GLF Construction Corporation v. FEDCON Joint Venture et al

Filing 25

ORDER & REASONS granting #8 Motion to Stay. This matter is administratively closed pending the stay. Signed by Judge Sarah S. Vance on 3/7/2017. (mmm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA for
the use and benefit of GLF
CONSTRUCTION CORPORATION
VERSUS

CIVIL ACTION

NO. 16-13022

FEDCON JOINT VENTURE, ET AL

SECTION “R” (4)

ORDER AND REASONS
Before the Court is the motion of FEDCON Joint Venture, David
Boland, Inc., JT Construction Enterprise Corporation, and Western Surety
Company to stay pending the completion of contractual dispute resolution
procedures.1 For the following reasons, the Court GRANTS defendants’
motion.

I.

BACKGROUND
This dispute arises out of a construction contract between the United

States, by and through the US Army Corps of Engineers (USACE), and
defendant FEDCON, a joint venture consisting of David Boland, Inc. and JT
Construction.2 On or about October 18, 2013, FEDCON was awarded a

1
2

R. Doc. 8.
R. Doc. 1 at 1-3 ¶¶ 2, 9.

contract (the Prime Contract) to perform all work on the “Resilient Features”
project.3 The contract called for repair and raising of substandard levees
along a section of the Mississippi River in Plaquemines Parish, Louisiana. 4
As required by the Prime Contract, FEDCON executed and delivered to
USACE a Miller Act payment bond, under which FEDCON and Western
Surety bound themselves to pay the sum under the bond. 5
On or about January 22, 2014, GLF Construction entered into a
subcontract with FEDCON to furnish labor, materials, and services on the
project and complete a portion of FEDCON’s scope of work under the Prime
Contract for the agreed price of $10,517,859.50. 6 In May of 2016, FEDCON
terminated the subcontract with GLF Construction. 7
On July 20, 2016, GLF Construction filed this Miller Act lawsuit
alleging that FEDCON breached its subcontract with GLF Construction.8
GLF Construction seeks payment under the Miller Act Bond, and also brings
claims for breach of contract and unjust enrichment.9 On October 19, 2016,
the defendants filed a motion to stay, arguing that GLF Construction is

3
4
5
6
7
8
9

Id.
Id.
Id. ¶ 10; R. Doc. 1-1 at 1 (Miller Act Payment Bond).
R. Doc. 1 at 3-4 ¶ 11.
Id. at 11 ¶ 35.
Id. at 12 ¶ 37.
Id. at 12-16.
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bound by the terms of the subcontract with FEDCON to stay any litigation
until the completion of the dispute resolution procedures contained in the
subcontract. 10

GLF Construction filed a response in opposition,11 and

defendants replied.12

II.

DISCUSSION
The Court has “broad discretion to stay proceedings as an incident to

its power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706
(1997) (citation omitted); see also United States v. Colomb, 419 F.3d 292,
299 (5th Cir. 2005); Ali v. Quarterman, 607 F.3d 1046, 1049 (5th Cir. 2010)
(recognizing that “district courts have inherent authority to control their
dockets”). Further, in the decision of whether a stay should be granted, the
Court is guided by the factors of judicial economy and convenience for the
Court, for counsel, and for the parties. See Landis v. N. Am. Co., 299 U.S.
248, 254 (1936). How this “can best be done calls for the exercise of
judgment, which must weigh competing interests and maintain an even
balance.” In re Beebe, 56 F.3d 1384, 1995 WL 337666, at *2 (5th Cir. 1995)

10
11
12

R. Doc. 8-1 at 1-2.
R. Doc. 12.
R. Doc. 19.
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(quoting Landis, 299 U.S. at 254-55); see also Kansas City So. R. Co. v.
United States, 282 U.S. 760, 763 (1931).
In their motion to stay, defendants argue that the subcontract between
FEDCON and GLF Construction explicitly provides for a stay of all litigation
against FEDCON and Western Surety in Paragraph 23.13 Paragraph 23
states:
If the Prime Contract incorporated herein is one for which the
Contractor has provided any bond(s) pursuant to 40 U.S.C. §
270a, the “Miller Act,” . . . then the Subcontractor expressly
agrees to stay any action or claim under this Subcontract
Agreement against the Contractor and against the Contractor’s
surety and its Payment Bond and Performance Bond pending the
complete and final resolution of the Prime Contractor’s
contractual remedial procedure or the Subcontract Agreement’s
mediation procedure, as required by Paragraph 13, above. 14
Paragraph 13, in turn, explains the applicable dispute resolution
provisions. It reads:
A.
The contractual remedial procedure described in Section
00700 – Contractual Clauses, 52.233-1 Disputes. (Jul 2002) of
the Prime Contract relating to claims for which [USACE] may be
responsible is specifically incorporated herein by reference and
made a part of this Subcontract Agreement. The term “claim” as
utilized in this paragraph shall include any request for monetary
or other relief, claim, appeal, or action arising from the
R. Doc. 8-1 at 2-3. Defendants’ motion also argues that a stay is
proper because of a concurrent lawsuit filed by FEDCON against GLF
Construction pending in state court in Florida. Id. at 3-4. The state court
litigation has been dismissed on forum non conveniens grounds, and
therefore this argument is moot. See R. Doc. 24-1 at 12.
14
R. Doc. 1-2 at 10 ¶ 23.
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subcontractor for which [USACE] has, or may have,
responsibility. The Subcontractor shall first pursue and fully
exhaust said procedure before commencing any other action
against the Contractor or its surety for any claims it may have
arising out of its performance of the Work herein. Upon the
Subcontractor’s written request, the Contractor agrees to
prosecute all claims submitted by the Subcontractor under the
contractual remedial procedure of the Prime Contract on behalf
of, and to the extent required by, the Subcontractor. . . . Final
determination of the Subcontractor’s claim(s) by the appropriate
board or court shall be final and binding on the Subcontractor
and the Contractor shall have no further liability, responsibility,
or obligation to the Subcontractor except as may be otherwise
provided in this Subcontract Agreement. 15
GLF Construction does not dispute the validity or enforceability of
Paragraph 13A. Instead, it argues that Paragraph 13A is not applicable
because none of its claims against FEDCON “relate[s] to claims for which the
Owner, the Corps of Engineers, may be responsible.”16 GLF Construction
argues that defendants’ motion neither asserts that USACE is responsible for
GLF Construction’s claims, nor contains evidence to support that
contention.17 First, the language of the Subcontract establishes that as long
as USACE “has, or may have, responsibility” for GLF Construction’s breach
of contract and Miller Act claims, GLF Construction is contractually
obligated to stay any litigation pending completion of the applicable dispute

15
16
17

Id. at 7 ¶ 13.
R. Doc. 12 at 4.
Id. at 3.
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resolution procedures. 18 The word “may” indicates that the liability or
responsibility of USACE need not be established for Paragraph 13A to apply,
but instead the responsibility or liability need only be a possibility. See May,
Black’s Law Dictionary (10th ed. 2014) (defining may as “to be a possibility”);
Merriam-Webster Dictionary Online, www.merriam-webster.com (last
visited February 6, 2017) (defining may as “used to indicate possibility or
probability”).
GLF Construction’s claims against defendants arise out of defendants’
alleged failure to construct a temporary access road and two temporary work
platforms. 19 According to GLF Construction, FEDCON was responsible for
this construction. 20 But the subcontract itself does not make clear that the
road and work platform is FEDCON’s responsibility.

Instead, the

subcontract merely notes that the access road and work platforms “will be
performed by others.”21 Further, defendants submit the declaration of David
Boland, president of David Boland, Inc., in which he attests that USACE has
acknowledged at least partial responsibility for the conditions that form the

R. Doc. 1-2 at 7 ¶ 13 (emphasis added); see also id. (“The
contractual remedial procedure described in . . . the Prime Contract relating
to claims for which the Owner may be responsible.”) (emphasis added).
19
R. Doc. 1 at 6-7 ¶¶ 19-24.
20
R. Doc. 1 at 5 ¶ 15.
21
R. Doc. 1-2 at 15.
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18

basis of GLF Construction’s claims. 22

In support of this attestation,

defendants also submit an April 7, 2016 letter from USACE to FEDCON in
which USACE “acknowledges that the field surveyed locations of the
protected side construction easement . . . differ from the layout shown on
contract drawing C-102.”23 Although GLF Construction contests Boland’s
declaration with a declaration of its own, 24 it did not address the April 2016
letter from USACE, and it has not negated the plausibility of USACE’s
responsibility. Therefore Paragraph 13A applies, and GLF Construction is
contractually bound to stay this litigation pending the completion of the
applicable dispute resolution procedures. See United States v. Bhate Envtl.
Assocs., Inc., No. 15-146, 2016 WL 544406, at *3 (D. Alaska Feb. 9, 2016) (in
contractor-subcontractor breach of contract Miller Act dispute, finding it
“entirely plausible that some, if not all, of the impacts alleged by [plaintiff]
were the result of actions taken by the [Government]”).
This finding is buttressed by other court decisions staying similar
Miller Act proceedings based on either similar or identical language covering
stays in the subcontract. For example, in United States v. David Boland,

R. Doc. 19-1 at 1 ¶ 2; Id. at 2-4 ¶¶ 5-12.
Id. at 32 (Letter from USACE acknowledging drawing
discrepancies).
24
R. Doc. 24-1.
7
22
23

Inc., Target Construction, a subcontractor, sued David Boland, Inc. under
the Miller Act, as well as for breach of contract. Boland and the surety moved
to stay the case based the language in its subcontract with Target, language
identical to the subcontract at issue here. No. 11-2813, 2014 WL 345293, at
*1-2 (E.D. La. Jan. 30, 2014). Relying on the language in Paragraph 13A and
23 of the subcontract, the court stayed the matter because “these provisions
are clear and unambiguous and must be enforced.” Id. at 2. Other courts
stayed Miller Act claims in similar situations with similar contract language
at issue.

See, e.g, Gabriel Fuentes Jr. Const. Co. v. Carter Concrete

Structures, Inc., No. 14-1473, 2014 WL 7046519, at *5-7 (D.P.R. Dec. 12,
2014) (granting stay of Miller Act proceedings between general contractor
and subcontractor based on stay provision in subcontract); Bhate Envtl.,
2016 WL 544406, at *3 (same); see also United States v. Balfour-Walton,
No. 16-2484, 2016 WL 7229269, at *2-4 (D. Kan. Dec. 14, 2016) (vacating
Magistrate Judge’s order denying request for stay in contractor-subcontract
Miller Act dispute because Magistrate Judge did not properly consider
language in subcontract when deciding if stay was appropriate).
Further, the Court finds that judicial economy will be served, and that
parties will not be unduly prejudiced, by a stay. In terms of judicial economy,
the use of the contract dispute resolution procedure may resolve all or part
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of the dispute, making further proceedings limited or unnecessary. See Bhate
Envtl., 2016 WL 544406, at *4 (finding that stay is supported by judicial
economy). In terms of prejudice, while completion of the dispute resolution
procedure will undoubtedly delay this matter, the delay was a reasonably
foreseeable event given the language of the subcontract, and it does not rise
to a level sufficient to deny the stay. See id.; Gabriel Fuentes, 2014 WL
7046519, at *6 (rejecting argument of prejudice based on delay). Further, if
the dispute resolution procedure does not resolve GLF Construction’s claims,
its Miller Act claims will not be barred or waived. See, e.g., United States,
for & on behalf of Portland Const. Co. v. Weiss Pollution Control Corp., 532
F.2d 1009, 1012 (5th Cir. 1976); United States v. Dick/Morganti, No. 072564, 2007 WL 3231717, at *3-4 (N.D. Cal. Oct. 30, 2007) (noting that stay
pending contractual dispute resolution procedure will not waive
subcontractors’ right to bring subsequent Miller Act claim).
Based on the language in the subcontract and the above caselaw, the
Court grants defendants’ motion to stay the proceedings pending the
completion of the dispute resolution procedure in Paragraph 13A.

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III. CONCLUSION
For the foregoing reasons, defendants’ motion to stay is GRANTED
pending the completion of the contractual dispute resolution procedure.
This matter is administratively closed pending the stay.

7th
New Orleans, Louisiana, this _____ day of March, 2017.

_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

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