Subs' Miller Act Claim Will Have To Wait Out Arbitration

Friday, August 03, 2018 3:51 am
August 2018 - Volume 40 Number 8

Payment --- Miller Act

United States ex rel. Debra's Glass, Inc. v. Ins. Co. of Pa., 2018 U.S. Dist. Lexis 98886 (Md. June 13, 2018)

A subcontractor’s attempt to collect payment from a surety under the Miller Act was put on hold pending the outcome of its arbitration proceedings with the prime contractor.

SEMI USA (SEMI) was the prime contractor for the NASA Flight Projects Building 36 at the Goddard Space Center in Greenbelt, Maryland. SEMI entered into a subcontract with Debra’s Glass, Inc. (DGI) for glass installation and curtainwall assemblies for the project as well as installation of terracotta tiles at a later time.

After work on the project ended, a payment dispute arose between SEMI and DGI. DGI claimed SEMI hadn’t paid for the subcontract work, and SEMI claimed that DGI performed non-compliantly. SEMI filed a demand for arbitration in May 2017 with the American Arbitration Association (AAA), pursuant to the subcontract’s terms.

In November 2017, DGI also filed a complaint against SEMI’s project surety, The Insurance Company of the State of Pennsylvania (AIG), demanding payment under the Miller Act. DGI argued that SEMI owed it $581,933 for work performed on the subcontract and $1.1 million for “overrun” damages arising from the related delay in construction. AIG filed a motion to stay the case against it pending arbitration between SEMI and DGI regarding payment. The court granted the motion to stay the proceedings pending the outcome of the arbitration.

Mandatory arbitration pr[..]