The United States of America v. Tri-Technic

Background

The dispute arose from a subcontract connected to a project authorized by the Department of Energy to upgrade the SLAC National Accelerator Laboratory. IEM agreed to provide equipment and services, including switchgears and circuit breaker control panels. IEM sued Tri-Technic, the prime contractor, for breach of contract and quantum meruit, which is a claim seeking payment for the reasonable value of services or goods provided. IEM also sued under the Miller Act on a payment bond issued by Tri-Technic as principal and Argonaut Insurance as surety.

Motion to Compel Arbitration

Tri-Technic and Argonaut moved to compel arbitration of all three claims. They relied on a provision in IEM’s quotation requiring binding arbitration of “[a]ny claim arising out of or related in any way to the purchase of goods or services.” The court held that the provision was broad enough to cover the claims in the case.

The court discussed, but did not resolve, whether the Miller Act’s protection against prospective waivers of a subcontractor’s right to bring a civil action prevents arbitration. The court noted that federal appellate courts had allowed Miller Act rights to be arbitrated, while Congress later amended the Miller Act to restrict waivers of the right to sue on a payment bond. The court described the issue as difficult, but concluded that it did not need to decide it because IEM had not pursued the argument in its opposition.

Making of the Arbitration Agreement

IEM argued that arbitration could not be compelled until the court determined whether additional terms in Tri-Technic’s purchase order became part of the parties’ agreement. The court rejected that position. Under the Federal Arbitration Act, the court needed to confirm only that an arbitration agreement had been made, not resolve every dispute about the subcontract’s terms.

The court found that the existence of an arbitration agreement was sufficiently clear because both sides had invoked the agreement, even though they disagreed about which claims it covered. The court also held that, after affirmatively seeking arbitration, IEM had waived its ability to deny the existence of an arbitration agreement when doing so later appeared strategically useful. The court further noted that IEM did not contest whether Argonaut, which was not a party to the arbitration agreement, could join the motion.

Disposition

The court granted the motion to compel arbitration. The arbitrator will decide in the first instance the scope of the parties’ obligations, including whether the quotation, purchase order, or applicable default rules provide the governing terms. The court stayed the case pending arbitration, vacated the scheduled initial case-management conference, and required periodic joint status reports until the stay is lifted.