## Facts

- Morse/Diesel, Inc. served as general contractor for construction of the Marriott Marquis Hotel in Manhattan.
- Trinity Industries, Inc., through its Mosher Steel division, was the structural steel subcontractor; Aetna Insurance Company issued a performance bond guaranteeing Trinity’s performance.
- Morse/Diesel sued Trinity and Aetna for damages allegedly caused by Trinity’s late performance in fabricating and erecting structural steel, asserting substantial project delay and increased costs.
- Trinity counterclaimed, alleging Morse/Diesel’s mismanagement and contractual breaches caused delays and increased Trinity’s costs.
- The subcontract contained detailed provisions governing delay-related costs, written notice requirements for claims, architect involvement, and excusable delays (including inclement weather).
- After a lengthy jury trial in the Southern District of New York, the jury found Trinity and Aetna liable to Morse/Diesel for approximately $25.8 million in compensatory damages.
- Trinity and Aetna appealed, challenging (among other matters) how the subcontract’s delay-cost provisions were presented to the jury and the effect on Trinity’s counterclaim.

## Issues

1. Whether the district court committed reversible error by submitting to the jury the meaning of an unambiguous subcontract provision governing Trinity’s right to recover delay-related costs.
2. Whether the district court was required, as a matter of law, to construe the subcontract and instruct the jury on Trinity’s entitlement to recover delay costs not attributable to Trinity.
3. Whether the identified instructional/interpretive error undermined the jury’s ability to evaluate Trinity’s counterclaim and potentially affected the verdict as a whole.

## Decision

- The Second Circuit reversed the judgment for Morse/Diesel and remanded for a new trial.
- The court held that the subcontract language at issue (including paragraph 53) was unambiguous as to Trinity’s right to recover delay-related costs not caused by Trinity.
- The district court erred by allowing the jury to determine the meaning of that unambiguous provision rather than construing it and instructing the jury accordingly.
- The error was not harmless because it impeded fair consideration of Trinity’s counterclaim and could have influenced the jury’s overall view of the case.

## Legal Principles

- Interpretation of an unambiguous contract is a question of law for the court, not a question of fact for the jury.
- A trial court must construe clear contractual language and provide the jury with instructions applying that construction to the disputed facts.
- Submitting the meaning of an unambiguous contract term to the jury is legal error warranting reversal when the term is central to a party’s theory and the error may have affected the verdict.

## Conclusion

The Second Circuit ordered a new trial because the district court improperly left to the jury the interpretation of an unambiguous subcontract clause governing the subcontractor’s right to recover delay-related costs, undermining fair evaluation of the subcontractor’s counterclaim and potentially affecting the verdict as a whole.


Morse/Diesel, Inc. v. Trinity Indus., Inc., 67 F.3d 435 (2d Cir. 1995)