United States District Court, E.D. Virginia, Alexandria Division
UNITED STATES OF AMERICA For the use and benefit of DUNCAN TELCOM, INC., Plaintiff,
POND CONSTRUCTORS, INC., and BERKLEY REGIONAL INSURANCE CO., Defendants.
C. CACHERIS UNITED STATES DISTRICT COURT JUDGE
case is before the Court on Defendants' motion to stay
litigation pending binding arbitration. Defendants have also
filed a motion for extension of time to file responsive
facts upon which the Court relies are taken primarily from
Plaintiff's Complaint. (See Compl. [Dkt. 1]
(“SOF”)). They are undisputed unless otherwise
Duncan Telcom, Inc. (“Duncan”) is a data
communication services firm incorporated and having its
principal place of business in Virginia. Defendant Pond
Constructors, Inc. (“Pond”) is a Georgia
corporation, with its principal place of business also in
Georgia. Pond provides professional engineering services.
Defendant Berkley Regional Insurance Company
(“Berkley”) is a Delaware corporation, with its
principal place of business in Connecticut. Berkley
underwrites insurance policies.
September 2013, Pond entered into a contract (the
“Prime Contract”) with the United States Army
Corps of Engineers (“Corps”) to provide labor and
supply materials to make fueling system improvements on
United States facilities in Fort Lee, Virginia. (SOF
¶¶ 4, 14.) As a requirement of the Prime Contract,
Pond provided a payment bond (the “Payment
Bond”), identifying itself as the principal and Berkley
as the surety. (Id. ¶ 5.) On March 28, 2014,
Pond then subcontracted a portion of its work to Duncan,
through Duncan's division of Duncan Energy Systems.
(Id. ¶ 5.) The first subcontract agreement (the
“Subcontract”) stated that Pond would pay Duncan
$371, 868.00 to provide labor and materials. (Id.
¶ 17.) On May 14, 2014, Pond submitted
“Subcontract Change Order No. 1” to Duncan,
asking for Duncan to provide a 4500 gallon temporary storage
tank for a maximum of four weeks. (Id. ¶ 19.)
This increased the amount that Pond owed Duncan by $2,
480.00, for a revised payment of $374, 348.00. (Id.)
21, 2016, an underground tank “floated, ” or rose
completely out of the ground, independent of the actions of
any workers on-site. (Id. ¶ 21.) This caused
extensive damage to the project site and had to be repaired
in order to complete the work outlined in the Prime Contract.
(Id.) Thus, Pond submitted Subcontract Change Order
No. 2 and No. 3 in September 2014, increasing the total
amount owed to Duncan to $392, 600.56. (Id.
¶¶ 25-27.) Duncan alleges that neither subcontract
change fully compensated it for the costs of labor or
materials to repair the floating underground tank.
(Id. ¶ 28.) Two additional subcontract change
orders were submitted in May 2015, bringing the total owed by
Pond to Duncan to $478, 091.56. (Id. ¶¶
30-32.) Duncan completed its subcontract work in September
2015. (Id. ¶ 33.)
the completion of its work, Duncan alleges that it submitted
seven Subcontractor's Applications for Payment to Pond.
(SOF ¶ 37.) Duncan also submitted separately all
payroll, invoices, and daily activity reports related to all
labor and materials provided by Duncan to repair the floating
underground tank. (Id. ¶ 36.) Duncan alleges
that Pond continues to owe $351, 376.03 for the costs of
labor and materials provided by Duncan to Pond to carry out
the Prime Contract. (Id. ¶¶ 38, 41, 43.)
August 23, 2016, Duncan filed a complaint in this court,
alleging: (1) breach of contract against Pond; (2) breach of
surety obligation/contract against Pond and Berkley; and (3)
quantum meruit against Pond and Berkley. (See Compl.
[Dkt. 1] at 8-9.) On September 19, 2016, Pond and Berkley
jointly filed a motion to stay litigation pending binding
arbitration. [Dkt. 6.] They also filed a motion for extension
of time to reply. [Dkt. 8.] Duncan filed a response to both
motions on September 30, 2016. [Dkt. 10, 11.] Defendants
submitted a response regarding the motion to stay litigation
on October 4, 2016. [Dkt. 12.] These motions are now ripe for
Standard of Review
the Federal Arbitration Act (“FAA”), 9 U.S.C.
§§ 1 et seq., a court must enforce an
arbitration agreement that meets the following requirements:
(1) is part of a written contract between the parties
“if the contract or transaction involves interstate
commerce;” (2) pertains to the specific dispute at
issue; and (3) is “valid under general principles of
contract law.” Hendrick v. Brown & Root,
Inc., 50 F.Supp.2d 527, 531-32 (E.D. Va. 1999) (citing 9
U.S.C. § 2). Section 3 of the FAA requires that:
If any suit or proceeding be brought in any of the courts of
the United States upon any issue referable to arbitration,
the court in which such suit is pending, upon being satisfied
that the issue involved in such suit or proceeding is
referable to arbitration under such an agreement, shall on
application of one of the parties stay the trial of the
action until such arbitration has been had in accordance with
the terms of the agreement[.]
Id. at 532 (quoting 9 U.S.C. § 3).
differently, a presumption exists in favor of arbitration.
See AT&T Techs, Inc. v. Communications Workers,
475 U.S. 643, 650 (1986) (“An order to arbitrate the
particular grievance should not be denied unless it may be
said with positive assurance that the arbitration clause is
not susceptible of an interpretation that covers the asserted
dispute. Doubts should be resolved in favor of
coverage.'”) (quoting United Steelworkers of
Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574,
582-83 (1960)). Despite this presumption, the party
requesting the stay bears the burden of proving that the
claim is “referable to arbitration under the
contract.” Hendrick, 50 F.Supp.2d at 532
(citing Carson v. Giant Food, Inc., 175 F.3d 325,
331 (4th Cir. 1999)). To determine whether the claim can be
referred, “[o]rdinary state law”
contract-formation principles control. Id. at 533
(citations and quotations omitted). The party requesting the
stay “‘must [also] justify it by clear and
convincing circumstances ...