UNITED STATES SUPREME COURT DECISIONS ON-LINE

U.S. Supreme Court

F.D. Rich Co., Inc. v. Industrial Lumber Co., 417 U.S. 116 (1974)

F.D. Rich Co., Inc. v. United States for the

Use of Industrial Lumber Co.

No. 72-1382

Argued January 9, 1974

Decided May 28, 1974

417 U.S. 116

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner F. D. Rich Co., the prime contractor on a federal housing project in California, had two separate contracts for the project with Cerpac Co., one contract being for Cerpac to select, modify, detail, and install all custom millwork and the other being for Cerpac to supply all exterior plywood. Cerpac, in turn, ordered the lumber called for under the plywood contract from respondent. When Rich needed plywood for another project in South Carolina, one of the shipments called for by respondent's contract with Cerpac was diverted to South Carolina. When Cerpac defaulted on its payments to respondent for the plywood, including the South Carolina shipment, respondent gave notice to Rich and its surety of a Miller Act claim, and thereafter brought suit in the Federal District Court for the Eastern District of California, where the California project was located. Finding that Cerpac was a "subcontractor" within the meaning of the Miller Act, rather than merely a materialman, that hence respondent could assert a Miller Act claim against Rich, and that venue for suit on the South Carolina as well as the California shipments properly lay, under 40 U.S.C. § 270b(b), in the Eastern District of California, the District Court granted judgment for respondent for the amount due on the unpaid invoices, but denied its claim for attorneys' fees. The Court of Appeals affirmed in large part, but held that attorneys' fees should be awarded respondent.

Held:

1. Based on the substantiality and importance of its relationship with the prime contractor, MacEvoy Co. v. United States ex rel. Tomkins Co., 322 U. S. 102, Cerpac was clearly a subcontractor for Miller Act purposes, considering not just its plywood contract, but also its custom millwork contract on the California project. Moreover, Cerpac and Rich had closely interrelated management and financial structures, and their relationship on the California clubjuris

Page 417 U. S. 117

project as the same as on many other similar projects; hence it would have been easy for Rich to secure itself from loss as a result of Cerpac's default. Pp. 417 U. S. 121-124.