Prime Steel Erecting, Inc v. Williams Building Company, Inc. et al

Filing 57

Judge Mark L. Wolf: ORDER entered. MEMORANDUM AND ORDER. (Bartlett, Timothy)

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

UNITED STATES OF AMERICA,
flulblo PRIME STEEL ERECTING,
INC. ,
Plaintiff,

v.

)
)
)
)
)

C.A. No. 13-CV-11920-MLW

)
)

WILLIAMS BUILDING COMPANY,
INC. ,
and
INTERNATIONAL FIDELITY
INSURANCE COMPANY,
Defendants.

)
)

)
)

)
)

MEMORANDUM AND ORDER
WOLF, D.J.

September 29, 2015

On August 9, 2013, Prime Steel Erecting, Inc.
a

complaint

("Williams")
("IFIC").

against
and

the

Williams

International

Building

Fidelity

("Prime") filed
Company,

Insurance

Inc.

Company

Prime alleged that Williams and IFIC owed Prime payment

for work on a federal construction project.

On October 4, 2013,

Williams filed its first motion to stay the proceedings pending
mediation

and

complaint

against

Inc.

("VHB")

arbitration.
two

Williams

subcontractors,

and Unistress Corporation

also

filed

Vanasse

a

third-party

Hangen

("Unistress")

Brustlin,
related to

the same construction project.

The parties have since filed many

counterclaims and crossclaims.

On April 10, 2014, Prime stipulated

to dismissal of its original complaint.

However, Williams's third-

party complaint, the counterclaims and crossclaims concerning it,

and

Unistress's

fourth-party

complaint

against

IFIC

remain

pending.
On April 25, 2014, Williams moved either to dismiss for lack
of subject matter jurisdiction or to stay the litigation pending
arbitration.

For the reasons explained below, Williams's motion

to stay pending arbitration is being allowed.

Williams's motion

to dismiss for lack of subject matter jurisdiction is being denied
without prejudice subject to possible refiling after arbitration.
1.

BACKGROUND
A.

Factual Allegations

The undisputed facts include the following.
out

of

a

federal

neighborhood
government

of
hired

construction

Boston,

project

as

the

construction of a parking garage.
relevant

subcontractors,

subcontracted with Prime.
Williams

as

required by

in

the

In

2011,

Massachusetts.

Williams

VHB

This case arises

prime

Jamaica
the

contractor

Plain
federal

for

the

Williams contracted with two
and

Unistress.

Unistress

IFIC provided surety bonds on behalf of
federal

law.

The

project

ran behind

schedule and over budget, leading to disputes among the parties.
In its third-party complaint, Williams alleged the following.
Williams hired VHB to "perform layout services for the project,"
but VHB "failed to properly perform its surveying duties, resulting
in the foundation for the new garage being located closer to the
2

existing garage" than had been specified in project plans.
No.

17 at

~~16-17.

In its answer, VHB denied these allegations.

~~16-17.

Docket No. 24 at
Williams

Docket

further

alleged that

its

contract with Unistress

required Unistress to "perform measurements at the Project site
before

fabricating

the

precast

concrete

Unistress did not perform these measurements.
~~31-32.

panels,"

Docket No.

but

17 at

After learning that the foundation had been laid closer

to the old garage than planned,

Unistress failed to "modify the

panels in its shop prior to transporting them to the Proj ect site."
Id. at

As a result, Unistress "engaged Prime to perform

~~33-35.

additional services for which it, Unistress, has failed and refused
to pay Prime."

~36.

Id.

In its answer, Unistress "admits that it

was informed at some point that the foundation for the new garage
was located closer to the existing garage" than planned, but denied
the other allegations.
In

its

complaint,

Prime

pursuant to its contract,
and steel at
performed

the

"Extra

alleged

the

following.

Prime,

installed concrete precast components
Docket

job site.
&

~~31-36.

Docket No. 34 at

Corrective

Work"

No.

1

at

including

~8.

Prime also

"making

j obsi te

adjustments to material and site preparations provided by Williams
and/or Unistress," as well as "many other fixes, repairs, and field
adjustments."

Id.

at

~10.

This additional work was not in the
3

original contract, but Williams and Unistress requested that Prime
perform this work.

Id.

at lJrlJrll-12.

Prime was not compensated

either for its contracted-for work or for the additional work, and
its complaint sought $171,328.82 plus attorneys'
Id.

at <j[lJr

9,

20,

22-24.

In its answer,

fees and costs.

Williams denied these

allegations to the extent that they "deviate from the terms of the
written contract."
B.

Docket No. 12 at lJr<j[ 8-12.

Procedural History

Williams's contracts with both Unistress and Vanasse provided
for mandatory mediation followed,
See Williams-Unistress

Contract,

if necessary,
Docket No.

by arbitration.

46-1

at

Williams-VHB Contract, Docket No. 46-2 at §§9.4-9.5.
20,

2013,

Unistress

demanded mediation.

The

§§6. 1-6.2;
On February

parties

attended

mediation, but the claims remained unresolved.
On

September

Williams and IFIC,
costs.

9,

2013,

Prime

initiated

litigation

seeking $171,328.82 plus attorneys'

against
fees and

This litigation was brought under the Miller Act,

applies to federal public works projects.

See 40 U.S.C.

which
§3131.

The Miller Act provides that federal public works contractors must
furnish a payment bond for the "protection of all persons supplying
labor and material in carrying out the work provided for in the
contract."

Id. §3131 (b) (2) .

The Miller Act authorizes "[e]very

person that has furnished labor or material in carrying out work
4

provided for in a contract for which a payment bond is furnished
under section 3131" to "bring a civil action on the payment bond
for the amount unpaid at the time the civil action is brought."
Id.

§3133 (b) (1);

against

a

see

also

contractor

id.

by

§3133 (b) (2)

person

having

(authorizing
direct

suits

contractual

relationship with only a subcontractor).
On September 20,

2013, Williams filed an answer, asserting,

among other affirmative defenses, that Prime had failed to pursue
mediation prior to initiating litigation.
On October 4,
pending mediation.
stay.

2013,

Docket No.

12 at 5.

Williams moved to stay the litigation

Docket No.

Docket No. 20 at 1.

14.

Prime opposed the motion to

Prime argued that it was not bound by

the arbitration clause in Williams's contract with Unistress, id.
at 2-5, and that its Miller Act bond claims could proceed prior to
an arbitrator's finding of fault, id. at 5-7.
On October 4,

2013--the

same day as

its motion to stay-­

Williams filed a third-party complaint against Unistress and VHB.
Docket No.

17.

On March 20,

2014,

Williams's third-party complaint.
On

November

mediation.
some,

26,

Docket No.

but not all,

2013,

the

Unistress filed an answer to
Docket No. 34.
four

parties

participated

During mediation,

45 at 5.

of the claims.

Id.

in

they settled

Among other terms,

the

settlement provided for the dismissal of pending claims and the
5

resolution

of

Unistress,

and

outstanding
Williams,

claims

but

not

in

arbitration.

VHB,

signed

a

Prime,

memorandum of

understanding on November 26, 2013, agreeing that the parties would
execute a formal agreement by March 20, 2014.
On December
complaint.

6,

Docket

2013,
No.

VHB

24.

answered

VHB's

Docket No. 45 at 5.

Williams's

third-party

answer asserted crossclaims

against Unistress and counterclaims against Williams.
February

24,

2014,

Williams

replied

to

VHB's

Id.

On

counterclaims.

Williams asserted, among other defenses, that the action should be
dismissed

pursuant

to

the

arbitration

contract.

Docket No. 31 at 6.

crossclaims on March 20, 2014.

clause

in

the

parties

r

Unistress filed an answer to VHB's
Docket No. 35.

On March 20, 2014, Unistress answered Williams's third-party
complaint.

Docket No. 34.

Unistress's answer asserted crossclaims

against VHB and IFIC, and counterclaims against Williams.
No.

34.

On April 11, 2014, Williams filed an assented-to motion

to enlarge time for responding to Unistress's counterclaim.
No.

41.

Docket

That motion was allowed.

Docket No.

Unistress's crossclaim on April 21, 2014.
On March 24, 2014,
against IFIC,

42.

Docket

IFIC answered

Docket No. 45 at 7.

Unistress filed a fourth-party complaint

seeking $442,629.30 plus attorneys' fees and costs

under the Miller Act.

Docket No. 38.

6

On

April

stipulation
parties.

10,

of

2014,

Prime,

dismissal

Docket No.

of

40.

Williams,

IFIC

claims

all

and
and

between

On April 25,

by
2014,

dismiss or stay on two alternative grounds.

filed

a

those

Williams moved to

Docket No. 44.

First, Williams argued that subject matter jurisdiction over
this litigation was predicated on the Miller Act claim in Prime's
initial complaint.
that

complaint,

supplemental

Docket No. 45 at 7-9.
Williams

argued,

jurisdiction

over

With the dismissal of

this

the

court

other

no

claims,

described as "garden-variety state law claims."
Unistress opposed the motion to dismiss,

longer
which

had
it

Id. at 7.
arguing that the

court still has jurisdiction because two claims continue to present
federal questions.

First,

Unistress I s March 20,

2014 answer to

the Williams third-party complaint asserted a crossclaim under the
Miller Act against

IFIC.

Docket No.

34.

Second,

Unistress' s

fourth-party complaint against IFIC asserted Miller Act claims.
Docket No. 38.

VHB made similar arguments.

Williams argued that the

Docket No. 50 at 5.

fourth-party complaint was

filed four

days after the Prime complaint was dismissed, and that jurisdiction
ended with that dismissal.
Second,

Williams

pending arbitration.
the

Unistress

and

moved

Docket No. 45 at 8-9.
to

dismiss

or

Docket No. 45 at 9-11.
VHB

contracts
7

contain

stay the

litigation

Williams argued that
binding

arbitration

clauses,

that Williams had consistently pursued arbitration, and

that Williams made filings in this litigation only when necessary
to avoid default or to preserve claims.

Id.

at 9-10.

Further,

Williams sought a stay of litigation pending arbitration at the
outset
filings.

and

invoked

the

contractual

arbitration

right

in

its

Id. at 10-11.

Unistress and VHB argued that Williams waived its right to
arbitrate by filing its third-party complaint against Unistress
and VHB and otherwise availing itself of the litigation process.
Docket No. 49 at 6-7; Docket No. 50 at 4.

In its reply, Williams

emphasized that it "acted promptly by moving to stay this matter
last

October

outcome

of

arbi tration. "

[2013]
initial

at

the

outset

mediation

Docket No.

53 at 2.

of

litigation,

and

pending

potentially

the

subsequent

Williams further argued that

the machinery of litigation has not been substantially invoked:
there had been no Rule 26 disclosures or discovery, and there had
been no Rule 16 conference.
On July 28,
Docket No. 55.

Id. at 2.

2015, Unistress requested a Rule 16 conference.

VHB assented to this motion.

Id.

Williams opposed

the motion, pointing to its pending Motion to Dismiss and/or Stay
Proceedings

Pending

Arbitration,

and

"contractual obligation to arbitrate."

8

asserting

Docket No. 56.

Unistress's

II.

MOTION TO STAY PENDING ARBITRATION
As discussed earlier, Williams has twice moved to stay this

li tigation pending arbitration.
stay

related

to

a

complaint

Williams's original motion to
that

has

since

been

dismissed.

Williams's more recent motion to stay applies to the parties and
claims that remain pending.

Accordingly, the first motion is moot.

As to Williams's second motion to stay,

Unistress and VHB argue

that Williams has waived its right to arbitration.

This claim is

not correct.
A.

The Applicable Standard

"Al though

a

party may waive

a

right

to

arbi trate--ei ther

explicitly or through its conduct--we resolve any doubts in favor
of arbitration."

FPE Found. v. Cohen, -- F. 3d --, 2015 WL 5138182,

at *2 (1st Cir. Sept. 2, 2015).
based waiver

has

An analysis of whether a conduct­

occurred must

"start with

policy favoring arbitration agreements."
LLC v. Brennan, 772 F.3d 945, 948

the

strong federal

Joca-Roca Real Estate,

(1st Cir. 2014).

Courts weighing waiver-of-arbitration arguments "ask whether
there has been an undue delay in the assertion of arbitral rights
and whether, if arbitration supplanted litigation, the other party
would suffer unfair prejudice."

Id.

"[T] here is no bright-line

rule for a waiver of arbitral rights, and each case is to be judged
on its particular facts."

Id. at 951 (quoting Tyco Int'l Ltd. v.
9

Swartz,

422

Circuit has

F.3d 41,

46

(1st Cir.

articulated a

2005)).

six-factor test

However,
to guide

the

First

this

fact-

intensive analysis:
(1) whether the parties participated in a lawsuit or
took other action inconsistent with arbitration;
(2)
whether
the
"litigation
machinery
has
been
substantially invoked and the parties [are] well into
preparation of a lawsuit by the time an intention to
arbitrate [is] communicated";
(3) "whether there has been a long delay" and trial is
near at hand;
(4) whether the party seeking to compel arbitration has
"invoked the jurisdiction of the court by filing a
counterclaim";
(5) whether discovery not available in arbitration has
occurred; and
(6) whether
prejudice.
FPE

Foundation,

(bracketed

the
2015

party
WL

alterations

asserting

5138182,
in

waiver

at

original)

*2

has

(line
(quoting

suffered
breaks

added)

Restoration

Preservation Masonry v. Grover Eur., Ltd., 325 F.3d 54, 60-61 (1st
Cir. 2003)

(citations orru t.t edj

j

v

'

1 In the past year, the First Circuit has articulated two different
multi-factor tests for conduct-based waivers of arbitration.
In
September 2015, Chief Judge Howard, Justice Souter, and Judge Lipez
outlined the test quoted above and applied below.
See FPE
Foundation, 2015 WL 5138182, at *2. In December 2014, Judge Selya,
then-Chief Judge Lynch, and Judge Kayatta employed a five-factor
test.
See Joca-Roca Real Estate, 772 F. 3d at 948.
Both cases
draw on the factors articulated in the 2003 case Restoration
10

Of

these

factors,

Joca-Roca Real Estate,

"prej udice
772

is

F.3d at

essential

948.

for

waiver."

"The party advocating

waiver has the burden of demonstrating prejudice."
B.

a

Id.

Analysis

Analysis of the six relevant factors persuaded the court that
Williams has not waived its contractual rights to arbitration.
Williams has participated in this litigation.
did not initiate the litigation.
wi th a

party that

is

However,

it

Its filings have been consistent

seeking arbitration and participating in

litigation only to avoid a default judgment or the loss of rights
to

file

claims

as

of

right.

Williams's

answer

to

Prime's

complaint, which was filed after obtaining the court's leave for
a

delay

to

pursue

mediation,

Docket

No.

5

at

1,

asserted

arbitration as an affirmative defense, Docket No. 10 at 5.
Williams's third-party claims against Unistress and VHB did
"invoke []

the

jurisdiction of the court,"

In re Citigroup,

376

F.3d at 26, which would support a conclusion that it participated
in litigation.

The third-party complaint made no reference to

Williams's arbitral rights, Docket No. 17, arguably suggesting an
"intent

to

forgo

arbitration

through

li tiga tion. "

and

Joca-Roca

resolve

Real

Estate,

Preservation Masonry, 325 F. 3d at 60-61.
the same decision under either test.
11

the

disputed
772

matter

F.3d at

949.

The court would reach

However, if Williams had not filed those complaints within fourteen
days of serving its answer,

it would have been required to seek

leave of the court to pursue them.

See Fed. R. Civ. P. 14(a) (1).

This suggests that Williams's filing was an attempt to preserve
claims, not an indication of intent to forego arbitration.
The litigation machinery has not been substantially invoked.
This factor addresses the risk that parties will "take advantage
of

judicial

resources

conferences."

such as

depositions

and

In re Citibank, 376 F.3d at 28.

in its early stages.

case management

This litigation is

Parties have filed claims, but there has not

been a scheduling conference and no discovery has been conducted.
The machinery of litigation, therefore, has not been invoked to an
extent consistent with waiver of arbitral rights.

See Joca-Roca

Real Estate, 772 F.3d at 949 (arbitral rights waived where "[o]ver
a period of more than eight months, the parties engaged actively
in discovery");

In re Ci tigroup,

rights waived where
rights,

"defendant

and during that delay,

376 F. 3d at 28

Inc.,

[]

failed

to

the litigation

timely
[]

(arbitral
invoke its

proceeded into

discovery"); Rankin, 336 F.3d at 13 (arbitral rights waived where
party

"wait[edJ

until

after

discovery

had

closed"

to

assert

arbitral rights).
There has not been a long delay, and trial is not imminent.
After

Prime

filed

its

complaint
12

on

August

9,

2013,

Williams

promptly asserted its arbitral rights in three sUbmissions.
but least significantly,

First

twenty-eight days after the complaint,

Williams filed an assented-to motion to enlarge time for responsive
pleading,

noting that "the parties are attempting to schedule a

mediation so as to resolve this dispute[.]"

Docket No.

5 at 1.

Forty-two days after the complaint, Williams's answer asserted its
arbitration rights as an affirmative defense.
Fifty-six days

after

the

pending arbitration.

complaint,

Docket No. 10 at 5.

Williams

moved

for

a

stay

The First Circuit has held that the motion

to stay is the relevant filing to consider in evaluating the length
of time a party took to assert its arbitral rights.
Citigroup, Inc., 376 F.3d 23, 27
The motion to stay,

filed

See In re

(1st Cir. 2004).
56 days after the complaint,

is

within the range that courts have found is proper for the assertion
of arbitral rights.
Pentzer Corp.,

See, e.g., Creative Solutions Group, Inc. v.

252 F.3d 28,

33

(1st Cir.

2001)

(no waiver where

the defendant filed motion to stay pending arbitration five months
after plaintiff filed

complaint).

Courts have

generally found

waiver only after much longer delays in the assertion of arbitral
rights.

In re Citigroup, 376 F.3d at 27 (three-year delay); Rankin

v. Allstate Ins. Co.,
delay);
Ltd.,

Restoration

325 F. 3d 54,

336 F.3d 8,

14

(1st Cir. 2003)

Preservation Masonry,
60

(1st Cir. 2003)
13

Inc.

v.

(nine-month
Grove

Europe

(four-year delay); Menorah

Ins.

Co.,

Ltd.

Cir. 1995)

V.

INX Reinsurance Corp.,

72

F.3d 218,

222

(1st

(sixteen-month delay).

In Navieros Inter-Americanos, S.A. v. M/V Vasilia Exp.,

120

F.3d 304, 315-16 (1st Cir. 1997), a one month delay was found to
justify a waiver, but due to an expedited trial schedule the motion
was filed only one day before trial.
14

See also Rankin, 336 F.3d at

(arbitral rights waived where party asserted arbitral rights

"only six weeks before a long-scheduled trial") .

In the instant

case, a trial date has not been set.
Williams,
invoked the

the party seeking to compel arbitration,

jurisdiction of the court by filing a

against Prime in response to the initial complaint.

has not

counterclaim
As discussed

previously, Williams did invoke the jurisdiction of the court by
filing a third-party complaint, but evidently did so to assure it
could pursue that claim in litigation if its motion for a stay
pending arbitration was denied.
Discovery not available in arbitration has not occurred.
discussed earlier,

this litigation is in its early stages.

As
No

discovery has occurred.
Unistress

and

VHB,

the

parties

asserting

suffered some prejudice, but it is not sUbstantial.

waiver,

have

As a result

of Williams's third-party complaints, Unistress has incurred fees
of "approximately $8,000."

Docket No. 49 at 8.
14

While VHB has not

provided an estimate of costs, it has made submissions similar to
Unistress.

However,

a

showing

of

litigation

costs

alone

is

sufficient only where the party seeking arbitration had engaged in

"a

deliberate

strategy

arbitration proceedings."

unilaterally

designed

to

delay

Tyco Int'l Ltd., 422 F.3d at 46.

the
Here,

there is no evidence that Williams's participation in litigation
was part of a strategy to deliberately delay arbitration.
Williams

has

consistently

asserted

its

arbitral

Rather,

rights

and

promptly moved to stay the litigation pending arbitration, after
Unistress's subcontractor Prime initiated this litigation.
Here, Unistress and VHB have not been prejudiced by having to
prepare for trial or participate in the rigors of discovery, and
Williams has not benefitted from obtaining any discovery that would
not be available in arbitration.

See Joca-Roca Real Estate, 772

F.3d at 951 (finding prejudice as a result of eight-month discovery
process

because

undertaken

here

it

was

would

"highly
have

improbable

occurred

in

that

the

discovery

arbitration").

While

Unistress and VHB have had to make submissions concerning the legal
issues in this case, similar work would likely have been necessary
for the mediation and arbitration.
Therefore,

while

Unistress

and

VHB

have

experienced

prejudice as a result of the litigation to date,

some

the procedural

posture of this case--with the litigation having been initiated by
15

a

subcontractor

of

one

of

the

now-prejudiced

--and the minor nature of the prejudice,

parties

weighs against finding

this prejudice sufficient to establish waiver of arbitral rights.
Having

considered

and

balanced

the

relevant

factors,

the

court finds that Williams has not waived its arbitral rights.

The

motion to stay pending arbitration is, therefore, meritorious, and
is being allowed.
III. MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
Williams has also moved to dismiss for lack of subject matter
jurisdiction.
the

parties

This motion is being denied without prejudice.
return

to

litigation

after

the

conclusion

If
of

arbitration, Williams may again present these arguments in light
of the claims then pending before the court.
IV.

ORDER
For the foregoing reasons, it is hereby ORDERED that:
1.

complaint,

In

light

of

Prime's

dismissal

Williams's

October

4,

2013

of

its

Motion

August
to

Stay

9,

2013

Pending

Mediation and Arbitration (Docket No. 14) is MOOT.
2.

Williams's April 25, 2014 Motion to Dismiss and/or Stay

Proceedings Pending Arbitration (Docket No. 44) is ALLOWED in part.
Specifically,

the motion to stay pending arbitration is ALLOWED

and this case is STAYED.

Williams's motion to dismiss for lack of

subject matter jurisdiction is DENIED without prejudice.
16

3.

The parties shall, within thirty days of the conclusion

of the arbitration,

report whether this case should be dismissed

and, if not, propose a schedule for resolving the issue(s) to be
litigated.
4.

55)

Unistress' s Motion for Rule 16 Conference

(Docket No.

is MOOT.

14... ~. ~~
UNITED'STATES DISTRICT JUDGE
~

CyC4'

17