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Ramada Dev. Co. v. Rauch - 644 F.2d 1097 (5th Cir. 1981)


A report prepared in an attempt to settle the case is inadmissible under Fed. R. Evid. 408.

Florida statute governing foreclosure of liens requires that an affidavit is delivered to the owner at least five days prior to the commencement of a foreclosure action.

A party who has specifically denied an issue upon which opponent has the burden of proof does not waive or admit the issue by failing to include the issue in the pretrial stipulation list of issues.


In 1972, Martin Rauch signed a contract in which the Ramada Development Company agreed to design, furnish, and construct a 160-unit motel and restaurant. The contract allowed for progress payments, and disbursement of progress payments were made by Rauch's lender. The construction was commenced shortly after the signing of the contract. By January 25, 1974, the construction of the motel was, according to one witness, "substantially complete" in accordance with the construction contract. A Ramada construction report indicates that on February 1, 1974, Rauch made a spot inspection and was "very pleased" with the motel and had "no complaints." The motel was furnished, and the inn supplies were substantially on the premises. But at some time Rauch became dissatisfied with the motel or the furnishings and supplies. Although the contract demanded that the final payment was due upon "substantial completion," Rauch admittedly refused to make the final payment. Rauch claims that he refused to make the final payment because he was not yet satisfied with the work while Ramada claims that by that time Rauch had not made any complaints beyond the usual "punch list" items. On January 31, 1975, approximately one year after Rauch occupied the motel and refused to make further payments to Ramada, Ramada brought this diversity action against Rauch for the balance due under the contract for the construction, furnishing and supplying of the motel. Ramada sought to establish a lien on the property and asked that, in event of Rauch's failure to pay the lienable amounts owed, the court foreclose upon the property. Rauch answered, denying liability and alleging a counterclaim against Ramada for failure to perform according to the contract and for negligence in planning and construction of the project. The district court, through a trial by jury, rendered a verdict that was favorable to Ramada. The jury found that Ramada had substantially performed its construction obligations and should receive $79,902.10 as the final payment for construction. Rauch appealed, raising issues regarding the instructions to the jury, excluded evidence,  whether Ramada complied with the Florida lien law.



Did the district court commit procedural error in its conduct of the case, thereby, rendering the decision in favor of Ramada a mistake? 




The Court held that failure of trial court to instruct on Ramada’s alleged negligence was not error because the duty owed under the contract was greater than the duty owed under a tort theory. The Court noted that Rauch failed to object to an instruction on the prevention of performance by Rauch and when reviewed under the plain error standard, the trial court did not commit error. The trial court was correct in refusing to admit report of Rauch’s architect because it was prepared in an attempt to settle the case and was inadmissible under Fed. R. Evid. 408. However, the Court remanded in part, noting that there was no evidence submitted as to whether Fla. Stat. Ann. § 713.06(3)(d, which required five day notice before commencement of foreclosure action, had been satisfied.

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