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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

Miller Act Lawsuit Brought Against Westchester Fire

June 6, 2011 - Ragan Mechanical, Inc. brought a Miller Act lawsuit in the name of the United States of America against Westchester Fire Insurance Co. asking a Tennessee court to award damages on an allegedly unpaid construction bill.

The complaint, filed in U.S. District Court for Eastern Tennessee, alleges that Applied Energy Management Inc. has refused to pay valid claims to its subcontractor Ragan for work at Oak Ridge National Laboratory in Oak Ridge, Tenn.

The sprawling Oak Ridge complex is the Department of Energy’s largest science and energy laboratory. It was established in 1943 as a part of the government’s secret Manhattan Project to pioneer a method for producing and separating plutonium.

According to the complaint, Applied Energy, of Huntersville, N.C., and Ragan had entered a subcontract Nov. 1, 2009 under which Ragan would provide supervision, labor, material and equipment for construction of a steam plant at Oak Ridge. The complaint further alleges that the two parties subsequently agreed to seven separate change orders.

Ragan said that it completed all of its work in accordance with the agreement. However, it alleged that Applied Energy still owes it $287,624 and “refuses to pay in violation of its contractual obligations despite Plaintiff’s demand for payment.”

The lawsuit alleges that Westchester Fire furnished a $2.987 million performance and payment bond to the United States and is a surety under a contract between Johnson Controls, Inc. – not a party to the litigation – and the government.

Ragan has asked the court for judgment against Applied Energy and Westchester for the past-due amount. It also asked for pre-judgment interest and attorney fees.

The Miller Act requires a contractor on a federal construction contract of $100,000 or more to post bonds for performance and labor and material payment.

The defendants answered Ragan’s complaint on May 26, 2011.  Applied Energy additionally filed a counterclaim against Ragan on the 26th.

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