{"id":901723,"date":"2023-10-17T15:53:26","date_gmt":"2023-10-17T21:53:26","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901723"},"modified":"2023-10-17T15:53:29","modified_gmt":"2023-10-17T21:53:29","slug":"miller-act-no-good-bad-and-ugly","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/miller-act-no-good-bad-and-ugly\/","title":{"rendered":"Construction Litigation\u00a0Roundup: \u201cNo Good – Just the Bad and the Ugly\u201d"},"content":{"rendered":"\n

Daniel Lund III | Phelps Dunbar<\/a><\/p>\n\n\n\n

A general contractor on a federal highway project in Arizona refused to pay in excess of $800,000 to its site preparation subcontractor. The sub filed suit in federal court against the GC and its Miller Act<\/a> surety.\u00a0<\/p>\n\n\n\n

After being served with the suit, the general contractor and surety \u2013 rather than answering the suit \u2013 requested a stay. The request was predicated in principal part upon GC friendly heavy-handed dispute resolution processes set forth in the subcontract. For example, the subcontract provided that if the dispute between GC and sub \u201cis connected to\u201d an ongoing dispute between the GC and the federal owner, litigation between the GC and sub must be stayed until resolution of the GC\/owner dispute. Added to the foregoing were requirements for claims disconnected from GC\/owner disputes, which required initial discussions, followed by mediation, followed by arbitration or litigation. <\/p>\n\n\n\n

The court wrestled with the stay request because the \u201cframework\u201d for that as presented by both parties, according to the court, was off base. The court eventually held that the stay request was to be handled under its inherent power to grant that type of relief and attributed the arbitration argument of the GC to a request for a stay under the Federal Arbitration Act. <\/p>\n\n\n\n

Concerning the alleged GC\/owner dispute, the subcontract called for a stay if those parties are in a \u201cdispute resolution proceeding.\u201d Noting that \u201cdispute resolution proceeding\u201d was not defined in the subcontract, the court \u2013 not requiring the term to entail a formal proceeding \u2013 nonetheless held that the GC had not provided evidence of \u201congoing discussions and meetings\u201d between the GC and the owner \u201cin sufficient detail to determine that they meet the bare minimum of being a \u2018dispute resolution proceeding.\u2019\u201d Hence, the court refused the argument of the general contractor.<\/p>\n\n\n\n

Regarding the mediation and arbitration requirements, the court also ruled in favor of the sub. Concerning mediation, the court noted that the subcontract provided that only the general contractor could invoke mediation (mediation was at the \u201csole discretion\u201d of the GC) and determined that it would be \u201cinappropriate to bar [subcontractor] from pursuing litigation before mediation when [subcontractor] has no ability to demand mediation.\u201d <\/p>\n\n\n\n

The court was unpersuaded by GC arguments that it planned to \u201cinvoke mediation at some identified point\u201d in the future.<\/p>\n\n\n\n

On arbitration, the court pointed out that the parties had literally not checked a box in the subcontract document to select either arbitration or litigation. Scrambling, the general contractor argued that because arbitration was the first listed of the two options, the parties \u201cintended to select the arbitration provision by not checking the box for arbitration or litigation.\u201d Naturally, the court rolled its eyes at this, determining that there was no agreement to arbitrate.<\/p>\n\n\n\n

In issuing its ruling refusing the stay, the court noted the possibility that a stay might later be requested but admonished the GC that a renewed request \u201cmust provide authority\u2026 that a federal court lacks discretion\u201d to refuse a stay under the circumstances presented \u2013 a high hurdle for the future.<\/p>\n\n\n\n

Stormwater Plans LLC v. Cincinnati Ins. Co., 2023 U.S. Dist. LEXIS 180549 (D. Ariz. Oct. 6, 2023)\u00a0<\/a><\/em><\/p>\n\n\n\n

\n\n\n\n

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Daniel Lund III | Phelps Dunbar A general contractor on a federal highway project in Arizona refused to pay in excess of $800,000 to its site preparation subcontractor. The sub filed suit in federal court against the GC and its Miller Act surety.\u00a0 After being served with the suit, the general contractor and surety \u2013… Continue reading Construction Litigation\u00a0Roundup: \u201cNo Good – Just the Bad and the Ugly\u201d<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[9895,989],"class_list":["post-901723","post","type-post","status-publish","format-standard","hentry","category-construction-2","tag-advise-consult","tag-miller-act","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nConstruction Litigation\u00a0Roundup: \u201cNo Good - 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