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United States ex rel. Harbor Construction Co., Inc. v. T.H.R. Enterprises, Inc.

United States District Court, E.D. Virginia, Newport News Division

April 26, 2018

THE UNITED STATES OF AMERICA ex rel. HARBOR CONSTRUCTION COMPANY, INC., Plaintiff,
v.
T.H.R. ENTERPRISES, INC., ET AL. Defendants.

          ORDER

          ROBERT G. DOUMAN UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on the defendant T.H.R. Enterprises, Inc.'s ("THR") Motion to Compel Arbitration, ECF No. 14, and accompanying motion to stay this action pending arbitration ("Motion to Stay"), ECF No. 16. Despite THR's request for a hearing on same, the Court dispenses with oral argument because the facts and legal contentions are adequately presented in the materials before the Court, and argument would not aid in the decisional process. For the reasons below, THR's Motions to Compel Arbitration and to Stay are GRANTED and this action is STAYED for a period of six months as set forth in this Order.

         I. PROCEDURAL HISTORY

         On December 15, 2017, Plaintiff United States of America for the use of Harbor Construction Company, Inc. ("Subcontractor" or "Harbor") filed a complaint against T.H.R. Enterprises, Inc. ("Contractor" or "THR") and Hanover Insurance Co. ("Hanover" or "Surety") (collectively, "Defendants") pursuant to the Miller Act, 40 U.S.C. §§ 3131-34. See Complaint ("Compl."), ECF No. 1. Defendants initially moved to dismiss the complaint or, alternatively, stay the action, but on April 9, 2018, such motion was denied after a hearing. ECF No. 13. With leave of court, THR then filed the instant Motion to Compel Arbitration, ECF No. 14, and Motion to Stay, ECF No. 16, on April 12, 2018.[1]These motions are now ripe for decision.

         II. FACTUAL BACKGROUND

         At all relevant times, THR has been the prime contractor for the United States government on a construction and building repair project at Langley Air Force Base in Hampton, Virginia ("Project"). Compl. ¶ 6. At all relevant times, Hanover has been the surety under the Project contract having furnished to the United States a payment bond under such contract and pursuant to the Miller Act. Id; see Payment Bond executed 10/24/2011, Id. at Ex. A.

         On October 19, 2011, THR entered into a written subcontract agreement, as amended, with Plaintiff Harbor ("Subcontract") to perform certain work under the Project contract. Id. ¶ 11; see Subcontract, Id. at Ex. B. Pursuant to the terms of the Subcontract, Harbor agreed to render electrical services and certain labor and materials for the Project, and THR agreed to pay the agreed contract price of $1, 400, 000.00, "excluding change orders and additional work." Id. ¶ 12; see Subcontract ¶ 4. Article 5 of the Subcontract provides that such sum shall be paid to Harbor in partial progress payments. See Compl. ¶ 12; Subcontract ¶ 5.

         Harbor last performed work under the Subcontract in September 2017. Id. ¶ 16. According to Harbor, it has completed all of the work required under the Subcontract as well as all change orders and directions for extra work, and it has demanded payment for same from THR. Id. ¶ 13. Harbor claims that, to date, THR has failed to pay $269, 056.86 owed to Harbor under the Subcontract. Id. ¶ 14.

         Count I of Harbor's complaint seeks action on THR's payment bond with Hanover to recover the monies owed under the Subcontract; Count II alleges breach of contract by THR; and Count III alleges unjust enrichment by THR. Id. Harbor ultimately seeks a judgment against the Defendants, jointly and severally, awarding Harbor compensatory damages in the amount of $269, 056.87 plus interest, costs, and attorneys' fees. Id. at 6.

         III. MOTION TO COMPEL ARBITRATION

         THR asks the Court to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§1, et seq.. on the grounds that the contractual dispute at issue in Harbor's complaint is subject to an alternative dispute resolution ("ADR") provision in Article 13 of the Subcontract. This provision, entitled "Disputes and Dispute Resolution, " states in relevant part:

At CONTRACTOR'S sole election, any and all disputes arising in any way or related in any way or manner to this Agreement may be decided by mediation, arbitration or other alternative dispute resolution proceedings as chosen by CONTRACTOR.. ..
The remedy shall be SUBCONTRACTOR'S sole and exclusive remedy in lieu of any claim against CONTRACTOR'S bonding company pursuant to the terms of any bond or any other procedure or law, regardless of the outcome of the claim. The parties further agree that all disputes under this Subcontract shall be determined and interpreted pursuant to the laws of the Commonwealth of Virginia....

Subcontract ¶ 13, Compl. at Ex. B.

         To show that THR has elected arbitration under Article 13 to resolve the contract disputes at issue here, THR submitted the following documents in support of its Motion to Compel Arbitration: (1) a copy of its letter, dated April 12, 2018, to the American Arbitration Association ("AAA") requesting initiation of arbitration with Harbor, enclosing its Arbitration Demand with respect to same, and remitting fees to the AAA in the amount of $2, 500; and (2) a copy of THR's letter, also dated April 12, 2018, to Harbor's counsel furnishing copies of THR's Arbitration Demand and its related correspondence with the AAA. See ECF No. 14 at Ex. 1.

         A. The Federal Arbitration Act

         The Federal Arbitration Act ("FAA") provides:

A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as ...

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