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In granting a motion to compel arbitration, a federal court held that claims brought under the Miller Act, which relates to federal construction contracts, are subject to arbitration.
In U.S. v. Sundt Const., Inc., No. CV-07-673-PHX-LOA, 2007 WL 1655976 (D. Ariz. June 7, 2007), the United States government awarded Sundt a contract for work at Andrews Air Force Base. Sundt entered into a subcontract agreement with First Call under which First Call supplied materials, equipment, and services. The subcontract provided that the parties must submit all disputes to mediation. If mediation is unsuccessful, then the parties must submit disputes to arbitration.
First Call alleged that Sundt owed $78,511.68. The United States filed suit on First Call's behalf, as claims under the Miller Act must be brought in the name of the United States. In response, Sundt moved to compel arbitration pursuant to the subcontract's terms.
The Court granted Sundt's motion and directed First Call to initiate arbitration. Under the Federal Arbitration Act, a federal district court must order arbitration when a valid arbitration agreement exists. Further, the Miller Act does not prevent enforcement of an arbitration clause between a general contractor and a subcontractor on a federal contract. Courts routinely stay Miller Act lawsuits while arbitration claims are pending.
The arbitration clause mandates arbitration of "all disputes…arising out of or relating to payments or performance." The Court ordered arbitration, as the claim brought before it related to nonpayment, an issue encompassed by the arbitration agreement.
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