Virginia Federal Court upholds unilateral arbitration clause in construction contract. On a Project for the United States Air Force at Langley Air Force Base in Hampton, Virginia, an electrical Subcontractor filed a lawsuit for nonpayment under the Federal Miller Act. The clause provided that at Prime’s “sole election, any and all disputes . . . may be decided by mediation, arbitration or [ADR] proceedings as chosen by [Prime].”
The Court upheld the clause finding: (1) it was not vague simply because only one party (the Prime) could invoke its terms when the other party (Subcontractor) had already agreed to allow the Prime this right and (2) the contract as a whole was supported by sufficient consideration (i.e., benefit or detriment to each party).
This appears to be the first case by a Virginia court (state or federal) to interpret and uphold such a clause, which allowed only the Prime Contractor, not the Subcontractor, to resolve disputes by arbitration. North Carolina, West Virginia, and now Virginia agree on upholding unilateral arbitration clauses. Maryland disagrees.
When it’s time to butt heads, know how the local turf (court) will interpret the clause.
U.S. f/u/b/o Harbor Construction Co., Inc. v. T.H.R. Enterprises, Inc., 311 F.Supp.3d 797 (U.S. District Ct., Eastern District of Virginia, April 26, 2018)
Trick or Treat in Government Contract Claims
Without a request for a contracting officer’s final decision, claimants may seek treats, but get tricked instead.
Owner Nonpayment is No Defense to Miller Act Claim
As if you needed confirmation that the Federal Miller Act is a powerful tool for unpaid subcontractors, this is it. Even when a Prime ordered and accepted the Sub’s work, but didn’t have to pay under the Subcontract, the Subcontractor still. . . .
Trust, but Verify
Rely at your own risk upon a Contracting Officer’s statements when statutes or contract provisions may conflict.
Payment for Verbal Changes When a Writing was “Required”
Even if your agreement can only be modified by a writing, you may still have a good argument to be paid for extra work.
Pirates and Arbitration
How does a pirate solve a dispute (besides walking the plank)?
Bases Covered?
Contractors, will your current insurance policy cover “your work” as a joint venture partner? The typical answer is NO.
Two Paths at the Same Time to the Same Place
“Two roads diverged in a wood, and . . .” the Prime Contractor had to take both roads at the same time to the same place.
Rules, Which Rules?
Good Idea: Include a choice of law clause in your contract to promote consistency and predictability (while reducing potential costs and risk).
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.
