HW Caldwell & Son, Inc. v. US for John H. Moon & Sons, Inc.

• Decision Date: 24 April 1969
• Docket Number: No. 26147.,26147.
• Citation: 407 F.2d 21
• Parties: H. W. CALDWELL & SON, INC., et al., Appellants, v. U. S. for Use and Benefit of JOHN H. MOON & SONS, INC., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

407 F.2d 21 (1969)

H. W. CALDWELL & SON, INC., et al., Appellants, v. U. S. for Use and Benefit of JOHN H. MOON & SONS, INC., Appellee.

No. 26147.

United States Court of Appeals Fifth Circuit.

February 11, 1969.

Rehearing Denied April 24, 1969.

Vardaman S. Dunn, Jackson, Miss., Overton A. Currie, Robert B. Ansley, Jr., Atlanta, Ga., for appellants.

Alfred N. Crisler, Charles W. Crisler, Jr., Jackson, Miss., for appellee.

Before WISDOM and GODBOLD, Circuit Judges, and HUGHES, District Judge.

HUGHES, District Judge:

This is a Miller Act (40 U.S.C. sec. 270a et seq.) case brought by the subcontractor, Moon & Sons, hereinafter referred to as Moon, against the prime contractor, Caldwell & Son, hereinafter referred to as Caldwell, for the balance owing for regular work performed under the subcontract and extra work resulting from the prime contractor's delay in performing.

Caldwell entered into a contract with the United States of America, hereinafter referred to as Government-owner, for highway construction. The contract includes the standard disputes clause of Standard Form 23-A utilized in Government construction contracts.¹ Moon contracted with Caldwell to do part of the construction work involved in the primary contract.

The Government-Owner terminated the contract and Caldwell, within the contractually-required time, notified the Government-Owner that it was invoking its remedies under the "disputes" clause for wrongful termination.

Moon subsequently brought this cause of action and Caldwell and the Surety filed a motion seeking a stay, injunction, suspension, abatement or dismissal of Moon's action pending exhaustion of administrative remedies against the Government-Owner under the standard "disputes" clause of the principal contract. That motion was overruled and this appeal followed.

Presented herein are two issues: (1) the appealability of the order overruling the motion to stay the proceedings and (2) the correctness of the decision denying the motion to stay.

We hold the order appealable and affirm the district court's denial of the stay.

With respect to the first question it is clear that the overruling of the motion to stay was not a final decision appealable under 28 U.S.C. § 1291. Caldwell contends, however, that the order below was in effect the denial of injunctive relief from which an appeal should be allowed pursuant to 28 U.S.C. § 1292 (a) (1). We agree.

In a 1962 decision, Jackson Brewing Co. v. Clarke, 5th Cir., 303 F.2d 844 this Court stated in an appeal from an order granting a stay:

we think the rule which has emerged from the various decisions can be stated thus: An order staying or refusing to stay proceedings in the District Court is appealable under § 1292 (a) (1) only if (A) the action in which the order was made is an action which, before the fusion of law and equity, was by its nature an action at law; and (B) the stay was sought to permit the prior determination of some equitable defense or counterclaim.²

The instant order, when viewed in light of the above rule, falls within the ambit of appealable orders. This action, brought under the Miller Act, is one at law and the stay was sought to await the results of the administrative remedies, which are equitable proceedings. Thus both (A) and (B) of the rule as stated by this court in Jackson Brewing, supra, are met,³ and the order is appealable.

Turning to the second issue, the correctness of the District Court's ruling denying the stay, Caldwell contends that the subcontractor is bound by the "disputes" clause of the prime contract or that the equities of the case require a granting of the stay.

The contract of Moon, the subcontractor, with Caldwell, the prime contractor, contained the following provision:

Section V: The Contractor and Subcontractor agree to be bound by the terms of the Agreement, the General and Special Provisions, Drawings, and Specifications as far as applicable to this subcontract, and also by the following provisions:

The Subcontractor agrees: (a) to be bound to the Contractor by the terms of the General Contract between the Owner and Contractor, and the General and Special Provisions, Drawing and Specifications, and to assume toward the contractor all the obligations and responsibilities that he, by those documents, assumes toward the owner insofar as concerns the subject matter of the Agreement:

Though these terms of the contract seem to bind the subcontractor to all the terms of the general contract similar provisions have been held not binding with respect to the "disputes" provision.

In the recent Miller Act case of United States for the use of B's Company v. Cleveland Electric Company of South Carolina, 4th Cir. 1967, 373 F.2d 585 the Court stated:

It is true that the terms of the subcontract stated that the subcontractor was bound by the terms of the prime contract and that it assumed the prime contractor\'s obligations to the Government insofar as applicable to the work performed by the subcontractor, but this identical language has been held, and we think properly, not to require the subcontractor to pursue the administrative remedies given the

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