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Subs Win Defaulted Miller Act Claims

Two subcontractors on a government project for improvements at the Oceana Naval Air Station in Virginia Beach have stated valid claims for unpaid bills under the Miller Act, and a magistrate judge for the Norfolk U.S. District Court awards default judgment and damages against the surety, which is in liquidation.

These cases concern an underlying construction project at the Dam Neck Annex to Oceana Naval air Station in Virginia Beach. Defendant Key Turf Construction entered into a contract with the federal government to perform improvements to the Sea Mist RV Park at Dam Neck Annex. Key Turf entered into subcontracts with each of the plaintiffs, Asphalt Roads & Materials Co. and E.G. Middleton Inc. for electrical work. Pursuant to the Miller Act, 40 U.S.C. § 3131, Key Turf was required to secure a payment bond in the value of the contract to make prompt payment to Key Turf’s subcontractors.

On April 20, 2011, Key Turf informed both plaintiffs it could not pay any outstanding invoices on the project, and they should look to its surety, Western Insurance Co., for payment. At the time, Key Turf owed $60,956 to Asphalt and $178,876 to Middleton for completed work on the project. Plaintiffs filed these complaints against Key Turf, Western and Lexon Insurance Co. On Nov. 1, 2011, Utah’s insurance commissioner sought to intervene in both cases in his capacity as the court-appointed liquidator of Western. While those motions were pending, the court entered default as to Western in both cases. The court has allowed the liquidator to intervene, but it has filed neither a motion to set aside default nor a response to plaintiff’s motion for default judgment in either case.

Both plaintiffs have stated valid Miller Act claims against Western. The liquidator has stipulated on the record in open court that the damages amount each plaintiff seeks were correct.

The court finds plaintiff Asphalt is entitled to recover damages of $60,956 from Western and Middleton is entitled to recover damages of $178,876 from Western.

U.S. v. Western Ins. Co. (Stillman) No. 2:11cv491, July 18, 2012; USDC at Norfolk, Va. VLW 012-3-356, 11 pp.

VLW 012-3-356

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