Mediation as a mandatory precursor to litigation is a common feature in construction contracts. What happens when mediation runs afoul of the timing requirements of a bond claim? Does a contractor's failure to pursue and complete contractually mandated mediation prior to filing its bond claim subject its bond claim to dismissal? No, according to the the U.S. District Court for the Eastern District of Missouri. The district court was asked to dismiss a Miller Act bond claim filed by an unpaid subcontractor against his contractor and the contractor's surety, Travelers Casualty and Surety Company of America ("Travelers"). The subcontract at issue contained a mandatory mediation clause requiring the parties to mediate their disputes prior to filing claims against one another. The subcontract also included a clause stating the subcontract was solely between the subcontractor and contractor.
When the subcontractor filed its Miller Act bond claim, the contractor and Travelers asked the district court to dismiss the claim due to the subcontractor's failure to first mediate its disputes with the contractor. The district court refused to do so, instead staying the case against the contractor as well as Travelers, while the parties pursued mediation.
United States ex. rel. J.F. Ahern Co. v. Frederich Constr., Inc., 2011 U.S. Dist. LEXIS 141017, (December 8, 2011)
