Opinion ID: 773496
Heading Depth: 3
Heading Rank: 1

Heading: Wausau's duty to arbitrate.

Text: 20 As an initial matter, Wausau is correct that, under the FAA, no party can be compelled to arbitrate unless that party has entered into an agreement to do so. See AT & T Tech., Inc. v. Communications Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 1418 (1986). Courts, however, have recognized a number of theories under which non-signatories may be bound to the arbitration agreements of others. See, generally, Thomson-CSF, S.A. v. Am. Arbitration Ass'n, 64 F.3d 773 (2d. Cir. 1995). These theories arise out of common law principles of contract and agency law: 1) incorporation by reference; 2) assumption; 3) agency; 4) veil-piercing/alter ego; and 5) estoppel. See id. at 776; see also MSDealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999). 21 In this case, the district court concluded that Wausau agreed to arbitrate disputes with Bright when it stepped into the shoes of A-1 and signed the Ratification Agreement with Bright. The court reasoned that the Ratification Agreement, signed by Wausau and Bright, incorporated by reference the Subcontract, thus, expressing Wausau's intent to arbitrate disputes arising out of the Subcontract in accordance with the arbitration provision therein. 8 See e.g., United States Fidelity and Guaranty Co. v. West Point Constr. Co., 837 F.2d 1507 (11th Cir.1988) (compelling surety to arbitrate where performance bond incorporated by reference subcontract that contained arbitration provision). 22 We agree with the district court that Wausau is bound by the arbitration provision in the Bright/A-1 Subcontract. By signing the Takeover Agreement, Wausau assumed all duties and responsibilities of A-1 to complete the prime contract in exchange for the balance of the contract price. See e.g., Travelers Indem., et al. v. United States, 16 Cl.Ct. 142 (1988) (holding that surety became a party to the prime contract upon executing a Takeover Agreement with the United States). While the Takeover Agreement did not specifically obligate Wausau to any contractual provisions previously negotiated between Bright and A-1, this agreement clearly reveals Wausau's intent to step into the shoes of A-1. The Ratification Agreement, executed with Bright, guaranteed performance of the Subcontract work according to the terms and conditions of the Subcontract. This agreement evinces Wausau's intent to affirm the Subcontract, including the arbitration provision therein. See Green v. Ford Motor Credit Co., 246 S.E.2d 721, 722-23 (Ga. App. 1978); Port Largo Club, Inc. v. Warren, 476 So. 2d 1330, 1333 (Fla. 3d DCA 1985). Finally, the Completion Contract granted Wausau the option to assign its rights in the Subcontract to Rogers. Read together, these agreements lead us to conclude that Wausau gained the benefits and obligations of the Subcontract between A-1 and Bright. Thus, Wausau became bound by the arbitration provision in the Subcontract. 23 Wausau does not contest that it acquired A-1's rights under the Subcontract. Pursuant to the Ratification Agreement, Wausau obtained Bright's agreement to complete the Subcontract at no additional cost. Wausau also acquired the right to assign its rights under the Subcontract to a completion contractor. Wausau concedes that it exercised its right to assign the Subcontract to Rogers. 9 However, Wausau contests its obligation to arbitrate under the agreement. This is tantamount to Wausau asking the Court to recognize its rights under the Subcontract without the correlative duties therein. 24 Wausau argues that it could not have assumed the obligation to arbitrate under the Bright/A-1 Subcontract because that Subcontract automatically terminated, by its own terms, upon the Government's default of A-1 on April 29, 1994. A fair reading of paragraph 10.4 of the Subcontract, however, leads us to conclude that the Subcontract became terminable, but did not automatically terminate when the Government defaulted A-1. 10 Wausau does not assert, and we find no evidence in the record, that Wausau or Bright terminated the Subcontract pursuant to its termination provisions. We also find it disingenuous for Wausau to have taken full advantage of the Subcontract and now argue that it was not in effect. 25 Finally, Wausau contends that it cannot be compelled to arbitrate with Bright because the Miller Act places exclusive jurisdiction of claims against Miller Act sureties in federal court. The district court found that the Miller Act does not preclude arbitration, and alternatively, that Wausau waived any such protection afforded it. We agree. 26 Under the Miller Act, a claim against a surety arising under a Miller Act bond shall be brought in federal court. See 40 U.S.C. § 270a-e. The Miller Act does not apply here because Bright alleges that Wausau breached the Subcontract; Bright does not pursue a claim against Wausau's payment bond. Even if it applies, the Miller Act does not preclude arbitration under the FAA where the parties have previously agreed to arbitrate disputes. See United States ex. rel. Portland Constr. Co. v. Weiss Pollution Control Corp., 532 F.2d 1009, 1012 (5th Cir.1976) 11 (staying Miller Act suit pending outcome of arbitration where subcontract contained arbitration provision); United States ex. rel. Capolino Sons, Inc. v. Electronic & Missile Facilities, Inc. 364 F.2d 705 (2d. Cir.1966) (requiring subcontractor to arbitrate Miller Act payment bond claim pursuant to arbitration provision in subcontract, which provision was not prohibited by the Miller Act). Accordingly, we conclude that Wausau assumed A-1's obligations to arbitrate with Bright when Wausau took over the Project and ratified the Subcontract. 12