Christopher G. Hill | Construction Law Musings
It seems to be Miller Act time here at Construction Law Musings, not to mention in the Federal District Courts here in Virginia. Last week I discussed what sort of work can form the basis for a Miller Act claim. This week I am discussing the effect of a mandatory mediation contract clause on the same type of claim. I have discussed both the benefits and the possible negative consequences of the inclusion of such a clause in your construction contract.
The recent case out of the Norfolk, Virginia Federal District Court recently explored the related question of whether such a clause can be enforced in the context of a Miller Act claim. In United States of America, for the use of Precision Air Conditioning of Brevard Inc. v. Cincinnati Insurance Company, the Court was confronted with a possible conflict between the legal requirement that any waiver of the right to pursue a Miller Act claim must be explicitly waived in writing and the clear contractual language between the general contractor and the plaintiff stating that mediation was a condition precedent to suit.
In this case, Precision filed a Complaint that met all of the requirements of a proper Miller Act claim. In defense, Leebcorp, the general contractor, moved to dismiss or stay the litigation for failure to meet the mediation requirement. In response to the Motion to Dismiss or Stay, Precision argued that the mediation clause violated the explicit waiver requirement and therefore could not be enforced. After review of the pleadings, the Court held that there was no prejudice to either party to stay the proceedings pending mediation and that such action would promote judicial economy. The Court also imposed a time limit of 12 months in which to comlete any such mediation, and stated as follows:
The court will grant the request to stay. But, because stays for an indefinite duration are disfavored, the court will impose a 12-month time frame for the parties to abide by the mediation protocols. The court will also consider requests to continue the time frame, as the court deems are warranted.
In short, the Court determined that while the mediation clause was not a waiver of the right to sue, it was a requirement to proceed beyond the Complaint stage.
My take away from this case? Courts like to know that parties seek to resolve their disputes and will work to assure that where mediation is possible, that it occurs. At least in the Miller Act context, the Court was willing to force mediation, but not to go so far as to invalidate the claim.