Clifford & Galvin v. Endicott Constructors Corporation et al

Filing 13

Chief Judge Mark L. Wolf: ORDER entered. MEMORANDUM AND ORDER In view of the foregoing, it is hereby ORDERED that: 1. Defendants' motion to dismiss, or in the alternative to stay the case and compel arbitration (Docket No. 9) is ALLOWED in part and DENIED in part. Specifically, the motion to stay is ALLOWED and this case is STAYED; the motion to dismiss is DENIED; and the request for an order compelling arbitration is DENIED without prejudice. 2. The parties shall, within 30-days of a decision in the arbitration, report whether this case should be dismissed and, if not, propose a schedule for resolving the issue(s) to be litigated.(Hohler, Daniel)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
UNITED STATES OF AMERICA f/b/o
CLIFFORD & GALVIN CONTRACTING,
LLC,
Plaintiff,
v.
ENDICOTT CONSTRUCTORS, CORP.
and WESTERN SURETY CO.
Defendants

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C.A. No. 12-10152-MLW

MEMORANDUM AND ORDER
WOLF, D.J.

December 13, 2012

Plaintiff Clifford & Galvin Contracting, LLC ("Clifford")
brought this action against defendants Endicott Constructors, Corp.
("Endicott") and Western Surety Co. ("Western") in part, pursuant
to the Miller Act, 40 U.S.C. §3131 et seq. Plaintiff entered into
a subcontracting agreement (the "Agreement") with Endicott, the
general contractor on a public construction project. Western is the
Miller Act surety to Endicott.
Defendants

have

jointly

moved

to

dismiss

or,

in

the

alternative, to stay the proceeding and compel arbitration pursuant
to the arbitration clause in the Agreement. Plaintiff does not
oppose staying the case, but opposes defendants' motion to dismiss
and the request for an order compelling arbitration. For the
reasons stated below, the motion to dismiss is being denied, the
motion to stay pending arbitration is being allowed, and the
request for an order compelling arbitration is being denied without
prejudice.

The Agreement has a clause requiring arbitration of disputes
between Clifford and Endicott, which the parties agree is governed
by the Federal Arbitration Act ("FAA"), 9 U.S.C. §§1-16. The FAA
provides

that

written

arbitration

agreements

are

"valid,

irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract." 9 U.S.C. §2.
Section 3 of the FAA further provides that, upon application of one
of the parties, federal courts must stay any suit in which any
issue is referable to arbitration under a written agreement. See
9 U.S.C. §3; see also Volt Info. Sciences, Inc. v. Bd. of Trs. of
Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989). Courts may
go beyond a stay, however, and dismiss the proceeding "when all of
the issues before the court are arbitrable." Bercovitch v. Baldwin
Sch., Inc., 133 F.3d 141, 156 n.21 (1st Cir. 1998).
The parties do not dispute that the Agreement between Clifford
and Endicott falls under the ambit of §3. Accordingly, the court
must allow defendants' motion to stay the case pending arbitration.
Dismissal, however, is not an appropriate remedy in this case.
Plaintiff's claims against Western, a Miller Act surety which is
not party to the Agreement, are not arbitrable and may only be
brought before a federal court. See 40 U.S.C §270b; United States
ex rel. Portland Constr. Co. v. Weiss Pollution Control Corp., 532
F.2d 1009, 1012 (5th Cir. 1976) (subcontractor may only seek Miller
Act remedy against surety in federal court). However, the claim

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against the surety may only need to be litigated if Clifford
prevails against Endicott in the arbitration. Accordingly, such
proceedings brought against a contractor and surety under the
Miller Act, are typically stayed pending arbitration. See United
States ex rel. Wrecking Corp. of America v. Edward R. Marden Corp.,
406 F.2d 525 (1st Cir. 1969); see e.g. United States ex rel.
Maverick Constr. Mgmt. Servs, Inc. v. Consigli Constr. Co., 2012 WL
2001619, at *6 (D. Me. Jun. 5, 2012). Therefore, the court is
allowing the motion to stay and denying the motion to dismiss.
In addition, an order compelling arbitration is premature.
Section 4 of the FAA provides that a "party aggrieved by the
alleged failure, neglect, or refusal of another to arbitrate under
a written agreement for arbitration may petition" for an order
directing

arbitration.

9

U.S.C.

§4.

Defendants

have

not

demonstrated that plaintiff has failed, neglected or refused to
participate in arbitration. To the contrary, plaintiff has not
opposed the motion to stay and asserts that it only initiated the
instant action to preserve its Miller Act claims, which are subject
to a one-year statute of limitations. The court expects that
plaintiff will proceed to arbitration in the manner prescribed by
the Agreement. The denial of defendants' request is, however,
without prejudice to reconsideration if plaintiff proves unwilling
to comply with the arbitration clause in the Agreement.

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In view of the foregoing, it is hereby ORDERED that:
1. Defendants' motion to dismiss, or in the alternative to
stay the case and compel arbitration (Docket No. 9) is ALLOWED in
part and DENIED in part. Specifically, the motion to stay is
ALLOWED and this case is STAYED; the motion to dismiss is DENIED;
and the request for an order compelling arbitration is DENIED
without prejudice.
2. The parties shall, within 30-days of a decision in the
arbitration, report whether this case should be dismissed and, if
not, propose a schedule for resolving the issue(s) to be litigated.

/s/ Mark L. Wolf
UNITED STATES DISTRICT JUDGE

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