United States of America for the use and benefit of Superior Steel, Inc. v. B.L. Harbert International, LLC et al, No. 1:2019cv00173 - Document 25 (S.D. Ga. 2020)

Court Description: ORDER granting 13 Motion to Compel Arbitration and Stay Pending Arbitration. Plaintiff and Defendant Harbert SHALL ARBITRATE Counts I, II, and IV of the complaint; and (2) this entire case including counts against non-arbitrating parties is STAYED pending arbitration. Plaintiff and Defendant Harbert SHALL file a joint status report with the Court every NINETY (90) DAYS until the arbitration has concluded. Signed by Chief Judge J. Randal Hall on 7/23/2020. (pts)

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United States of America for the use and benefit of Superior Steel, Inc...t International, LLC et al Doc. 25 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 1 of 30 FILED r. I r- T u.s ICT COURT STA DIV. UiO i 1 h IN THE UNITED STATES DISTRICT COURT FOR SOUTHERN DISTRICT OF GEORGIA AUGUSTA DIVISION UNITED STATES OF AMERICA for * the use and benefit of * 20JUL23 PfM2:50 CLERK SUPERIOR STEEL, INC., * k Plaintiff, * * V . CV 119-173 * B.L. LLC; * HARBERT INTERNATIONAL, TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA; FIDELITY AND OF MARYLAND; AMERICAN DEPOSIT * COMPANY * and ZURICH INSURANCE COMPANY, k k Defendants. ORDER Before LLC's the Court ("Harbert") arbitration. (Doc. is Defendant B.L. Harbert International, motion to compel arbitration and stay pending For the following reasons, the motion is 13.) GRANTED. I. A. BACKGROUND^ The Project Defendant Harbert is the prime contractor constructing improvements to the United States Army Corps of Engineers' Command Headquarters in Fort Gordon, Georgia Cyber ("Project") . ^ The Court details only those facts necessary to decide the present motion. Dockets.Justia.com Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 2 of 30 Defendant (Compl., Doc. 1, 1 8; Lalor2 Aff., H 4.) Plaintiff Superior subcontract ("Plaintiff") Inc. Steel, ("Subcontract") on October 17, Harbert entered 2016, and into under a which Plaintiff was to complete structural steel work for the Project. (Compl., 9; Lalor Aff., 5 5; see Subcontract, Doc. 1-1.) As required under the Miller Act, 40 U.S.C. §§ 3131 et seq., Defendant Harbert took out payment bonds for the Project with Defendants Travelers Casualty and Surety Company of America, Fidelity and Deposit Company of Maryland, and Zurich American Insurance Company (collectively. Sureties"). (Compl., SI 10; Payment Bonds, Compl. Ex. B, Doc. 1-2.) B. Payment Dispute During construction and for disputed reasons unnecessary to presently detail - issues arose with Plaintiff's performance under the Subcontract and Defendant Harbert incurred additional costs. (Compl, deducted SIS! 11-13; costs Lalor from Aff., SII 6-8, amounts otherwise Defendant 10.) owed to Plaintiff demanded payment of the deducted amount. Lalor Aff., recover. SI 8.) No payment Plaintiff filed the was made. Harbert Plaintiff, and (Compl., SI 16; (Compl., SI 17.) To present suit raising four counts: (I) a breach of contract claim against Defendant Harbert, (II) an unjust enrichment claim against Defendant Harbert, (III) a Miller 2 William Lalor is Defendant Harbert's Vice President. 2 2.) 2 (Lalor Aff., Doc. 13-1 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 3 of 30 Act bond claim against Defendants Harbert and Sureties, and (IV) a (Id. Georgia Prompt Pay Act claim against Defendant Harbert. gigi 20-33.) C. Dispute Resolution Provision Paragraph 29 of the Subcontract contains the dispute resolution \\ provision, providing: All disputes between [Defendant Harbert] and [Plaintiff] related in any way to this Subcontract, the Work[,] or the Project shall n [Paragraph] 29. be resolved w (Id. mediation. accordance resolve direct discussions 5 29(a), (b), at this with To 29, at 12-13.3) (Subcontract, dispute, the parties must engage in necessary. in n a and, if If 12.) the disagreement nonetheless endures, section (c) provides: Unless suit is brought under the Miller Act (40 U[.]S[.]C[.] §§ 3131, et seq.), . . . at [Defendant Harbert]'s sole election, the parties shall submit the disputes to either binding arbitration or to litigation, as further detailed below. (Id. 29(c), at 12.) If Defendant Harbert chooses litigation in lieu of arbitration, section (c) dictates that the claims \\ shall be resolved by bench trial, without a jury, in the United States District Court for the Northern District of "4 Alabama. (Id. ) 3 For the reader's convenience, the Court cites the PDF page numbers of the Subcontract (Doc. 1-1) as supplied by CM/ECF. The Court identifies the page number at which to find a paragraph section only once. ^ According to the Subcontract, the Northern District of Alabama is a proper venue because: [Plaintiff] and [Defendant Harbert] agree that this Subcontract has been negotiated, formulated, drafted, agreed upon, executed, and at least in part performed within the jurisdiction of the United States District Court for the Northern 3 District of Alabama, and that Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 4 of 30 W t! Should [Defendant paragraph Harbert] 29 applies, elect requiring arbitration, a section three-arbitrator (f) panel of held under the American Arbitration Act's ("AAA") Construction Industry Arbitration 12-13.) Rules ("AAA Construction N\ In addition. (Id. f 29(f), at Rules"). [Plaintiff] agrees that should it initiate litigation or arbitration Harbert]'s authorization without as to first choice obtaining of forum. [Defendant [Defendant Harbert] shall have the absolute and sole right to transfer the // disputes to the other forum. D. (Id. 29(e), at 12. ) Procedural Posture On September 16, 2019, the parties mediated the disputes, but the mediation proved Plaintiff filed Compl.) the unsuccessful. present suit on (Lalor Aff., September 26, 2019. (See Defendant Harbert then filed the present motion to compel arbitration and stay pending arbitration. Compel Arbitration, Doc. 13.) Opp'n 51 16-17.) Mot. to Compel (Def. Herbert's Mot. to Plaintiff responded Arbitration, Doc. 14), (Pl.'s Resp. Defendant Harbert replied (Def. Herbert's Reply Supp. Mot. to Compel Arbitration, Doc. 17), and Plaintiff sur-replied (Pl.'s Sur-Reply Opp'n Mot. to Compel Arbitration, Doc. 19) . Defendant Harbert's motion is ripe for review. [Plaintiff] draft has entered into Alabama to negotiate, formulate, execute and perform (at least in part) this Subcontract. (Subcontract, 2 29(c).) 4 now Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 5 of 30 II. There is LEGAL STANDARD emphatic federal policy in favor of arbitral an H Mitsubishi Motors Corp. v. Sober Chrysler- dispute resolution. Plymouth, Inc., 473 U.S. 614, 631 (1985). N\ Act ("FAA") requires courts to arbitrate. // Davis (11th Cir. 1995) V. rigorously enforce agreements to Prudential Sec., Inc., 59 F.3d U.S. 220, 1186, 1192 (quoting Shearson/Am. Express, Inc, v. McMahon, \\ 482 The Federal Arbitration 226 (1987)) . [T]he party seeking to compel arbitration has the initial burden of producing the arbitration agreement and establishing the contractual relationship necessary to implicate the FAA and its provisions granting th[e] [c]ourt authority to dismiss or stay [the] [p]laintiff's cause of action rr Compere v. Nusret Miami, LLC, 396 F. and to compel arbitration. Supp. 3d 1194, 1199 (S.D. quotation marks omitted). burden of production. the Fla. 2019) (citation and internal If the party for arbitration meets its burden shifts to the party opposing arbitration to show why the court should not compel arbitration. Bhim V. Rent-A-Ctr., Inc., 655 F. Supp. 2d 1307, 1311 (S.D. Fla. 2009) . III. As an initial DISCUSSION matter. the Court has subject matter jurisdiction over this dispute because Plaintiff brings a claim 5 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 6 of 30 28 U.S.C. § 1331; (see also Compl. arising under federal law.^ It also appears to the Court that diversity jurisdiction 6.) exists given that there is complete diversity and the amount in 28 controversy exceeds $75,000.00. gigi 1-5, 21.) U.S.C. § 1332; (see Compl., Defendant Herbert moves the Court to compel Plaintiff to arbitrate Counts I, II, and IV of the Complaint as against The Court analyzes whether (A) the FAA governs Defendant Herbert. the agreement to arbitrate. (B) the agreement to arbitrate is valid. (C) Defendant Harbert may elect to arbitrate the relevant claims, and (D) the Court should stay this action pending arbitration. A. FAA \\ The FAA applies to n involving construed this U.S.C. language ff involving 9 commerce. agreements commerce evidencing § 2. broadly. The holding a transaction Supreme that Court Section has 2's language must be read to extend the Act's Allied- reach to the limits of Congress's Commerce Clause power. Bruce Terminix Cos. v^ Dobson, 513 U.S. 265, 268, 277 (1995). Here, States the overall government Project through was the commissioned United States by the Army United Corps of See Tamiami 5 The FAA does not confer federal subject matter jurisdiction. Partners, Ltd, ex rel. Tamiami Dev. Corp. v. Miccosukee Tribe of Indians of Fla., 177 F.3d 1212, 1222 (11th Cir. 1999); Merrill Lynch, Pierce, Fenner & Smith, Inc, v. Haydu, 637 F.2d 391, 395 (5th Cir. Unit B 1981) (stating that to compel arbitration under the FAA, the court must have an independent basis of jurisdiction, such as federal question or diversity). 6 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 7 of 30 Plaintiff Engineers. Subcontract in and Defendant furtherance of the Herbert entered into Plaintiff Contract. the is a Tennessee corporation with its principal place of business in Tennessee. (Compl., corporation (Compl., with 52.) 5 1.) Defendant its principal place The Subcontract was Herbert is a Delaware of business in Alabama. "negotiated, formulated, drafted, agreed upon, executed, and at least in part performed f/ [i]n . . . Alabama. the Project in Finally, the work was to be completed for Georgia. The Court transaction affecting interstate Cf. W.G. Yates finds the Subcontract commerce. and the FAA is a governs. & Sons Constr. Co. v. Ard Contracting, Inc., No. 2;04-CV-00664-WKW, 2008 WL 942027, at *2 (M.D. Ala. Apr. 7, 2008) (finding the construction transactions involved interstate commerce when the subcontracts were executed in and payments were mailed from Mississippi, the construction project was in Alabama, materials were purchased outside of Alabama, and the bonds were issued by Nebraska and Maryland companies). B. Validity of Agreement to Arbitrate The Court (1) initially addresses valid whether under the Alabama arbitration law and provision (2), if is so. unconscionable. 1. Validity Whether an arbitration agreement exists is settled by state// law principles of contract law. 7 Hefter v. Charlie, Inc., No. Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 8 of 30 2 : 16-CV-01805-RDP, 2017 WL 4155101, at *5 (N.D. Ala. Sept. 19, 2017) (quoting Hanover Ins. Co. v. Atlantis Drywall & Framing LLC, 611 F. 585, App' X 588 (11th Cir. 2015)); see also Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1368 (11th Cir. 2005). Where jurisdiction is based on federal question and diversity. choice of law rules of the state in which the the was filed action United States ex rel. Duncan Pipeline, provide the applicable law. Inc. V. Walbridge Aldinger Co., No. CV411-092, 2013 WL 1338392, *10 (S.D. Ga. Mar. 29, 2013) (citing Klaxon Co. v. Stentor Elec. Mfq. Co., 313 U.S. 487, 496 (1941)). in Georgia, the \\ requirements. Court looks to Because this case was filed Georgia's choice of law Absent a contrary public policy, this court will n Carr normally enforce a contractual choice of law clause. v. Kupfer, 296 S.E.2d 560, 562 (Ga. 1982). Here, Alabama law applies because following the provision: Subcontract contains the choice of law This Subcontract shall be governed by, and all matters relating to the validity, performance, or interpretation of this Subcontract[,] shall be determined in accordance with[] the laws of the PI.'s State of Alabama. Resp. Alabama Opp'n law); // Mot. Def. (Subcontract, SI 34(a), at 13; see also to Compel Harbert's Arbitration, Reply Supp. at Mot. 7 (applying to "Compel Arbitration, at 6-9 (applying Alabama law).) Under Alabama law. \\ [t]he basic elements of a contract are an offer and an acceptance, consideration, and mutual assent to the Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 9 of 30 // essential terms of the agreement. Halbert v. Credit Suisse AG, 402 F. Supp. 3d 1288, 1322 (N.D. Ala. 2019) (quoting Armstrong Bus. Servs., Inc, AmSouth v. Bank, 817 So. 2d 665, 673 (Ala. 2001)). Defendant Herbert shows that Plaintiff and Defendant Herbert signed the arbitration provision as within the Subcontract (Subcontract, at 14.) transaction affecting interstate commerce. Plaintiff declines to challenge the existence of an arbitration provision. As such. a a contract with Defendant Herbert meets its See Hanover, burden of showing an agreement to arbitrate exists. 611 F. App'x at 588-89 (finding the party moving for arbitration met its burden because it pointed to the subcontract that affected interstate commerce and contained an arbitration provision). Thus, the Court finds the arbitration agreement is initially valid and proceeds to Plaintiff's argument that the agreement to arbitrate IS nevertheless unconscionable. 2. Unconscionability Plaintiff unconscionable. \\ argues that the agreement IS (Pl.'s Resp. Opp'n Mot. to Compel Arbitration, at The FAA makes arbitration agreements, 'valid, irrevocable. and enforceable, save upon such grounds as exist at - law or in equity for the revocation of any contract. r If Kindred Nursing Ctrs. Ltd. V. Clark, 137 S. Ct. 1421, 1426 (2017) (quoting 9 U.S.C. § 2). Unconscionability is one such ground for revocation. 9 Id. As the Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 10 of 30 party asserting the defense, Plaintiff has the burden to prove unconscionability. So. Green Tree Fin. Corp. of Ala, v. Wampler, 749 2d 409, 415 (Ala. 1999); Conseco Fin, v. Murphy, 841 So. 2d 1241, 1245 (Ala. 2002). A contract provision is unconscionable no man in his sense and not under when the provision is one that delusion would make on the one hand. and as no honest and fair man n would accept on the other. Blue Cross Blue Shield of Ala. v. Rigas, 923 So. 2d 1077, 1086 (Ala. 2005) (quoting S. United Fire Ins. Co. V. Howard, 775 So. 2d 156, 163 (Ala. 2000) (quoting, among others, Hume v. United States, 132 U.S. 406, 410 (1889))). The Alabama Supreme court set out factors to consider when facing such a challenge; In addition to finding that one was party unsophisticated and/or uneducated, a court should ask (1) whether there was an absence of meaningful choice on one party's part[;] (2) whether the contractual terms are unreasonably favorable to one party[;] (3) whether there was unequal bargaining power among the parties[;] and (4) whether there were oppressive, patently unfair terms in the contract. Id. one-sided, or (quoting Layne v. Garner, 612 So. 2d. 404, 408 (Ala. 1992)). This test, reduced to its essential elements, requires showing. u first, terms that are grossly favorable to a party unconscionability — and. second. n w overwhelming bargaining power the favored procedural substantive party has unconscionability. Am. Gen. Fin., Inc, v. Branch, 793 So. 2d 738, 748 (Ala. 2000); \\ Rigas, 923 So. 2d at 1086-87. 10 [T]he party objecting to Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 11 of 30 both show must arbitration If and procedural Rigas, 923 So. 2d at 1087. unconscionability. substantive At the outset, the Court notes that, apart from explaining the legal standard. Plaintiff cites no legal support for its contention that the arbitration provision is unconscionable. a. Substantive Unconscionability Plaintiff asserts the arbitration provision is substantively unconscionable® because the provision HarbertJ 's favor f/ skews heavily in [Defendant sole' ability by giving Defendant Harbert the to determine how disputes are to be resolved, whether it be. in a judicial proceeding or in arbitration. (Pl.'s Resp. Opp'n Mot. to Compel Arbitration, at 8.) And, by choosing arbitration. Defendant Harbert "avoid [s] any discovery of dam[n]ing evidence within its n because possession \\ arbitration the provides: provision [N]otwithstanding any AAA rules to the contrary, there shall be no depositions information. !/ taken. and no (Subcontract, production of documents or gi 29(f)(1), at 13; see also other PI. 's Resp. Opp'n Mot. to Compel Arbitration, at 8.) The fact that Defendant Harbert may choose the forum for resolving disputes does not automatically make the arbitration provision remedy. unconscionable See Conseco because Fin., 841 Plaintiff So. 2d at still 1245 maintains (finding a the ® Plaintiff does not use the terms substantive or procedural unconscionability, but the Court categorizes Plaintiff's arguments appropriately. 11 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 12 of 30 arbitration provision not unconscionable because it "does not limit the kind or amount of damages the [plaintiffs] can recover"); Stinson v. Am.'s Home Place, Inc., 108 F. Supp. 2d 1278, 1286 (M.D. Ala. 2000) (applying Alabama law) ("A court must be wary of finding a contract unconscionable where the plaintiff is left with some place to go[] . . . because denial of a specific remedy or forum is substantively different from denial of any means of enforcement whatsoever.") (internal citation and quotation marks omitted); cf. Ex Parte Merrill Lynch, Pierce, Fenner & Smith, 494 So. 2d 1, 4 (Ala. 1986). Plaintiff maintains that \\ accompanying arbitration, it given will the be discovery unable to limitation obtain through arbitration the very same relief that would be otherwise available in a court action. at 9. ) n (Pl.'s Resp. Opp'n Mot. to Compel Arbitration, It is true that the Court must consider Plaintiff's ability to obtain the same relief, Roberson v. Money Tree of Ala., Inc., 954 F. Supp. 1519, 1525-26 (M.D. Ala. 1997) (applying Alabama law). however, the Court also notes part of the appeal of arbitration is the "simplicity, informality, and expedition" it provides. V. \\ Interstate/Johnson Discovery limitations limitations ft agreement. are Lane promote rarely 500 Corp., the grounds goals for U.S. 20, of the avoiding 31 Gilmer (1991). FAA, and an such arbitration Hopkins v. World Acceptance Corp., 798 F. Supp. 2d 1339, 1350 (N.D. Ga. 2011). The discovery limitations here apply 12 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 13 of 30 to both parties equally. on the argument that [Defendant Herbert] information and it as Plaintiff's perceived unfairness rests the general contractor on the Project, controlled the wishes conceal to Project If documentation that and from information (Pl.'s Resp. Opp'n Mot. to [Plaintiff] by forcing arbitration. Compel Arbitration, at 8-9.) The record lacks any actual evidence as to how limited discovery adversely affects Plaintiff while benefiting Defendant The Herbert. arbitration Court provision See discovery. \\ agreement finds no legal unconscionable Caley, 428 F.3d at support solely 1378 for finding because (finding it an limits arbitration consistent with the goals of simplicity, informality. n and expedition — "characteristics that generally make arbitration an vehicle \\ attractive n when it precluded class actions and limit[ed] discovery by allowing the taking of depositions only if authorized by the arbitrator"); Hopkins, 798 F. Supp. 2d at 1350 (finding arbitration agreement not unconscionable when it limited discovery beyond the AAA Consumer rules); cf. Walker v. Ryan's Family Steak Houses, Inc., 400 F.3d 370, 387-88 (6th Cir. 2005) \\ (finding limited discovery. controlled by a potentially biased ff arbitration panel, creates . . . unfairness to claimants even though reduced discovery is anticipated in because arbitration. parties to a valid arbitration agreement also expect that neutral 13 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 14 of 30 arbitrators will preside over their disputes"). Furthermore, the Eleventh Circuit stated: Court cautioned that clauses limiting like class-action arbitration — much as categorically waivers — cannot be rejected unconscionable under state law without running afoul of [T]he Supreme discovery in Even if the the F7\A's pro-arbitration mandate. . . clause at issue here limited [the plaintiff]'s discovery options in a meaningful way, it would not be substantively unconscionable on that basis alone. Larsen Citibank v. (internal FSB, citation 871 F.3d omitted) 1295, 1316 (11th (citing AT&T Concepcion, 563 U.S. 333, 341-44 (2011)). Cir. Mobility 2017) LLC V. Based on the foregoing. the Court finds Plaintiff fails to carry its burden of showing the arbitration provision is substantively unconscionable.'^ b. Procedural Unconscionahility As to procedural unconscionahility. \\ arbitration provision argues the was offered on essentially a 'take it or leave it' basis to [Plaintiff]. Arbitration, at 8 .) Plaintiff tr (Pl.'s Resp. Opp'n Mot. to Compel And Plaintiff lacked a meaningful choice in accepting the provision[] [because] [Defendant Harbert] is one of the largest construction companies in the country with revenue and rr resources vastly above those of [Plaintiff]. (Id. ) Unequal bargaining power arguments generally do not involve two sophisticated, large companies such as Plaintiff and Defendant Because both substantive and procedural unconscionability are required for a court to find a provision unconscionable, the Court may end its analysis here. The Court however, addresses Plaintiff's procedural unconscionability argument. 14 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 15 of 30 Herbert. See Leonard v. Terminix Int'l Co., L.P., 854 So. 2d 529, 537-38 (Ala. 2002) (listing Alabama cases where arbitration clause found unconscionable and all involved consumer see contracts) ; also Process Am., Inc, v. Cynergy Holdings, LLC, 839 F.3d 125, 138 n.6 (2d Cir. 2016) ("Business entities negotiating in a commercial setting do not warrant any special solicitude as 'unsophisticated' parties simply because they are new to the industry and choose to forego representation by counsel."); Remza Drywall Inc. v. W.G. Yates & Sons Constr., No. 1:07CV106-LG-JMR, 2007 WL 2033047, at *3 (S . D. Miss . unconscionability issue were 10, July two (finding 2007) the because corporations parties to no the contracting for procedural subcontracts over six at million dollars['] worth of drywall work"). Defendant Herbert also offers the Subcontract n as evidence that // negotiated the Subcontract. Standard 7\mendment to the Plaintiff \\ freely and fairly (Def. Harbert's Reply Supp. Mot. to Compel Arbitration, at 10; Subcontract Attach. A, Doc. 1-1, at 85106.) Plaintiff declines to counter this argument, and the Court finds there is no evidence that Plaintiff lacked the ability to negotiate any contract provision if it so chose. Cf. Avid Eng'g, Inc. V. Orlando Marketplace Ltd., 809 So. 2d 1, 5 (Fla. Dist. Ct. App. 2001) (finding unconscionable when \\ arbitration agreement not procedurally [i]n fact, there was evidence that the parties negotiated and modified many of the terms of the contract"). 15 Thus, Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 16 of 30 Plaintiff's challenge procedurally fails also because The unconscionable. the Court now provision discusses is not whether Defendant Harbert may elect arbitration of the specified claims. C. Defendant Herbert's Ability to Elect Arbitration Because the FAA creates a presumption in favor arbitrability, Paladino v. Avnet Comput. Techs., Inc., 134 of F.3d 1054, 1057 (11th Cir. 1998), any doubts concerning the scope of arbitral issues must Mitsubishi Motors, 473 be construed U.S. at 626. in favor of The Eleventh arbitration. Circuit holds that if parties intend to exclude categories of claims from their arbitration agreement. Brown intent. v. (llth Cir. 2000). unless it is ITT the parties Consumer Fin. must clearly express Corp., 211 F.3d 1217, such 1222 In other words, issues will be deemed arbitrable clear that the arbitration.agreement intentionally omits them. First Options of Chi., Inc, v. Kaplan, 514 U.S. 938, 945 (1995). Defendant Harbert argues it may elect to arbitrate Counts I, II, and IV under paragraph 29, sections (c) and (e). 1. Non-Miller Act Claims Under Paragraph 29 Section (c) As to its first argument. Defendant Harbert asserts that Plaintiff's non-Miller Act claims® against it are arbitrable under 8 In its Complaint, Plaintiff brings the Miller Act claim. Count III, against all Defendants. (Compl., IS 26-30.) Nevertheless, Defendant Harbert maintains that "Count III . . . is asserted against the Sureties, not [Defendant] Harbert." (Def. Harbert's Reply Supp. Mot. to Compel Arbitration, at 2.) At present, the Court declines to decide whether Count III applies to Defendant Harbert because no party advocates to arbitrate Count III. 16 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 17 of 30 (Def. Harbert's Mot. to Compel Arbitration, at Paragraph 29(c).9 Defendant Harbert acknowledges that its ability to choose 4-7. ) Unless suit arbitration is restrained by section (c)'s language: n (Def. Harbert's is brought under the Miller Act. According to Defendant Harbert, Mot. to Compel Arbitration, at 2.) \\ Paragraph 29(c) provides for Reply Supp. arbitration of any claim that [Defendant] Harbert elects to arbitrate, except for a Miller Act claim. // (Id.) Plaintiff's stance in opposition is that if it n brings a Miller Act count in the complaint, the "suit is then brought under the Miller Act and Defendant Harbert may not elect arbitration. (Pl.'s Resp. Opp'n Mot. to Compel Arbitration, at 4- 7. ) The dispute here is one of contract interpretation. w important part of the sentence at issue is: 10 The Unless suit is brought under the Miller Act . . . , should disputes between the parties fail to be resolved at mediation then. at Contractor's sole 5 No party argues the general provision of the dispute resolution clause fails to cover all of Plaintiff's claims because it governs "[a]11 disputes between . . . [Defendant Harbert] and [Plaintiff] related in any way to this Subcontract, the Work[,] or the Project." (Subcontract, 2 29.) As discussed below, paragraph 29 section (c) contains the disputed coverage restriction. 10 Although there is a presumption that a dispute is arbitrable whenever not expressly excluded, "a party cannot be required to submit to arbitration any dispute which it has not agreed so to submit." Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 314 (2010) (citation omitted) . As such, courts must determine whether the arbitration agreement covers the dispute at issue, and to do so, courts may use standard principles of contract interpretation. Id. at 296; see also See Cavalier Mfq., Inc, v. Jackson, 823 So. 2d 1237, 1242 (Ala. 2001) ("The question whether an arbitration clause in a contract requires arbitration of a given dispute remains a matter of state-law contract interpretation."), overruled on other grounds by Ex Parte Thicklin, 823 So. 2d 723 (Ala. 2002); Seaboard Coast Line R.R. v. Trailer Train Co., 690 F.2d 1343, 1348 (11th Cir. 1982). 17 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 18 of 30 election. the parties shall submit the disputes to either binding // arbitration or to litigation. whether "suit If The question boils down to, then, refers only to a Miller Act count within a complaint or an entire complaint if at least one count is a Miller Act count. a. Contract Interpretation Legal Standard w Under Alabama law, contract ff interpretation is guided by the intent of the parties. Allied-Bruce Terminix Cos, v. Dobson, 684 So. 1995). 2d 102, 110 (Ala. The intent of the contracting Where there parties is discerned from the whole of the contract. IS no indication that the terms of the contract are used in a special or technical sense. they will be given their ordinary. n plain. and natural meaning. So. 2d at 1242; absent ambiguity. Allied-Bruce Terminix, \\ Ambiguity exists in a contract clause if. w 684 Cavalier Mfg., 823 So. 2d at 110. n when given the context. n it is reasonably susceptible of more than one meaning. Madison Cty. V. Evanston Ins. Co., 340 F. Supp. 3d 1232, 1271 (N.D. Ala. 2018) (emphasis omitted) (applying Alabama law); In re Knepp, 229 B.R. 821, 847 (N.D. Ala. 1999) (citing Voyager Life Ins. Co. v. Whitson, 703 So. 2d 944, 948 (Ala. 1997)) . exists V' 4 is a Allied-Bruce Whether an ambiguity ff question of law Terminix, 684 to be So. 2d determined by the court. at 110. In interpreting language: [T]he mere fact that a word or a phrase is not defined in a document does not mean that the word or phrase is inherently ambiguous. In the absence of a definition. 18 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 19 of 30 the court should construe the word or phrase according to the meaning a person of ordinary intelligence would reasonably give it. Madison Cty. v. Evanston Ins. Co., 340 F. Supp. 3d 1232, 1271 (N.D. Ala. 2018) (quoting Hall v. Envtl. Litig. Grp., P.C., 248 So. 3d 949, 958 (Ala. 2017)). If the court finds the term susceptible to \\ more than one established reasonable rules if Id,. ambiguity. of meaning. contract then the construction court to must resolve use the (quoting Once Upon a Time, LLC v. Chappelle Props., LLC, 209 So. 3d 1094, 1097 (Ala. 2016)). All the while. the court must evoke the presumption in favor of arbitration, which requires courts to: (1) apply[] the presumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand; and (2) adher[e] to the presumption and order[] arbitration only where the n presumption is not rebutted. Granite Rock, 561 U.S. at 301. b. Ambiguity To show restriction rather than \\ the plain meaning. Plaintiff argues that the mentions 'suit' being brought under the Miller Act a 'claim' under the "11 Miller Act. Opp'n Mot. to Compel Arbitration, at 3.) (Pi.'s Sur-Reply As discussed below, the 11 Plaintiff also argues, "The plain meaning of that sentence is clear: if suit is brought under the Miller Act, [Defendant Harbert] does not have the ability to elect whether arbitration must be used to resolve disputes. Opp'n Mot. to Compel Arbitration, at 5.) the heart of the issue. 19 n (PI.'s Resp. This argument is circular and avoids Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 20 of 30 terms \\ suit /r claim and // are not always as clear Plaintiff as suggests. w To determine whether the phrase the Miller Act n unless suit is brought under is reasonably susceptible to more than one meaning, the Court uses dictionaries to determine the "plain, ordinary, and /f Once Upon a Time, 209 So. 3d at 1098. natural meaning. Webster defines "suit" as \\ Merriam an action or process in a court for the // recovery of a right or claim, Suit, Merriam-Webster's Dictionary, available at https://www.merriam-webster.com/dictionary/suit? utm_campaign=sd&utm_medium=serp&utm_source=jsonld June 25, 2020). (last visited This definition associates suit with a singular claim and supports an interpretation that Plaintiff and Defendant Herbert's use claim — the \\ suit" as in a \\ court of w suit Miller Act // was claim. intended to Black's apply to law the defined dictionary defines [a]ny proceeding by a party or parties against another of law. // Suit, Black's Law Dictionary (10th ed. 2014). The Tenth Edition supplements the definition by explaining: All these nouns [(]suit, lawsuit, action, case, and cause [)] denote proceedings instituted for the purpose of enforcing a right or otherwise seeking justice. Although they are all in frequent use as synonyms for a court proceeding, their etymological development has lent them shades of meaning that they still faintly bear. a Suit stresses the sense of campaign . . complainant's attempt to redress a wrong, enforce a In the right, or compel application of a rule. . . legal sense, suit refers to an ongoing dispute at any stage, from the initial filing to the ultimate r resolution. 20 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 21 of 30 Id. omitted) (emphasis (quoting Bryan A. Dictionary of Legal Usage 862-63 (3d ed. 2011)). Law Dictionary // proceeding, acknowledges that suit // Garner's Garner, Here, Black's may encompass a broad can be limited to redressing a wrong or compelling application of a rule, and is often used interchangeably with other similar terms. In addition. courts often refer to a plaintiff's Miller Act claim as a Miller Act suit. Co., United States v. Int'l Fidelity Ins. 232 F. Supp. 3d 1193, 1194 (S.D. Ala. 2017) ("The amended suit on the brought against both defendants pursuant to the complaint asserts six causes of action . payment bond. Miller Act; (2) a breach of contract claim . . . ; and (3) a state law claim for violation of the Alabama Prompt Pay Act. ); see also United States Control Corp., w (stating ex rel. Portland Constr. Co. v. Weiss Pollution 532 F.2d 1009, 1011, 1012, 1013 (5th Cir. 1976) there is no inconsistency between subsequent suit on the Miller Act bond"); arbitration and a United States ex Capolino Sons, Inc, v. Elec. & Missile Facilities, Inc., 364 rel. F.2d 705, 708 (2d Cir. 1966) ("[W]hen [the FAA] is applicable, [it] quite clearly is broad enough to include Miller Act suits within The Court also acknowledges that in other contexts, what an action or claim encompasses is up to reasonable dispute. See Jackson v. Equifax Info. Servs., LLC, No. CV 119-096, 2020 WL 476698, at *1-2 (S.D. Ga. Jan. 29, 2020) (explaining the Eleventh Circuit recently clarified that Federal Rule of Civil Procedure 41 contemplates dismissing an "action," which does not cover dismissing less than all claims in a lawsuit, yet encompasses all claims against a particular defendant). 21 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 22 of 30 its scope, and, with equal clarity. it gives the parties an enforceable right to agree to refer to arbitration differences // arising under their contract. ); Cent. Rock Corp. v. Horton Constr, Co., No. 2:13-CV-00406-PM-KK, 2013 WL 12184300, at *5 (W.D. La. July 31, 2013) ("[T]he subcontractor pursued arbitration against a contract and then filed a Miller Act suit against the contractor and its non-arbitrating surety.") Boland, Inc., No. But see United States v. David 6: 05-cv-549-Orl-19JGG, 2006 WL 2683304, at *3 (M.D. Fla. Sept. 18, 2006) ("In Miller Act suits, state law governs whether a contractor materially breached a contract or engaged in active interference with respect to a contractual obligation."); see also United States ex rel. Cleveland Constr., Inc, v. Stellar Grp., Inc., No. 4:16-CV-179 (CDL), 2019 WL 338887, at *1 (M.D. Ga. Jan. 28, 2019) (The plaintiff "brought this breach of contract and Miller Act suit.") Lastly, the Court looks to the Miller Act for context. The Miller Act explains. \\ Every person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131 of this title does not receive timely payment after completing performance rr who for which the claim is made[,] may bring a civil action on the payment bond. ft 40 U.S.C. § 3133(b)(1). Here, the Miller Act's specifications and requirements apply to a claim on the payment bond, making no mention of additional claims that may be brought 22 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 23 of 30 arising out of the same transaction, In civil actions, courts routinely treat a Miller Act,claim differently than any non-Miller Act claims. See Weiss Pollution Control, 532 F.2d at 1012 ("[W]e have been cited to no authority which stands for the proposition that a subcontractor who arbitrates in accordance with the terms of his subcontract thereby relinquishes his right to bring a subsequent Miller Act suit"); Int'l Fidelity Ins. , 232 F. Supp. 3d at 1201 (staying Miller Act claim against surety pending arbitration of the subcontractor's contract and state law claims against the contractor); United States ex rel. Vining Corp. v. Carothers Constr., Inc., No. 5:09-CV-438 (CAR), 2010 WL 1931100, at *2, *4-5 (M.D. Ga. May 12, 2010) (compelling arbitration of the contract claims but not the Miller Act claim). Based on the foregoing, the Court concludes only that there is no plain meaning; the phrase is reasonably susceptible to more than one meaning. It could mean, as Plaintiff postulates. the remainder of the sentence does not apply if a Miller Act claim is part of the action. Act claims are The phrase could also mean that any Miller not arbitrable but non-Miller Act claims remain subject to arbitration. c. Resolving the Ambiguity Because the phrase is reasonably susceptible to more than one meaning, the Court turns to rules of construction to resolve it. Ohio Cas. Ins. Co. v. Holcim (US), Inc., 744 F. Supp. 2d 1251, 23 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 24 of 30 1260 (S.D. Ala. 2010) (applying Alabama law). with Plaintiff to rebut the presumption favoring of whole. n w construction burden rests arbitration. To interpret the ambiguity, Granite Rock, 561 U.S. at 301. rule The one is that an agreement is to be viewed as a In re Jefferson Cty., 503 B.R. 849, 882 (N.D. Ala. 2013) (applying Alabama law). In addition, courts must "give effect to the intentions of the parties by, among other things, (1) taking into account the practical construction put on the language of the agreement by the parties, . . . (2) giving words their ordinary circumstances. ft Id. at the considering (3) meanings, . . . and 882-83 (internal surrounding citations omitted); Voyager Life Ins., 703 -So. 2d at 949 (If the textual rules do not \\ dictate an outcome. the surrounding circumstances, including the practical construction put on the language of the agreement by the parties to the agreement, are controlling in resolving the ambiguity.") Examining the whole of the contract does little to resolve the ambiguity. Analyzing the ordinary meaning of the words used also fails to clarify the ambiguity, having previously analyzed the ordinary meaning to reveal the ambiguity. As such, the Court turns to the practical construction and surrounding circumstances to gain an understanding of Plaintiff intent within the arbitration provision. 24 and Defendant Harbert's Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 25 of 30 \\ Plaintiff argues that [t]he Phrase '[u]nless suit is brought n under the \\ thus, Miller Act' is placed at the beginning of the clause, // (Pl.'s Sur- it qualifies everything that comes after it. To support its Reply Opp'n Mot. to Compel Arbitration, at 2-3.) argument that the remainder of section (c) is inapplicable in the presence of a Miller Act count. Plaintiff brings the Court's attention to the choice of forum provision within the latter part of section (c). 4, 5.) (Pl.'s Resp. Opp'n Mot. to Compel Arbitration, at Plaintiff alleges that the Miller Act requires its Miller Act count to be brought in this Court. (Id. at 5.) The choice of forum provision within section (c) designates the United States District Court for the Northern District of Alabama as the proper forum. (Subcontract, 1 29(c).) Miller Act count. Therefore, if Plaintiff brings a the Miller Act provides the appropriate forum and the choice of forum provision within section (c) is rendered moot. (Pl.'s Resp. Opp'n Mot. to Compel Arbitration, at 4, 5.) In opposition. Defendant Herbert provides justification for why the Miller Act exception was included: to comply with Congress' 1999 amendment to the Miller Act, which limits waiver of Miller Act lawsuits. (Def. Herbert's Reply Supp. \\ Arbitration, at 3 (The arbitration provision Mot. does to Compel not intend to restrict [ Plaint if f ] 's right to bring a civil action on a payment bond. However, Paragraph 29(c) unquestionably allows 25 [Defendant] Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 26 of 30 Harbert to insist on arbitration of non-Miller Act disputes with [Plaintiff] First, it is uncertain whether Plaintiff's Miller Act claim could have been brought in the Northern District of Alabama. The action . . . must be Miller Act brought . . . (B) in the civil a specifies, United States District Court for any district in which the contract was to be performed and executed. 40 U.S.C. § 3133(b) (3) . n The statute allows for the possibility that more than one district may satisfy the requirement, and the \\ Subcontract provides it was executed[] and at least in part performed within the jurisdiction of the United States District Court for g[ 29(c).) the Northern District of Alabama. n (Subcontract, Second, even if the Northern District of Alabama is an improper venue for the Miller Act claims here. courts routinely split Miller Act counts from others (as previously discussed), and parties often arbitrate non-Miller Act disputes while bringing civil actions under the Miller Act to preserve Miller Act claims. See, e.g., Weiss Pollution Control, 532 F.2d at 1013. Finally, the Court finds little practical justification for treating all counts in a complaint differently simply because one count is a Miller Act count. The Miller Act does not require that all adjoining counts in a civil suit be treated the same as the Miller Act count. and the waiver limitations apply only to a Miller Act payment bond claim. 26 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 27 of 30 In conclusion. agreement is counts ambiguous within ambiguity, Defendant a about whether After complaint. the Court Herbert shows it covers attempting positive lacks the arbitration non-Miller to resolve that assurance Act the the arbitration clause is not susceptible of an interpretation that // covers the asserted Defendant Herbert. Inc., Counts dispute I, II, and IV against Auto Owners Ins., Inc. V. Blackmon Ins. Agency, 99 So. 3d 1193, 1196 (Ala. 2012) (quoting Ex Parte Colquitt, 808 So. 2d 1018, 1024 (Ala. 2001) (quoting United Steelworkers of Am. V. Warrior Gulf & \\ of arbitration, and // — including 363 U.S. 574, any doubts concerning the scope language arbitration. // with problems ft contract Co., 582-83 Thus, Plaintiff did not rebut the presumption in favor (1960)) ) . issues Navigation \\ itself the should be of arbitral construction resolved in of favor the of Ex Parte Colquitt, 808 So. 2d at 1022 (quoting Moses H. Cone Mem'1 Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). The Court finds Defendant Harbert may elect to arbitrate Plaintiff's non-Miller Act counts against it under section (c). 2. Right to Choose Forum in Absence of Authorization Under Paragraph 29 Section (e) Paragraph 29(e) provides: initiate [Defendant litigation or [Plaintiff] agrees that should it arbitration Harbert]'s ^authorization without as to [Defendant Harbert] shall have the absolute 27 first choice obtaining of forum. and sole right to Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 28 of 30 // transfer the disputes to the \\ because Harbert (e) allows it to elect arbitration of any argues that section claims Defendant other forum. Plaintiff failed to obtain authorization as to choice of forum, rr Defendant Harbert's thus triggering Defendant f/ \\ Harbert's absolute and sole right to transfer the disputes arbitration. to (Def. Harbert's Mot. to Compel Arbitration, at 7.) Plaintiff responds. [Defendant Harbert] ignores that the clause granting it the purported ability to choose a forum. Article 29(c), is rendered moot in the presence of a suit brought under the Miller Act. // (Pl.'s Resp. Opp'n Mot. to Compel Arbitration, \\ Plaintiff repeats its argument that the phrase at 5 . ) n w [u]nless suit is brought under the Miller Act qualifies everything that comes the after it and thereby qualifies ability to select a dispute resolution forum on suit not being brought under the Miller Act. // (Id. at 6-7.) The Court need not engage here in a detailed analysis. Even if Plaintiff is correct and section (e) applies only "unless suit // IS brought under the Miller Act, this language is the Court previously found that ambiguous and Plaintiff failed to overcome the presumption favoring arbitration. As such. Defendant Harbert has // the right to transfer the disputes to [arbitration]. D. Status Pending Arbitration According to Defendant Harbert, in the Complaint against [Sureties] 28 The Miller Act bond claims should be stayed while Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 29 of 30 [Defendant] Harbert and [Plaintiff] arbitrate their (Def. Herbert's Mot. to Compel Arbitration, at 6.) support staying arbitration Int'1 of Fidelity Miller a Act claims subcontractor's Ins., (collecting cases). 232 F. against claims Supp. 3d If Numerous cases pending sureties against at disputes. a contractor. 1200-01, 1200 n.7 Plaintiff fails to address the possibility that arbitration is appropriate; consequently. Defendant Herbert's request to stay this action pending arbitration is unopposed. The FAA 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 such 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 the applicant for the stay is not in default in proceeding with such arbitration. 9 U.S.C. § 3. and IV against Defendant Because the Court finds Plaintiff's Counts I, II, Defendant Harbert's Harbert request to arbitrable. stay this the Court action grants pending arbitration. The Eleventh Circuit has also acknowledged that the principle that "a party cannot be required to submit to arbitration any dispute which he has not agreed n [Nevertheless,] the might result in 'piecemeal litigation[.] Hanover Ins., court must 'rigorously enforce' the agreement of the parties. so to submit 611 F. App'x at 588 (quoting United Steel Workers of Am., 363 U.S. at 582; Nobles V. Rural Cmty. Ins. Servs., 122 F. Supp. 2d 1290, 1295 (M.D. Ala. 2000) (citing Dean Witter Reynolds, Inc, v. Byrd, 470 U.S. 213, 218-21 (1985))). 29 Case 1:19-cv-00173-JRH-BKE Document 25 Filed 07/23/20 Page 30 of 30 IV. The Court GRANTS CONCLUSION Defendant Herbert's arbitration and stay pending arbitration. motion (Doc. 13.) to compel IT IS HEREBY ORDERED that (1) Plaintiff and Defendant Harbert SHALL ARBITRATE Counts I, II, case — including and IV counts of the complaint; against STAYED pending arbitration. and (2) this non-arbitrating entire parties — is Plaintiff and Defendant Harbert SHALL file a joint status report with the Court every NINETY (90) DAYS until the arbitration has concluded. ORDER ENTERED at Augusta, Georgia, this, of July, 2020. J. .N :all, ohief judge UNITED^TATES DISTRICT COURT SOraHE(RN DISTRICT OE GEORGIA 30

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