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United States of America v. Federal Insurance Company

July 1, 2011

UNITED STATES OF AMERICA
FOR THE USE AND BENEFIT OF MILESTONE TARANT, LLC/HIGHLAND
ORNAMENTAL IRON WORKS, INC., A JOINT VENTURE PLAINTIFF/USE-PLAINTIFF,
v.
FEDERAL INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Signed by Royce C. Lamberth, Chief Judge,

Memorandum

Before the Court are Plaintiff's Motion [16] to Confirm the Arbitration Award and Manhattan Construction Company's ("Manhattan's") Motion [18] to Intervene and Motion for Interpleader Relief. Having considered the motions, the responsive pleadings, the entire record in this case, and the applicable law at length, the Court will DEFER ruling on the Motion to Confirm the Arbitration Award and GRANT Manhattan's Motion to Intervene and for Interpleader Relief for the reasons that follow.

I.Introduction

Manhattan awarded Milestone Tarant, LLC-Highland Ornamental Ironworks, Inc., a Joint Venture ("Joint Venture") a subcontract to fabricate and install ornamental metals and custom bronze doors and windows for the "Capitol Visitors Center-Sequence II" project ("Project").

The project was part of a prime contract between the Architect of the Capitol ("Government") and Manhattan.

After the Government took beneficial occupancy of the Capitol Visitors Center and opened it to the public, the Joint Venture filed this case against Federal Insurance Company ("FIC")-Manhattan's bond surety-under the Miller Act, 40 U.S.C. § 3131 et seq. Manhattan then filed to arbitrate the disputes between the Joint Venture and Manhattan for the Project and FIC moved this Court to stay this matter while it was under arbitration.

In its motion to stay this matter pending arbitration, FIC specifically agreed to be bound by the results of the arbitration between the Joint Venture and Manhattan. This Court's memorandum opinion granting the stay ruled that the FIC is bound by the results of the arbitration and following the arbitration, the Joint Venture could "immediately collect on the bond against FIC." ECF No. 14 at 18. The arbitration resulted in a Final Award of $1,008,278 plus fees and expenses of $78,810.14 to the Joint Venture. The Final Award further ordered that Manhattan must pay the amount awarded to the Joint Venture within thirty days of the Final Award date, or the awarded amount would be subject to interest at 6% per annum. The interest didn't apply to the fees and expenses.

II.The Motion to Intervene and to Interplead

a.Motion to Intervene

FIC claims that it and Manhattan "are both willing, indeed anxious, to pay the arbitration award, but several persons, including the IRS, may claim all or part of the award." Mem. Mot. Manhattan Construction Company to Intervene and Interpleader Relief 1, May 5, 2011, ECF No.18. FIC and Manhattan both fear, therefore, that they may end up with multiple or conflicting obligations if they aren't allowed to interplead so that these various parties may sort out among themselves who has a right to the funds. To protect the interests of Manhattan, Federal, and those who may be claiming an interest in the award, Manhattan and Federal request that the Court:

1. Allow Manhattan to intervene in this action.

2. Allow Manhattan and Federal to interplead funds into this Court or provide a bond (in accordance with 28 U.S.C. 1335(a)(2)) to pay the arbitration award; and

3. Accept for filing Manhattan and Federal's Complaint in Interpleader.

Manhattan may intervene as of right under Federal Rule of Civil Procedure 24(a)(2) or, alternatively, permissively under Federal ...


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