Proportionality, Not Nominal Prevailing Status, Controls Contractual Fee Awards Under New Jersey Law: Third Circuit Affirms $0 Fee Award in Miller Act Subcontract Dispute

Introduction

In United States for the Use of Colorado Custom Rock Corp. v. G&C Fab-Con, LLC; Everest Reinsurance Co. (3d Cir. Nov. 5, 2025) (non-precedential), the Third Circuit affirmed a series of trial court rulings arising from a contentious construction dispute on a federal project—the Pikes Peak National Cemetery in Colorado Springs—between a general contractor (G&C Fab-Con) and its masonry subcontractor (Colorado Custom Rock, “CCR”). The litigation involved cross-claims for breach of contract after G&C demolished a building three days after issuing CCR a notice to cure alleged plumbness defects.

A jury largely found for CCR, awarding $589,000 on CCR’s breach claim and only $1 in nominal damages to G&C on its counterclaim. Post-trial, G&C sought contractual attorneys’ fees and costs under a fee-shifting clause, and also moved for judgment as a matter of law, a new trial, or to alter/amend the judgment. The district court denied those requests. On appeal, the Third Circuit:

Affirmed the denial of contractual attorneys’ fees, holding that under New Jersey law a fee award must be reasonable and proportional to the party’s success—permitting a $0 award despite nominal success on a counterclaim.
Affirmed the denial of G&C’s Daubert motion, permitting CCR’s expert to testify based on project documents, photographs, and measurements by others after the building’s demolition.
Affirmed the sufficiency of evidence for damages relating to stored materials and unbilled labor under Colorado’s “reasonable certainty” standard, and rejected G&C’s Rule 50 (judgment as a matter of law), Rule 59(a) (new trial), and Rule 59(e) (alter/amend judgment) challenges.
Noted (in its jurisdictional discussion) that forum-selection clauses receive controlling weight under Atlantic Marine and that the Miller Act’s venue provision is waivable—aligning with other circuits.

Although designated “not precedential” under the Third Circuit’s Internal Operating Procedures, the opinion offers important guidance for construction litigants and commercial drafters on fee-shifting proportionality, expert admissibility when physical inspection is impossible, practical proof of damages, and the robust enforcement of forum-selection clauses in Miller Act contexts.

Summary of the Opinion

The Third Circuit (Judge Chung) affirmed in full. Key holdings include:

Contractual attorneys’ fees (New Jersey law). Even with a contractual clause entitling the contractor to recover reasonable fees “by reason or as a result of Subcontractor’s default,” the district court acted within its discretion by awarding $0 where the contractor’s success was merely nominal and the overall results favored the subcontractor. Proportionality to the “ultimate results achieved” remains central to reasonableness.
Daubert/Rule 702. The district court properly allowed CCR’s engineering expert to testify. Reliability challenges focused on disputes between experts and went to weight, not admissibility. The expert’s reliance on documents, photography, and measurements taken by others was permissible, especially given the building’s demolition.
Damages sufficiency (Colorado law). Payment applications, corroborating documents, and testimony supported awards for stored materials and unbilled labor with “reasonable certainty,” even without underlying invoices in evidence. The court affirmed denials of judgment as a matter of law and a new trial.
Rule 59(e). No intervening change of law, no newly discovered evidence, and no manifest error were shown; denial of the motion to alter/amend judgment was affirmed.
Venue and forum selection. The panel acknowledged Atlantic Marine’s controlling-weight rule for forum-selection clauses and collected circuit authority holding that the Miller Act’s venue provision is waivable—explaining the propriety of transfer to New Jersey under a subcontract forum clause.

Analysis

Precedents Cited and Their Influence

North Bergen Rex Transportation, Inc. v. Trailer Leasing Co., 730 A.2d 843 (N.J. 1999). The cornerstone for the fee ruling. New Jersey requires courts to measure fee reasonableness by the results achieved. Even where fee-shifting is contractual, provisions are strictly construed and proportionality governs. The court applied this to uphold a $0 fee award where the contractor’s counterclaim yielded only nominal damages versus substantial recovery by the subcontractor.
Perelman v. Perelman, 793 F.3d 368 (3d Cir. 2015). Sets the standard of review: denial of fees reviewed for abuse of discretion, with legal standards reviewed de novo. The panel employed this framework to assess the district court’s application of New Jersey fee law.
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993); General Electric Co. v. Joiner, 522 U.S. 136 (1997); In re Paoli Railroad Yard PCB Litigation, 35 F.3d 717 (3d Cir. 1994). Together, these decisions guide expert admissibility. Rule 702’s reliability inquiry is flexible and focuses on methodology rather than conclusions. Appellate review is deferential (abuse of discretion). The panel leaned on this body of law to reject G&C’s challenges and keep CCR’s engineering expert in.
Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993), and Dupree v. Younger, 598 U.S. 729 (2023). Define the Rule 50 standard: akin to summary judgment, but evaluated on the trial record. A Rule 50 motion succeeds only if no reasonable jury could find for the nonmovant. The court found CCR’s damages proof cleared this threshold.
Pomerantz v. McDonald’s Corp., 843 P.2d 1378 (Colo. 1993). Under Colorado law, damages must be proved with reasonable certainty by a preponderance of the evidence. The Third Circuit applied this state-law metric to affirm stored-material and unbilled-labor awards based on payment applications, corroborative documentation, and testimony.
Blystone v. Horn, 664 F.3d 397 (3d Cir. 2011); Howard Hess Dental Labs., Inc. v. Dentsply Int’l Inc., 602 F.3d 237 (3d Cir. 2010); Max’s Seafood Café v. Quinteros, 176 F.3d 669 (3d Cir. 1999); Addie v. Kjaer, 737 F.3d 854 (3d Cir. 2013). Outline the strict confines of Rule 59(e): not a vehicle to relitigate; reserved for changes in law, new evidence, or manifest error. The court used these to affirm denial of reconsideration.
Atlantic Marine Construction Co. v. U.S. District Court, 571 U.S. 49 (2013). Forum-selection clauses are given controlling weight in all but the most exceptional cases. The Third Circuit cited Atlantic Marine to explain the transfer from Colorado to New Jersey pursuant to the subcontract’s forum clause.
FGS Constructors, Inc. v. Carlow, 64 F.3d 1230 (8th Cir. 1995); U.S. ex rel. Pittsburgh Tank & Tower, Inc. v. G&C Enterprises, Inc., 62 F.3d 35 (1st Cir. 1995); U.S. ex rel. B&D Mechanical Contractors v. St. Paul Mercury Ins. Co., 70 F.3d 1115 (10th Cir. 1995). Circuit consensus that the Miller Act’s venue provision is waivable, supporting enforcement of forum clauses in Miller Act suits—a point the panel endorses in its jurisdictional discussion.
Darbrow v. McDade, 255 F.2d 610 (3d Cir. 1958). Denial of a new trial under Rule 59(a) is reviewed for abuse of discretion—applied here to affirm the trial court’s refusal to retry damages issues.

Legal Reasoning

1) Contractual Attorneys’ Fees and Proportionality (New Jersey Law)

The subcontract’s fee clause provided that the contractor could recover “reasonable attorneys’ fees … as a result of Subcontractor’s default.” G&C argued this entitled it to fees because it technically prevailed—securing a breach finding (with $1 in nominal damages) on its counterclaim. The district court rejected the request and set the “reasonable” fee at $0 in light of the litigation’s overall outcome (CCR’s $589,000 award against G&C versus G&C’s $1 nominal recovery and a fee request exceeding CCR’s total jury award).

The Third Circuit affirmed, applying North Bergen Rex’s prevailing-party/proportionality framework. Even where fee-shifting is contractual, New Jersey courts strictly construe such provisions and focus on reasonableness, measured by “the ultimate results achieved.” If success is “limited” relative to the relief sought, courts must adjust fees to align with the outcome—down to zero if appropriate. The panel also distinguished G&C’s reliance on non-New Jersey, largely unpublished authorities, emphasizing that New Jersey law controls and requires proportionality even in contract-based fee awards.

2) Expert Admissibility Under Daubert/Rule 702

CCR’s engineering expert could not inspect the demolished structure and instead relied on project documents, photographs taken by others, and measurements taken by others at G&C’s direction. G&C argued unreliability on several fronts, including:

the expert’s inability to state opinions to a “reasonable degree of engineering certainty,”
the methodology of extracting “cloud point” data,
the widening of a “tolerance envelope” for masonry wall measurements,
speculative remediation-cost opinions, and
alleged disregard of critical facts.

The Third Circuit agreed with the district court that these objections went to the weight of the testimony, not its admissibility. Rule 702’s reliability inquiry is flexible and aims at whether the testimony rests on “good grounds”—the methods and procedures of science—rather than whether the court agrees with the expert’s conclusions. Given that the opposing expert could cross-examine and present contrary evidence, excluding CCR’s expert would have been unwarranted. No abuse of discretion occurred in admitting the testimony.

3) Sufficiency of Damages Evidence; New Trial

G&C moved for judgment as a matter of law (Rule 50) and a new trial (Rule 59(a)), targeting two components of CCR’s damages: (i) $132,900 in unpaid stored materials from March and April 2019 payment applications and (ii) $266,078.41 for unbilled labor and stored materials. Under Colorado law, damages must be proved with reasonable certainty by a preponderance of the evidence.

The court identified ample trial evidence: the March and April 2019 applications showing specific stored-material amounts ($88,690 and $43,500), testimony from CCR’s CEO that those items remained unpaid, email communications attaching a Continuation Sheet reflecting unbilled stored materials still due, and testimony placing unbilled labor at $120,670.41 based on CCR’s internal records (even though the underlying documents were not themselves introduced). G&C argued that the absence of invoices was fatal, but the court rejected any per se invoice requirement and held a reasonable jury could find the claimed amounts with the requisite certainty on the record presented. For the same reasons, the district court did not abuse its discretion in denying a new trial.

4) Motion to Alter or Amend Judgment (Rule 59(e))

The Third Circuit reiterated Rule 59(e)’s limited scope: it is not a vehicle to relitigate issues but to correct manifest errors of law or fact, account for intervening changes in controlling law, or consider newly discovered evidence. G&C offered none of the qualifying grounds; the panel therefore affirmed the denial of the Rule 59(e) motion.

5) Forum-Selection Clauses and Miller Act Venue

In explaining transfer from Colorado to the District of New Jersey, the panel cited Atlantic Marine’s command that forum-selection clauses ordinarily control. It also aligned with First, Eighth, and Tenth Circuit decisions holding the Miller Act’s venue provision is waivable. The case thus reinforces the expectation that properly drafted forum-selection clauses in subcontracts will be enforced even in Miller Act litigation, though the point appears in the opinion’s jurisdictional discussion and the decision is non-precedential.

Impact

Fee-shifting clauses under New Jersey law. Parties cannot rely on nominal “prevailing” status or breach findings to guarantee fee recovery. Courts will calibrate fees to the true measure of success, which can be zero. Contract drafters should recognize that even expansive fee provisions will be strictly construed, and fee petitions should be proportional and well-justified to avoid a $0 outcome.
Construction experts when the structure is gone. If a building is destroyed (even by a party’s unilateral demolition after a notice to cure), an opponent’s expert may validly opine from secondary sources—project records, photographs, and measurements collected by others—so long as the methodology is sound. Parties should anticipate that gatekeeping will focus on methods; disagreements on conclusions are for the jury. Robust documentation and preservation of measurement data can be outcome-determinative.
Proving stored-materials and unbilled-labor damages. In Colorado contract cases, juries may rely on payment applications, internal continuation sheets, and credible testimony; invoices are not strictly required if the record otherwise supports “reasonable certainty.” This is particularly salient for construction disputes where AIA-style pay applications and job-cost records are common.
Forum selection in Miller Act suits. Expect courts to enforce forum-selection clauses notwithstanding the Miller Act’s venue language. Subcontractors and sureties should evaluate litigation exposure in the chosen forum and negotiate forum clauses with care.
Appellate posture and standards of review. The outcome reflects deference to the trial court across multiple rulings (fees, Daubert, new trial, reconsideration) and a high bar for JMOL. Litigants should build comprehensive trial records and tailor post-trial motions to the exacting standards of Rules 50, 59(a), and 59(e).

Complex Concepts Simplified

Plumbness. In construction, “plumb” means perfectly vertical. A “plumbness” issue refers to a wall or structure deviating from vertical within or beyond allowed tolerances.
Miller Act and venue. The Miller Act allows subcontractors to seek payment from a prime contractor’s bond on federal projects. While it includes a venue provision, courts have held it can be waived via contract. A forum-selection clause will generally control where suit proceeds.
Fee-shifting proportionality (New Jersey). Even when a contract promises fees to a “prevailing” party or upon a “default,” New Jersey courts award only “reasonable” fees, measured by the overall results achieved. Minimal or purely nominal success can justify no fee at all.
Daubert and Rule 702. Judges serve as gatekeepers to ensure expert testimony is reliable and relevant. The focus is on the expert’s principles and methods, not whether the court agrees with the expert’s bottom-line conclusions. Methodological criticisms often go to weight for the jury, not admissibility.
Rule 50 (Judgment as a Matter of Law). After a party has been fully heard, the court may take the case from the jury only if no reasonable jury could find for the nonmoving party, taking the evidence in the light most favorable to that party.
Rule 59(a) (New Trial). Courts may grant a new trial for traditional reasons (e.g., a verdict against the weight of the evidence), but the decision is discretionary and deferential on appeal.
Rule 59(e) (Alter/Amend Judgment). A narrow remedy for correcting manifest errors, addressing intervening changes in law, or considering newly discovered evidence. It is not an opportunity to reargue issues already decided.
“Reasonable certainty” in damages (Colorado). Contract damages must be proven with reasonable certainty, but rigid forms of proof (like invoices) are not mandatory if credible testimony and contemporaneous records substantiate the amounts.

Conclusion

The Third Circuit’s non-precedential decision in Colorado Custom Rock v. G&C Fab-Con offers clear, practical guidance in four areas:

Under New Jersey law, contractual fee awards turn on proportionality to the results achieved. Nominal victory does not compel fees—courts may award $0.
Daubert gatekeeping remains focused on methodology, and experts may rely on secondary sources when direct inspection is impossible, with disputes reserved for cross-examination and jury assessment.
Colorado’s “reasonable certainty” damages standard allows juries to credit payment applications and testimony to award stored-material and unbilled-labor costs without rigid invoice requirements.
Forum-selection clauses will generally govern venue in Miller Act disputes, reflecting Atlantic Marine’s controlling-weight principle and a broad consensus that the Act’s venue provision is waivable.

For construction practitioners, contract drafters, and trial lawyers, the opinion underscores the importance of proportional litigation strategies, rigorous documentation of project costs, thoughtful expert development where site conditions are no longer available, and careful attention to dispute-resolution clauses that may dictate the forum for federal project disputes. While not binding precedent, the decision synthesizes well-settled doctrines in a way that will inform strategy in analogous cases across the Third Circuit and beyond.