Do you remember the Choose Your Own Adventure books? If you are a subcontractor on a federal project, where should you bring a lawsuit to get paid? If you are a prime contractor on a federal project, would you like the convenience of defending such a lawsuit in your own backyard?
The Federal Miller Act is designed to enforce payment for work on public buildings and public works when the U.S. Government is a party to the prime contract. Typically, a lawsuit by a subcontractor or material supplier seeking payment must be filed in the same geographic area where the Project is located. (40 USC § 3133(b)(3)(B)). However, a forum selection clause may differ and determine where such a lawsuit must be filed.
In mid-July 2015, a Federal District Court transferred a case from Connecticut to Virginia by applying a valid forum selection clause in a Miller Act lawsuit. The project was for refurbishment of a barracks building located at the U.S. Coast Guard Academy in New London, Connecticut. Typically then, Connecticut would be the proper place to file a Miller Act lawsuit.
However, the subcontract provided that all “claims related in any way or manner to the Subcontract Work . . . shall be litigated in” Virginia. The Federal Court in Connecticut followed the same logic as some other Federal Circuits (1st, 5th, 8th, and 10th) and found that when the forum selection clause is otherwise valid, it will be upheld even when the Federal Statute does not expressly provide for anything different (i.e., the Federal Statute states the Miller Act lawsuit “must” be filed where the Project is located).
U.S. Courts Map (Credit: Wikipedia)
The Connecticut Federal District Court also noted that Virginia law, not Connecticut law, applied to interpret the Subcontract, but this alone was not a reason to transfer the case to Virginia.
Keystone: If your Project is located in any of the Federal Circuits following the same reasoning (1st, 5th, 8th, and 10th Circuits) and your subcontract provides for a specific place to file the lawsuit, you should consider it as a defensive maneuver as a prime contractor or for efficiency sake as a subcontractor.
Case: QSR Steel Corporation, LLC v. Safeco Insurance Co. of America, Case No. 3:14-1017 (U.S.D.C., Dist. Conn., July 16, 2015).
Government Liability for Third-Party Delays
Generally, the Government is not responsible for delays caused by third parties, even other contractors at its own project site, unless the Government affirmatively indicates the site will be ready and available.
Keep a Pass-Thru Claim Burning, Don’t Extinguish Liability
Prime contractors, have you ever submitted a subcontractor’s claim to a public owner? Subcontractors, have you ever wanted to submit a claim against the government, but you had no contract with government?
When You Can’t Recover from a Third-Party (The Economic Loss Doctrine)
Suppose that you (the Contractor) had extra costs and want payment for those extra costs from the designer.
Barbecue and Construction Contracts
While barbecue recipes can be short and simple, contracts can be long and complicated. Fundamentally, though, recipes are very much like contracts: what’s required, how much of each part/ingredient, in what order should they be assembled/added, when, and for how long?
Show Your Work
A mentor of mine once said that process and procedures can be more important than substance and results. Like solving a math problem, how you solve it is often more important than the answer itself. The same is true in resolving construction contract disputes with public owners.
Substandard is Not Defective
The government need not follow the industry standard. It can do less or more.
Hide, Seek, & Seek
Have you ever played hide and seek? If you are the seeker, do you win the game when you find the hidden person? Yes, of course! Unless, you’re a government contractor.
Contractor Schooled School
Have you ever done exactly what you were supposed to do, but it didn’t work and you were blamed anyway? Nevertheless, if contractors follow the owner’s plans and it still doesn’t work, the contractor may be without fault – this is as it should be.
Walk It Off, Keep Going
During a recent soccer game, my seven-year-old son took the ball squarely in the face. But, he walked it off and continued playing. Contractors must do the same with changes.
