             IN THE UNITED STATES COURT OF APPEALS

                               FOR THE FIFTH CIRCUIT
                                           _______________

                                             m 99-30012
                                           _______________



                                  UNITED STATES ON BEHALF OF
                                   CAL’S A/C AND ELECTRIC,
                                                               Plaintiff-Appellant,
                                                VERSUS

                         THE FAMOUS CONSTRUCTION CORPORATION;
                            CAPITOL INDEMNITY CORPORATION,
                                                               Defendants-Appellees.

                                    _________________________

                             Appeal from the United States District Court
                                for the Eastern District of Louisiana
                                  _________________________

                                              May 16, 2000

Before REAVLEY, SMITH, and EMILIO M.                   amounts owing on unpaid construction and
  GARZA, Circuit Judges.                               repair work, subcontractor Cal’s A/C and
                                                       Electric (“Cal’s”) appeals a partial summary
JERRY E. SMITH, Circuit Judge:*                        judgment dismissing its Louisiana state law
                                                       claim for attorney’s fees.2 Because the district
   Having won its Miller Act claim1 against            court incorrectly concluded that the Miller Act
federal contractor The Famous Construction             precludes supplemental jurisdiction over Cal’s’
Corporation (“Famous”) and its surety,                 related state claim for fees, we vacate and
Capitol Indemnity Corporation (“Capitol”), for         remand, noting that, because the district court
                                                       rendered its decision on November 30, 1998,

    *
      Pursuant to 5TH CIR. R. 47.5, the court has
determined that this opinion should not be               2
                                                           See LA. REV. STAT. ANN. § 9:2784(C) (“If the
published and is not precedent except under the        contractor or subcontractor without reasonable
limited circumstances set forth in 5TH CIR. R.         cause fails to make any payment to his
47.5.4.                                                subcontractors and suppliers within fourteen
                                                       consecutive days of the receipt of payment from the
        1
        See 40 U.S.C. § 270a et seq. (imposing         owner for improvements to an immovable, . . . the
bonding requirements for federal contracts and         contractor or subcontractor shall be liable for
establishing federal cause of action to recover on     reasonable attorney fees for the collection of the
such bonds).                                           payments due the subcontractors and suppliers.”).
it could not have taken into account this                  Pruden, “[w]e do not read F.D. Rich to
court’s opinion announced the next day in                  prohibit an award of attorneys’ fees under a
United States ex rel. Varco Pruden Bldgs. v.               state claim over which the court has exercised
Reid & Gary Strickland Co., 161 F.3d 915,                  supplementary jurisdiction in a Miller Act
918-19 (5th Cir. 1998).                                    case.” 161 F.3d at 918-19.4 We therefore
                                                           vacate, concluding that Cal’s may pursue
                       I.                                  attorney’s fees under Louisiana law.
   Federal district courts can exercise
supplemental jurisdiction “over all . . . claims              This result is not, however, mandated by
that are so related to claims in the action                the Prompt Payment Act Amendments of
within such original jurisdiction [of the district         1988.5 The Prompt Payment Act, 31 U.S.C.
court] that they form part of the same case or             § 3901 et seq., confers additional rights and
controversy under Article III of the United                duties on federal contractors and
States Constitution.” 28 U.S.C. § 1367. The                subcontractors.     The 1988 amendments
parties do not contest that Cal’s’ state law               additionally provide that
action for fees is sufficiently related, for §
1367 purposes, to its Miller Act claim. The                   this section [of the Prompt Payment
district court read F.D. Rich Co. v. United                   Act] shall not limit or impair any
States ex rel. Indus. Lumber Co., 417 U.S.                    contractual, administrative, or judicial
116 (1974), however, as construing the Miller                 remedies otherwise available to a
Act to bar supplemental jurisdiction over                     contractor or a subcontractor in the
otherwise related state law claims for                        event of a dispute involving late
attorney’s fees.                                              payment or nonpayment by a prime

   F.D. Rich did no such thing; it stated that
the Miller Act does not “explicitly provide for            (...continued)
an award of attorneys’ fees to a successful                state actions on the bonds of contractors for state
plaintiff.” Id. at 126. The Court further held             and municipal public works projects . . . [though
that “[t]he Miller Act provides a federal cause            that statute was] inapplicable to construction
of action, and the scope of the remedy as well             projects of the United States. The Court of
as the substance of the rights created thereby             Appeals nonetheless held that since federal law
is a matter of federal not state law.” Id.                 controls Miller Act recoveries, it was free to look
at 127.                                                    to ‘state policy’ rather than state law . . . .”). Here,
                                                           by contrast, the plaintiff looks to Louisiana state
                                                           law, and not the Miller Act, for relief.
   F.D. Rich thus announced only that Miller
Act claims themselves do not incorporate state                  4
                                                                  See also United States ex rel. Garrett v.
law remedies such as attorney’s fees; it did not           Midwest Constr. Co., 619 F.2d 349, 352-53 (5th
read the Act to preclude the pursuit of state              Cir. 1980) (“Under [F.D. Rich], federal common
causes of action for fees in addition to Miller            law governs the claim for attorney’s fees in Miller
Act claims.3 As we announced in Varco                      Act cases. . . . F.D. Rich proscribes attorney’s
                                                           fees in Miller Act cases absent a controlling
                                                           contractual or statutory provision.”); but see
                                                           United States ex rel. Howell Crane Serv. v. U.S.
   3
     Indeed, the plaintiff in F.D. Rich did not even       Fidelity & Guar. Co., 861 F.2d 110, 112 (5th Cir.
seek a state law-based claim for attorney fees, for        1988) (holding that no state law claim for
California law did not provide such an action.             attorney’s fees should be inferred from pleadings
Instead, the plaintiff sought to incorporate               because “[t]he clear holding of F.D. Rich is that
California state policy into the federal Miller Act.       attorney’s fees are not generally available in a
See F.D. Rich, 417 U.S. at 126-18 (“Looking to             Miller Act suit even when state law provides for
California law, the Court of Appeals found an              such an award.”).
award of attorneys’ fees proper because [California
                                                               5
law] allowed for the recovery of attorneys’ fees in             See Pub. L. No. 100-496, 102 Stat. 2455,
                           (continued...)                  2460-63, § 9 (codified at 31 U.S.C. § 3905).

                                                       2
   contractor or deficient subcontract                       owner for improvements to          an
   performance or nonperformance by a                        immovable, . . . the contractor    or
   subcontractor.                                            subcontractor shall be liable     for
                                                             reasonable attorney fees for      the
31 U.S.C. § 3905(j). Cal’s would have us                     collection of the payments due    the
recognize that § 3905(j) effectively overrules               subcontractors and suppliers.
the construction of the Miller Act offered by
F.D. Rich,6 but the text plainly limits itself to
one particular section of the Prompt Payment
Act. Any bars to additional remedies erected
by the Miller Act are left untouched by
§ 3905(j). We therefore do not rely on the
Prompt Payment Act, but instead conclude
that F.D. Rich found no such barrier in the
Miller Act in allowing Cal’s to proceed on its
Louisiana claim.

   Finally, because we follow the lead of
Varco Pruden in holding that F.D. Rich did
not preclude state-based actions for attorney’s
fees to accompany Miller Act claims, we need
not entertain Cal’s alternative argument that
§ 1367 implicitly overrules F.D. Rich.
Because F.D. Rich did not bar supplemental
jurisdiction over state law claims, there was
nothing in that opinion for § 1367 to overrule.

                      II.
    Famous and Capitol argue that the district
court should be affirmed, notwithstanding
Varco Pruden, because Cal’s’ Louisiana claim
fails on the merits. Louisiana law states:

   If the contractor or subcontractor
   without reasonable cause fails to make
   any payment to his subcontractors and
   suppliers within fourteen consecutive
   days of the receipt of payment from the


   6
    A few district courts, in addition to the district
court in this case, have supported this approach.
See United States ex rel. Don Siegel Constr. Co.
v. Atul Constr. Co., 85 F. Supp. 2d 414, 416 n.1
(D.N.J. 2000) (stating that, though “at least one
federal district court has held that a
subcontractor’s supplemental state law claims
against a contractor or surety may be preempted by
the Miller Act . . . the holding in that case was
subsequently superseded by the Prompt Payment
Act”). We are aware of no courts of appeals that
have addressed the issue.

                                                         3
LA. REV. STAT. ANN. § 9:2784(C) (emphasis                     Moreover, Famous had paid the undisputed
added).                                                    amounts in full; only the disputed amounts
                                                           were kept from Cal’s.10 Therefore, according
   Thus, Louisiana law allows Cal’s to recover             to Famous, Cal’s cannot prove that Famous
attorney’s fees from Famous, the contractor,               lacked reasonable cause not to make payment,
though not from Capitol, the surety.7                      as required to obtain attorney’s fees under
Furthermore, as we have previously held,                   Louisiana law.
“recovery on the bond must be under the
Miller Act.” Varco Pruden, 161 F.3d at 919.8                  We may affirm on any ground supported by
Cal’s therefore may proceed against Famous                 the record, even if it was not the basis for
but not Capitol.                                           judgment.11 Nevertheless, rejection on the
                                                           merits of Cal’s request for attorney’s fees
   Famous presents two arguments, under LA.                under § 9:2784(C) requires particular factual
REV. STAT. ANN. § 9:2784(C), why it should                 findings that the district court did not
not be held liable for attorney’s fees and                 makeSSindeed, had no need to make.12
asserts that remand is inappropriate because               Therefore, remand is necessary to determine
Cal’s failed to comply with FED. R. APP. P. 10.            whether Famous had reasonable cause not to
We address each argument in turn.                          pay Cal’s.

                     A.                                                             B.
   First, Famous claims that it had “reasonable               Second, the statute allows recovery of
cause” to refuse to make payment and                       attorney’s fees only “[i]f the contractor or
therefore cannot be made to pay fees under                 subcontractor . . . fails to make any payment to
§ 9:2784(C). Famous and Cal’s disputed the                 his subcontractors and suppliers within
amount owed. In fact, the district court                   fourteen consecutive days of the receipt of
granted less than what Cal’s originally had                payment from the owner.” § 9:2784(C)
requestedSSfurther evidence that the dispute               (emphasis added). The VA made a series of
was joined in good faith on the part of
Famous.9
                                                           (...continued)
                                                           payments. . . . [T]he trial court did not err in
  7
    See Howell Crane, 861 F.2d at 113 (“[Surety]           denying the plaintiff attorney fees . . . .”).
USF&G’s only involvement with [subcontractor]
                                                                 10
Howell was its Miller Act bond. No state law                        Cf. Unis v. JTS Constructors/Managers,
claim was asserted by Howell against USF&G.                Inc., 541 So. 2d 278, 281 (La. App. 3d Cir. 1989)
Thus, there is no basis for a pendant jurisdiction         (reasoning that “because no disputes existed
award of attorney’s fees against USF&G.”).                 between the parties over the Palmetto Creek
                                                           Project, it was unreasonable for JTS Constructors
      8
       See also Bernard Lumber Co. v. Lanier-              to withhold payment”).
Gervais Corp., 560 So.2d 465, 467 (La. App. 1st
                                                              11
Cir. 1990) (“While the Miller Act is not the                     See Zuspann v. Brown, 60 F.3d 1156, 1160
exclusive remedy available to suppliers in some            (5th Cir. 1995) (“We are free to uphold the district
cases, it is the exclusive remedy available to a           court’s judgment on any basis that is supported by
supplier against a surety (or the surety’s guarantor       the record.”); Wooton v. Pumpkin Air, Inc.,
in this case) on a Miller Act payment bond.”).             869 F.2d 848, 850 n.1 (5th Cir. 1989) (stating that
                                                           judgment “may be affirmed on appeal for reasons
      9
       See Contractors Supply & Eq-Orleans v.              other than those asserted or relied on below”).
J. Caldarera & Co., 734 So. 2d 755, 759 (La.
                                                              12
App. 5th Cir. 1999) (“The trial judge determined                 The intensely factual nature of this dispute is
that the amount demanded by the plaintiff was out          reflected in the briefs of both parties, and that
of proportion to the amount owed, therefore the            remand for further proceedings is warranted is
defendant had reasonable cause to withhold                 reflected in the paucity of record references by
                           (continued...)                  either side.

                                                       4
payments to Famous, including compensation                    Famous and Capitol, however, blame any
for part of the work performed by Cal’s.                   deficiencies in the record not on the procedural
Cal’s, however, also did work for Famous that              posture of this case, but on Cal’s. They assert
the VA never paid for.                                     that record omissions should be construed
                                                           against Cal’s on the ground that Cal’s failed to
   That is, the VA never paid for work                     notify them that it ordered only an incomplete
ordered by Famous, despite Cal’s repeated                  transcript, inadequate to support Famous and
warnings that such work did not comply with                Capitol’s merits defense.
Famous’s contract with the VA and thus
wo uld not be eligible for federal                            It is the duty of the appellant either to
reimbursement. Therefore, if, on remand,                   “order from the reporter a transcript of such
Famous does not establish reasonable cause                 parts of the [district court] proceedings not
for failing to pay Cal’s, the district court is            already on file as the appellant considers
directed to award Cal’s attorney’s fees, but               necessary,” or “file a certificate stating that no
only those fees that were necessary to obtain              transcript will be ordered.” FED. R. APP. P.
payments for which Famous was previously                   10(b)(1). Moreover, where the appellant
compensated by the VA.13                                   decides to order something less than the entire
                                                           transcript, it must “file a statement of the
   Cal’s claims that Famous should be                      issues that the appellant intends to present on
estopped from asserting nonpayment by the                  the appeal and must serve on the appellee a
VA as a defense, because Famous                            copy of both the order or certificate and the
unreasonably failed to request additional                  statement.” FED. R. APP. P. 10(b)(3)(A). The
payments from the VA to ensure full                        appellee then has the opportunity to order
compensation for Cal’s. But nothing in the                 other parts of the proceedings to be included
text of § 9:2784(C) suggests any opportunity               in the record on appeal. FED. R. APP. P.
for relief where the contractor has not received           10(b)(3)(B)-(C).
payment from the owner, and Cal’s does not
provide any alternative theory under Louisiana                Cal’s satisfied in toto the requirements of
law to justify recovery of attorney’s fees.                rule 10(b)(3)(A). It served Famous and
                                                           Capitol with its transcript order and with its
                      C.                                   notice of appeal, which adequately articulated
   Remand therefore is necessary, because the              a “statement of the issues that the appellant
record does not permit us to render judgment               intends to present on the appeal.” Id. The
on Cal’s claim under § 9:2784(C). The district             appellate rules do not require, as Famous and
court erroneously dismissed this claim for lack            Capitol seem to suggest, that an appellant
of supplemental jurisdiction. Therefore, on                specifically warn appellees that it is not
remand it will have its first opportunity to               ordering a complete transcript. Famous and
address the claim on the merits.                           Capitol may regret failing to take the
                                                           opportunity to order additional parts of the
                                                           transcript for appealSSparticularly because
                                                           Varco Pruden has forced them to press
         13
                                                           alternative legal theoriesSSbut the fault lies
             See Gitz v. Quality Restorations              with Famous and Capitol, and not Cal’s.
Contractors, Inc., 508 So. 2d 170, 172 (La. App.
4th Cir. 1987) (Ciaccio, J., concurring) (“[Section           VACATED and REMANDED.
9:2784(C)] is a punitive statute that regulates the
timely payment of the sub-contractor out of those
funds the contractor receives as progress payments
from the owner. It does not and cannot shift the
risk of non-payment by the owner from the general
contractor to the sub-contractor in the absence of
specific language in the contract providing for that
contingency.”).

                                                       5
