stating the Supreme Court has “repeatedly held that ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration.” (citations omitted)
How later courts described this case
- stating the Supreme Court has “repeatedly held that ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration.” (citations omitted)
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
SOUTHERN DIVISION
UNITED STATES OF AMERICA, )
for the use and benefit of EWS TEXAS, )
INC., )
)
Plaintiffs, )
)
v. ) Case No. 1:23-cv-00288-RAH-KFP
) [WO]
THE ROBINS & MORTON GROUP, )
et. al., )
)
Defendants. )
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
The United States of America, for the use and benefit of EWS Texas, Inc.
(EWS), sues Defendants The Robins & Morton Group (RMG) and Zurich American
Insurance Company (Zurich) under the Miller Act, 40 U.S.C. § 3131, et seq., and
the Alabama Prompt Payment Act, Ala. Code § 8-29-3, after the Defendants
allegedly failed to pay EWS for work performed on a construction project at the Fort
Rucker Training Support Facility. RMG has moved to compel arbitration of all
claims against it and to stay this action. Zurich consents to RMG’s requested relief
but does not seek arbitration of the claims against it. EWS opposes RMG’s motion.
The motion being fully briefed and ripe for review, the Court concludes that it is due
to be granted.
II. JURISDICTION AND VENUE
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331. The
Court finds adequate allegations to support both jurisdiction and venue.
III. BACKGROUND
According to the Complaint, RMG entered into a construction contract with
the United States Army Corps of Engineers to construct the Fort Rucker Training
Support Facility. (Doc. 1 at 3.) RMG obtained a payment bond for which Zurich
was the surety. (Id.) On June 14, 2021, RMG entered into a Subcontract with EWS
for work on the project, including roof and siding installation. (Id.) RMG failed to
pay EWS amounts due and owing under the Subcontract after EWS completed its
work and demanded payment. (Id.)
On May 1, 2023, EWS sued RMG and Zurich, asserting four causes of action:
(1) suit on the payment bond, brought jointly against RMG and Zurich; (2) breach
of contract, brought against RMG; (3) quantum meruit, brought against RMG; and
(4) violation of the Alabama Prompt Payment Act, brought against RMG. (Doc. 1
at 4–9.)
IV. LEGAL STANDARD
There is an “emphatic federal policy in favor of arbitral dispute resolution.”
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985).
The Federal Arbitration Act (FAA) requires courts to “rigorously enforce
agreements to arbitrate.” Davis v. Prudential Sec., Inc., 59 F. 3d 1186, 1192 (11th
Cir. 1995) (quoting Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226
(1987)). “[T]he party seeking to compel arbitration bears the burden of proving . . .
the existence of a binding arbitration agreement, its applicability to the claim at issue,
and a sufficient connection to interstate commerce[.]” Hammonds v. Montgomery
Children’s Specialty Center, LLC, No. 2:21-cv-448-MHT, 2023 WL 4474095, at *2
(M.D. Ala. July 11, 2023) (citation omitted). “If the moving party makes the
requisite showing, the burden shifts to the nonmoving party to present evidence that
the arbitration agreement is invalid or inapplicable to the dispute in
question. Finally, if the court finds that there is a binding and enforceable arbitration
clause pursuant to the FAA, it is required to order the parties to submit to arbitration.
Additionally, if one of the parties to the agreement requests a stay of litigation
pending said arbitration, the court is statutorily bound to grant the stay.” Id.
(citations omitted).
V. DISCUSSION
RMG asserts that EWS must pursue its claims against RMG in arbitration in
accordance with the arbitration clause contained in the Subcontract between RMG
and EWS. EWS opposes the motion, arguing that Miller Act claims cannot be
arbitrated and because the scope of the arbitration clause does not require arbitration
of EWS’s claims. Neither argument is persuasive.
A. The Miller Act
Asserting the parties did not contractually waive the right to bring a civil
action in federal court under the Miller Act, 40 U.S.C. § 3131, et seq., EWS
maintains the arbitration of disputes solely between RMG and EWS is statutorily
prohibited. EWS relies on § 3133(c) of the Miller Act which provides that a waiver
of the right to bring a civil action on a payment bond is void unless the waiver is in
writing, signed by the person whose right is waived, and is executed after the person
whose right is waived has furnished labor or material for use in the performance of
the contract. 40 U.S.C. § 3133(c). According to EWS, the waiver provision applies
because the Subcontract’s arbitration clause is a “quintessential waiver of the right
to bring a civil action” and, by analogy, courts have refused to enforce forum
selection clauses that require Miller Act suits to be brought in state court rather than
federal court. (Doc. 23 at 3.) EWS cites to no case decisions that support its
argument while RMG cites to numerous other court decisions that support its
position.
The Court sees little reason to discuss this issue further, especially in the
absence of any authority from EWS. In short, courts have overwhelmingly
concluded that Section 3133(c) of the Miller Act does not prohibit enforcement of
an arbitration agreement executed before the subcontractor has furnished labor or
material for use in the performance of the contract. See, e.g., United States v.
International Fidelity Ins. Co., 232 F. Supp. 3d 1193, 1195–98 (S.D. Ala. 2017);
United States ex rel. Milestone Tarant, LLC v. Fed. Ins. Co., 672 F. Supp. 2d 92,
104 (D.D.C. 2009) (collecting cases). The Court agrees with the logic in those
decisions. See also United States ex rel. Harbor Const. Co., Inc. v. T.H.R. Enters.,
Inc., 311 F. Supp. 3d 797, 802 (E.D. Va. 2018). Accordingly, EWS’s Miller Act
waiver argument is unavailing and due to be rejected.
B. Scope of the Arbitration Agreement
Citing Article 30 (Claims and Disputes; Arbitration as a Remedy) of the
Subcontract, EWS argues “only those claims which are the result of the Owner’s
errors and omissions are subject to arbitration” and since “EWS’ claims are not
against the Owner nor does EWS allege that the Owner is at fault” and that its
“damages are the result of Robins & Morton’s errors and omissions, not the
Owner’s,” then EWS’s claims against RMG cannot be forced into arbitration. RMG
responds, arguing that EWS misinterprets the language in Article 30 and in fact has
it backwards.1
The Subcontract (see Doc. 16-2 at 6–49) provides that “any disputes between
[RMG] and [EWS] not resolved under Paragraphs 30.2 and 30.3 shall be finally
1 Neither party argues that this is an issue of arbitrability that must be submitted to the arbitrator
for resolution due to the existence of a delegation clause. Compare Betkowski v. Kelley Foods of
Ala, Inc., 697 F. Supp. 2d 1296, 1300–01 (M.D. Ala. 2010), with Neal v. GMRI, Inc., No. 1:19-
cv-647-RAH, 2020 WL 698270, at *4–5 (M.D. Ala. Feb. 11, 2020). Accordingly, the Court
does not consider this issue.
determined by binding arbitration in accordance with the Construction Industry
Rules of the American Arbitration Association as those Rules existed on January 1,
1994 (notwithstanding any later amendments, except as to fees) by one or more
arbitrators selected in accordance with said Rules.” (Doc. 16-2 at 16.) Paragraph
30.2 provides, “In case of any dispute between [RMG] and [EWS], in any way
relating to or arising from any act or omission of the [Army Corps] or involving the
Contract Documents, [EWS] agrees to be bound to [RMG] to the same extent that
[RMG] is bound to the [Army Corps], by the terms of the Contract Documents, and
by any and all preliminary and final decisions or determinations made thereunder by
the party, board or court so authorized in the Contract Documents or by law, whether
or not [EWS] is a party to such proceedings.” (Id.) And paragraph 30.3 provides,
“If an appeal or legal proceeding is specifically permitted by the Contract
Documents and if requested in writing by [EWS], [RMG] will, in its name and on
[EWS’s] behalf, appeal any decision of [the Army Corps] or Architect or institute a
legal proceeding against [the Army Corps] based on any just claim by [EWS]
involving the Work.” (Id.)
The Court disagrees with EWS’s interpretation of the scope of Article 30 and,
alternatively, EWS’s assertion of ambiguity concerning Paragraphs 30.2, 30.3 and
30.4. Article 30 generally contemplates two types of claims: (1) claims brought by
EWS that arise out of conduct by the Army Corps, and (2) claims brought by EWS
that arise out of conduct by RMG that is unrelated to the acts of the Army Corps.
The former type of claims arguably cannot be arbitrated, as they contemplate an
action whereby EWS is bound by whatever resolution and outcome that RMG
obtains from and against the Army Corps. The latter type of claims however must
be arbitrated.
In its brief, EWS concedes that its claims are against RMG, that EWS’s claims
are not against the Army Corps, that the Army Corps bears no fault for EWS’s
damages, and that EWS’s damages flow from RMG’s own errors and omissions.
Under the plain language of Paragraphs 30.2, 30.3 and 30.4 of Article 30, these are
the type of claims that must be determined by binding arbitration in accordance with
the Construction Industry Rules of the American Arbitration Association. That was
the agreement of the parties. Contrary to EWS’s assertion, there is no ambiguity,
but to the extent there is ambiguity, considering the favorability that must be shown
toward enforcement of arbitration agreements under the FAA, such ambiguity must
be construed in favor of enforcing the arbitration agreement. Lamps Plus, Inc. v.
Varela, 587 U.S. __, 139 S.Ct. 1407, 1418 (2019) (stating the Supreme Court has
“repeatedly held that ambiguities about the scope of an arbitration agreement must
be resolved in favor of arbitration.” (citations omitted)).
VI. CONCLUSION
Accordingly, it is ORDERED that,
(1) Defendant The Robins & Morton Group’s Motion to Compel
Arbitration and to Stay This Action Pending Arbitration (Doc. 16) is GRANTED;
(2) Plaintiff United States of America, for the use and benefit of EWS
Texas, Inc., shall immediately pursue its claims against Defendant The Robins &
Morton Group by binding arbitration in accordance with the Construction Industry
Rules of the American Arbitration Association;
(3) This action is STAYED, including the claims brought against Zurich
American Insurance Company, pending resolution of the arbitration proceeding;
(4) Onor before November 10, 2023, and on or before the tenth day of
every second month thereafter, the Defendants are ORDERED to jointly file and
serve a report detailing the status of the arbitration proceeding;
(5) Plaintiff shall notify the Court of the conclusion of the arbitration
proceeding within fourteen days of the same.
DONE on this the 28th day of September 2023.
Cbd.
Bhife
UNITED STATES DISTRICT JUDGE