CLEVELAND CONSTRUCTION INC v. STELLAR GROUP INCORPORATED et al

Filing 107

ORDER regarding choice of law. Ordered by US DISTRICT JUDGE CLAY D. LAND on 9/28/2018 (tlf).

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
UNITED STATES OF AMERICA, for
the use and benefit of
CLEVELAND CONSTRUCTION, INC.,
Plaintiff,

*
*
*

vs.

CASE NO. 4:16-CV-179 (CDL)

*

STELLAR GROUP, INC. and LIBERTY *
MUTUAL INSURANCE COMPANY,
*
Defendants.
*
O R D E R
This
Benning.

action
In

arises

December

from
2010,

a

construction

Defendant

project

Stellar

on

Fort

Group,

Inc.

(“Stellar”) contracted with the Army to construct a short-term
lodging facility on Fort Benning.

Stellar subcontracted with

Plaintiff Cleveland Construction, Inc. (“Cleveland”) to provide
certain construction services for the project.
delayed by almost a year.
arising from the delay.

The project was

Both parties sued the other for damages
The trial of this action is scheduled to

begin on Monday, October 15, 2018.

The present issue is what law

shall apply at trial.1

1

For additional background, see the Court’s order granting in part and
denying in part the parties’ cross motions for summary judgment. See
Order (Feb. 28, 2018), ECF No. 84.

1

The parties’ subcontract contains a choice-of-law provision.
That provision states: “Federal law shall govern the construction,
interpretation, enforcement and all other matters relating to this
Subcontract.”

Compl. Ex. A, Subcontract 7, § 12, ECF No. 1-2.

The parties dispute what “federal” means.

Cleveland contends that

“federal” law means the “body of uniform federal common law of
contracts that is applied between the federal government and its
citizens.”

Pl.’s Resp. in Opp. to Def.’s Mem. 3, ECF No. 105.

Cleveland submitted proposed jury instructions reflecting this
understanding of federal law.

Those instructions rely primarily

on cases from the Federal Circuit, the Federal Courts of Claims,
and various government contract review boards.

See, e.g., Appeal

of the Clarke Constr. Grp., Inc., GAOCAB No. 2003-1, 2014 WL
5462234 (2004) (Government Accountability Office Contract Appeals
Board decision setting forth exceptions to no damages for delay
provision enforceability); Fomby-Denson v. Dep’t of Army, 247 F.3d
1366 (Fed. Cir. 2001) (explaining that “principles of general
contract

law,

construction

which

of

be[came]

settlement

federal

agreement

common

law”

govern

between

Army

and

the

former

employee); K-Con Bldg. Sys., Inc. v. United States, 778 F.3d 1000,
1008-11 (Fed. Cir. 2015) (applying federal common law in contract
dispute between general contractor and Coast Guard); Begner v.
United States, 428 F.3d 998, 1004 (11th Cir. 2005) (“Federal courts
use federal common law to evaluate government contracts.”); see

2

also Interface Kanner, LLC v. JP Morgan Chase Bank, N.A., 704 F.3d
927, 931-32 (11th Cir. 2013) (concluding that choice of law
provision

in

purchase

“federal”

law

and

required

assumption

application

of

agreement
federal

specifying

common

law

to

determine whether plaintiff was intended third party beneficiary).
Stellar,
jurisdiction
diversity,

however,
over

the

the

Erie

argues
parties’

doctrine

that

because

contract

applies.

contends that Georgia law should apply.

the

claims

is

Court’s
based

Accordingly,

on

Stellar

But this argument ignores

the unambiguous choice of law provision in the subcontract, which
Stellar drafted.

Further, Erie requires this Court to apply

Georgia’s choice-of-law rules.
313 U.S. 487, 496 (1941).

Klaxon Co. v. Stentor Elec. Mfg.,

And Georgia courts generally enforce

choice-of-law provisions unless the application of different law
would contravene public policy.

See Becham v. Synthes USA, 482 F.

App’x 387, 390-91 (11th Cir. 2012) (per curiam).

Stellar did not

point to any public policy reasons against enforcing the clause
here.
Additionally, if Stellar intended Georgia law (or any other
state’s law) to apply, it should have said so.
subcontract

specified

“federal”

law.

Stellar

Instead, the
is

a

general

contractor with experience in federal public contracting.

And the

parties entered the subcontract in the context of a large-scale
Army construction project. The parties would certainly be expected

3

to know what the contract means by “federal law.”

Accordingly, to

the extent that federal common law exists regarding the legal
issues presented, then that law shall apply.2
IT IS SO ORDERED, this 28th day of September, 2018.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

2

Both parties submitted proposed jury charges, but only Cleveland’s
relied on federal law. Stellar shall thus have until October 10, 2018
to submit another version of its proposed charges that relies on federal
law instead of Georgia law.

4