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United States v. Bhate Environmental Associates, Inc.

United States District Court, D. Alaska

February 9, 2016




Before the Court at Docket 6 is a Motion to Stay filed by Bhate Environmental Associates, Inc. (“Bhate”) and Lexon Insurance Company (“Lexon”) (collectively “Defendants”). Defendants seek an order staying this litigation pending completion of the Contract Disputes Act dispute resolution process and, if necessary, pending completion of arbitration thereafter. Plaintiff Brice Environmental Services Corporation opposes, in part, at Docket 17. Defendant filed a reply on November 10, 2015, seven days after the deadline per the stipulated extended briefing schedule granted by the Court at Docket 15. Plaintiff has moved to strike the reply while Defendants have moved for leave to file the reply late. The Court agrees with Defendants and finds no evidence of willful disregard by Defendants in the untimely filing nor any prejudice to Plaintiff by allowing Defendants' reply to stand. Therefore Plaintiff's Motion to Strike Untimely Reply at Docket 21 is DENIED and Defendants' Motion to Request Leave to File Reply Late at Docket 23 is GRANTED.


Brice performed soil remediation work as a subcontractor to Defendant Bhate Environmental Associates, Inc. ("Bhate") for a large-scale soil cleanup project at the former, Cold War-era radio station near Petersburg, Alaska. The project was known as the Duncan Canal Radio Relay Station on Kuprean of Island in Alaska-Project No. 9130165 (the "Project"). The Project was led by the United States of America through the Air Force Civil Engineer Center ("AFCEC"). The parties agreed to an initial subcontract price to be paid to Brice of $3, 605, 350.00. Ultimately, Plaintiff and Defendant Bhate were unable to complete the Project in the planned single season and were forced to demobilize-largely due to inclement weather-until the 2015 season.

On January 6, 2015, Plaintiff submitted to Defendant Bhate a Request for Equitable Adjustment ("REA") in the amount of $2, 947, 899.32 for compensation resulting from Defendant Bhate's standby directives, changed and added scope, as well as other impacts caused by Defendant Bhate's disruption and interference with Plaintiff's work.[1] Plaintiff asserts that a majority of the REA involves claims against Defendant Bhate directly and unrelated to the Owner, including Defendant Bhate’s lack of experienced field staff, Defendant Bhate’s unsupported directives to Plaintiff to perform work out of sequence, and Defendant Bhate’s failure to perform its scope of work.[2]

Subsequently, Plaintiff and Defendant Bhate agreed it was in the best interest of both parties for Plaintiff's Subcontract to be terminated, Defendant Bhate would contract with another subcontractor to perform the 2015 work, and Brice would reduce its REA by its anticipated 2015 season costs to a total REA amount of $1, 111, 008 plus interest and attorney fees. Defendant Bhate, on behalf of both itself and its subcontractors, submitted a Request for Change Order (“RCO”) to AFCEC on May 12, 2015.[3] Plaintiff filed the present action with the Court on August 21, 2015, alleging a breach of contract, a claim against payment bond under the Miller Act, and a violation of the 32 U.S.C. § 3901, et seq. ("the Prompt Payment Act").


The Court's power to stay proceedings is “incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants” and “must weigh competing interests and maintain an even balance.”[4]In addition to the Court’s power to grant a stay, there are several statutes relevant to this matter.

A. The Miller Act

"The Miller Act represents a congressional effort to protect persons supplying labor and material for the construction of federal public buildings in lieu of the protections they might receive under state statutes with respect to the construction of nonfederal buildings.”[5] A general contractor on a federal construction project is required to furnish a payment bond "for the protection of all persons supplying labor and material in carrying out the work provided for in the contract.”[6] The Miller Act then provides that a supplier or subcontractor contributing to the federal construction project who "has not been paid in full within 90 days after the day on which the person did perform the last of labor . . . may bring a civil action on the payment bond for the amount unpaid at the time the civil action is brought and may prosecute the action to final execution and judgment for the amount due."[7] A subcontractor's failure to comply with the notice requirement is "fatal to a Miller Act claim."[8]

B. Federal Arbitration Act

Federal Arbitration Act ("FAA") mandates arbitration whenever a contract provides for claims to be submitted to arbitration and evidences a transaction involving interstate commerce.[9]The principle purpose of the FAA is to "ensur[e] that private arbitration agreements are enforced according to their terms" and embodying "a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary."[10]

C. Contract Disputes Act of 1978

The Contract Disputes Act of 1978 (“CDA”) provides remedies for disputes involving government procurement contracts.[11] “To proceed under the CDA, an aggrieved contractor must first present its claim to the agency Contracting Officer.”[12] If the claim is denied, then the contractor has two options: It can either (1) appeal to the governing agency board of contract appeals (“ABCA”) pursuant to §§ 606 and 607(d), or (2) file suit in ...

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