United States of America et al v. Travelers Casualty and Surety Company
ORDER granting in part and denying in part 34 Motion for Partial Summary Judgment. Signed by Judge Paul G. Byron on 12/13/2018. (SCM)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
UNITED STATES OF AMERICA and
ARCHITECTURAL COATINGS, INC.,
Case No: 6:17-cv-1984-Orl-40TBS
TRAVELERS CASUALTY AND
This cause comes before the Court on the following:
1. Defendant Travelers’ Motion for Partial Summary Judgment (Doc. 34), filed
September 4, 2018; and
2. Plaintiff’s Memorandum in Opposition to Travelers’ Motion for Partial Summary
Judgment (Doc. 39), filed October 3, 2018.
Upon consideration and review of the record as cited by the parties in their
respective briefs, Defendant Travelers’ Motion for Partial Summary Judgment (Doc. 34)
is due to be granted in part and denied in part.
This case arises out of an allegedly unpaid claim for work performed by
subcontractor Architectural Coating, Inc. (“ACI”) at NASA/John F. Kennedy Space Center
for the Government for which Hensel Phelps Construction Co. (“Hensel Phelps”) served
as the prime contractor. ACI filed suit against Hensel Phelps’ surety, Travelers Casualty
and Surety Company (“Travelers”), pursuant to the Miller Act, 40 U.S.C. § 3131, which
provides a subcontractor who has supplied labor or materials on a federal government
construction project—but has not been paid—with the right to sue the surety who provided
the primary contractor with the statutorily required payment bond.
Factual Background 1
On March 5, 2014, Hensel Phelps entered into General Contract No.
NNK14EA35C (the “Prime Contract”) with the Government to perform all work required
to modify and improve the Vehicle Assembly Building High Bay 3 for Space Launch
System (the “Project”), located at the John F. Kennedy Space Center. (Docs. 1, ¶ 6; 34,
¶ 1). On March 6, 2014, Hensel Phelps, as principal, and Travelers, as surety, executed
and delivered a payment bond (the “Bond”) to the Government, pursuant to the Miller
Act, 40 U.S.C. § 3131. (Docs. 1, ¶ 7; 34 ¶ 2). On March 13, 2015, the Government issued
a unilateral contract action pursuant to FAR 43.103(B) and 52.243-4 and NASA FAR
Supplement 1843.70 for TN-43, TD-07, Design – Replace Accessways with Egress
Ramps. (Doc 34-2 (“Modification 15”)). Modification 15 had a “Not to Exceed Value” of
$7,180,252.00 and required the contractor to “track costs incurred for this action
separately from other contract costs.” (Id.).
On July 6, 2015, ACI contracted with Hensel Phelps to furnish all materials and to
perform all work necessary to complete a portion of the Project. (Doc. 1-2 (the
“Subcontract”)). ACI’s scope of work was limited to fireproofing work added to the Prime
Contract as part of Modification 15. (Doc. 37, ¶ 8).
ACI alleges that it has satisfactorily performed all required work and furnished the
required services, materials, and supplies, and that they have been accepted by Hensel
The facts are adopted from the parties’ joint Statement of Undisputed Facts (Doc. 48).
Phelps and the Government. (Doc. 1, ¶ 9). However, ACI asserts that there remains due
the sum of $376,609.00 from the full Subcontract amount of $646,886.00. (Id. ¶ 10). ACI’s
sole claim is against the Bond posted by Hensel Phelps and delivered to the Government
pursuant to the Miller Act. (Id. ¶ 11). Accordingly, ACI claims that Travelers, as surety, is
obligated to pay according to the terms of the Bond for monies owed under the
Travelers requests partial summary judgment in its favor on the basis that: “1) the
Subcontract between Travelers and ACI was subject to auditing, adjustment, and change
pursuant to an Undefinitized Contract Action; and 2) the amounts due under a payment
bond are defined by the terms of the Subcontract—which limits ACI’s recovery in this
action.” (Doc. 34, p. 1). Therefore, Travelers argues that ACI cannot make a claim based
on the un-audited Subcontract amount of $646,886.00. (Id.).
In support of its motion, Travelers seeks review of the following documents: (1) the
Subcontract (Doc. 1-2); (2) the Prime Contract (Doc. 34-1); and (3) Modification No. 15
(Doc. 34-2). Travelers cites the following provisions from the aforementioned documents:
Section A. The Subcontractor covenants, promises and agrees to
furnish all material and personal property and to diligently and fully
perform all work hereinafter described . . . in strict accordance with
Contract NNK14EA35C between the Contractor and the Owner
entered into March 5, 2014 and hereby made a part of this
Subcontract by reference. (Doc. 1-2, p. 2, § A).
Section B. The Subcontractor agrees to . . . furnish and install all
fireproofing work as required by Contract NNK14EA35C dated
March 5, 2014 . . . Additionally, all RFI’s and approved TN’s prior to
March 26, 2015 are incorporated into the work of this contract. (Doc.
1-2, p. 2, § B).
Section C. The Contractor agrees to pay the Subcontractor for the
full, faithful and complete performance of this Subcontract the sum
of Six Hundred Forty-Six Thousand Eight Hundred Eighty-Six
and No/100 Dollars ($646,886), subject to additions and
deductions for changes agreed upon in writing as hereinafter
set forth or as otherwise authorized hereinafter; and Contractor
further agrees to make all partial and final payments on account
thereof in accordance with the terms and provisions of the
Subcontract Documents including, but without restriction
thereto, the provisions of Section D, Article 5 of this
Subcontract. (Doc. 1-2, p. 2B, § C) (emphasis added).
Section D. General Provisions.
Article 1 - Definitions
The term “Contract Documents” as used herein refers to the
“Contract” between the Owner and the Contractor, together with all
plans, drawings and specifications, including the General Conditions,
Supplemental General Conditions, and Special Conditions,
Addenda, Amendments, and/or instruments of like effect issued by
or on behalf of the Owner as a part of the Contract; together with any
and all other documents or instruments referred to or incorporated in
the aforesaid “Contract” and “Contract Documents” and/or as
identified by the Owner’s Authorized Agent. (Doc. 1-2, p. 3, § D
Article 2 – Compliance with Contract Documents.
The Contract Documents, as defined in the Contract, are
hereby incorporated by reference. Subcontractor will not do, or fail
to do, any act relating to Subcontractor’s work, if by reason of such
act or failure to act, Contractor would be in breach of or fail to comply
with the Contract Documents. (Doc. 1-2, p. 3, § D(2)(a)).
Article 5 – Payment.
When requested by the Contractor to do so, the Subcontractor
shall, within (30) days of the date hereof or at least thirty (30) days
prior to its first application for payment hereunder, submit to the
Contractor a complete and accurate schedule of various parts of the
Subcontractor’s work aggregating the total sum of this Subcontract,
itemized and detailed as required by the Contractor and supported
by such evidence as to its correctness as the Contractor may direct.
This schedule, when approved by the Contractor, shall be used as
the basis for making payments unless it is found to be in error or in
conflict with the procedures or determinations of the Owner or its
representative regarding partial payments by the Contractor. (Doc.
1-2, p. 3, § D(5)(c)) (emphasis added).
No partial payment or certificate therefor shall constitute
acceptance or approval of the Contractor of the work or material for
which the partial payment is made. No partial payment shall
constitute a waiver by the Contractor of any right to require fulfillment
of all terms of the Subcontract Documents. Neither the final payment
nor any partial payment, nor any certificate for either shall constitute
acceptance by the Contractor of defective work or improper materials
or of any element of Subcontractor’s performance determined to be
at variance with the Subcontract Documents. Each partial payment
and the final payment made hereunder, and the total thereof, will be
subject to final audit and adjustment, and the Subcontractor
hereby agrees to reimburse the Contractor in the event of
overpayment, together with any costs and expenses, including
attorneys’ fees, the Contractor may incur in securing recovery
thereof. (Doc. 1-2, p. 3, § D(5)(d)) (emphasis added).
Article 16 – Changes. Contractor may at any time, by written order
and without notice to surety, make changes in the work called for
herein and Subcontractor shall proceed with the work as directed. If
said changes cause an increase or decrease in the cost of
performance or in the time required for performance, an
equitable adjustment shall be made and this Subcontract shall
be modified in writing accordingly. (Doc. 1-2, p. 3, § D(16))
Exhibit 19A - #3. The Prime Contract includes reference to
specific Federal Acquisitions (FAR) Clauses, including variations
such as AFARS and NFS if referenced. . . . The referenced FAR
Clauses are requirements of this Subcontract Agreement. (Doc. 1-2,
Prime Contract Provisions
FAR 2 52.232-5: Limitation because of undefinitized work.
Notwithstanding any provision of this contract, progress payments
shall not exceed 80 percent on work accomplished on undefinitized
contract actions. A “contract action” is any action resulting in a
contract, as defined in FAR Subpart 2.1, including contract
modifications for additional supplies or services, but not including
contract modifications that are within the scope and under the terms
of the contract, such as contract modifications, issues pursuant to
the Changes clause, or funding and other administrative changes.
48 C.F.R. 52.232-5.
The Contracting Officer may, at any time, without
notice to the sureties, if any, by written order designated or indicated
to be a change order, make changes in the work within the general
scope of the contract, including changes [to] specifications [and] the
method or manner of performance of the work. 48 C.F.R. 52.2434(a)(1)-(2). If any change under this clause causes an increase or
decrease in the Contractor’s cost of, or the time required for, the
performance of any part of the work under this contract, whether or
not changed by any such order, the Contracting Officer shall make
an equitable adjustment and modify the contract in writing. 48 C.F.R.
Modification No. 15 Provision
The contractor is hereby directed to proceed with all work associated
with TN-43, TD-07 Design—Replace Accessways with Egress
Ramps. The Not to Exceed value is $7,180,252. The Contractor
shall track costs incurred for this action separately from other
contract costs. (Doc. 34-2, § 14) (emphasis added).
The Miller Act
The Miller Act requires any general contractor awarded a government contract for
more than $100,000 to secure two bonds, a performance bond to protect the government,
and a payment bond “for the protection of all persons supplying labor and material in
FAR stands for “Federal Acquisition Regulations.” The complete text of all FAR
Clauses is available at http://www.arnet.gov/far/. The FAR Clauses also appear in Title
48 of the Code of Federal Regulations.
carrying out the work provided for in the contract.” 40 U.S.C. § 3131(b). The purpose of
the Act is to ensure payment to subcontractors that the prime contractor fails to pay.
Entities providing labor or material on a project for which a payment bond was issued may
bring a civil action in federal court 3 to recover unpaid amounts within ninety days of
completing its work and may collect judgment on the bond for the amount due. 40 U.S.C.
§ 3133; United States ex rel. McKenney’s Inc. v. Gov’t Tech. Servs., LLC, 531 F. Supp.
2d 1375 (N.D. Ga. 2008).
A plaintiff must prove four elements to collect under the Miller Act: 1) that materials
were supplied for work in the particular contract at issue; 2) the supplier is unpaid; 3) the
supplier had a good faith belief that the materials were for the specified work; and 4) the
jurisdictional requisites are met. United States ex. rel. W.W. Gay Mech. Constr., Inc. v.
Walbridge Aldinger Co., 543 Fed. App’x. 937 (11th Cir. 2013). 4
The Miller Act, remedial in nature, is “entitled to a liberal construction and
application . . . in order to properly effectuate the Congressional intent to protect those
whose labor and materials go into public projects.” J.W. Bateson Co. v. U.S. ex rel. Bd.
of Trs., 434 U.S. 586, 594 (1978); United States ex rel. Carlson v. Cont’l Cas. Co., 414
F.2d 431 (5th Cir. 1969).
STANDARD OF REVIEW
The Miller Act requires that such suits be brought “in the name of the United States
for the use of the person bringing the action.” 40 U.S.C. § 3133(b)(3)(A).
“Unpublished opinions are not controlling authority and are persuasive only insofar as
their legal analysis warrants.” Bonilla v. Baker Concrete Const., Inc., 487 F.3d 1340,
1345 (11th Cir. 2007).
A court may only “grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial burden of “citing to
particular parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations, stipulations . . . , admissions,
interrogatory answers, or other materials” to support its position that it is entitled to
summary judgment. Fed. R. Civ. P. 56(c)(1)(A). “The burden then shifts to the nonmoving party, who must go beyond the pleadings, and present affirmative evidence to
show that a genuine issue of material fact exists.” Porter v. Ray, 461 F.3d 1315, 1320
(11th Cir. 2006). “The court need consider only the cited materials” when resolving a
motion for summary judgment. Fed. R. Civ. P. 56(c)(3); see also HRCC, LTD v. Hard
Rock Café Int’l (USA), Inc., 703 F. App’x 814, 816–17 (11th Cir. 2017) (per curiam)
(holding that a district court does not err by limiting its review to the evidence cited by
the parties in their summary judgment briefs).
An issue of fact is “genuine” only if “a reasonable jury could return a verdict for
the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In
determining whether a genuine dispute of material fact exists, the Court must read the
evidence and draw all factual inferences therefrom in the light most favorable to the nonmoving party and must resolve any reasonable doubts in the non-movant’s favor.
Skop v. City of Atlanta, Ga., 485 F.3d 1130, 1136 (11th Cir. 2007). Summary judgment
should only be granted “[w]here the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party.” Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
Contract interpretation presents questions of law appropriate for summary
judgment. Saregama India Ltd. V. Mosley, 635 F.3d 1284, 1290 (11th Cir. 2011); see also
Keybank Nat’l Ass’n v. Willoughby, No. 2:09-cv-662, 2010 WL 3212086, at *3 (M.D. Fla.
Aug. 12, 2010). “In a case involving contract interpretation, summary judgment is
appropriate ‘when the agreement is totally unambiguous, or when any ambiguity may be
resolved by applying the rules of construction to situations in which the parol evidence of
the parties’ intentions is undisputed or non-existent.’” Dew Seven, LLC v. Big Lots Stores,
Inc., 354 Fed. App’x 415, 416 (11th Cir. 2009) (per curiam).
Travelers argues that the Subcontract was never a fixed-price contract but rather
always subject to definitization, adjustment, and audit. (Doc. 34, p. 9). Specifically,
Travelers moves for the Court to find that the amounts due and owing to ACI are subject
to the provisions regarding modification/change appearing in: (1) the Subcontract (Doc.
1-2); (2) the Prime Contract (Doc. 34-1); and (3) Modification No. 15 (Doc. 34-2).
Accordingly, Travelers contends that ACI cannot make a claim against Travelers based
on the un-audited $646,886.00 Subcontract amount. (Doc. 34, p. 1).
Travelers argues the terms of the Subcontract provide that the payment amount
was subject to definitization, adjustment, and audit. (Doc. 34, p. 8). First, Travelers cites
Section C of the Subcontract, which states the Contractor agrees to pay the
Subcontractor the amount of $646,886.00 “subject to additions and deductions for
changes agreed upon in writing as hereinafter set forth or as otherwise authorized
hereinafter . . . and agrees to make all partial and final payments . . . in accordance with
the terms and provisions of the Subcontract Documents including . . . the provisions of
Section D, Article 5.” (Id.; Doc 1-2, p. 2B). Section D, Article 5 sets forth payment
procedures and includes the following provisions: (1) “[w]hen requested by the Contractor
to do so, the Subcontractor shall . . . submit to the Contractor a complete and accurate
schedule of values of the various parts of the Subcontractor’s work aggregating the total
sum of this Subcontract, itemized and detailed,” (Doc. 1-2, § C(5)(c)) (emphasis added);
and (2) “[e]ach partial payment, and the final payment made hereunder, and the total
thereof, will be subject to final audit and adjustment.” (Doc. 1-2, § C(5)(d)) (emphasis
added)). Second, Travelers cites Section C, Article 16 which permits the Contractor to
make changes at any time by written order and to adjust the cost of performance
accordingly. (Doc. 34, p. 8; Doc. 1-2, § C(16)). Therefore, Travelers—standing in the
shoes of Hensel Phelps as surety—asks the Court to find that the amounts due and owing
to ACI are subject to the foregoing clauses regarding audits and changes to the
In response, ACI avers that the Subcontract was a lump sum, fixed-price contract
whereby ACI would be paid a total amount of $646,886.00 for its work on the Project.
(Doc. 39, ¶ 8). First, ACI states that the Subcontract did not contain any unit pricing or
line-item prices; it only listed the amount of $646,886.00, which establishes it is a lump
sum contract. (Id. ¶ 9). Second, ACI asserts that there were no changes in the scope of
work to justify changes to the Subcontract amount, and ACI did not agree to any such
changes. (Id. at p. 10). Third, ACI contends that the parties “intended and have
consistently acknowledged that the [S]ubcontract was a lump sum contract” and cites to
communication between the parties as evidence of this intent. (Id. at p. 9–10).
The Court finds that the Subcontract contains unambiguous language which shows
the Subcontract payment amount was subject to definitization, adjustment, and audit,
rather than being a fixed-price amount. “[W]hen construing a contract, a court should look
to the whole contract.” In re Yates Dev., Inc. v. Old Kings Interchange, Inc., 256 F.3d
1285, 1290 (11th Cir. 2001). Under general principles of contract interpretation, “a
document should be read to give effect to all its provisions and to render them consistent
with each other.” In re FFS Data, Inc., 776 F.3d 1299, 1305 (11th Cir. 2015). ACI argues
the Subcontract was a lump sum, fixed-price contract for $646,886.00 because the
Subcontract lists the amount of $646,886.00 without including unit pricing or line-item
prices. (Doc. 39, ¶ 9). However, the Court cannot look to the $646,886.00 in isolation.
Instead, the Court must “look at the whole contract,” including the provisions regarding
changes, audits, and final adjustments. See In re Yates, 256 F.3d at 1290; (Doc. 1-2, §
C(5)(c)–(d)). Section C of the Subcontract explicitly states the $646,866.00 payment is
“subject to additions and deductions . . . in accordance with . . . the provisions of Section
D, Article 5.” (Id. at p. 2B). Section D, Article 5 mandates that each payment “will be
subject to final audit and adjustment” and requires ACI to submit an “itemized and
detailed” schedule of values for payment when requested by the Contractor. (Id. §
C(5)(c)–(d)). Similarly, Section C, Article 16 permits the Contractor to modify the scope
of work and to adjust performance accordingly. (Id. § C(16)). Reading these provisions of
the Subcontract together, the Court finds that the plain language clearly and
unambiguously subjects the $646,886.00 payment amount to definitization, adjustment,
ACI’s second argument presents questions of fact relating to whether there were
any changes to the scope of work and if so, whether those change were agreed to in
writing. (Doc. 39, p. 10). However, the Motion for Partial Summary Judgment is on the
narrow issue of whether the amounts allegedly due and owing to ACI are subject to the
contract clauses regarding modification and/or change to the Subcontract amount. (Doc.
34, p. 9). Therefore, the Court will not address ACI’s second argument.
ACI’s third argument regarding intent relies solely on communications outside the
Subcontract, such as emails and letters between the parties. (Doc. 39, p. 10). “While it is
hornbook contract law that a court ‘may rely on parol evidence to explain or clarify an
ambiguity’ in a contract, where the essential terms of a contract are unambiguous the
court ‘will not look beyond the four corners of the document to determine the parties’
intent.’” Ellinger v. United States, 470 F.3d 1325, 1338 (11th Cir. 2006). Accordingly,
given the unambiguous terms regarding auditing and changes, the Court will not consider
ACI’s third argument. (Doc. 39, ¶ 9–10).
Prime Contract and Modification 15 Terms
Travelers contends that the Subcontract incorporated the Prime Contract and any
addenda, and specifically requests the Court determine that the Subcontract incorporated
by reference FAR 52.232-5, FAR 52.243-4, and Modification 15. (Doc. 34, p. 6). Travelers
avers that the Government invoked its rights under FAR 52.232-5 and FAR 52.243-4 to
unilaterally issue Modification 15—an undefinitized contract action 5—which required the
“Undefinitized contract action” means a unilateral or bilateral contract modification or
work/task order in which the final price or estimated cost and fee have not been
negotiated and mutually agreed to by NASA and the contractor. 48 C.F.R. 1843.7001.
contractor to “track costs incurred for this action.” (Id.). Notably, as a result of Modification
15, Hensel Phelps entered into the Subcontract with ACI, whereby ACI agreed to furnish
and install all fireproofing work required by Modification 15. (Docs. 37-1, ¶ 5; 39, ¶ 3).
Therefore, Travelers argues that ACI is bound by Modification 15’s requirement that all
costs be tracked and definitized. (Id.).
The Prime Contract specifically designates FAR 52.232-5 and FAR 52.243-4 as
clauses that are “incorporated by reference.” (Doc. 34-1, p. 51). FAR 52.243-4 states that
the Government “may, at any time, without notice to the sureties, if any, by written order
designated or indicated to be a change order, make changes in the work within the
general scope of the contract, including changes to” specifications and the method or
manner of performance of the work. 48 C.F.R. 52.243-4(d). “If any change under [FAR
52-243-4] causes an increase or decrease in the Contractor’s cost of, or the time required
for, the performance of any part of the work under this contract . . . the [Government] shall
make an equitable adjustment and modify the contract in writing.” (Id.). FAR 52.232-5
further provides for a limitation to payment for undefinitized work. 48 C.F.R. 52.232-5.
Travelers contends that pursuant to these regulations, the Government issued
Modification 15–an undefinitized contract action that changed the Prime Contract’s, and
therefore the Subcontract’s payment terms. (Doc. 34, p. 6).
Travelers argues that the Prime Contract, and therefore FAR 52.232-5, FAR
52.243-4, and Modification 15, were incorporated into the Subcontract by the following
Subcontract provisions: (1) Section D, Article 2(a) which states that “The Contract
Documents, as defined in [Article 1(b)], are hereby incorporated by reference” (Doc. 1-2,
p. 3, § D(2)(a)); (2) Section D, Article 1(b) which defines “Contract Documents” as the
“‘[Prime] Contract’ between the [Government] and the Contractor” including addenda,
amendments, or instruments issued by the Government as a part of the [Prime] Contract;
“together with all other documents referred to or incorporated” in the Prime Contract (Doc.
1-2, p. 3, § D(1)(b)); (3) Exhibit 19A(3) which states that FAR Clauses referenced in the
Prime Contract are “requirements of this Subcontract” (Doc. 1-2, Exhibit 19A(3)); (4)
Section A which requires ACI to perform all work in strict accordance with the Prime
Contract (Doc. 1-2, p. 2, § A); and (5) Section B which states that “all RFI’s and approved
TN’s prior to March 26, 2015 are incorporated into the work of this contract.” (Doc. 1-2, p.
2, § B).
In response, ACI argues that the only provisions that can be incorporated by
reference are those provisions related to scope, quality, character, and manner of the
work. (Doc. 39, p. 7); see Edward E. Morgan Co. v. United States, 230 F.2d 896 (5th Cir.
1956). 6 ACI explains that FAR 52.232-5, FAR 52.243-4, and Modification 15 cannot be
incorporated by reference because they deal with payment terms. (Doc. 39, p. 7). Further,
ACI contends that the general incorporation-by-reference language relied on by Travelers
incorporates the Prime Contract for the limited purpose of specifying the work to be
performed, and that no other provision or federal regulation was specifically incorporated.
(Id. at p. 9). Accordingly, ACI argues that FAR 52.232-5, FAR 52.243-4, and Modification
15 are not incorporated into the Subcontract and cannot alleviate Travelers from fulfilling
its payment obligations under the Subcontract. (Id.).
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the
Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit
handed down before October 1, 1981.
It is a general principle that public contracts are “strictly construed and nothing is
added by implication.” United States v. R.M. Wells Co., 497 F. Supp. 541, 544 (11th Cir.
1980). This principle is critical in the context of Miller Act cases given the Act’s purpose
“to provide security for those who furnish labor and material in the performance of
government contracts.” Id. (quoting Liebman v. United States, 153 F.2d (9th Cir. 1946)).
“[C]ourts are reluctant to incorporate into the subcontract provisions of the prime contract
which adversely affect the Miller Act rights of the subcontractor.” R.M. Wells Co., 497 F.
Supp. at 544. Courts therefore routinely require an express provision to incorporate
specific prime contract terms into a subcontract. Id.; see also H.W. Caldwell & Son, Inc.
v. United States, 407 F.2d 21 (5th Cir. 1969) (administrative remedies in a dispute clause
of prime contract held not incorporated into Miller Act subcontract without an express
provision to that effect in the subcontract). Incorporation by general reference only
incorporates the quality and manner of the subcontractor’s work from the prime contract,
not the rights and remedies he may have against the prime contractor. H.W. Caldwell,
407 F.2d at 23; see also United States v. Interstate Landscaping Co., 37 F.3d 1500 (6th
Cir. 1994) (“Historically, courts have viewed incorporation by general reference with
skepticism in Miller Act cases. . . . The Miller Act establishes specific statutory rights
intended to protect subcontractors, and courts are reluctant to conclude that a
subcontractor abandoned those rights absent language of specific incorporation.”).
Here, no express provision is made incorporating FAR 52.232-5, FAR 52.243-4,
or Modification 15 into the Subcontract. Rather, the Subcontract includes general
incorporation-by-reference language that incorporates the Prime Contract in its entirety.
(Doc. 1-2, p. 3, § D(2)(a)). Taken together, the above cases instruct that the incorporation-
by-reference provisions incorporate the FAR Clauses and Modification 15 only if they
refer to the quality and manner of ACI’s work. See H.W. Caldwell, 407 F.2d at 23. The
Court finds that FAR 52.243-4 and Modification 15 are incorporated, but FAR 52.232-5 is
not. FAR 52.243-4 authorizes the Government to “make changes in the work within the
general scope of the contract, including changes [to] specifications [and] the method or
manner of performance of the work.” 48 C.F.R. 52.243-4(d) (emphasis added).
Modification 15, issued by the Government pursuant to FAR 52.243-4, makes changes
to the manner of work by adding the additional project to “Replace Accessways with
Egress Ramps.” (Doc. 37-1, ¶ 4). The provision within Modification 15 stating that the
contractor “shall track costs occurred for this action” is also incorporated because it
relates to the manner in which the work was to be completed. However, the Court finds
that FAR 52.232-5 is not incorporated because it only discusses “limitation of payment”
and bears no relation to the quality or manner of subcontract work. 48 C.F.R. 52.232-5.
Accordingly, it is ORDERED AND ADJUDGED that Defendant’s Motion for Partial
Summary Judgment (Doc. 34) is GRANTED IN PART and DENIED IN PART as provided
DONE AND ORDERED in Orlando, Florida on December 13, 2018.
Copies furnished to:
Counsel of Record
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