Washington State-based contractor Harris Pacific Northwest, LLC filed a Miller Act claim on April 20, 2021, alleging non-payment of $3.16 million stemming from its work as a subcontractor participating in seismic upgrades on a Bremerton, Washington United States naval base.
Seismic upgrades involve the renovation of existing structures and facilities to keep them resistant to any seismic activity — a significant task for any notable facility in Washington, a state with dozens of active faults and frequent seismic activity.
The project is intended to bring the US government’s Naval Base Kitsap, originally built in 1933, up to seismic code. This involves the renovation of an existing ship maintenance facility, alongside significant demolition, renovation of mechanical and electrical systems, and handling of hazardous material. Contractors were originally solicited to work on the project in February 2015.
The filed claim asserts that Diamond B Constructors, Inc. — a subcontractor uninvolved in the complaint itself — was engaged to provide plumbing, heating, ventilation, and air conditioning services for the Bremerton naval base on September 10, 2015.
Then, Harris Pacific purchased Diamond B’s interest under the subcontract on January 31, 2018, taking over the remainder of the project’s requirements.
Harris Pacific claims that the scope of work under the subcontract was changed or impacted by Walsh Construction during the course of the project — causing both Diamond B and Harris Pacific to suffer what the complaint claims to be “substantial costs.”
Despite these setbacks Harris Pacific claims that its work (and Diamond B’s prior work) was performed as required in the subcontract, asserting that any deviations from the terms of the contract were done under the direction of Walsh Construction.
Nevertheless, allegedly neither Harris Pacific nor Diamond B has been paid in full for their work, leading to Harris Pacific’s $3.16 million claim.
When contracted to work on federal construction projects, subcontractors need protection against non-payment. However, in order to keep government properties out of the risk of third-party claims, a different route is taken to combat non-payment than filing a mechanics lien. General contractors for government projects are required to post a payment bond for all projects — subcontractors are then allowed to make Miller Act claims against the payment bond rather than the project’s property.
Miller Act protections and provisions may allow for full restitution to Harris Pacific
According to the complaint, Walsh Construction has claimed that the release of this balance has been submitted for payment by the federal government — a claim which, according to Harris Pacific, has not been clearly updated by either the government or Walsh Construction, and has not been paid despite Harris Pacific’s “repeated requests.”
In addition to the $3.16 million in outstanding payment for its work under the subcontract, Harris Pacific requests additional monetary damages, attorney’s fees, and prejudgment interest.
Notably, Miller Act claims normally cannot include attorney’s fees, and such claims are intended to be restricted only to the principal amount of non-payment. However, attorney fees are allowed to be included when they are guaranteed in the original contracts; in this case, the contract between Diamond B/ Harris Pacific and Walsh Construction agrees that Travelers Casualty and Surety will pay any attorney’s fees stemming from a subcontractor’s successful dispute.
The Miller Act provides that any party who “furnishes labor or material” on a project is entitled to a level of protections. However, “first tier” and “second tier” subcontractors — those who contract with a project’s general contractor or a “first tier” subcontractor — specifically have rights under the Miller Act. In this case protection is extended to Harris Pacific, which is situationally a “first tier” subcontractor.
Learn everything about the Miller Act with Levelset’s Federal Miller Act Guide, with downloadable forms and FAQs.
Multiple active disputes point to an unsettling pattern of concerns for Walsh Construction
This claim is not the only current issue for Walsh Construction: As of time of reporting, there are at least six active liens against Walsh totaling $815,060.45.
Similar to its current Miller Act dispute, one of these liens is also for a US Navy facility — a NAVFAC Southeast-controlled property in Mayport, Florida.
In addition to the active liens, slow payment has been reported and liens have been threatened for a total possible amount upwards of $812,000 in relation to 18 incidents in California, New York, and Texas — projects which are either commercial or are run by states or counties.
Penalties for its business practices have similarly weighed upon Walsh Construction, as it has had to pay $10,367,571 in penalty fees stemming from 33 cases since 2000. The vast majority of that amount comes from a 2013 violation of the False Claims Act — a violation that resulted in a loss of $10 million to the federal government.
More worryingly, a 2006 class-action lawsuit filed by 12 workers formerly employed by Walsh Construction claimed that “Walsh has engaged in a pattern and practice of race discrimination against Blacks that has dramatically reduced its Black labor force by systematically laying off Black laborers and labor foremen and replacing them with non-Blacks.”
According to the suit, Walsh Construction was further accused of fostering a hostile workplace environment and systematically giving its less desirable and more dangerous assignments to black employees. The lawsuit was granted partial judgment in 2012, and Walsh Construction came to an undisclosed settlement with the lawsuit’s plaintiffs in 2013.