rights and obligations of Subcontractor shall
be the same as the rights and obligations of the
Construction Manager under the General Terms and
Conditions of the Prime Contract.
Any claims by Subcontractor for delay or additional
costs must be submitted to [PRBC] three (3)
business days prior to the time, and in the manner,
in which [PRBC] must submit such claims to the
Owner, and failure to comply with such conditions
for giving notice and submitting claims shall
result in the waiver of such claims.
In addition to the foregoing, in other cases in the
Prime Contract where specific notice is required,
Subcontractor shall be required to provide notice
to [PRBC] three (3) business days earlier, so that
[PRBC] may analyze such notice and forward it to
the Owner within the time period required by the
Prime Contract.
(JX-8)(emphasis added).
However, PRBC claims that Exhibit G, Section 9 only
applies to pass-through claims to the Owner – the Government
– in the event that the Government has done something to delay
or hinder performance or otherwise cause damages to PRBC and
its subcontractors. (Doc. # 162 at 34). Thus, PRBC argues
that it has no applicability to the unearned lost profits

33

claimed by Ragghianti. (Id.). Upon review of Exhibit G,
Section 9, it is not apparent to this Court that it only
applies to pass-through claims. In fact, the provision is
devoid of any such language. Therefore, the Court does not
join PRBC’s interpretation on this provision.
Nonetheless, PRBC argues that even if Exhibit G can be
read to give Ragghianti the same rights as PRBC has against
the Owner, consequential damages – such as unearned lost
profits and unabsorbed home office overhead - are still
unrecoverable.

(Id.).

Under

the

Prime

Contract,

if

the

Government terminated PRBC for convenience,3 48 C.F.R. §
52.249-2 would govern the rights and obligations of PRBC.
(JX-13). Under 48 C.F.R. § 52.249-2(f), PRBC would only be
entitled to a reasonable profit for work done. (Id.).
Additionally, 48 C.F.R. § 52.249-2(g)(2)(iii) provides
that the Contractor is entitled to “a sum, as profit on
subdivision

(g)(2)(i)

of

this

3

clause,

determined

by

the

The Court notes that reasonable profits are only allowed
under the FAR for work already performed and only when there
has been a termination for convenience. See 48 C.F.R. §§
52.249-2(g)(2)(ii); 49.202(a). Although this Court has
already found PRBC’s termination of Ragghianti was one of
default, it will discuss the applicability of the relevant
FAR provisions to bolster its position on why Ragghianti is
not entitled to consequential damages under a finding of
either a termination for default or termination for
convenience.

34

Contracting Officer under 49.202 of the FAR . . . to be fair
and reasonable.”
in

relevant

(Id.). Section 49.202 of the FAR provides,

part,

that

“the

TCO

shall

allow

profit

on

preparations made and work done by the contractor for the
terminated portion of the contract but not on the settlement
expenses.

Anticipatory

profits

and

consequential

damages

shall not be allowed.” See 48 C.F.R. § 49.202(a)(emphasis
added). Thus, according to PRBC, it is clear that a terminated
Contractor is only allowed reasonable profit on the work
already performed under the Prime Contract and the referenced
FAR provisions.
Instead of reasonable profit on the work completed or
preparations for that work, however, Ragghianti is seeking
anticipatory profits on the work it did not perform as a
result of its termination. Ragghianti’s request for unearned
profits is not the type of profit allowed under the Prime
Contract. As Ragghianti is entitled to the same rights and
obligations

as

PRBC

under

the

Prime

Contract,

unearned

profits are not available to Ragghianti, either.
b) Delay Damages
At trial, Ragghianti made a claim for “total unabsorbed
home office overhead” of $85,417 (JX-19), which it claims is
the “cost of the extended duration of days of the Project,”

35

which resulted from the Project lasting “261 more days past
the original contract completion date.” (Doc. # 148 at 184).
PRBC takes issue with Ragghianti’s claimed damages as it
contends

that

Integrated

a

“total

disfavored.”

“universally

this

is

(Doc.

Logistics

Support

cost
#

Sys.

claim,”

139

Int'l,

at
Inc.

which

is

8)(quoting
v.

United

States, 47 Fed. Cl. 248, 260 (Fed. Cl. 2000) aff'd, 36 F.
App'x 650 (Fed. Cir. 2002)).

Specifically, PRBC argues that

Ragghianti’s expert – Jens Baker – calculated claims for
Ragghianti by taking its total labor hours and total costs
and

deducting

its

estimate,

in

order

to

determine

Ragghianti’s damages, which PRBC posits is a total cost claim.
(Id.)(“Under the total cost method, damages are calculated by
subtracting

the

amount

the

contractor

has

already

been

reimbursed from the aggregate amount the contractor spent
from the project.”).
According

to

PRBC,

a

“contractor’s

obligation

of

carrying [its] burden of submitting satisfactory proof of
damages

also

includes

the

burden

of

submitting

fully

substantiating supporting evidence that its actual costs are
reasonable.” (Id.)(citing Cavalier Clothes, Inc. v. United
States, 51 Fed. Cl. 399, 418 (Fed. Cl. 2001)(“[A]vailability
of [the total cost method] hinges on whether: ‘(1) the nature

36

of

the

particular

losses

make

it

impossible

or

highly

impractical to determine them with a reasonable degree of
accuracy; (2) the plaintiff's bid or estimate was realistic;
(3) its actual costs are reasonable; and (4) it was not
responsible for the added expenses.’”)). To that end, PRBC
submits that:
[N]o evidence was produced by which anyone could
calculate the home office overhead of [Ragghianti].
Jens Baker merely claimed that he received that
number from [Ragghianti] and that it was calculated
wholly by the company. No documents were produced
in support of that claim. [Jens] Baker also does
not make any determination as to whether the
estimates of [Ragghianti] . . . were reasonable. *
* * Jens Baker opined that he took no account of
any delays occasioned by [Ragghianti] in reducing
the damages in any way, shape or fashion. His
testimony was simple: PRBC is responsible for 100%
of the delays and 100% of the losses over estimates.
(Doc. # 139 at 9-10).
PRBC admits that Ragghianti is entitled to recover those
expenses occasioned by PRBC’s breach. (Id. at 10). However,
Ragghianti

may

not

include

all

costs

arising

from

the

performance of the Subcontract as the basis for its recovery.
(Id.). Especially, as PRBC suggests, the quantum of delay is
not

solely

serious

attributable

conflict

in

to

the

PRBC;
evidence

37

instead,
as

to

there

remains

exactly

what

Ragghianti’s pre-bid estimate was and its reasonableness.
(Id.).
Conversely, Ragghianti contends that Jens Baker did not
use a total cost method in his damages calculation. (Doc. #
146 at 11). Particularly, Ragghianti submits that Jens Baker
did not simply take an aggregate of costs and subtract from
it the estimated costs of performing the regular work under
the

Subcontract,

but

rather

identified

each

and

every

increased cost experienced by Ragghianti as a result of PRBC’s
delay and termination. (Id.; see Doc. # 146-1).
A total cost claim is a method whereby damages are
measured

by

performing

the

the

difference

contract

between

and

the

the

costs

actual

cost

estimated

in

of
the

contractor’s proposal. WRB Corp. v. United States, 183 Ct.
Cl. 409, 426 (1968). At trial, the evidence demonstrated that
after completion of the schedule review by Jens Baker, he
identified the activities – while Ragghianti was on the
Project - that resulted in delays to the forecasted completion
date. (See Doc. # 146 at 12). Once these activities were
identified, Jens Baker determined the party responsible for
the delay. (Id.). By doing so, Jens Baker opined that PRBC
was responsible for 261 days of delay suffered by Ragghianti.
(Id.).

38

The

damages

determined

by

Jens

Baker

consist

of

“equipment, materials, superintendent, and travel costs which
were incorporated as a direct result of the extended duration
of the [P]roject time and other requirements and changes made
by [PRBC].” (Id.). The damages “do not include any costs for
labor increases [or] labor inefficiencies. . . .” (Id.). The
Court notes that there is no assertion by PRBC that the amount
of Ragghianti’s claims are unreasonable, nor was there any
evidence

presented

responsible

for

any

that
of

Ragghianti
its

own

was

added

substantially

expense.

(Id.).

Therefore, the Court finds that Ragghianti’s claim is not one
of a “total cost claim.”
Regardless of this Court’s determination as to whether
Ragghianti’s claim is a “total cost claim,” PRBC argues that
Ragghianti’s delay damages are expressly barred by Article
8.4’s “no damages for delay” clause, which states in pertinent
part:
Subcontractor shall not be entitled to any claim
for damages (including but not limited to claims
for delay, accelerations, time impact, extended
general conditions, extended field or home office
overhead, loss of profits, loss of use, equipment
rental) on account of hindrances or delays from any
cause whatsoever.
An extension of time shall be
Subcontractor’s sole and exclusive remedy for any
occurrence giving rise to a delay and The
Construction Manager and the Owner shall be
released and discharged of and from any claims for

39

damages which Subcontractor may have on account of
any cause of delay, whether or not specifically
stated herein, except as provided in Exhibit G.
(JX-1 at 9)(emphasis added). However, Ragghianti contends
that once again Exhibit G, Section 9 (as referenced above)
provides for an exception to Article 8.4.
Ragghianti further cites to Article 9.1 to bolster its
argument that an exception to Article 8.4 exists:
The Construction Manager may, at any time,
unilaterally or by agreement with Subcontractor,
without notice to the sureties, make changes in the
Subcontractor’s Work. * * * Subcontractor shall be
entitled to submit a change order request for
changes affecting its work in accordance with
[Article] 9.2.
(JX-1 at 10).
Article 9.2 states:
Subcontractor shall submit to The Construction
Manager any requests or claims for adjustment in
the Subcontract Price, schedule or other provisions
of this Subcontract for changes directed by The
Construction Manager, as a result of deficiencies
or discrepancies in the Contract Documents, or for
circumstances otherwise permitted by the Contract
Documents. Said requests or claims shall be
submitted in writing by Subcontractor in time to
allow The Construction Manager to comply with the
applicable provisions of the Contract Documents
regarding requests and/or claims to or against the
Owner. * * * Subcontract adjustments shall be made
only to the extent that The Construction Manager is

40

entitled to and obtains relief from or must grant
relief to the Owner.
(Id.).
However, according to PRBC, even if these provisions can
be read to allow Ragghianti damages for delay, Ragghianti’s
rights and obligations shall be the same as the rights and
obligations of PRBC under the Prime Contract. (See Doc. # 162
at 37). This Court agrees. Although Ragghianti is in fact
entitled to the same rights and obligations of PRBC under the
Prime Contract, as previously discussed, the FAR provisions
that govern the Prime Contract do not allow for the delay
damages Ragghianti is seeking. (Id.).
Furthermore, as argued by PRBC, irrespective of whether
or not Ragghianti was terminated for default or convenience
or whether its claimed damages are barred by Article 33, PRBC
argues that Ragghianti’s pre-termination claims and its posttermination claims for delay-related home office overhead
damages and loss of anticipatory profits, are all barred, for
its failure to provide the required notice under Article 9.4:
If Subcontractor considers any action or inaction
by The Construction Manager other than a formal
change order to be a change, it shall so notify The
Construction Manager within seven (7) days of said
action or inaction and seek a confirmation from the
Construction Manager. Failure to comply with said
confirmation procedure shall constitute a waiver of

41

the right
inaction.

to

compensation

for

the

action

or

(JX-1 at 10).
There was no evidence presented at trial that Ragghianti
gave any notice of its claims for total unearned profit or
increased costs of performance at any time before it was
terminated and certainly not within 7 days of the action or
inaction on the part of PRBC which allegedly caused those
damages. There is also no evidence that PRBC waived the notice
requirement

under

the

Subcontract.

(Doc.

#

162

at

38-

39)(citing Emerald Forest Util. Dist. v. Simonsen Const. Co.,
679 S.W.2d 51, 54 (Tex. App. 1984)(“The requirement that
notice of delays in construction must be in writing for the
contractor to invoke certain rights under a construction
contract [is] valid.”).
For the reasons stated above, Ragghianti is not entitled
to unearned lost profits, unabsorbed home office overhead
damages, and increased costs attributable to delay. These
damages equate to anticipatory profits and consequential
damages, which are not allowed under the Subcontract, the
Prime Contract, and the cited FAR provisions. Ragghianti is
entitled only to the outstanding payment for the work it

42

completed at the time of its termination, which amounts to
$392,000. (See Doc. # 162 at 23).
D. Ragghianti’s Miller Act Claim Against PRBC’s Sureties
“The purpose of a Miller Act payment bond is to protect
subcontractors and suppliers who provide labor and material
for a federal project. . . .” United States for Use & Benefit
of Pertun Const. Co. v. Harvesters Grp., Inc., 918 F.2d 915,
917

(11th

Cir.

1990).

“To

effectuate

this

congressional

intent, the Miller Act is to be liberally construed and
applied.” Id. But a liberal construction does not mean that
the Miller Act establishes an unlimited basis for recovery;
courts have held that the Miller Act surety is not liable for
damages caused by the prime contractor's breach of contract.
Id.; see, e.g., United States for Use & Benefit of Edward E.
Morgan Co., Inc. v. Md. Cas. Co., 147 F.2d 423 (5th Cir.
1945).
The Miller Act requires a general contractor on a federal
construction

project

to

furnish

a

payment

bond

for

the

protection of all persons supplying labor and material in the
prosecution of the work provided for in the contract. United
States ex rel. Capital Computer Grp., LLC v. Gray Ins. Co.,
453 F. App’x 905, 906 (11th Cir. 2011) (citing 40 U.S.C. §
3131(b)(2)). Under the Miller Act, “‘every person who has

43

furnished labor or material’ used in a project may recover
against a Miller Act surety.” Mail Steel Serv. Inc. v. Blake
Constr. Co., 981 F.2d 414, 417 (9th Cir. 1992)(emphasis
added).
A Miller Act plaintiff is entitled to recover under the
bond the out-of-pocket labor and expenses attributable to
delays. Pertun Constr. Co., 918 F.2d at 918-19. Further, a
subcontractor can recover from the Miller Act surety for labor
and material furnished despite non-payment by the government
to

the

contractor.

United

States

for

Use

&

Benefit

of

Lochridge-Priest, Inc. v. Con-Real Support Grp., Inc., 950
F.2d 284, 288 (5th Cir. 1992).
Ragghianti submits that it is entitled to damages for
delay

against

PRBC’s

Sureties

as

PRBC

never

afforded

Ragghianti an extension of time, and further, the language of
the Subcontract otherwise provides for delay claims. (Doc. #
161 at 64).
As previously indicated, Article 8.4 states in pertinent
part:
Subcontractor shall not be entitled to any claim
for damages (including but not limited to claims
for delay, accelerations, time impact, extended
general conditions, extended field or home office
overhead, loss of profits, loss of use, equipment
rental) on account of hindrances or delays from any
cause whatsoever. An extension of time shall be

44

Subcontractor’s sole and exclusive remedy for any
occurrence giving rise to a delay and The
Construction Manager and the Owner shall be
released and discharged of and from any claims for
damages which Subcontractor may have on account of
any cause of delay, whether or not specifically
stated herein, except as provided in Exhibit G.
(JX-1 at 9).
However, Ragghianti contends that there is an exception
to Article 8.4 - Exhibit G Section 9. According to Ragghianti,
this provision does not include a “no damages for delay
clause,” as argued by PRBC, but instead states:
The rights and obligations of Subcontractor shall
be the same as the rights and obligations of the
Construction Manager under the General Terms and
Conditions of the Prime Contract.
* * *
Any claims by Subcontractor for delay or additional
cost must be submitted to [PRBC] three (3) business
days prior to the time, and in the manner, in which
[PRBC] must submit such claims to the Owner, and
failure to comply with such conditions for giving
notice and submitting claims shall result in the
waiver of such claims.
(JX-8).
Ragghianti further argues that even if Article 8.4 was
construed as a “no damages for delay clause,” Texas law
includes other exceptions to enforcement of a no damage for
delay clause. (Doc. # 161 at 66)(citing Green Int’l, Inc. v.

45

Solis, 951 S.W. 2d 384, 387 (Tex. 1997)). The exceptions are
when the delay:
(1) was not intended or contemplated by the parties
to be within the purview of the provision; (2)
resulted from fraud, misrepresentation, or other
bad faith on the part of one seeking the benefit of
the provision; (3) has extended for such an
unreasonable length of time that the delayed party
would have been justified in abandoning the
contract; or (4) is not within the enumerated
delays to which the clause applies.
(See Id.). Ragghianti submits that its evidence presented at
trial

demonstrates

that

“delay

was

caused

by

PRBC’s

prodigious mismanagement and related events, material changes
to the Subcontract, as well as active interference by PRBC
and its privies, thus negating its enforcement of the no
damage for delay clause, if any.” (Doc. # 161 at 66).
Accordingly, Ragghianti posits that it is entitled to
recover unpaid furnished labor and material, for burdens not
contemplated by the Subcontract, delay damages, lost profits
and unabsorbed home office overhead from Sureties in the
amount of $520,735.23. (Id. at 67). However, should the Court
find that Ragghianti is not entitled to lost profit in its
Miller Act Claim, Ragghianti asserts that the total claim
amount is $398,550. (Id.).

46

PRBC

takes

issue

with

Ragghianti’s

position

as

(1)

Ragghianti’s total cost claim is not permitted under either
Texas or Federal Law and (2) Ragghianti’s “delay damages” are
expressly barred by the “no damages for delay” clause in
Article 8.4. (See Doc. # 139). This Court has already found
that

Ragghianti’s

Therefore,

the

claim

Court

is

will

not

a

analyze

“total
whether

cost

claim.”

Ragghianti’s

damages against PRBC’s Sureties are barred by the terms of
the Subcontract.
As this Court has previously determined, Ragghianti – as
the Miller Act Plaintiff – is entitled to recover under the
bond the out-of-pocket labor and material costs attributable
to delays. See Pertun Constr. Co., 918 F.2d at 918. However,
a damage claim against a surety that does not flow directly
and immediately from actual performance is barred by the
Miller Act. United States for Use & Benefit of T.M.S. Mech.
Contractors, Inc. v. Millers Mut. Fire Ins. Co. of Tex., 942
F.2d 946, 952 (5th Cir. 1991)(“The subcontractor can only
recover from the surety for additional or increased costs
actually expended in furnishing the labor or material in the
prosecution of the work provided for in the contract and
attributable to the delay.”)(emphasis in original).

47

Further, “[A] subcontractor cannot recover on a Miller
Act payment bond for the cost of labor and materials provided
after the termination of work under a government construction
project” Id. at 953, and cannot recover the profits on outof-pocket

expenditures

attributable

to

delay.

See

Id.

(concluding that a subcontractor cannot recover from a Miller
Act

surety

the

profits

on

out-of-pocket

expenditures

attributable to delay. A claim for profit does not involve
actual outlay and thus “falls outside both the letter and the
spirit of the [Miller] Act.”); United States for Use & Benefit
of Otis Elevator Co. v. Piracci Constr. Co., 405 F. Supp.
908, 910 (D.D.C. 1975) (holding that although subcontractor
could

recover

out-of-pocket

expenditures

attributable

to

delay, subcontractor could not recover from surety for profit
of ten percent of direct and indirect additional costs).
Therefore, Ragghianti is not entitled to any anticipated
lost profits, and any of Ragghianti’s unabsorbed overhead,
increased labor, and material costs beyond the scope of its
Subcontract

with

PRBC

is

unrecoverable

against

PRBC’s

Sureties. Thus, Ragghianti’s entitlement to damages, if any,
is limited to those “sums or sums justly due for labor or
materials furnished in the performance of its agreement to
work [on the Project],” which includes liability for all out-

48

of-pocket expenditures for that labor or material, including
additional or increased expenditures caused by delay. See
Pertun Constr. Co., 918 F.2d at 919 (emphasis added).
“A surety’s liability under the Miller Act is measured
by the general contractor’s liability under the construction
contract.” Consol. Elec. & Mechanicals, Inc. v. Biggs Gen.
Contracting,
Therefore,

in

Inc.,
order

167
for

F.3d
this

432,

435

Court

to

(8th

Cir.

1999).

determine

PRBC’s

Sureties’ liability, it must look to PRBC’s liability. This
Court has previously determined that the Subcontract, which
affords Ragghianti the same rights as PRBC has against the
Owner in the Prime Contract, does not allow for anticipatory
profits and consequential damages. Furthermore, the Court
found that the evidence presented at trial demonstrates that
Ragghianti failed to provide adequate notice to PRBC of its
“delay damage” in accordance with Article 9.4. Therefore,
this Court finds that PRBC’s Sureties are liable to the same
extent as PRBC; PRBC’s Sureties’ liability is limited to
Ragghianti’s unpaid furnished labor and materials (i.e.,
Ragghianti’s total outstanding balance).
To the extent Ragghianti seeks attorneys’ fees against
PRBC’s Sureties, by way of Fed. R. Civ. P. 54 motion, the
Court finds that Ragghianti is barred from doing so. “It is

49

undisputed that attorneys' fees cannot be awarded in Miller
Act

claims

absent

an

enforceable

contract

provision

or

evidence of bad faith.” United States for Use of Varco Pruden
Bldgs. v. Reid & Gary Strickland Co., 161 F.3d 915, 918 (5th
Cir. 1998)(citing F.D. Rich Co., Inc. v. United States for
the Use of Indus. Lumber Comp., Inc., 417 U.S. 116, 126–31
(1974)); United States for Use of L.K.L. Assocs. v. Crockett
& Wells Const., Inc., 730 F. Supp. 1066 (D. Utah 1990)(finding
that an attorney’s fees provision must be included in either
the general contract or the payment bond).
Ragghianti has failed to point to a provision in the
Subcontract or payment bond that would entitle Ragghianti to
attorneys’ fees against the Sureties. Therefore, Ragghianti’s
clam for attorneys’ fees against PRBC’s Sureties is barred as
a matter of law.
E. Ragghianti’s Cardinal Change Claim Against PRBC and
PRBC’s Sureties
In the alternative, Ragghianti sets forth a cardinal
change claim for recovery against PRBC and its Sureties for
work done outside the terms of the Subcontract and for the
benefit of the Prime Contract. (Doc. # 59 at 8; Doc. # 161 at
67). Specifically, Ragghianti posits that PRBC imposed a

50

series of changes which amounted to a cardinal change to the
Subcontract:
PRBC repeatedly pushed back the start date and
accelerated and condensed subsequent work in an
attempt to catch up, changed the method and
conditions of grade beam construction, resequenced
the grade beam work to quadrants when it was
originally to be performed from end to end, added
Dalcan laborers working in tight space at crosspurposes to Jack Daniels, erected the steel prior
to the slab on grade, failed to timely perform
waterproofing of preceding work, forcing Jack
Daniels to work around huge piles of excavated dirt
that could not be back-filled pending [PRBC’s]
waterproofing, and start and stop work throughout
the day to accommodate steel erectors. [PRBC’s]
actions required [Ragghianti] to employ a special
concrete pump to pump concrete up, over, and
through the erected steel, then failed to provide
the larger pad required for the truck’s setup, and
larger crews were necessary to pour and finish the
concrete. [PRBC] changed the construction schedule
and sequence, failed to provide access to work
areas, failed to timely make submittals and obtain
materials such as concrete blankets, failed to
properly perform preceding work, kept [Ragghianti]
and Jack Daniels’ crews standing around awaiting
work, engaged in continuous changing of schedules
and compressing of work, failed to make timely
payment, and did not respond to requests for
information.
(Doc. # 146 at 4-5).
Ragghianti argues that these changes were more than
“delays, interruptions and inconveniences,” as argued by PRBC

51

(Doc. # 139 at 5), but that when taken as a whole, are more
than sufficient to support a cardinal change. (Doc. # 146 at
6). Therefore, Ragghianti submits that it is entitled to
recover from PRBC and its Sureties its resulting damages and
expenses, and amounts unpaid for work performed, costs of
delay, acceleration, interference and changes to its work and
in having been prevented from completing its work in quantum
meruit, in the amount of $398,550. (Doc. # 161 at 69); see
United States, for Use of C.J.C., Inc. v. W. States Mech.
Contractors,

Inc.,

834

F.2d

1533,

1549

(10th

Cir.

1987)(“[T]he subcontractor may recover in quantum meruit
where it has performed work outside the terms of the contract
that benefits the prime contractor.”).
Conversely,

PRBC

argues

that

Ragghianti’s

cardinal

change claim only involves “[a] series of small changes”
including delays, interruptions, and inconveniences, none of
which establish that PRBC required Ragghianti to perform
duties

materially

different

from

those

it

originally

bargained for. (Doc. # 139 at 5). Instead, the proof adduced
at

trial

is

that

all

of

the

changes

arise

out

of

the

Subcontract and no evidence has been introduced to support a
cardinal change claim. (See Doc. # 139 at 4-6).

52

“The cardinal change doctrine is not a rigid one.” Edward
R. Marden Corp. v. United States, 442 F.2d 364, 369 (Ct. Cl.
1971).

“Its

purpose

is

to

provide

a

breach

remedy

for

contractors who are directed by the Government to perform
work which is not within the general scope of the contract.”
Id. “In other words, a cardinal change is one which, because
it fundamentally alters the contractual undertaking of the
contractor,

is

not

comprehended

by

a

normal

[c]hanges

clause.” Id.; see Krygoski Constr. Co., Inc. v. United States,
94 F.3d 1537, 1543 (Fed. Cir. 1996) (A cardinal change is a
breach that occurs “when the Government effects a [change] in
the

work

so

drastic

that

it

effectively

requires

the

contractor to perform duties materially different from those
in the original bargain.”).
In order to prove a cardinal change claim, the plaintiff
must show that it had imposed on it work that “fundamentally
alters the contractual undertaking” such that the altered
work was not redressable under the “change clause” of the
contract.

Edward,

doctrine

asks

442

whether

F.2d

at

the

369.

changes

The

cardinal

were

change

outside

the

contemplation of the bargained for performance. (See Doc. #
161 at 71). “A modification generally falls within the scope
of the original procurement if potential bidders would have

53

expected it to fall within the contract's changes clause.”
AT&T Commc'ns, Inc. v. Wiltel, Inc., 1 F.3d 1201, 1205 (Fed.
Cir. 1993).
As provided for in Wunderlich Contracting Company v.
United States, 351 F.2d 956 (1965), there is no automatic or
easy formula which can be used to determine whether a change
(or

changes)

is

beyond

the

scope

of

the

contract

and,

therefore, in breach of it. “Each case must be analyzed on
its own facts and in light of its own circumstances, giving
just consideration to the magnitude and quality of the changes
ordered and their cumulative effect upon the project as a
whole.” Id. A cardinal change, however, does not arise if
“[t]he

contract

itself

explicitly

provide[s]

that

discrepancies, omissions, conflicts and design changes would,
or likely, would arise, and that the parties would address
such issues during contract performance.” Metcalf Const. Co.,
Inc. v. United States, 102 Fed. Cl. 334, 367 (Fed. Cl. 2011);
Int'l Data Prods. Corp. v. United States, 492 F.3d 1317, 1325
(Fed. Cir. 2007)(finding that the change fell under express
warranty and upgrade clauses of the contract; thus was not a
cardinal change); Gen. Dynamics Corp. v. United States, 585
F.2d 457, 466 (Ct. Cl. 1978)(finding that the record did not

54

provide for cardinal change as all changes ordered were within
the scope of the contract).
Ragghianti cites Edward R. Marden Corp., to support its
position that the present circumstances materially altered
the nature of Ragghianti’s undertaking and required work
which was not essentially the same work as the parties
bargained for when the contract was awarded. (Doc. # 146 at
7). In Edward, the plaintiff alleged that the specifications
were

defective

and

that

the

whole

project

resulted

in

increased costs of $3,700,000. 442 F.2d at 370. The court
found that the claims were not ones encompassed by the changes
clause

of

the

contract,

but

rather

involved

major

reconstruction, and resulted in increased costs of almost
double the contract price. Id. The court’s decision – the
claim was not encompassed by changes clause - was “based on
the sheer magnitude of reconstruction work caused by the
alleged defective specifications.” Id.; see also SW Bell Tel.
Co. v. Chrisman Constr. Co., Inc., 529 S.W. 2d 586, 587 (Tex.
Civ. App. 1975)(affirming trial court’s finding that change
in required backfill material and thickness of manhole walls
resulted in extra work under Texas law, which was sufficient
to support a claim for quantum meruit, though end product was
essentially the same).

55

Here, the Court finds that the evidence provided at trial
fails to establish Ragghianti’s entitlement to damages based
on a theory of cardinal change. Ragghianti provides a laundry
list of items it claims rises to the level of a cardinal
change. However, this Court finds that although not merely
delays, interruptions, and inconveniences, the changes and
modifications were reasonably expected and fell within the
scope of completion for the Subcontract.
Ragghianti provides that “it bid the job to a schedule
that showed its performance in an orderly sequence, the piers,
followed by grade beams installed across the project, slab on
grade (after which the steel subcontractor would arrive), and
site

concrete

and

sidewalks.

Therefore,

the

changes

and

modifications resulted from PRBC’s mismanagement and its
continually changing contractual requirements.” (Doc. # 146
at 6). However, these allegations alone do not persuade the
Court to find a cardinal change.
PRBC and Ragghianti entered into a Subcontract with
Ragghianti to provide the building foundation, slab on grade,
miscellaneous concrete and site concrete to the Project.
(Doc. ## 59 at ¶ 9; 59-1; 95 at 1; 96 at 2; Ragghianti Dep.
Doc. # 96-10 at 17; JX-1; JX-2 at 1; JX-3 at 1). None of the
changes or modifications presented by Ragghianti demonstrate

56

that Ragghianti’s undertaking of the Project was materially
altered or that PRBC required work from Ragghianti that was
not essentially the same work as the parties bargained for
when

the

contract

was

awarded.

The

work

Ragghianti

was

required to do as a result of PRBC’s changes was necessary
for the completion of the Project; thus, the work done was
not a cardinal change. See Brown-McKee, Inc. v. W. Beef, Inc.,
538 S.W. 2d 840, 844 (Tex. Civ. App. 1976)(“the work and
consequent expense incurred in digging in rock was necessary
in

the

performance

of

the

very

thing

which

[plaintiff]

contracted to do.”).
Furthermore, Article 9.2 provides:
Subcontractor shall submit to The Construction
Manager any requests or claims for adjustment in
the Subcontract Price, schedule or other provisions
of this Subcontract for changes directed by The
Construction Manager, as a result of deficiencies
or discrepancies in the Contract Documents, or for
circumstances otherwise permitted by the Contract
Documents.
(JX-1 at 10). The changes and modifications referenced by
Ragghianti

are

covered

by

Article

9.2,

which

provides

Ragghianti with an adequate procedure to obtain relief for
the changes and modifications imposed by PRBC.

57

For the reasons stated above, the Court finds in favor
of PRBC and its Sureties as to Ragghianti’s alternative
cardinal change claim as Ragghianti has not established that
PRBC’s actions effected a cardinal change.4
F. PRBC’s Indemnity Claim Against Ragghianti
Count I of PRBC’s Amended Counterclaim is an action for
contractual indemnification against Ragghianti and its surety
American

Safety.

(Doc.

#

64).

Noteworthy,

however,

on

February 20, 2014, PRBC dismissed its claim against American
Safety. (Doc. ## 127, 128). Therefore, Count I of the PRBC’s
Amended Counterclaim remains only as to Ragghianti.
According to PRBC, Ragghianti is liable to PRBC under
Article

6.2

for

all

costs

PRBC

incurred

to

correct

Ragghianti’s “defective work.” (Doc. # 162 at 24). Article
6.2 states:
To
the
fullest
extent
permitted
by
law,
Subcontractor shall indemnify, defend and hold
harmless The Construction Manager, Prime Contract
and the Owner, any other entity entitled to
indemnification under the Contract Documents, and
their respective employees . . . to the extent said
Losses arise out of Subcontractor’s actual failure

4

As this Court finds that Ragghianti has failed to
establish that PRBC’s actions amounted to a cardinal change,
the Court declines to address PRBC’s contention that
Ragghianti failed to protest the changes imposed by PRBC.
(See Doc. # 139 at 6).

58

to perform this Subcontract in accordance with the
terms of this Subcontract and the Contract
Documents.
The
foregoing
obligations
of
Subcontractor shall include, but are not limited
to, indemnifying, defending and holding harmless
the Indemnified Parties from claims made by third
parties against any Indemnified Party to the extent
such claims arise out of the negligence, acts or
omissions of the Subcontractor. Subcontractor’s
liability includes, but is not limited to, (1)
damages,
delay
costs,
increased
costs
of
performance, warranty, rework and repair costs; (2)
liability to third parties, including, but not
limited
to,
other
subcontractors
of
The
Construction Manager and Prime Contract or Owner’s
other contractors; (3) attorney’s fees and related
costs.
(JX-1 at 7).
Furthermore, PRBC states that pursuant to Article 14.1,
Ragghianti was obligated to replace or correct any of its
work that PRBC or the Owner rejected as failing to conform to
the requirements of the Subcontract within a “reasonable
time.” (Doc. # 162 at 31). Article 14.1 states in relevant
part:
Subcontractor shall promptly replace or correct any
of Subcontractor’s work which The Construction
Manager or the Owner shall reject as failing to
conform to the requirements of this Subcontract.
If Subcontractor does not do so within a reasonable
time, The Construction Manager shall have the right
to do so and Subcontractor shall be liable to The
Construction Manager for all losses on account
thereof.

59

(JX-1 at 12).
Both PRBC and the Corps rejected Ragghianti’s defective
slab pour on February 14, 2012. (Doc. # 162 at 31; Samuel
Parker Dep. Doc. # 118-1 at 142-43). Furthermore, Ragghianti
breached its obligation under Article 14.1 to correct this
defective work when it failed to have its workers, who were
on the Project on February 17-18, 20-21, 2012, begin removing
the slab. (PX-31). Therefore, PRBC is entitled to recover its
costs

to

correct

the

defective

work,

in

the

amount

of

$827,457.
1. Whether PRBC Was in Prior Breach of Subcontract
Ragghianti

contends

that

PRBC

is

precluded

from

obtaining damages, as it breached the Subcontract. (Doc. #
161 at 82). The established rule of law in Texas is that “a
party to a contract who is himself in default cannot maintain
a suit for its breach.” Dobbins v. Redden, 785 S.W. 2d 377,
378 (Tex. 1990). Here, Ragghianti argues that PRBC is in prior
breach of the Subcontract as it did not make payment of
Ragghianti’s January of 2012, requisition, despite having
received payment from the Corps. (Doc. # 161 at 83). Thus,
according to Ragghianti, PRBC did not comport with the FAR’s
Prompt Payment Act, which is incorporated in the Subcontract,

60

or perform in accordance with its agreement to pay Ragghianti
every two weeks. (Id.; JX-13 at 86).
However, PRBC argues that it was not in prior breach by
its failure to pay Ragghianti contract sums through the fall
of 2011, as evidence showed that the justification for nonpayment

was

PRBC’s

receipt

of

several

notices

from

Ragghianti’s suppliers that Ragghianti had failed to make
payment to them. (Doc. # 162 at 32; Doc. # 151 at 51-60).
Namely, starting on September 15, 2011, PRBC received a notice
from a supplier of Ragghianti – ASCO - that it had not been
paid by Ragghianti for work previously performed. (DX-105).
PRBC became concerned that Ragghianti was not paying its
suppliers,

and

thus,

declined

to

process

payment

to

Ragghianti until these supplier payment issues were resolved.
(Doc. # 151 at 51-60).
According to PRBC, it had the right to withhold payment
if it became aware that Ragghianti had not made payments to
its lower-tier subcontractors, pursuant to Article 4.14(1):
The Construction Manager may withhold approval of
Application for Payment and/or monthly progress
payments in an amount sufficient to protect The
Construction Manager because:
(1) The Construction Manager receives information
that Subcontractor may not have made payments

61

properly to its Lower-Tier Subcontractors or for
labor (including fringe benefits), materials or
equipment, transportation or shipping costs, taxes,
fees
or
any
other
claims
arising
out
of
Subcontractor’s Work and Subcontractor fails or
refuses to produce proof requested by The
Construction Manager that such payments have been
made[.]
(JX-1

at

6)(emphasis

added).

Indeed,

two

other

vendors,

Capital pumping and Labor Ready also supplied notices to PRBC
that Ragghianti had not paid them. (Doc. # 151 at 51-60; DX106).
The language provided in Article 4.14 is clear that PRBC
– as the Construction Manager – had the right to withhold any
payments until Ragghianti submitted evidence satisfactory to
PRBC that all amounts owed in connection with the performance
of the Subcontract have been paid. Therefore, as PRBC received
notice that Ragghianti had failed to pay several of its lowertier subcontractors, PRBC was not in breach when it withheld
Ragghianti’s January of 2012, payment.
2. Whether Indemnification Provisions Must Comply
with the Express Negligence Doctrine
Ragghianti further argues that the indemnity provisions
PRBC relies upon are unenforceable as they are subject to,
and fail to satisfy, Texas’s Express Negligence Doctrine.
(Doc. # 161 at 37).

62

The Court notes, however, that in its Order denying the
parties’ cross-motions for summary judgment, this Court found
that the Subcontract’s indemnity provisions were not required
to conform to the Express Negligence Doctrine. (See Doc. #
114). Ragghianti admits that:
[T]he Subcontract’s provisions may be read to only
require [Ragghianti] to indemnify [PRBC] from
claims arising out of the negligence, acts or
omissions
of
[Ragghianti]
or
[Ragghianti’s]
subcontractors. However, because [PRBC] seeks
indemnification for [Ragghianti’s] performance
under the contract, and [PRBC’s] own actions
directly, indirectly, continuously, and negatively
impact [Ragghianti’s] performance and ability to
perform, [PRBC] is necessarily and impermissibly
seeking indemnity for its own actions.
(Doc. # 155 at 12); see Am. Eurocopter Corp. v. CJ Sys.
Aviation Grp., 407 S.W. 3d 274, 289 (Tex. App. 2013)(noting
that

“The

situations

[Express
where

Negligence

the

Doctrine]

indemnitee's

also

negligence

applies

to

proximately

causes injury jointly and concurrently with the indemnitor's
negligence.”). Therefore, Ragghianti argues that “Because
[PRBC]

is

seeking

indemnification

from

[Ragghianti]

for

damages that [PRBC] directly and indirectly caused, the claim
is subject to Texas’s Express Negligence Doctrine, and the
Subcontract

must

specifically

63

express

an

intent

that

[Ragghianti] must indemnify [PRBC] from its own negligence.”
(Doc. # 155 at 16).
As articulated by PRBC, “This Court has already held
that the express negligence doctrine is inapplicable to the
[Subcontract’s] indemnity provision, and that the provision
remains enforceable under Texas law.” (Doc. # 159 at 10).
Specifically, the Court’s previous Order stated:
Upon review of the Subcontract, the Court finds
that the relevant contractual provisions do not
require Ragghianti to indemnify PRBC for PRBC’s own
negligence.
In
fact,
the
provisions,
read
collectively, express that Ragghianti is to
indemnify PRBC from claims arising out of the
negligence, acts or omissions of Ragghianti or
Ragghianti’s Lower Tier Subcontractor – Jack
Daniels – not the negligence of PRBC. As the
provisions are not contemplating indemnification
for PRBC’s own negligence, the express negligence
doctrine is inapplicable.
(Doc. # 114 at 24-25).
This Court stands by its previous decision and holds
that the indemnity provisions relied upon by PRBC are not
required to conform with Texas’s Express Negligence Doctrine.
Therefore,

this

Court

declines

to

allow

Ragghianti

to

relitigate this matter.
3. Whether PRBC Failed to Apportion its Damages
Finally, Ragghianti argues that PRBC failed to apportion
its damages in regard to its indemnity claim as the indemnity

64

claim relies on the same proof to establish damages that PRBC
uses in its termination for convenience or default analysis.
(Doc. # 161 at 84). Ragghianti submits that “[t]he measure of
damages in contracts of indemnity is not the amount of
liability allegedly incurred, but the amount actually paid by
the

person

indemnified

that

is

properly

attributable

to

[Ragghianti’s] ‘actual failure to perform [the] Subcontract
in accordance with [its] terms. . . .’” (Id.)(citing In re
Lathrop

Haskins

&

Co.,

216

F.

102,

106-07

(2d

Cir.

1914)(“[T]he measure of damages in contracts of indemnity is
not the amount of liability incurred, but the amount actually
paid by the person indemnified on account of the loss.”).
According

to

Ragghianti,

PRBC

seeks

indemnity

for

expenses that are attributable to overcoming the delay PRBC
itself created. (Doc. # 155 at 18).

However, as PRBC fails

to provide any concurrent delay analysis, Ragghianti argues
that PRBC is precluded from recovery of claims that include
an acceleration component.

(Id.). “Just as [Ragghianti] and

Jack Daniels presented opinion testimony of [PRBC’s] impact
in causing delay and calling for acceleration of their work,
[PRBC] had to present evidence through an expert witness to
apportion delay associated with Ragghianti’s work from its
own delay and delay caused by its privies.” (Id.).

65

However, PRBC states that it is “simply not seeking any
damages that have an acceleration or delay component to them
and thus any failure to provide concurrent delay analysis
does not preclude PRBC’s recovery for its indemnification
claims.” (Doc. # 159 at 13). Instead, PRBC is requesting “the
costs it actually incurred to rip out the defective concrete,
to

replace

the

defective

concrete

and

to

complete

[Ragghianti’s] unfinished scope of work. PRBC is not seeking
acceleration

costs,

liquidated

damages,

extended

general

conditions or other damages dependent upon a concurrent delay
analysis or apportionment of delay.” (Doc. # 159 at 13).
PRBC is not seeking delay damages. In fact, the Court
notes that in a previous Order, this Court found that PRBC
had abandoned its claim of delay and liquidated damages in
this case. (Doc. # 114 at 20). Instead, PRBC is requesting
costs actually incurred in replacing Ragghianti’s defective
work. Therefore, the Court finds that Ragghianti is incorrect
in its position that PRBC had to present expert testimony on
the apportionment of delay associated with Ragghianti’s work
from its own delay, as no apportionment was necessary.
For the reasons set forth above, the Court finds in favor
of PRBC on its Indemnity claim.
G. PRBC’s Breach of Contract Claim Against Ragghianti

66

Ragghianti submits that PRBC cannot maintain its breach
of contract claim or recover attorneys’ fees because, among
other reasons, PRBC first breached the Subcontract and its
attorneys’ fees are an element of damages under the provisions
it relies upon. (Doc. # 161 at 85). This Court has previously
determined

that

PRBC

did

not

breach

withholding payment from Ragghianti.

the

Subcontract

by

Thus, this Court will

analyze Ragghianti’s additional arguments as to why PRBC is
not entitled to its breach of contract claim.
1. Whether PRBC’s Damages are Premature & Speculative
According to Ragghianti, PRBC failed to present evidence
of final acceptance of the concrete work, or final billing,
and

therefore,

the

contents

of

PRBC’s

claims

and

final

invoicing to the Owner are unknown. (Doc. # 161 at 86). As a
result, Ragghianti contends that PRBC’s default damage claim
is premature and speculative. (Id.).
Article 10.1(ii) of the Subcontract states in pertinent
part:
In case of termination for default, Subcontractor
shall not be entitled to receive any further
payment until Subcontractor’s Work shall be fully
completed and accepted in accordance with the
provisions of the Prime Contract with the Owner and
Payment therefore has been made in full by the
Owner.

67

(JX-1 at 11)(emphasis added). Ragghianti submits that the
amount of any future offset is unknown until the work is
accepted by the Owner and PRBC is paid for it, making PRBC’s
claim impermissibly speculative. (Doc. # 161 at 86)(citing
Wis. Elec. Power Co. v. United States, 90 Fed. Cl. 714, 79293 (Fed. Cl. 2009)).
At trial, the following questioning of Charles Ernest
Edgar – general counsel for Atkins North America, the parent
company for both PBS&J and PRBC - occurred:
A: To be clear, there was only one [Request for
Equitable Adjustment (REA)] submitted to the
government, and the government took no action,
returned it to us.
And that is where the REA
activity stands right now.
* * *
Q: All right. And there also has not been a final
payment application submitted to the government
yet, correct?
A. That’s correct.
Q: And so the project has not be finally accepted
by the government, correct?
A. No. It was substantially complete on May 15th,
2013, which then allowed the government to take
occupancy.
The government didn’t want us to complete some
additional scope that they added. So final

68

completion occurred – I don’t remember the exact
date, but it was the end of October of 2013.
There are still warranty responsibilities that we
have on the project, and those are being resolved
as well.
Q: And no final payment has been issued, of course,
because final billing hasn’t been presented?
A. That’s correct.
(Doc. # 151 at 234, 241). Therefore, as no final billing has
been presented, Ragghianti argues that PRBC cannot recover
damages under its termination for default theory. This Court
disagrees.
The language of Article 10.1 explicitly states that “In
case of termination for default, Subcontractor shall not be
entitled to receive any further payment until Subcontractor’s
Work shall be fully completed and accepted in accordance with
the provisions of the Prime Contract.” (JX-1 at 11)(emphasis
added). Nowhere in Article 10.1 does it indicate that PRBC is
unable to receive payment from Ragghianti, as a result of
Ragghianti’s defective performance, prior to final acceptance
and payment by the Owner.
Although no final payment has been issued to the Owner,
final completion of the Project has occurred and, as a result,
PRBC is able to determine its damages to date as a result of

69

Ragghianti’s defective performance under the Subcontract.
Therefore, the Court does not find PRBC’s damages speculative
or premature.
2. Measure of Damages
According to PRBC, the sum total of the default damages
PRBC incurred to remove and replace the defective slab and
complete Ragghianti’s scope of work was $827,457, and this
amount must be offset by Ragghianti’s unpaid contract sum of
$392,000. (See Doc. # 162 at 23). Therefore, the net total
damages resulting from Ragghianti’s breach are $435,457. (See
Id.; Doc. # 152 at 76).
Ragghianti submits that under Texas law, the measure of
damages for defective construction is “the difference in
value of the structure in its defective state versus as
planned or the cost to repair it if repair does not constitute
economic

waste.”

(Doc.

#

161

at

86)(citing

Jacobini

v.

Zimmerman, 487 S.W. 2d 249, 251 (Tex. App. 1972)); see also
Fid. & Deposit Co. of Maryland v. Stool, 607 S.W. 2d 17, 20
(Tex. Civ. App. 1980)(“Texas courts have long held that where
defects in construction of a building may be remedied, the
measure of damages for the owner is the cost of such remedy
or repair, but where such defects cannot be remedied without
injury to the structural efficiency of the building as a

70

whole, the measure of damages is the difference between the
value of the building as constructed and its value had it
been constructed according to the contract.”).
Ragghianti suggest that, “In this case, the cost to
repair the defect would be the proper measure of damages, a
legal conclusion recognized and concurred with by PRBC’s
delay claim expert, who notes PRBC seeks damages based on the
February 14, 2012, pour but speculates that the repair costs
should be similar.” (Doc. # 161 at 87).

Notwithstanding this

baseline proposition in construction law, Ragghianti points
out that PRBC has “continuously included costs incurred for
the February 14, 2012[,] pour in its damages claim.” (Id.).
According to Ragghianti, these damages are not the cost of
repair, and therefore, not recoverable. (Id.).
PRBC’s termination for default damages consist of the
costs it actually incurred and paid to remove and replace the
defective slab and complete Ragghianti’s scope of work. PRBC
has provided detailed explanation for each cost incurred.
For example, in regards to the damages incurred as to Ingram
Concrete, PRBC provides “The invoice used to support the
charge of $13,298 was the invoice from the February 14th
pour.” (See Doc. # 162 at 20). The Court notes that at trial
Steve Bennett testified that using the actual February 14,

71

2012, invoice was the better method to determine how much the
concrete that was ripped out cost, rather than using an
invoice from the subsequent March 27, 2012, Cantera pour and
backing into a calculation. (Id.; Doc. # 151 at 270-71).
Therefore, although this Court agrees with Ragghianti
that the proper measure of damages is “the difference in value
of the structure in its defective state versus as planned or
the cost to repair it if repair does not constitute economic
waste,” the Court finds that PRBC has provided adequate
explanation of its damages, including why it included costs
incurred for the February 14, 2012, pour in its damages claim.
3. Whether PRBC Provided Sufficient Evidence to
Establish Damages Were Reasonable and Necessary
Under Texas law, “[t]he party seeking to recover the
cost of completion in a breach of contract case has the burden
to prove that the damages sought are reasonable.” Mustang
Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W. 3d
195, 200 (Tex. 2004). To prevail in an action for costs of
repair

or

completion,

the

damages

sought

must

be

both

reasonable and necessary. City of Alton v. Sharyland Water
Supply Corp., 402 S.W. 3d 867, 876-77 (Tex. App. 2013). Mere
evidence of out-of-pocket costs is insufficient to support a
damages award absent competent proof that the expenditures

72

were reasonable and necessary. Mustang Pipeline Co., Inc.,
134 S.W. 3d at 201 (“it is now well settled that proof of the
amounts

charged

or

paid

does

not

raise

an

issue

of

reasonableness, and recovery of such expenses will be denied
in the absence of evidence showing that the charges are
reasonable.”).
“In order to establish that repairs are necessary and
reasonable, the magic words ‘reasonable’ and ‘necessary’ need
not be used; the injured party need only present sufficient
competent testimony so that the trier of fact is justified in
concluding that the repairs are necessary and that the cost
of repair is reasonable.” Carrow v. Bayliner Marine Corp.,
781 S.W. 2d 691, 694 (Tex. App. 1989). Although Ragghianti
asserts

that

reasonableness

Texas

law

requires

must

come

from

the

that

testimony

person

who

about

actually

prepared the estimate of the costs, or an expert in the field,
“[t]here is simply no requirement that reasonableness can
only be established through the testimony of the preparer of
an estimate or an expert.” (Doc. # 159 at 3).
Ragghianti relies on the fact that PRBC’s expert said he
was not qualified to testify in regard to “construction
estimating of labor services, equipment, or materials on the
. . . Project. . . .” (Doc. # 151 at 251-52). However, at

73

trial PRBC presented ample evidence to support a finding that
the costs it incurred to complete Ragghianti’s work were
reasonably and necessarily incurred. Ron Hartshorn and Baron
Steve White both have extensive experience in estimating
work,

obtaining

concrete

pricing

and

otherwise

were

intimately familiar with the market for such work in the area
around San Angelo, Texas, where the Project was located.
Although, Hartshorn and White agreed that some of the pricing
to fix Ragghianti’s defective work – namely Cantera’s - was
much

higher

than

Ragghianti’s

pricing,

each

provided

a

reasonable explanation for having to pay a premium price.
Therefore, for the reasons stated above, this Court
finds in favor of PRBC on its breach of contract claim.
4. Whether PRBC Can Recover Attorneys’ Fees
Finally, Ragghianti argues that PRBC cannot recover its
attorneys’ fees even if it prevails on its indemnity or
termination for default claims. (Doc. # 161 at 89). “To obtain
attorney’s fees as actual damages, a plaintiff must show that
the claimed attorney’s fees were reasonable and necessary.”
Dixon Fin. Servs., Ltd. v. Chang, 325 S.W. 3d 668, 678. (Tex.
App. 2010).
According to PRBC, it has incurred $630,000 in legal
fees and paid $580,000 of that amount at trial. (Doc. # 151

74

at 244). Ragghianti contends that PRBC failed to prove its
reasonable attorneys’ fees as an element of damages at trial
as it offered no relevant witnesses or exhibits; therefore,
PRBC is not entitled to recover attorneys’ fees on either
claim. (Doc. # 161 at 89-90).
At trial, PRBC offered Charles Ernest Edgar to provide
testimony on the amount of fees paid to date, the hourly rate,
and the reasonableness of those fees based on his experience
in procuring legal services in the Tampa, Florida market.
(Doc. # 160 at 15). Ragghianti has provided no justifiable
basis to exclude this testimony. (Id. at 10).
At trial, Charles Ernest Edgar provided the following
testimony:
Q: Okay. And what’s the total amount of legal fees
that have been billed to Atkins in this lawsuit?
A: Inception to date through, I believe, the end of
December, the figure is around – is approximately
$630,000.
Q:

And the total paid?

A:

Approximately 580,000.
* * *

Q: And do you know what the billing rate is for
Mr. Buesing in this case?

75

A.

Yes. $475 an hour, I believe.

Q:

425.

A:

425.

Q:

And [Mr. Vento’s] billing rate?

A:

The same.

Q:

All right. And Mr. Kiser’s billing rate?

A:

I believe it’s 375.

Q:

Okay. And Miss Saunders’ billing rate?

A:

175, if I’m not mistaken.

Q:
And do – and you are the general counsel of
Atkins and you hire lawyers all the time, correct?
A:
I retain all counsel on behalf of the
corporation and I review all level bills on behalf
of the corporation.
Q:
And are those hourly rates reasonable and
appropriate for this type of case?
A:

They are.

Q:
Okay.
And
is
the
amount
expended,
unfortunately, consistent with the amount of work
that had to be done in the case when we had five or
six Motions to Compel and all kinds of other things?
A: The billings are consistent with the work that’s
been performed.

76

(Doc. # 151 at 244-246). This Court finds that PRBC – through
Charles

Ernest

establishing

Edgar

its

–

provided

entitlement

to

sufficient

attorneys’

testimony

fees

and

the

reasonableness of such fees under the circumstances of this
action.

The

Court

notes

that

Ragghianti

has

previously

attempted to strike Charles Ernes Edgar’s testimony (Doc. #
156), and this Court denied Ragghianti’s request (Doc. # 168
at 11-13).
IV. Conclusion
For the reasons stated above, the Court finds that PRBC’s
termination

of

Ragghianti

Ragghianti

seeks

unabsorbed

home

damages

was

office

for

one

of

default.

unearned

overhead,

and

lost

Although
profits,

increased

costs

attributable to delay, the express terms of the Subcontract
limit Ragghianti’s recovery to those damage representing its
unpaid furnished labor and materials (i.e., Ragghianti’s
outstanding balance), totaling $392,000. In addition, the
Court finds in favor of PRBC on its indemnity and breach of
contract claims. Therefore, the $827,457 in damages PRBC
incurred to remove and replace the defective slab and complete
Ragghianti’s scope of work must be offset by Ragghianti’s
outstanding balance of $392,000. As a result, PRBC’s net total
damages amount is $435,457.

77

To the extent PRBC, as the prevailing party, seeks
attorneys’ fees and costs in this matter, it has until October
15, 2014, to file an appropriate motion requesting such
relief.5
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Defendant Peter R. Brown Construction, Inc.’s Motion to
Conform the Pleadings to the Evidence (Doc. # 154) is
DENIED.

(2)

Peter R. Brown Construction, Inc.’s Motion for Judgment
on Partial Findings Pursuant to Fed. R. Civ. P. 52(c)
(Doc. # 139) and Plaintiff Ragghianti Foundations III,
Inc.’s Motion for Judgment on Partial Findings Pursuant
to Fed. R. Civ. P. 52(c) (Doc. # 155) are GRANTED to the
extent provided herein.

(3)

The Clerk is directed to enter judgment in favor of Peter
R. Brown Construction, Inc. in a sum of $435,457, and
thereafter CLOSE this case.

5

The Court will address PRBC’s entitlement to attorneys’
fees and costs regardless of whether, at the time PRBC’s
counsel submits further documents in support of their fee and
cost request, this case has been closed by the Clerk.

78

(4)

Peter

R.

Brown

Construction,

Inc.

has

until

and

including October 15, 2014, to file any motions for
attorneys’ fees or costs.
DONE and ORDERED in Chambers in Tampa, Florida this 19th
day of September, 2014.

Copies: All Counsel of Record

79