# I n t h e U n i t e d S t a t e s C o u r t o f F e d e r a l C l a i m s

No. 12-374C (F iled: Aug ust 1, 2013)

************************************* AEROPL ATE CORP., a California * corpor ation, * * Plaintiff, *

* Subcontrac tors’ Motion to I nterve ne; v. * RCFC 24(a)( 2) * THE UNI TED STATES, * * Def endant. * ************************************* Wil liam L . Br

uckner , San Dieg o, CA, for plaintiff.
J essica R. Toplin, United States De partment of Justice, Washington, DC, for de fenda nt.
L eo A. Ha ckett, Media , PA, for putative de fenda nt-intervenor s. OP INION AND ORDER
SWEE NEY , J udg e Plaintiff Aeroplate Corp. alleg es that the United States De partment of V eter ans Aff airs (“V A”) brea ched a

contra ct re lated to the re novation of the VAmedical c enter in Phil adelphia, Pennsylvania. U.S. Glass, Inc. and X L E Mater ials, Inc., two of pla intiff’s subcontra ctors on the projec t, move to intervene in this sui t to obtain and enfor ce a n equitable lien on the f

unds held by the VA that a

re se t aside for

the projec t or owed to plaintiff. F or the re asons set for th below, the court de nies the subcontra ctors’ motion to intervene

. I. BACKG ROUND The VAawa

rded the medical c enter

renova tion contrac t, contrac t number VA244- C1453, to plaintiff on J uly

30, 2010. Plaintiff then executed a pa y ment bond for the c ontrac t 1

The c ourt derive s the fac ts and proce dural history in this section from the complaint; a 1 prior motion to intervene by Premier Va lley

Ba nk, a judg ment cre ditor of plaintiff; the subcontrac tors’ motion to int erve ne and attached e x hibits; and the f ilings in United States ex rel. U.S. Glass, Inc., No. 2:12-c v-02634-LFR (E.D . Pa. filed May 15, 2012).amount, $8,876,145, on September 8, 2010. The surety was a n individual, Ronald D. Patterson, who pledg ed re al estate at three locations in support of the bond. The VA issued a notice to proce ed on Nove mber 3, 2010, a nd in May

2011, plaintiff hired the putative interve nors to provide mate rials and labor . The subcontr actor s submitt ed invoices to plaintiff in May , J une, and J uly 2011, reque sting pa

y ment for their

work. Plaintiff did not pay the subcontra ctors. In October 2011, one of the subcontrac tors–U.S. Glass, Inc.–advise d the VA that it had not bee n paid. Howe ver, a ccor ding to the subc ontrac tors, the VA c ontinued to make pay ments to plaintiff. On J anuar

y 31, 2012, the subcontra ctors submitted claims to the pay ment bond surety : U.S. Glass, Inc. soug ht $118,085, and XL E Mater ials, Inc. soug ht $58,789.77. The sure ty has not paid the subcontra ctors. The subcontr actor s filed a Miller Ac t suit aga inst plainti ff, the sur ety , and a c orpora tion purportedly

owned by

the surety

on May 15, 2012, in the United States District Court for the Easter n District of Pennsylvania, for the money

owed to them for

the work that they

perf ormed on the projec t. The three defe ndants filed an a nswer on Septe mber 11, 2012, whic h included the following aff

irmative def

ense: “ The United States Gove rnment is the owner of the prope rty

and responsible for

the pay ment.”
In the meantime, on June 12, 2012, plaintiff filed suit in this court ag ainst the United States. Plainti ff a lleg es that work on the projec t has bee n suspended since September 24, 2011, and see ks damag es of $688,513.14 f or unpaid c ontrac t modifications, delay s, and the afor ementioned suspension of w ork. On Oc tober 24, 2012, the de fenda nts in the district court action, includingplaintiff her e, soug ht a stay of the district cour

t proce eding s pendingthe resolution of this suit. I n their stay petition, the district court defe ndants alleg ed that the United States ref used to pay

the balanc e due on the VA medica l center renovation contrac t and that once the suit in the United States Court of Fe dera l Claims was resolved, the subc ontrac tors would be paid in full. The district cour t denied the stay

petition on November 13, 2012; proc eeding s in that suit remain ong oing.
The subcontr actor s were not the only parties to file suit ag ainst plaintiff for its fa ilure to make pa y ments. After

plaintiff def

aulted on seve ral loans made by Premier Va lley

Ba nk that wer e sec ured, in pa

rt, by plaintiff’s ac counts rec eivable, the bank obtained a judgme nt ag ainst plaintiff in the Fr esno County , California Superior Court on March 27, 2013, in the a mount of $743,136.24. On May

8, 2013, the bank soug ht to intervene in this case for the sole purpose of placinga lien on the pr ocee ds, if any , of plaintiff’s suits in this court. Due to the ba nk’s fa ilure 2 to assert nonc onclusory

alleg ations reg ardingits int ere st in plainti ff’ s claims, the cour t denied its motion to i nterve ne on June 7, 2013.

Plaintiff had two contra cts with the VA a nd alleg es bre ache s of both contra cts by the 2 VA in two sepa

rate suits. I n the other suit, Aer oplate Corp. v. United States, No. 12- 377C, which per tains to contrac t number VA244- C-0876, plaintiff see ks damag es of $744,690.95. The subcontrac tors only

seek to interve ne in this suit, which pertains to contra ct number V A244-C1453. -2-Subsequently , on J une 26, 2013, the subc ontrac tors moved to intervene as plaintiffs.

Specifica lly , the subcontra ctors “se ek to obtain and e nforc e an e quitable lien on funds held by the [VA] , including, but not limited to, those funds ear marke d for the c onstruction projec t known as g overnme nt contrac t number VA 244- C-1453 as we ll as other funds owing to [ plaintiff].” As the basis for their

motion to i nterve ne, they contend that the V A did not properly scrutinize the issuer of the pa y ment bond, that the pay

ment bond did not conform to the re levant leg al re quirements, and that the VAcontinued to pay plaintiff despite having notice of plaintiff’s f ailure to pa

y its subcontrac tors. Both plaintiff a nd defe ndant oppose the subc ontrac tors’ motion to int erve ne. 3
II. DISCUSS ION The subcontr actor s seek to interve ne in this suit as a matter of r ight pur suant to Rule 24(a) (2) of

the Rules of the United States Court of F eder al Claims (“RCFC”). RCFC 24(a )(2) provides: On a timely

motion, the court must permit any one to interve ne who . . . c laims an interest re lating to the pr operty or transa ction that is the subject of the a ction, and is so situated that disposingof the a ction may as a pr actica l matter impair or impede the movant’ s ability to protect its interest, unless existi ngparties adequately

repr esent that intere st. The re quirements of this rule “ are to be construe d in favor of intervention[.] ” Am. Mar . Transp., Inc. v. United States, 870 F .2d 1559 (F ed. Cir. 1989).
A. Tim eliness ParsingRCFC 24(a)( 2)’s re quirements, the f irst prongto satisfy

intervention is that the motion mus t be timely

filed. The United States Court of Appea ls for the F eder al Circuit (“F eder al Circuit”) ha s provided fa ctors to consider when de termining whether a motion to intervene is tim ely : (1) the leng th of time a putative interve nor knewor should have known of its rig ht to intervene pr ior to filing its motion; (2) the balanc e of ha rms–whether

the pre judice to the rig hts of the exist ing litig ants, if interve ntion is gra nted, is outweig hed by

the pre judice an intervenor

would suffe r if interve ntion is denied; and (3) the exis tence of unusual cir cumstance s that weig h in favor of

or ag ainst the grantingof the motion. Be lton I ndus., Inc. v. United States, 6 F.3d 756, 762 ( Fe d. Cir. 1993).

Although the subcontrac tors seek inter vention as plaintiffs and the bases of their motion 3 to intervene are alleg ations of wrong doing by the VA, the a lleg ations in their proposed c omplaint are not limi ted to alleg ations ag ainst the United States. Rather, in a ddition to t he two cla ims of relief for de clar atory

judgme nt ag ainst the United States, the putative inter venors se t forth two claims for r elief a g ainst plaintiff for Miller A ct violations and two claims of re lief ag ainst plaintiff for br eac h of contra ct. Thus, they appea r to be a ligningthemselves ag ainst both parties in this case. -3-Acc ordingto the subcontrac tors, they first lear ned that plaintiff ha d filed a c omplaint in this court eig ht months prior to filing their motion to intervene. T he subcontra ctors do not elabor ate or

offe r any thing more to their timeliness argument; conseque ntly , the cour t will construe the ir argument to be that an e ight- month delay in filing is insignific ant. Intere stingly , neither pla intiff nor def

endant c omment on the timeliness of the motion. Although a

n eight-month lag in seekingintervention ca nnot be cha

rac terized as proce edingposthaste, RCFC 24(a) (2) r equire s only that the motion be timely . Be cause plaintiff amende d its complaint and discovery disputes arose a fter the filing of the amende d complaint, this case ha s not prog resse d, afte r eig ht months, as far down the litigation trac k as the c ourt finds optimal. I ndeed, it is bec ause of the disputes betwee n plaintiff and de fenda nt that discovery

in this case c an be c hara cter ized fairly as beingin its nascent stag e. Consequently , for the pur pose 4 of addr essingthe timeliness inquiry , neither pla intiff nor def endant would be prejudice d based on the subcontra ctors’ e ight- month delay in filing their motion to intervene . Thus, the cour t finds that the subcontra ctors’ motion to intervene was timely filed.
Of c ourse, the de termination that the subcontra ctors’ motion was timely , which mer ely addre sses the first prongof the c ourt’s inquiry conce rningwhether

intervention is appropr iate, does not dec ide the pendingmotion. To prevail on their motion, the subcontra ctors must also demonstrate, inter

alia, an inter est in the proper ty or the tra nsaction at issue.
B. Su ff icient Inter est Re lating to the P roperty or Transaction To meet RCFC 24(a )(2) ’s intere st require ment, a putative inter venor must demonstrate an interest that is “of suc h a dire ct and immediate c hara cter that the interve nor will either g ain or lose by the direc t leg al oper ation and ef fec t of the judg ment.” Am. Mar . Transp., Inc., 870 F .2d at 1561 (e mphasis and interna l quotation marks omitted). In other wor ds, the interest c annot be indirect or c ontinge nt. I d. A putative interve nor must also show that the intere st is a “leg ally protec table intere st.” I d. (interna l quotation marks omitted). A leg ally protec table intere st is “one which the substantive law r ecognizes as belong ing to or beingowned by

the applica

nt,” and is “something mor e than mer ely an ec onomic interest.” I d. at 1562 (e mphasis and interna l quotation marks omitted). In addition, of particula r re levanc e her e: The intere st of an applica nt non-party

havingno privity

claim in a contr act, the terms of whic h are disputed by the par ties to it, also has not been re cog nized as

On J une 10, 2013, def

endant f iled its first moti on to compel discover y response s; its 4 supplemental motion to compel was filed on June 28, 2013. Br iefingon these two motions was completed on July

25, 2013. Duringa Jul y

30, 2013 status confe renc e with the cour t, the outstanding discove ry

issues were resolved. -4-leg ally protec table, eve n when the outc ome of the c ontrac t action is almost certa in to have a signific ant and immediate e conomic impact on the a pplicant.
I d. (citingRosebud Coal Sales Co. v. Andrus, 644 F.2d 849, 851 ( 10th Cir. 1981)).
The subcontr actor s contend that they have a n interest in the funds he ld by the VA that wer e either

ear marke d for the me dical ce nter re novation projec t or otherwise owed to plaintiff. There can be littl e dispute that the outcome of these pr ocee dings w ill have a “ signific ant and immediate impact” on the putative interve nors. I f plaintiff pre vails, it will rec eive f unds from which the subc ontrac tors could be pa id, but if defenda nt preva ils, the chanc es of r ecove ry from plaintiff bec ome much more slim. Neverthele ss, the putative interve nors ca nnot establish a leg ally protec table intere st.
I t is well settled that the court possesse s ancillary jurisdiction to “adjudicate issues that are incidental to the cour

t’s g ener al jurisdictional authority to rende r money

judgme nts.” Am. Renovation & Constr. Co. v. United St ates, 65 F ed. Cl. 254, 260 (2005); ac cord K lamath Irrig ation Dist. v. United States, 64 Fed. Cl. 328, 334 (2005) . Howeve r, anc illary jurisdiction “does not e x tend to power s specific ally excluded from the Court’s jurisdiction . . . .” Am. Renovation & Constr. Co., 65 Fed. Cl. at 260. In this case, the putative intervenor s are subcontrac tors, and ar e not in privity of contra ct with the United States. Thus, as conf irmed by 5 the binding pr ece dent of the F eder al Circuit in America n Maritime Tra

nsport, Inc., the subcontrac tors have no le g ally protec table intere st in thi s suit. 6

Indeed, be cause subcontrac tors on fede ral g overnme nt contrac ts lack the re quisite 5 privity with the United States, the putative interve nors would lack sta nding to sue the United States in their own name f or bre ach of

contra ct or for

an equitable adjustment. Erickson Air Crane Co. v. United States, 731 F .2d 810, 813 (F ed. Cir. 1984); ac cord Me rritt v. United States, 267 U.S. 338, 340 (1925) (“ Plaintiff[ , a subcontra ctor,] cannot re cover under the Tucke r Ac t. The pe tition does not allege any contra ct, express or implied in fac t, by the g overnme nt with the plaintiff to pay

the latter . . . .” (citation omitted)); B ell BCI Co. v. United States, 91 Fed. Cl. 664, 669 (2010) ( “The only

parties who ma

y maintain an ac tion in the trial court base d upon a contra ct ar e those who ha ve ac tually

enter ed into a contr act with the United States.” ). To obtain relief , their options are limit ed to a suit ag ainst the prime contr actor or pass-thr oug h suit ag ainst the g overnme nt broug ht by the prime c ontrac tor. Erickson Air Crane Co., 731 F .2d at 813. Notably , in a dec ision iss ued prior to Ame rica n Maritime Tra

nsport, Inc., the United States Claims C ourt found that a subc ontrac tor’s motion to int erve ne pre sented the same issue, and raised the same jurisdictional bar rier, a s a subcontra ctor’s la ck of standingto sue the United States on its own behalf. See Tec hcra ft, Inc. v. United States, 13 Cl. Ct. 248 (1987). The c ontrolling de cisional law in this circuit is develope d by the United States Supreme 6 Court and the F eder al Circuit. See F CC v. P ottsvil le B road. Co., 309 U.S. 134, 140 (1940) ( “[A] lower c ourt is bound to respec t the mandate of an appe llate tribunal and c annot re consider questions which the mandate has laid at rest.”) ; Colt ec I ndus., Inc. v. United States, 454 F .3d -5-In an ef fort to avoid this conclusion, the subcontra ctors ana logize their c ircumstance s to those descr ibed in Kenne dy Electric Co. v. U.S. P ostal Service, 508 F .2d 954 (10th Cir. 1974), wher e a subc ontrac tor broug ht suit aga inst the United States Post al Service (“U SPS ”) unde r the Miller Act upon discove ringthat the prime c ontrac tor was insolvent and ha d not furnished the USPS with a pay

ment bond. The c ourt observe d that there was no standingissue beca use the suit was a g ainst an indepe ndent entity with the power

to sue and be sued, the subcontr actor had a direc t interest, and ther e wa s no bond that could be sued upon. I d. at 959. It ultim ately conclude d that the subcontra ctor possesse d an equitable lien on contra ct re tainag es held by the USPS . I d. at 960. The subc ontrac tors’ re liance on K ennedy Electric Co. is unavailing. In addition to it being fa ctually distinguishable, United E lec. Corp. v. United States, 647 F .2d 1082 (Ct. Cl. 1981), the dec ision was issued more than te n y ear s prior to Americ an Mar itime

7 Transpor t, I nc., and, unlike A merica n Maritime Tra

nsport, Inc., is not binding on this court.
Be cause the putative interve nors–subcontra ctors who lac k privity of contra ct with the United States–ca

nnot establish that they

possess “an inter est relating to the pr operty or transac tion that is t he subjec t of the ac tion” as re quired by RCFC 24(a)( 2), the c ourt nee d not addre ss whether

they have satisfied the rule’ s other re quirements.

1340, 1353 (F ed. Cir. 2006) (“ There can be no question that the Court of Fe dera l Claims i s require d to follow the prec edent of the Supreme Court, our c ourt, and our pr edec essor c ourt, the Court of Claims.”).
In United Elec tric Corp., the c ourt noted that althoug h the subcontra ctor’s la ck of 7 standing to sue the United States wa s mandated by the Tucke r Ac t, it was not a satisfac tory result if the subcontra ctor fa iled to rec eive pa y ment for wor

k that it perfor

med. 647 F.2d at 1087. Reflec ting upon the obvious injustice suff ere d by such a subc ontrac tor, it remar ked:
As we ha ve done be fore , we stre ss that the United States may voluntarily

choose to make pay

ment, and we believe that it has a nonenfor cea ble obligation to do so, when a nd if it becomes c lear

that [t he subcontra ctor] had a va lid claim, that contra ct re tainag es or other unexpended funds under the contra ct ar e ava ilable for such pay ment, and that, if those f

unds are not paid out, the Gover nment will be rec eivinga windfa ll which it should nothave. T he Gove rnment should not “re tain both the benef

its of the contra ct and the f unds that were to be used to pay for them.”
I d. (citations omitted). -6-III. CONCLUSION

For the fore g oing r easons, the c ourt DENIES the subcontra ctors’ motion to intervene

. IT IS SO ORDERED. s/ Marg are t M. Sweeney MARGARET M. SW EENEY J udg e

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