UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA _______________________________________ ) ) 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. ) Civil Action No. 08-2186 (RCL) ) FEDERAL INSURANCE COMPANY, ) ) Defendant. ) ) _______________________________________)

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”).

1 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,

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

2 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 Rule of Civil Procedure 24(b)(1)(B).

Under Federal Rule of Civil Procedure 24(a)(2), the Court must permit anyone who “is so

situated that disposing of the action may as a practical matter impair or impede the movant’s

ability to protect its interest, unless existing parties adequately represent that interest.” Numerous

parties appear ready to claim Manhattan’s payment. Manhattan is liable to FIC for amounts FIC

pays to Manhattan’s subcontractors—including the Joint Venture—and would therefore be

subject to the possibility of multiple or inconsistent rulings if Manhattan’s and Federal’s liability

are not determined simultaneously. See United States f/u/b/o Coleman Capital Corp. v. Fidelity

Deposit Co. of Maryland,

(S.D.N.Y 1967) (holding that a general contractor

could intervene in a subcontractor’s suit against a surety on a payment bond because the

“[d]efendant surety is unable to represent adequately petitioner’s interest because it cannot

interpose petitioner’s personal defenses or claims”) (internal quotation marks and citations

omitted). Thus, Manhattan may intervene as of right in order to pay the amount of the arbitration

award into this Court so that the parties claiming its payment can make their cases in a single

forum without the risk of multiple or inconsistent rulings.

3 Under Federal Rule of Civil Procedure 24(b)(1)(B), the Court may permit anyone to

intervene who “has a claim or defense that shares with the main action a common question of

law or fact.” FIC’s obligations are coextensive with Manhattan’s because FIC is Manhattan’s

bond surety. In order to determine how much FIC must pay the Joint Venture, one must first

determine how much Manhattan owes the Joint Venture. Thus, Manhattan has claims and

defenses that share common questions of law and fact with the Joint Venture’s action against

FIC, and Manhattan should be permitted to intervene in order to pay the arbitration award into

this Court so that the parties claiming its payment can make their cases in a single forum without

the risk of multiple or inconsistent rulings.

For permissive intervention under Rule 24(b), however, this Court must consider whether

intervention will unduly delay or prejudice the adjudication of the original parties’ rights. Having

considered the issue, this Court finds that it will not. Administratively, it’s far more efficient for

Manhattan to intervene in this action because it deals with the same subject matter and will allow

these conflicting claims to be resolved once and for all quickly. The Joint Venture is more likely

to be prejudiced if this Court doesn’t allow Manhattan to intervene to have the conflicting claims

sorted out because sorting them out one at a time could lead to conflicting rulings and would

certainly take much more time. Thus, Manhattan’s intervention is proper and won’t prejudice

any of the original parties’ rights.

Rule 24(c) requires a motion for intervention to include a pleading that sets out the claim

or defense for which intervention is sought. Manhattan and FIC seek to file such a complaint in

interpleader so that they can pay the arbitration award amount into the Court and let the various

parties who may claim an interest in the funds state their cases. This Court grants Manhattan

leave to file its complaint in interpleader for the reasons that follow.

4 b. Motion to Interplead

Interpleader is proper under Rule 22 and

. Jurisdiction exists under

, which states:

(a) The district courts shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader filed by any person, firm, or corporation, association, or society having in his or its custody or possession money or property of the value of $500 or more, or having issued a note, bond, certificate, policy of insurance, or other instrument of value or amount of $500 or more, or providing for the delivery or payment or the loan of money or property of such amount or value, or being under any obligation written or unwritten to the amount of $500 or more, if (1) Two or more adverse claimants, of diverse citizenship as defined in subsection (a) or (d) of section 1332 of this title, are claiming or may claim to be entitled to such money or property, or to any one or more of the benefits arising by virtue of any note, bond, certificate, policy or other instrument, or arising by virtue of any such obligation; and if (2) the plaintiff has deposited such money or property or has paid the amount of or the loan or other value of such instrument or the amount due under such obligation into the registry of the court, there to abide the judgment of the court, or has given bond payable to the clerk of the court in such amount and with such surety as the court or judge may deem proper, conditioned upon the compliance by the plaintiff with the future order or judgment of the court with respect to the subject matter of the controversy. (b) Such an action may be entertained although the titles or claims of the conflicting claimants do not have a common origin, or are not identical, but are adverse to and independent of one another.

Manhattan and FIC are holding more than $500 and therefore satisfy

(a).

Moreover, at least two adverse claimants (Highland, Milestone, Braude & Margulies, and the

Joint Venture’s surety are citizens of Virginia, the District of Columbia, the District of

Columbia, and Maryland respectively). Other potential claimants are federal government entities.

Thus,

(a)(1) is satisfied as well.

Manhattan and FIC can’t satisfy

(a)(2), however, because they’ve not

yet actually deposited the amount of the arbitration award into the Court’s registry. Instead,

5 they’ve merely indicated a willingness to do so. Thus, interpleader under

is

impermissible.

Interpleader is alternatively proper under Federal Rule of Civil Procedure 22, which

states in part:

Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Joinder for interpleader is proper even though:

(A) the claims of the several claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical; or

(B) the plaintiff denies liability in whole or in part to any or all of the claimants.

For reasons discussed above, Manhattan does satisfy Rule 22, and thus may interplead in this

case.

The Joint Venture conceded that Manhattan may intervene, but opposes interpleader. Its

argument boils down to the general objection that it’s not very likely that Manhattan or FIC will

be vulnerable to double or multiple liabilities for the arbitration award amount. The law is clear,

however, that jurisdiction in interpleader doesn’t depend on the merits of the claims of the parties

in interpleader. Bierman v. Marcus,

(3d Cir. 1957); see also 7 Wright, Miller,

Kane, and Marcus, Federal Practice and Procedure: Civil, § 1702 (2010) (“Because of the

emphasis on multiplicity, a determination of the respective merits of the adverse claims is

inappropriate at the initial stage; at that point the primary question is whether interpleader should

be allowed. Issues relating to the merits of the action should be deferred to the so-called ‘second-

stage’ of interpleader.”) (citing cases).

6 III. Motion to Confirm Arbitration Award

The Joint Venture moved this Court to confirm the arbitration award against FIC, arguing

that this Court held in its December 10, 2009 Memorandum Opinion granting the stay pending

arbitration, that “FIC is bound by the results of the arbitration and following arbitration, the Joint

Venture could ‘immediately collect on the bond against FIC.’” Mot. Confirm Arbitration 2, Apr.

21, 2011, ECF No. 16-1 (quoting Order 18, ECF No. 14).

The Joint Venture’s argument fails because it misleadingly takes this Court’s Order out

of context. Quoted in full, this Court held that “FIC has agreed to be bound by the result of

arbitration. Were Joint Venture to succeed at arbitration but be unable to secure its remedy

against Manhattan, it could still immediately collect on the bond against FIC.” Order 18. The

Joint Venture has not even tried to “secure its remedy against Manhattan” much less shown itself

“unable” to do so. Id. Thus, it cannot use this Court’s Order as a justification for seeking to

confirm this arbitration award against FIC instead of Manhattan.

Manhattan and FIC are responsible for prompt service of the Interpleader Complaint on

each of the interpleader defendants. Once each of the interpleader defendants has been served

and has had an opportunity to respond to the Interpleader Complaint, the Joint Venture may

renew its motion to confirm the arbitration award against Manhattan. Until then, this Court will

defer ruling on the Joint Venture’s Motion to Confirm the Arbitration Award.

IV. Conclusion

For the reasons discussed above, Manhattan’s Motion to Intervene and its Motion to

Interplead are GRANTED. The Court defers ruling on the Motion to Confirm the Arbitration

Award. A memorializing order will be entered today as well.

7 Signed by Royce C. Lamberth, Chief Judge, on July 1, 2011.

8