United States District Court, W.D. Washington, Seattle
ORDER DENYING MOTION TO DISMISS OR STAY
L. ROBART UNITED STATES DISTRICT JUDGE
the court is Defendants Hartford Fire Insurance Company
(“Hartford”) and Cherokee General
Corporation's (“Cherokee”) (collectively,
“Defendants”) motion to dismiss or stay. (MTD
(Dkt. # 34).) Plaintiffs United States of America for the Use
and Benefit of Pinnacle Crushing and Construction, LLC;
Pinnacle Crushing and Construction, LLC (collectively,
“Pinnacle”); United States of America for the Use
and Benefit of SCI Infrastructure, LLC; and SCI
Infrastructure, LLC (collectively, “SCI”)
(collectively, “Plaintiffs”) oppose the motion.
(Pinnacle Resp. (Dkt. # 43); SCI Resp. (Dkt. # 45).) The
court has considered the motion, the parties' submissions
in support of and in opposition to the motion,  the relevant
portions of the record, and the applicable law. Being fully
advised,  the court DENIES the motion for the
reasons set forth below.
case arises from Plaintiffs' work on a United States Army
Corps of Engineers (“the Corps”) construction
project. Plaintiffs performed work “for the
construction project known as ‘USACE-S YTC Repair Selah
Airstrip, Yakima WA, W912DW-14-D-1002 0012, ' at the
United States Army's Yakima Training Center”
(“the Project”).(Pinnacle Compl. (Dkt. # 1) ¶
2); see also SCI Infrastructure, LLC v. Cherokee Gen.
Corp., No. C17-3181SMJ, Dkt. # 1 (“SCI
Compl.”) ¶ 2 (E.D. Wash.). “The Project
involved demolishing the existing airfield, expanding the
airstrip[, ] and reconstructing the airway and taxiway as
well as other incidental work.” (Line Decl. (Dkt. #
34-1) ¶ 2.) Cherokee was the prime contractor for the
Corps-the owner of the Project. (Pinnacle Compl. ¶ 3);
SCI Infrastructure, No. C17-3181SMJ, SCI Compl.
¶ 2. SCI was a subcontractor for Cherokee, and Pinnacle
was, in turn, a subcontractor for SCI. (Pinnacle Compl.
¶ 3); SCI Infrastructure, No. C17-3181SMJ, SCI
Compl. ¶ 3. Hartford was the “compensated surety
and bonding company for Cherokee.” (Pinnacle Compl.
¶ 4); SCI Infrastructure, No. C17-3181SMJ, SCI
Compl. ¶ 4. Cherokee and Hartford provided a payment
bond-Bond No. 52BBCSHH7744 (“the Bond”)-to the
United States of America. SCI Infrastructure, No.
C17-3181SMJ, SCI Compl. ¶ 5, Ex. A.
October 11, 2016, Cherokee and SCI entered into a subcontract
(“the Cherokee-SCI Subcontract”) governing
SCI's work on the Project. (Line Decl. ¶ 3, Ex. A
(“SCI Sub.”) (Dkt. # 35-1) at 1.) The
Cherokee-SCI Subcontract “incorporates by reference . .
. all relevant and applicable clauses of the Prime Contract
[the contract between the Corps and Cherokee], as well as all
clauses under the Federal Acquisition Rules
(“FARs”) required by the Prime Contract.”
(Id.) The parties further agreed that the dispute
provisions of the Prime Contract would apply to any disputes
arising from the Cherokee-SCI Subcontract. (Id. at
3.) Cherokee agreed to “present to the [Corps] . . .
all of [SCI's] claims for additional monetary
compensation . . . and to further invoke, on behalf of [SCI],
those provisions in the Prime Contract for determining
disputes.” (Id.) SCI agreed to be “bound
by the procedure and final determinations as specified in any
such Disputes clause.” (Id. at 3-4.)
and SCI also entered into a subcontract (“the
SCI-Pinnacle Subcontract”). (Line Decl. ¶ 4, Ex. B
(“Pinnacle Sub.”).) The SCI-Pinnacle Subcontract
also contains a disputes provision that calls for Cherokee to
“pass through” Pinnacle's claims to the
Corps. (See Id. at 12.) Specifically, the parties
agreed to be bound “by the terms of the Main Contract
and by any and all procedures and resulting decisions,
findings, determinations, or awards made thereunder by the
person so authorized in the Main Contract, or by an
administrative agency, board, [or] court of competent
jurisdiction or arbitration.” (Id.) Pinnacle
further agreed that “it will not take, or will suspend,
any other actions”-including Miller Act, 40 U.S.C.
§ 3131, et seq., claims- “and will pursue
no independent litigation with respect thereto, pending final
determination of any dispute resolution procedure
between” Cherokee and the Corps. (Id.)
7, 2017, the Corps terminated Cherokee's contract and
withheld certain payments. (Line Decl. ¶ 7, Ex. C
(“Letter”)). The Corps contends that Cherokee
“fail[ed] to make progress” on the Project,
“fail[ed] to provide and adhere to schedules, ”
and “fail[ed] to provide adequate quality
control.” (Id. at 1.) Cherokee contends that
it “encountered differing site conditions that delayed
the work and increased the cost of performance.” (Line
Decl. ¶ 5.) Cherokee disputes the Corps' actions and
submitted a claim pursuant to the Prime Contract.
(Id. ¶ 8.) Plaintiffs also provided Cherokee
with their claims, which Cherokee passed to the Corps.
(Id. ¶ 9.)
Pinnacle also brought suit under the Miller Act. (Pinnacle
Compl. ¶ 5); SCI Infrastructure, No.
C17-3181SMJ, SCI Compl. ¶¶ IV.1-3. Plaintiffs
assert that they performed their obligations under the
subcontracts but Cherokee has not paid them. (Pinnacle Compl.
¶ 11); SCI Infrastructure, No. C17-3181SMJ, SCI
Compl. ¶¶ 10-14. Plaintiffs contend that Cherokee
owes Pinnacle $1, 057, 597.95 and SCI $2, 595, 116.96.
(Pinnacle Compl. ¶ 14); SCI Infrastructure, No.
C17-3181SMJ, SCI Compl. ¶ 14. Plaintiffs each bring a
claim to recover those amounts on the Bond. (Pinnacle Compl.
¶¶ 15-17); SCI Infrastructure, No.
C17-3181SMJ, SCI Compl. ¶¶ IV.1-3. SCI additionally
brings claims for breach of contract; violation of the Prompt
Payment Act, 31 U.S.C. § 3901, et seq.; unjust
enrichment and quantum meruit; promissory estoppel; and
negligent misrepresentation. SCI Infrastructure, No.
C17-3181SMJ, SCI Compl. ¶¶ V-IX.
February 9, 2018, Defendants moved to dismiss or stay the
case. (See MTD.) Defendants first argue
that Plaintiffs' claims against Hartford are
“entirely contingent” on Cherokee's
liability, and Hartford is therefore not liable because
“the damages SCI and Pinnacle have alleged are the
responsibility of [the Corps] and are being resolved through
the Contract Disputes Act process.” (Id. at
7.) Defendants further argue that Plaintiffs' claims are
unripe-and the court therefore lacks subject matter
jurisdiction-because “the parties are in the process of
pursuing their claim[s] administratively using the
mechanisms.” (Id. at 7-8.) In the alternative,
Defendants request that the court stay the case pending
resolution of the administrative process. (Id. at
oppose the motion, contending that any contractual provisions
requiring them to wait before pursuing their Miller Act
claims are invalid waivers of their rights under the Act.
(See Pinnacle Resp. at 7-8; SCI Resp. at 2, 15.)
They also argue that a stay would be prejudicial because
“the upstream dispute resolution process will possibly
take years to complete.” (SCI Resp. at 17; see
also Pinnacle Resp. at 3, 6.) The court now addresses
bring their motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(1), which concerns the court's
subject matter jurisdiction. (See MTD at 8);
Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039
(9th Cir. 2004); see also Oregon v. Legal Servs.
Corp., 552 F.3d 965, 969 (9th Cir. 2009) (“An
objection that a federal court lacks subject matter
jurisdiction may be raised at any time.”); Salois
v. Medifast, Inc., No. 17cv1810-GPC (NLS), 2018 WL
108346, at *3 (S.D. Cal. Feb. 28, 2018) (citing Gemtel
Corp. v. Cmty. Redevelopment Agency, 23 F.3d 1542, 1544
n.1 (9th Cir. 1994)) (stating that Rule 12(b)(1) is the
proper procedural vehicle for raising a ripeness challenge).