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United States v. Fedcon Joint Venture

United States District Court, E.D. Louisiana

June 20, 2017

UNITED STATES OF AMERICA for the use and benefit of GLF CONSTRUCTION CORPORATION
v.
FEDCON JOINT VENTURE, et al.

         SECTION “R” (4)

          ORDER AND REASONS

          SARAH S. VANCE UNITED STATES DISTRICT JUDGE.

         GLF Construction Corporation moves the Court to reconsider its order[1]staying this case pending the completion of contractual dispute resolution procedures.[2] For the following reasons, GLF Construction's motion is denied.

         I. BACKGROUND

         This dispute arises out of a construction contract between the United States, by and through the U.S. Army Corps of Engineers (USACE), and defendant FEDCON, a joint venture consisting of David Boland, Inc. and JT Construction.[3] On or about October 18, 2013, FEDCON was awarded a contract (the Prime Contract) to perform all work on the “Resilient Features” project.[4] The contract called for repair and raising of substandard levees along a section of the Mississippi River in Plaquemines Parish, Louisiana.[5]As required by the Prime Contract, FEDCON executed and delivered to USACE a Miller Act payment bond, under which FEDCON and Western Surety bound themselves to pay the sum under the bond.[6]

         On or about January 22, 2014, FEDCON entered into a subcontract with GLF Construction to furnish labor, materials, and services on the project and complete a portion of FEDCON's scope of work under the Prime Contract for the agreed price of $10, 517, 859.50.[7] In May of 2016, FEDCON terminated the subcontract with GLF Construction.[8]

         On July 20, 2016, GLF Construction filed this Miller Act lawsuit alleging that FEDCON breached its subcontract with GLF Construction.[9]GLF Construction sought payment under the Miller Act Bond, and also brought claims for breach of contract and unjust enrichment.[10] On October 19, 2016, the defendants filed a motion to stay, arguing that GLF Construction is bound by the terms of the subcontract with FEDCON to stay any litigation until the completion of the dispute resolution procedures contained in the subcontract.[11]

         On March 7, 2017, the Court stayed the case, finding that the subcontract between the parties contractually bound GLF Construction to stay the litigation pending the completion of the applicable dispute resolution procedures.[12] The Court's order administratively closed the case pending the stay.[13] GLF Construction now moves the Court to reconsider its order under Federal Rule of Civil Procedure 59(e), arguing both that the Court committed manifest error and that failure to lift the stay will result in manifest injustice.[14] FEDCON filed a response in opposition, [15] and GLF Construction replied.[16]

         II. LEGAL STANDARD

         A district court has considerable discretion to grant or deny a motion under Rule 59(e). See Edward H. Bohlin Co. v. Banning Co., 6 F.3d 350, 355 (5th Cir. 1993). Reconsideration of an earlier order is an extraordinary remedy, which should be granted sparingly. See Fields v. Pool Offshore, Inc., 1998 WL 43217, *2 (E.D. La. Mar. 19, 1998); Bardwell v. George G. Sharp, Inc., 1995 WL 517120, *1 (E.D. La. Aug. 30, 1995). The Court must “strike the proper balance between the need for finality and the need to render a just decision on the basis of all the facts.” Edward H. Bohlin Co., 6 F.3d at 355. A moving party must satisfy at least one of the following criteria to prevail on a Rule 59(e) motion: (1) the motion is necessary to correct a manifest error of fact or law; (2) the movant presents newly discovered or previously unavailable evidence; (3) the motion is necessary in order to prevent manifest injustice; and (4) the motion is justified by an intervening change in the controlling law. See Fidelity & Deposit Co. of Md. v. Omni Bank, 1999 WL 970526, *3 (E.D. La. Oct. 21, 1999); Fields, 1998 WL 43217 at *2; see also Compass Tech., Inc. v. Tseng Labs., Inc., 71 F.3d 1125, 1130 (3d Cir. 1995) (“Rule 59 and Rule 60(b)(2) share the same standard for granting relief on the basis of newly discovered evidence.”).

         III. DISCUSSION

         GLF Construction does not base this motion on newly discovered or previously unavailable evidence, nor does it argue that reconsideration is justified by an intervening change in the controlling law. Instead, it argues that the Court committed manifest error because its order staying the entire litigation, instead of only specific claims, was based on an erroneous interpretation of the subcontract between FEDCON and GLF Construction.[17] Additionally, GLF Construction argues that failure to lift the stay will subject GLF Construction to manifest injustice.[18] The Court addresses each argument in turn.

         A. The Stay of the Entire Litigation Was Not Manifest Error

         GLF Construction argues that the Court manifestly erred by interpreting paragraphs 13 and 23 of the subcontract between itself and FEDCON to require a stay of the entire litigation instead of only certain claims. GLF Construction's argument is unavailing. As explained in the Court's previous order, paragraph 23 of the subcontract states:

If the Prime Contract incorporated herein is one for which the Contractor has provided any bond(s) pursuant to 40 U.S.C. § 270a, the “Miller Act, ” . . . then the Subcontractor expressly agrees to stay any action or claim under this Subcontract Agreement against the Contractor and against the Contractor's surety and its Payment Bond and Performance Bond pending the complete and final resolution of the Prime Contractor's contractual remedial procedure or the Subcontract Agreement's mediation procedure, as required by Paragraph 13, above.[19]

         Paragraph 13A, in turn, reads:

The contractual remedial procedure . . . relating to claims for which [USACE] may be responsible is specifically incorporated herein by reference and made a part of this Subcontract Agreement. The term “claim” as utilized in this paragraph shall include any request for monetary or other relief, claim, appeal, or action arising from the subcontractor for which [USACE] has, or may have, responsibility. The Subcontractor shall first pursue and fully exhaust said procedure before commencing any other action against the Contractor or its surety for any claims it may have arising out of its performance of the Work herein. Upon the Subcontractor's written request, the Contractor agrees to prosecute all claims submitted by the Subcontractor under the contractual remedial procedure of the Prime Contract on behalf of, and to the extent required by, the Subcontractor. . . . Final determination of the Subcontractor's claim(s) by the appropriate board or court shall be final and binding on the Subcontractor and the Contractor shall have no further liability, responsibility, or obligation to the Subcontractor except as may be otherwise provided in this Subcontract Agreement.[20]

         GLF Construction makes the same argument it made in opposition to the stay: that GLF Construction's breach of contract claim is not covered by the provision and therefore should not be stayed. This argument fails for the same reasons the Court rejected it previously. A plain reading of the text of the applicable provisions indicates that they apply to all of GLF Construction's claims. “Responsibility” is not qualified in ...


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