United States of America f/u/b/o Kogok Corporation v. Travelers Casualty and Surety Company Of America et al

Filing 61

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS 28 MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANTS MOTION TO STAY ALL PROCEEDINGS. Signed by Senior Judge Frederick P. Stamp, Jr on 9/23/2014. (Copy counsel of record via CM/ECF)(jmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
UNITED STATES OF AMERICA
f/u/b/o KOGOK CORPORATION,
Plaintiff,
v.

Civil Action No. 1:13CV240
(STAMP)

TRAVELERS CASUALTY AND SURETY
COMPANY OF AMERICA,
FEDERAL INSURANCE COMPANY,
FIDELITY & DEPOSIT COMPANY
OF MARYLAND,
ZURICH AMERICAN INSURANCE COMPANY,
LIBERTY MUTUAL INSURANCE COMPANY
and THE CONTINENTAL INSURANCE COMPANY,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
AND DENYING DEFENDANTS’ MOTION TO STAY ALL PROCEEDINGS
I.
The

plaintiff,

Procedural History

United

States

of

America

f/u/b/o

Kogok

Corporation (“Kogok”) filed this action against the defendants
pursuant to the Miller Act, 40 U.S.C. § 3133, to recover payment
for labor and materials it rendered to the FBI Biometric Technology
Center, New Office Building and Central Utilities Plant Expansion
(the

“project”)

located

in

Clarksburg,

West

Virginia.

Specifically, the complaint seeks a declaratory judgment from this
Court finding that each defendant is liable to Kogok in the amount
of $1,920,177.02.
After the defendants filed an answer and this Court entered a
scheduling order in this matter, the defendants filed a motion for

partial

summary

judgment

and

to

stay

all

proceedings.

The

defendants seek summary judgment against Kogok with respect to: (1)
all claims that arose on or before October 31, 2013; (2) Kogok’s
claims for damages for delay; and (3) Kogok’s claim for damages
allegedly resulting from labor inefficiency.

In support of their

motion for partial summary judgment, the defendants argue that: (1)
Kogok executed sworn releases and waivers where it expressly
released all claims for damages arising from labor and materials
relating to the project up to and including October 31, 2013; (2)
Kogok expressly waived all claims for damages arising from delay to
its performance; and (3) because Kogok admits that it is still both
performing labor on the project and incurring labor inefficiency
damages, it fails to comply with the Miller Act, which requires
Kogok to provide notice of its labor inefficiency within ninety
days after the last date it performed services.

In addition to

seeking partial summary judgment, the defendants also seek a stay
of all proceedings until Kogok completes the work that underlies
its claims and complies with its contractual obligations to support
its claims.
Kogok filed a response in opposition arguing that: (1) the
releases are invalid to release claims and proposed change orders
submitted under the contract; (2) the “no damages for delay” clause
should not be enforced against Kogok, especially when both Turner
Construction Company (“Turner”) and Bell Constructors, LLC (“Bell”)

2

caused the delays and the government will compensate Turner for
delays on the project; (3) Kogok’s claim for labor inefficiencies
is not premature; and (4) this case should not be stayed.

The

defendants filed a timely reply wherein they reasserted their
arguments and countered Kogok’s arguments.
For

the

reasons

stated

below,

this

Court

grants

the

defendants’ motion for partial summary judgment and denies the
defendants’ motion to stay proceedings.1
II.

Facts2

Turner Construction Company and the United States entered into
a construction contract, in which Turner agreed to construct the
project.

Under the construction contract and Miller Act, Turner

executed a labor and material payment bond with the defendants as
joint and several sureties, which Turner delivered to the United
States.

After entering into the contract with the United States,

Turner subcontracted the mechanical work on the project to Bell.
Bell then entered into a subcontract agreement with Kogok, in which
Kogok agreed to provide sheet metal, duct work, and related HVAC

1

On July 23, 2014, this Court provided the parties with a
letter setting forth its tentative rulings on this matter. This
letter indicated that this Court granted the defendants’ motion for
partial summary judgment and deferred ruling on defendants’ motion
to stay. This order confirms the ruling on defendants’ motion for
partial summary judgment and, further, provides a definitive ruling
on defendants’ motion to stay.
2

For the purposes of this opinion, this Court adopts, for the
most part, the facts as set forth by Kogok in the complaint.
3

services for the project.

Kogok was to provide such material and

services for the price of $3.22 million.
The subcontract has several provisions at issue.

First, Bell

required Kogok to submit a “[o]n a monthly basis, [Kogok] shall
submit to Bell its payment applications.”

ECF No. 29 Ex. 1, B.

These payment applications, called “Release and Waiver Forms,”
provided the following:
In consideration of the payment herewith made, the
Undersigned [Kogok] does fully and finally release and
waive any and all claims, causes of action, and/or lien
rights against the Contractor [Bell] . . . for all costs,
expenses, or losses of any nature or description which
have arisen or are in any manner related to any aspect of
the Work items from the date the Work items originally
commenced to the date payment is made hereunder. This
Release and Waiver applies to all claims, disputes, and
other matters through the date this payment is made,
including all claims for direct and indirect costs,
productivity losses, delays, accelerations, ripple
effects, field and home office overhead, equipment costs,
and all other consequential and incidental costs, losses,
and/or damages.
ECF No. 29-5 Ex. 1, D1.

This language was contained in every

Release and Waiver form Kogok filed monthly for payment. It
consecutively filed these waivers twenty-six times, with the above
language appearing in all of them.
Second, in addition to the payment provision, the contract
also contained a Change Order provision and Disputes provision.
The Change Order provision provided for if either party sought to
amend the contract or project specifications.

The Change Order

provision states in relevant part that if Kogok and Bell are unable

4

to agree on adjustments to the contract by change orders, “Kogok
shall proceed with the change as directed by Bell and preserve its
right to an equitable adjustment hereto pursuant to the Disputes
provision set forth herein.

The Subcontractor shall be bound by

Bell’s adjustments if the Subcontractor fails to strictly comply
with the Disputes provision.”
referenced

in

the

Change

ECF No. 29 Ex. 1, B.

Order

provision,

the

Third, as

contract

also

maintains a Disputes provision that states, “[Kogok] shall give
Bell

written

notice

of

all

claims

involving

Bell

for

time

extensions and additional costs within seven (7) days of the event
giving rise to the claim; otherwise, such claim(s) shall be deemed
forever waived.”
Finally, the contract contained a “no damages for delay”
clause, which states
The clause states in relevant part:
NO DAMAGES FOR DELAY:
The Subcontractor [Kogok]
expressly agrees not to make, and hereby waives, any and
all claims for damages on account of any delay,
obstruction, or hindrance for any cause whatsoever,
including but not limited to the aforesaid cause, and
agrees that its sole right and remedy in the case of any
delay, obstruction or hindrance shall be an extension of
time fixed for completion of the Work [unless and to the
extent that Bell recovers delay damages from the Owner
which are directly allocable to the Subcontractor
[Kogok]].
ECF No. 29 Ex. 1, B.

Bell and Kogok agreed to the contract with

the above terms and conditions. No accusations or facts indicating
foul play exist regarding the parties’ agreement.

5

However, as the project progressed and Kogok rendered its
services, the government unilaterally extended the project deadline
to February 27, 2015, citing issues with Turner’s production of
information and paperwork.
As a result of the delay, Kogok asserts that it is currently
in the process of rendering the labor and materials for the project
required under the subcontract, but it has received no payment for
such work.
labor

and

Specifically, Kogok asserts that unpaid amounts for
materials

exist

for

February 2013, and May 2013.

November

2012,

December

2012,

Further, Kogok asserts that Bell has

not paid it for additional labor and materials rendered for the
project outside of the contract’s scope of work that it had
submitted requests for change orders.

In total, Kogok is seeking

recovery from the defendants in the amount of $1,920,177.02,
asserting that it is entitled to payment of this sum under the
payment bond and the Miller Act.
III.
A.

Discussion

Motion for Partial Summary Judgment
The defendants argue that summary judgment should be granted

on three of Kogok’s claims.

Specifically, they seek partial

summary judgment against Kogok with respect to: (1) all Kogok’s
claims that arose on or before October 31, 2013; (2) Kogok’s claim
for

damages

for

delay;

and

(3)

inefficiency.

6

Kogok’s

claim

for

labor

Under Rule 56(c) of the Federal Rules of Civil Procedure,
A party asserting that a fact cannot be or is genuinely
disputed must support the assertion by:
(A) 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; or
(B) showing that the materials cited do not
establish the absence or presence of a genuine dispute,
or that an adverse party cannot produce admissible
evidence to support the fact.
Fed. R. Civ. P. 56(c).

The party seeking summary judgment bears

the initial burden of showing the absence of any genuine issues of
material fact.
(1986).

See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

“The burden then shifts to the nonmoving party to come

forward with facts sufficient to create a triable issue of fact.”
Temkin v. Frederick County Comm’rs, 945 F.2d 716, 718 (4th Cir.
1991), cert. denied, 502 U.S. 1095 (1992) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). However, as the
United States Supreme Court noted in Anderson, “Rule 56(e) itself
provides that a party opposing a properly supported motion for
summary judgment may not rest upon the mere allegations or denials
of his pleading, but . . . must set forth specific facts showing
that there is a genuine issue for trial.”

Id. at 256.

“The

inquiry performed is the threshold inquiry of determining whether
there is the need for a trial -- whether, in other words, there are
any genuine factual issues that properly can be resolved only by a
finder of fact because they may reasonably be resolved in favor of

7

either party.”

Id. at 250; see also Charbonnages de France v.

Smith, 597 F.2d 406, 414 (4th Cir. 1979) (Summary judgment “should
be granted only in those cases where it is perfectly clear that no
issue of fact is involved and inquiry into the facts is not
desirable to clarify the application of the law.” (citing Stevens
v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir. 1950))).
In Celotex, the Supreme Court stated that “the plain language
of Rule 56(c) mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who
fails to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party
will bear the burden of proof at trial.”

Celotex, 477 U.S. at 322.

In reviewing the supported underlying facts, all inferences must be
viewed in the light most favorable to the party opposing the
motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986).
1.

Kogok’s Claims that Arose on or Before October 31, 2013

In their motion for summary judgment, the defendants first
argue that Kogok’s sworn releases and waivers equate to a waiver of
all

Kogok’s

claims

arising

on

or

before

October

31,

2013.

Specifically, the defendants claim that Kogok executed twenty-six
sworn waivers and releases that applied to all claims. This was an
explicit requirement of the agreement between the parties.

8

Thus,

because Kogok waived its claims, the defendants argue that the
claims arising on or before October 31, 2013 are waived.
In response, Kogok contends that adopting the defendants’
interpretation of the contract creates ambiguities between the
“Change Orders”3 and “Disputes”4 provisions.

In particular, Kogok

asserts that its contract allows Kogok to preserve any claims or
adjustments despite filing the affidavits. Thus, Kogok argues that
when looking at the contract in its entirety, the defendants’
interpretation renders the Dispute and Change Order provisions
meaningless.

For the reasons stated below, this Court agrees with

the defendants’ argument and grants its motion for partial summary
judgment on this claim.
When reading and interpreting contract provisions, the court’s
purpose is to give full force and effect to the expressed or
implied intentions of the contracting parties, if such can be
discerned.

Truong Xuan Truc v. United States, 212 Ct. Cl. 51, 66,

1976 WL 905 (1976) (quoting Massachusetts Port Auth. v. United

3

As stated above, the provision provides that “Kogok shall
proceed with the change as directed by Bell and preserve its right
to an equitable adjustment hereto pursuant to the Disputes
provision set forth herein. The Subcontractor shall be bound by
Bell’s adjustments if the Subcontractor fails to strictly comply
with the Disputes provision.” ECF No. 29 Ex. 1, B.
4

As referenced in the Change Order provision, the Disputes
provision that states: “[Kogok] shall give Bell written notice of
all claims involving Bell for time extensions and additional costs
within seven (7) days of the event giving rise to the claim;
otherwise, such claim(s) shall be deemed forever waived.”
9

States, 456 F.2d 782, 784, 197 Ct. Cl. 721, 726 (1972)); see also
SCM Corp. v. United States, 675 F.2d 280, 283, 230 Ct. Cl. 199, 203
(1982); Honeywell Inc. v. United States, 661 F.2d 182, 186, 228 Ct.
Cl. 591, 596 (1981); Dynamics Corp. of America v. United States,
389 F.2d 424, 429, 182 Ct. Cl. 62, 72 (1968).

Generally, a release

under a contract is interpreted the same as any other contract term
or provision. Metric Constructors, Inc. v. United States, 314 F.3d
578, 579 (Fed. Cir. 2002); see also

Restatement (Second) of

Contracts § 284 cmt. c (1981) (providing that releases face the
same rules of interpretation as generally apply to contracts).
However,

in

the

releases

of

claims

contractors.”

government
are

strictly

complete

context,

construed

“exceptions

against

to

government

Mingus Constructors Inc. v. United States, 812 F.2d

1387, 1394 (Fed. Cir. 1987).
a

contract

release

of

Further, when a contractor executes

claims,

it

reflects

the

contractor’s

“unqualified acceptance and agreement with its terms and is binding
on both parties.”

Clark Mechanical Contractors, Inc. v. United

States, 5 Cl. Ct. 84, 86 (1984).

When a contractor “has the right

to reserve claims from the operations of release, but fails to
exercise that right . . . it is neither improper nor unfair, absent
some

vitiating

or

aggravated

circumstance,

to

preclude

the

contractor from maintaining a suit based on events which occurred
prior to” executing the release.

10

Id.

(citing Inland Empire

Builders, Inc. v. United States, 424 F.2d 1370, 1376 (1970); Metric
Constr. Co. v. United States, 1 Cl. Ct. 383, 396 (1983)).
Under the facts of this case, Kogok’s argument falls short of
convincing this Court to deny defendants’ motion. The terms of the
subcontractor agreement between Bell and Kogok requires Kogok to
provide

Bell

a

“Release

and

Waiver”

application for services rendered.

as

part

of

its

payment

In this Release and Waiver

form, it explicitly states the following:
In consideration of the payment herewith made, the
Undersigned [Kogok] does fully and finally release and
waive any and all claims, causes of action, and/or lien
rights against the Contractor [Bell] . . . for all costs,
expenses, or losses of any nature or description which
have arisen or are in any manner related to any aspect of
the Work items from the date the Work items originally
commenced to the date payment is made hereunder. This
Release and Waiver applies to all claims, disputes, and
other matters through the date this payment is made,
including all claims for direct and indirect costs,
productivity losses, delays, accelerations, ripple
effects, field and home office overhead, equipment costs,
and all other consequential and incidental costs, losses,
and/or damages.
ECF No. 29-5 Ex. 1, D1 (emphasis added).

As seen in this language

from the Release and Waiver form, it explicitly provides a full and
final waiver of all claims up to the date of the respective
payment. Further, Kogok filed twenty-six consecutive waivers under
oath from June 15, 2011 through October 31, 2013.
As clear as these above provisions appear, Kogok asserts that
they are both ambiguous and conflict with Change Order and Disputes
provisions.

Kogok refers to the Dispute provisions and Change

11

Order provisions, claiming that the Release and Waiver requirement
renders those provisions useless because all claims are waived by
filing the Release and Waiver requirement.

However, this argument

seems to ignore the fact that Kogok could dispute the charges
rather than waive them.

Or, it could have modified the Releases

and Waivers for what claims would or would not be waived, as it did
later.

See ECF No. 29 Ex. 1-F.

This Court fails to see either the

conflict or ambiguity that Kogok claims is so readily apparent.
This civil action mirrors the situation in MAFCO Elect.
Contractors, Inc. v. Turner Const. Co., 357 F. App’x 395 (2d. Cir.
2009).

In MAFCO, the plaintiff, an electrical subcontractor,

alleged that the various waivers it signed regarding claims did not
apply due to ambiguities and conflicting contract language. Id. at
396.

However, the court there rejected plaintiff’s arguments,

because the plaintiff signed “clear, unconditional release and
waiver” forms during the course of the project. Id. Specifically,
the forms provided language similar to the case at hand, including
clauses such as “the Subcontractor recognizes that there is no
basis for any such claim in the future,” or waiving all rights to
seek payment adjustments “for any reason or matter arising out of
or related to matters occurring or existing on or before the date
hereof.” Id. Further, the plaintiff in MAFCO filed almost twentyfour of these forms that contained the waiver language.

12

Because

these waivers were so clear, unambiguous, and explicit, the court
rejected plaintiff’s arguments and found for the defendant.
Similar to MAFCO, Kogok here filed forms with similarly clear
and explict language barring claims.

Further, like MAFCO, where

the plaintiff filed numerous forms containing waivers, here Kogok
filed twenty-six forms that waived all claims up to the date of
payment provided on each form.

Because these waivers contain

neither ambiguities nor conflicts, this Court rejects Kogok’s
argument.

Thus, this Court grants defendants’ motion for partial

summary judgment on its first claim.
2.

Kogok’s Claim for Delay Damages

The defendants next argue that this Court should grant their
motion for summary judgment because the subcontractor agreement
contained a “no damages for delay” clause.

The clause states in

relevant part:
NO DAMAGES FOR DELAY:
The Subcontractor [Kogok]
expressly agrees not to make, and hereby waives, any and
all claims for damages on account of any delay,
obstruction, or hindrance for any cause whatsoever,
including but not limited to the aforesaid cause, and
agrees that its sole right and remedy in the case of any
delay, obstruction or hindrance shall be an extension of
time fixed for completion of the Work [unless and to the
extent that Bell recovers delay damages from the Owner
which are directly allocable to the Subcontractor
[Kogok]].
ECF No. 29 Ex. 1, B.

As provided in the facts of this case, the

government unilaterally extended the project deadline, setting
February 27, 2015, as the new deadline for the project.

13

However,

because the agreement contained this clause, defendants argue that
Kogok cannot recover damages for added construction and labor costs
that resulted from delays in the project.
In response, Kogok argues that language in its agreement
provides that it is entitled to receive damages for the delays if
Bell also recovers delay damages from the contractor.

Here, Kogok

claims that Bell will recover delay damages, and because of this,
Kogok is now entitled to such damages. Further, Kogok asserts that
the no damages for the delay clause is unconscionable, and that
Kogok did not contemplate this clause in the contract.
Under the Miller Act, contractors for government projects must
furnish payment bonds when the contract exceeds $100,000 in value.
40

U.S.C.

§

3131(b).

The

bonds

protect

subcontractors

and

suppliers that contribute to the federal project because federally
owned lands and buildings are exempt from liens that may normally
be used under state law.

United States f/u/b/o Sherman v. Carter,

353 U.S. 210, 216 (1957).

Although the Miller Act should be

liberally construed and applied, a surety for the bonds generally
is not liable for damages that the prime contractor causes. United
States f/u/b/o Pertun Construction Company v. Harverster’s Group,
Inc., 918 F.2d 915 (11th Cir. 1990); United States f/u/b/o Edward
E. Morgan Co., Inc. v. Maryland Casualty Co., 147 F.2d 423 (5th
Cir. 1945); L.P. Freidstedt Co. v. U.S. Fireproofing Co., 125 F.2d
1010 (10th Cir. 1942).

Further, “‘[a]s a general matter, a

14

surety’s liability is defined by the liability of the underlying
contract.’”

HPS Mechanical, Inc. v. JMR Construction Corp., No.

11-CV-026000, 2014 WL 3845176 (N.D. Cal. Aug. 1, 2014) (quoting
Morganti Nat’l, Inc. v. Petri Mechanical Co., Inc., No 98-0309,
2004 WL 1091743, at *1 (D. Conn. May 13, 2004)). More importantly,
a contract clause that affects the timing of recovery or the right
to recovery under the Miller Act would contradict the Miller Act.
United States ex rel. Walton Technology v. Westar Engineering, 290
F.3d 1199, 1207 (9th Cir. 2002).

However, no damages for delay

clauses does not contradict the Miller Act because they affect the
measure of recovery, not the timing of it.
0309, 2004 WL 1091743, at *11.

Id.; Morganti, No 98-

Thus, under the Miller Act, such

clauses do not contradict the Miller Act and are generally valid.
As stated above, Kogok asserts that the no damages for delay
clause is unconscionable and thus unforeceable, but not because of
the Miller Act.

Rather, Kogok argues that West Virginia law has

not determined the enforceability of such clauses, and that other
jurisdictions have found them invalid.

Further, Kogok claims that

West Virginia contract law would generally view such clauses as
unenforceable or unconscionable.
It

is

true

that

West

Virginia

has

not

enforceability of no damages for delay clauses.

determined

the

However, many

states hold that such clauses are valid and enforceable, so long as
they meet ordinary rules governing validity of contracts.

15

See,

e.g., Tricon Co. v. Lafarge North America, Inc., 186 P.3d 155
(Colo. 2008); Green Intern., Inc. v. Solis, 951 S.W.2d 384 (Tex.
1997); United States f/u/b/o Williams Elec. Co., Inc. v. Metric
Constructors, Inc., 480 S.E.2d 447 (S.C. 1997); State Highway
Admin. v. Greiner Engineering Sciences, Inc., 577 A.2d 363 (Md.
1990); Corinno Civetta Const. Corp. v. City of New York, 493 N.E.2d
905 (N.Y. 1986); Hansen v. Covell, 24 P.2d 722 (Cal. 1933).

More

importantly, West Virginia law provides that “a valid written
agreement using plain and unambiguous language is to be enforced
according to its plain intent and should not be construed.”
Toppings v. Rainbow Homes, Inc., 490 S.E.2d 817, 822 (W. Va. 1997);
see also Syl. Pt. 2, Orteza v. Monongalia County General Hospital,
318 S.E.2d 40 (1984); Syl. Pt. 1, Cotiga Development Co. v. United
Fuel Gas Co., 128 S.E.2d 626 (W. Va. 1962).

Further, in order to

demonstrate that a term of a contract is unconscionable and thus
unenforceable, the proponent must prove that the term is both
procedurally and substantively unconscionable.

Brown v. Genesis

Healthcare Corp., 729 S.E.2d 217 (W. Va. 2012).
unconscionability

refers

to

inequities

or

Procedural

unfairness

in

the

bargaining process and formation of the contract, while substantive
unconscionability means the term is so unfair to one party as to be
one-sided.

Id.; see also Syl. Pts. 1, 19, Brown ex rel. Brown v.

Genesis Healthcare Corp., 724 S.E.2d 250 (W. Va. 2011).

16

Under the law provided above, this Court disagrees with
Kogok’s argument.

First, it appears that many jurisdictions do

enforce no damages for delay causes like the one in dispute here.
Second,

no

indications

exist

that

West

Virginia

law

would

substantially oppose the enforcement or validity of a no damages
for delay clause.

Rather, West Virginia law gives contracts their

full effect based on their plain meaning.

Finally, no indications

of unconscionability exist here. The parties are both commercially
sophisticated and members of the same industry.

Looking at the

facts present, no hint of foul play or inequities exists.

Indeed,

the language of the clause explicitly provides that Kogok can
recover damages for delay if the damages are both recovered from
the government and directly allocable to Kogok.
their

contract

enforceable.

is

clear,

and

the

clause

The language of

appears

valid

and

Thus, this Court grants defendant’s motion for

partial summary judgment on this claim.5

5

This Court also notes that Kogok claims it is entitled to
damages because Bell will receive damages for the contractor’s
delay. However, under the facts of this case, it appears that Bell
has not received any compensation for the delay.
Under the
government’s unilateral extension for delay, the form explicitly
states: “This Contract time extension . . . is being granted as a
non-compensable delay. Therefore, the Contract price is unchanged
by this Modification.” ECF No. 29 Ex. 1, C.
17

3.

Kogok’s Claim for Labor Inefficiency

Finally, defendants assert that Kogok’s claim regarding labor
impacts and inefficiencies is premature under the Miller Act.
Specifically, defendants argue that Kogok has yet to show its “last
date” for labor provided, as required under the statute.

Because

of this, defendants claims that Kogok cannot file a notice of claim
for labor inefficiency costs until ninety days after the last date
of labor furnished, which it claims has yet to be declared. In
response, Kogoks argue that it filed a notice of claim within
ninety days, and that Kogok is complying with the Miller Act’s
requirements.

Further, Kogok points to case law that it claims

justifies its filing a notice of claim.
Under the Miller Act, a right to civil action exists if a
person who furnishes materials or labor under a contract where a
§ 3131 payment bond is furnished
has not been paid in full within 90 days after the day on
which the person did or performed the last of the labor
or furnished or supplied the material for which the claim
is made may bring a civil action on the payment bond for
the amount unpaid at the time the civil action is brought
and may prosecute the action to final execution and
judgment for the amount due.
40 U.S.C. § 3133(b)(1) (2012).

Further, the statute also provides

that a person who has a direct contractual relationship with a
subcontractor but not contractor may bring a civil action on the
payment bond by giving the contractor notice within ninety days
after the date when the last of the labor or materials were

18

provided.

Id. § 3133(b)(2) (2012); United States ex rel. Water

Works Supply Corp. v. George Hyman Constr. Co.,131 F.3d 28, 31-32
(1st Cir. 1997). As provided in case law interpreting the statute,
“the measuring date will be the date when the last material is
furnished

under

the

last

contract.”

Noland

Co.

v.

Allied

Contractors, Inc., 273 F.2d 917, 920 (4th Cir. 1959); see also
Water Works Supply Corp., 131 F.3d at 30; United States ex rel.
A & M Petroleum, Inc. v. Santa Fe Engineers, Inc., 822 F.2d 547,
548 (5th Cir. 1987).
The issue here is whether a last date exists regarding Kogok’s
labor and services furnished so as to render its notice of claim
for labor inefficiencies and costs timely.
that date does not exist.

Under the facts here,

Documents in the record show that

Kogok’s notice was premature.

Specifically, in a letter dated

March 24, 2014, where Kogok responded to Bell’s inquiries regarding
Kogok’s notice for claim, Kogok referred to its work on the project
as “ongoing,” that it is “continuing to suffer labor costs,” and
that it was supposed to be “on the project” until at least June 17,
2014. Despite this, Kogok filed its notice of claim on October 16,
2013.

Based on the record before this Court, it appears no “final

date” has been provided yet that would justify filing a notice of
claim.
However, Kogok does cite to case law that it claims refutes
this interpretation of the Miller Act.

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Kogok looks to United

States f/u/o Honeywell, Inc. v. A & L Mechanical Contractors, Inc.,
where the court held for the plaintiff who filed a notice of claim
before the last date of its participation in the project. 677 F.2d
383 (4th Cir. 1982).

There, a plaintiff subcontractor provided

services and had a balance owed to it.

Then, the plaintiff filed

a notice regarding those claims in October and November 1979.
at 385.

Id.

However, its final date regarding the project was January

22, 1980.

Id.

The plaintiff argued that although it filed the

notices before its final project date, the notice still applied to
claims prior to October 1979.

Id.

The court in Honeywell found

the October 1979 notice to be timely under a liberal interpretation
of the Miller Act.

It reasoned that if a “subcontractor is

delinquent in making progress payments, its subcontractor, the
claimant, should not be required to continue work on a prolonged
project without progress payments.”

Id.

Further, the court found

that “[t]he November 1979 notice did not claim anything with
respect to work to be done or materials supplied thereafter; it was
within ninety days after the labor or material ‘for which such
claim is made’ had been furnished.” Id. (emphasis added). Because
the court believed that principal purpose of the Miller Act is to
protect contractors and subcontractors on federal construction
projects, the Miller Act should be interpreted liberally toward
that end.

Id. at 386.

Thus, the court in Honeywell found the

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notice to be timely despite it being premature under a stricter
interpretation.
Although persuasive, this Court finds several distinctions
between this civil action and the Honeywell case.
Honeywell,

where

the

subcontractor’s

claim

Unlike in

involved

already

provided services and materials, here Kogok’s claim involving the
“impact and inefficiencies” on labor costs lacks definiteness.
Indeed, Kogok’s response to Bell’s inquiries regarding the “impact
and inefficiencies” demonstrates this lack of definiteness, as
opposed to what was present in Honeywell.

In Kogok’s response to

Bell’s inquiries regarding the claim, it states:
Bell’s request for information regarding [the notice of
claim regarding impact and inefficiencies on labor] is
premature, especially considering that the Project is
ongoing, and that . . . Kogok is scheduled to be on the
project through June 17, 2014 . . . Accordingly, any
information provided prior to the completion of Kogok’s
labor activities on the Project would be invalid and
meaningless.
ECF No. 29 Ex. 1, H.

As seen in the quote, Kogok is referring to

the impact and inefficiencies claim.

It even admits that the

impact and inefficiencies claims are premature in the sense that
the total amount for this claim is yet to be determined.

The

services are still being rendered.
This contrasts with the situation in Honeywell, where past
services and materials were in dispute, not an abstract and still
not fully defined amount of impacts and inefficiencies.

Further,

unlike Honeywell, where the plaintiff sought damages for past
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services rendered, here Kogok is filing a notice for past and
forthcoming costs related to its labor impact and inefficiencies
claim. Although the Miller Act in its entirety should be construed
liberally, the statute’s ninety day notice for claims provision is
exempted from such construction.

Pepper Burns Insulation, Inc. v.

Artco Corp., 970 F.2d 1340 (4th Cir. 1992); see United States ex
rel. John D. Ahern Co., Inc. v. J.F. White Contracting Co., 649
F.2d 29, 31 (1st Cir. 1981); United States ex rel. General Dynamics
Corp. v. Home Indemnity Co., 489 F.2d 1004, 1005 (7th Cir. 1973);
see also Honeywell, 677 F.2d at 386 (“strict enforcement of [the
notice] requirement is necessary”).

Therefore, this Court grants

defendants’ motion for summary judgment regarding the notice of
claim because Kogok’s notice of claims was premature.
B.

Motion to Stay
In

addition

to

seeking

partial

summary

judgment,

the

defendants request that this Court stay all proceedings until such
time that Kogok has completed the work underlying its claims and
complies with its contractual obligations.

In support of this

argument, the defendants assert that the largest element of Kogok’s
claim arises from alleged labor inefficiency damages, which Kogok
claims it is still incurring.
that

because

information

as

Kogok
to

cannot
this

Accordingly, the defendants argue
provide

claim

until

any
it

valid

or

completes

meaningful
its

labor

activities, the defendants request that the action be stayed.

22

It is well settled law that federal district courts possess
the ability to, under their discretion, stay proceedings before
them when the interests of equity so require.

Williford v.

Armstrong World Indus., Inc., 715 F.2d 124, 125 (4th Cir. 1983).
Although neither the Federal Rules of Civil Procedure nor statute
have expressly promulgated such power, it is inherent within the
courts’ “general equity powers and in the efficient management of
their dockets to grant relief.”
unfettered.

Id.

Still, this power is not

A party seeking a stay must sustain the heavy burden

of justifying it by showing that clear and convincing circumstances
support a stay. Landis v. North American Co., 299 U.S. 248, 254-55
(1936).

Further, the Court must weigh the equities when deciding

whether to grant a stay, and must also consider the interests of
judicial economy and the desire for “the orderly and expeditious
disposition of cases.”

See Link v. Wabash R. Co., 370 U.S. 626,

630 (1962).
In this instance, the defendants’ proffered reason for this
Court to grant a stay of the proceedings is no longer a valid
justification for a stay based on the findings above concerning the
defendants’ motion for partial summary judgment.

The defendants

request the stay based on Kogok’s claim for labor inefficiency. As
stated above, however, this Court granted the defendants’ motion
for summary judgment as to Kogok’s claim for labor inefficiency.
Accordingly, no clear and convincing justification for a stay of

23

proceedings remains, and thus, this Court must deny defendants’
motion to stay the proceedings.
V.

Conclusion

For the reasons stated above, the defendants’ motion for
partial summary judgment is GRANTED, and the defendants’ motion to
stay all proceedings is DENIED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

September 23, 2014

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

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