U.S., for and on Behalf of Portland Const. Co. v. Weiss Pollution Control Corp.
| Decision Date | 04 June 1976 |
| Docket Number | No. 74-4085,74-4085 |
| Parties | UNITED STATES of America, for and on Behalf of PORTLAND CONSTRUCTION COMPANY, Plaintiff-Appellant, v. WEISS POLLUTION CONTROL CORPORATION et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Michael H. Feiler, Alan Ackerman, Detroit, Mich., Sumner & Tyner, Dade City, Fla., for plaintiff-appellant.
Robert Goldhagen, C. R. Talley, Tampa, Fla., Thomas A. Rayer, New Orleans, La., for defendants-appellees.
Appeal from the United States District Court for the Middle District of Florida.
Before GEWIN and AINSWORTH, Circuit Judges, and MARKEY, * Chief Judge.
This is an appeal from an order dismissing an action brought pursuant to the Miller Act, 40 U.S.C. § 270a et seq.
On November 9, 1972 appellee Weiss Pollution Control Corporation (Weiss) entered into a construction contract with the United States, acting by and through the Army Corps of Engineers, for certain canal and bridge construction work on the project commonly known as the Tampa Bypass Canal. At the same time appellee Argonaut Insurance Company (Argonaut), as surety, executed and delivered to the United States a Miller Act payment bond, with Weiss as principal, for the protection of all persons supplying labor and material in the prosecution of the work provided for in the construction contract.
By contract dated December 8, 1972, Weiss subcontracted specific portions of the excavation and associated work under its prime contract to appellant Portland Construction Company (Portland). Paragraph 9 of this subcontract provides as follows:
It is further agreed that any controversy or claim arising out of, or related to any provision of this subcontract, or breach thereof, shall be settled by arbitration in accordance with the rules then in effect of the American Arbitration Association to the extent consistent with the laws of the State of Michigan and the award of the arbitrators shall be final and binding upon the parties.
Portland commenced work under the contract, but a dispute between the parties arose, and Portland stopped work on or about October 29, 1973. On May 21, 1974 Portland issued a demand for arbitration in accordance with the subcontract.
On August 28, 1974 Portland instituted this suit on the Miller Act bond in the United States District Court for the Middle District of Florida. 1 On September 23 Weiss and Argonaut each filed motions to dismiss or in the alternative to stay the Miller Act suit. They argued that Portland, having chosen the alternative remedy of arbitration in Michigan, was thereafter precluded from maintaining a federal suit with identical issues. 2 In its response to these motions, Portland consented to an order staying the federal proceedings, but opposed dismissal of the suit. The district court, adopting the reasoning put forth by the appellees, granted their motions to dismiss and entered the following order:
The crux of defendants' argument is that plaintiff, having instituted binding arbitration proceedings, should not be permitted to maintain the instant action claiming identical relief. The Court agrees. Although the plaintiff may have had a choice of forums in which to bring his claims, his choice of arbitration precludes his later suit in this Court. See United States for the Use of Trucco & Sons Company v. Bregman Construction Corp., 256 F.2d 851 (7th Cir. 1958). This dispute should be settled through the pending arbitration process. A stay of this action would be completely unproductive. Accordingly the defendants' motions to dismiss should be, and they are hereby GRANTED, and this action is hereby DISMISSED.
On February 9, 1976 the very day that this appeal was argued before this court, the arbitration panel in Michigan rendered an award in favor of Portland and against Weiss in the amount of $209,440. Weiss has since filed a motion to vacate the arbitration award in the Circuit Court for Oakland County, Michigan. We remand this case with instructions pending the final outcome of those proceedings.
In dismissing the suit the district court treated Portland's demand for arbitration in accordance with the terms of its subcontract as a contractually agreed upon waiver of its Miller Act remedy or an election not to pursue that remedy. Neither of these approaches warranted dismissal. In United States for the use of Ray Gaines, Inc. v. Essential Construction Co., 261 F.Supp. 715 (D.Md.1966), the court denied the general contractor's and surety's motions to dismiss the Miller Act suit based on a subcontract provision stating that all disputes were to be settled exclusively in state court. This provision, the court held, did not constitute a waiver of the subcontractor's right to sue on the Miller Act bond in federal court:
No case has been called to the Court's attention holding that a federal court will enforce a clause in a contract expressly denying a subcontractor rights conferred by Congress when it enacted the Miller Act. There are several cases which hold that an agreement between a contractor and subcontractor to arbitrate a dispute will be upheld even though Miller Act jurisdiction exists and that a suit brought in federal court under the Act may be stayed pending such arbitration. (citations omitted) These cases go no further than to say that the Miller Act does not prohibit arbitration before resort to the courts if the subcontractor and contractor had previously agreed to arbitrate disputes.
261 F.Supp. at 721 (footnote omitted).
Similarly, in United States for the use of N. Gigliello v. Sovereign Construction Co., 311 F.Supp. 371 (D.Mass.1970), the court concluded that a contractual provision giving the general contractor the right to have disputes settled in state court could not be interpreted as a bar to the subcontractor's right to bring his Miller Act suit:
Parties cannot by contract oust the District Court of the jurisdiction conferred upon it . . . If (the contract) is to be interpreted as barring the plaintiff from his right to bring this action in this court, . . . then it is in direct contradiction to the provisions of the Miller Act and is therefore void.
By demanding arbitration in Michigan, Portland did not waive its right to pursue its Miller Act remedy. Argonaut, the surety, was not a party to the subcontract that provided for arbitration and could not be joined as a party in the arbitration proceedings. Portland may avail itself of its Miller Act remedy against Argonaut only by way of a Miller Act suit in federal court. United States Fidelity & Guar. Co. v. Hendry Corp., 391 F.2d 13 (5th Cir. 1968), cert. denied, 393 U.S. 978, 89 S.Ct. 446, 21 L.Ed.2d 439 (1968). Consequently, to find a waiver in these circumstances would totally deprive Portland of the cause of action conferred by the terms of the Miller Act.
By the same token, Portland's Miller Act suit was not barred by the doctrine of election of remedies. This doctrine means that if one party has alternative, inconsistent remedies, his choice of one remedy precludes further pursuit of the second remedy. Alexander v. Gardner-Denver Co., 415 U.S. 36, 50, 94 S.Ct. 1011, 1020, 39 L.Ed.2d 147, 159 (1974). See generally 5A Corbin, Contracts §§ 1214-1227 (1964 and Supp.1971). The purpose of the doctrine is to prevent double recovery for a single wrong. Twin City Federal Savings and Loan Ass'n v. Transamerica Ins. Co., 491 F.2d 1122, 1125 (8th Cir. 1974).
The United States Arbitration Act provides:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which 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, providing that the applicant for the stay is not in default in proceeding with such arbitration.
9 U.S.C. § 3 (emphasis supplied). The provisions of this Act apply to suits brought pursuant to the Miller Act. United States for the use of Capolino Sons, Inc. v. Electronic & Missile Facilities, Inc., 364 F.2d 705 (2d Cir. 1966); Agostini Bros. Bldg. Corp. v. United States for the use of Virginia-Carolina Electrical Works, Inc., 142 F.2d 854 (4th Cir. 1944). The Arbitration Act and these cases necessarily recognize that there is no inconsistency between arbitration and a subsequent suit on the Miller Act bond. If the two were inconsistent, a...
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