Opinion ID: 2519890
Heading Depth: 3
Heading Rank: 2

Heading: The Federal Court Lawsuit

Text: In May 1997 Tru-Line filed suit against USF & E and Star in United States District Court in Anchorage, alleging breach of contract and claiming damages totaling over $730,000, plus interest, costs, and attorney's fees. In its complaint, Tru-Line asserted that the federal court had federal question jurisdiction pursuant to 28 U.S.C. § 1331 and by virtue of the Miller Act. [1] USF & E and Star moved for summary judgment, arguing that Tru-Line's claims were barred under the Miller Act. USF & E and Star also contended that, because Tru-Line was not registered as a contractor in the State of Alaska pursuant to AS 08.18.151, [2] it was not entitled to enforce its contract with USF & E. Tru-Line attempted to amend its complaint in September 1997. The amended complaint purported to establish diversity of citizenship as another ground for federal jurisdiction. However, Tru-Line failed to note diversity in the heading, did not allege any facts establishing diversity in the pleadings, and stated the incorrect jurisdictional amount. At oral argument on the motion for summary judgment, United States District Court Judge John W. Sedwick, noting these substantial defects in the amended complaint, allowed counsel for Tru-Line to withdraw the amended complaint and file another. (Tru-Line never filed a second amended complaint.) Judge Sedwick also stated that he saw no valid claim based upon the Miller Act. [3] He indicated that he would consider the other matters with respect to the state law issues, that is whether Tru-Line, as an unregistered contractor, could sue on its contract. He expressed skepticism that Tru-Line could do so. [4] In his written order from chambers, Judge Sedwick granted summary judgment to USF & E. He found that, because Tru-Line was a third-tier contractor and because the Star payment bond was not a Miller Act bond, Tru-Line was not entitled to recover under the Miller Act. Judge Sedwick also discussed the Alaska contractor registration law and its applicability to Tru-Line's claims. He found the Alaska Contractor Registration Act to be substantive in nature and applicable to Tru-Line's claims brought in federal court pursuant to diversity jurisdiction. As Tru-Line did not dispute that it was an unregistered contractor, Judge Sedwick stated that Tru-Line was barred from suing on the contract it entered into with USF & E. In a separate order from chambers, Judge Sedwick granted USF & E Rule 11 sanctions in the sum of reasonable attorney's fees, expenses, and costs. He found that Tru-Line filed an utterly baseless claim under the Miller Act. He also found that the lack of reasonable inquiry made by Tru-Line supported a finding of frivolousness and warranted the imposition of sanctions.