                                                              [PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS
                                                          FILED
                   FOR THE ELEVENTH CIRCUIT       U.S. COURT OF APPEALS
                                                    ELEVENTH CIRCUIT
                                                        MAY 22, 2001
                     ________________________
                                                     THOMAS K. KAHN
                                                          CLERK
                            No. 98-5404
                     ________________________

                  D. C. Docket No. 97-00410 CV-UUB


EMPLOYERS INSURANCE OF WAUSAU,
a Mutual Company,
                                                Plaintiff-Counter-
                                                Defendant-Appellant,

                               versus

BRIGHT METAL SPECIALTIES, INC.,
                                                Defendant-Counter-
                                                Claimant, Cross-
                                                Claimant-Cross-
                                                Defendant-Appellee,

ROGERS CONSTRUCTION COMPANY,
                                                Defendant-Cross-
                                                Defendant-Cross-
                                                Claimant-Third-Party
                                                Plaintiff-Appellee.

__________________________________________________________________
_


BRIGHT METAL SPECIALTIES, INC.,
                                                Plaintiff-Cross-
                                               Defendant-Appellee,

                              versus

EMPLOYERS INSURANCE OF WAUSAU,
a Mutual Company,
                                               Defendant-Cross-
                                               Defendant-Appellant,

ROGERS CONSTRUCTION COMPANY,
                                               Defendant-Cross-
                                               Claimant.

                    ________________________

                           No. 98-5405
                    ________________________

                 D. C. Docket No. 97-00410-CV-UUB


EMPLOYERS INSURANCE OF WAUSAU, a Mutual Company,

                                               Plaintiff-Counter-
                                               Defendant-Appellee,

                              versus

BRIGHT METAL SPECIALTIES, INC.,
                                               Defendant-Counter-
                                               Claimant-Cross-
                                               Claimant-Cross-
                                               Defendant-Appellee,

ROGERS CONSTRUCTION COMPANY,
                                               Defendant-Cross-
                                               Defendant-Cross-


                                2
                                                                  Claimant-Third-Party
                                                                  Plaintiff-Appellant.

__________________________________________________________________
_


BRIGHT METAL SPECIALTIES, INC.,
                                                                  Plaintiff-Cross-
                                                                  Defendant-Appellee,

                                            versus

EMPLOYERS INSURANCE OF WAUSAU,
a Mutual Company,

                                                                  Defendant-Cross-
                                                                  Defendant-Appellee,

ROGERS CONSTRUCTION COMPANY,
                                                                  Defendant-Cross-
                                                                  Claimant-Appellant.

                              ________________________

                     Appeals from the United States District Court
                         for the Southern District of Florida
                           _________________________

                                       (May 22, 2001)


Before EDMONDSON, FAY and GARWOOD*, Circuit Judges.

______________________
       *Honorable Will L. Garwood, U.S. Circuit Judge for the Fifth Circuit, sitting by
designation.



                                               3
FAY, Circuit Judge:

      Appellants Employers Insurance of Wausau (“Wausau”) and Rogers

Construction Company (“Rogers”) appeal the district court’s order compelling

arbitration of a claim asserted by Appellee Bright Metal Specialties, Inc. (“Bright”)

arising from a dispute on a Government construction project in Everglades

National Park. The district court held that Wausau, a Miller Act surety, became a

party to

Bright’s subcontract and the arbitration provision therein by virtue of Wausau’s

Takeover Agreement with the Government, Wausau’s Completion Contract with

its completion general contractor, Rogers Construction Co. (“Rogers”), and the

Ratification Agreement with Bright. Wausau argues that it did not contractually

agree to arbitrate with Bright, that it is not bound by the arbitration provision in

Bright’s subcontract, and that the Miller Act precludes arbitration of a claim

against a Miller Act surety such as Wausau. Rogers concedes that it is bound by

Bright’s subcontract, but contends that Bright’s claim is excluded from arbitration

pursuant to an arbitration exception in the subcontract. Moreover, Bright contests

our jurisdiction to hear this appeal. We conclude that the district court’s order was

an appealable “final decision” and affirm the arbitration order with respect to both

Wausau and Rogers.


                                           4
I.    Background

       The parties agree to the following facts, most of which are established by

contract. On or about July 16, 1993, the National Park Service (“Government”)

contracted with A-1 Construction/BellincCo. (“A-1") for the repair of roofs to

certain buildings located in the Everglades National Park (the “Project”). Wausau,

as contract surety, provided performance and payment bonds for the Project on

behalf of A-1, its principal, in favor of the Government, as required by the Miller

Act, 40 U.S.C. § 270, et seq. In September 1993, A-1 subcontracted a portion of

the Project work to Bright pursuant to a written agreement (the “Subcontract” or

“Bright/A-1 Subcontract”) that included an arbitration clause.

      The Government subsequently terminated A-1 for its default on the Project,

and called upon Wausau to complete the work pursuant to the performance bond.

On or about May 20, 1994, the Government and Wausau entered into a Takeover

Agreement by which Wausau agreed to complete the prime contract for A-1. On

or about May 26, 1994, Wausau entered into a Contract for Completion and

Construction (the “Completion Contract”) with Rogers whereby Rogers became

the completing contractor for all remaining work under the prime contract.

Pursuant to the Completion Contract, Wausau agreed to assign to Rogers all of




                                          5
Wausau’s right, title and interest in and to A-1's executory subcontracts for the

performance of Project work.

      On or about June 14, 1994, Bright and Wausau entered into a Ratification

Agreement which resolved Bright’s payment bond claim and ratified the Bright/A-

1Subcontract. First, Wausau and Bright resolved claims relating to monies due

Bright for work performed prior to A-1's termination. Second, Bright agreed to

complete the Subcontract and agreed to start work on the Project within seven (7)

days after request by Wausau, its agent, “or assigns, including any completion

contractor engaged by [Wausau].” Third, the Ratification Agreement provided that

Wausau could “assign its rights under the [A-1] subcontract and this agreement” to

a completion contractor. Finally, the parties agreed that Wausau would pay Bright

the remaining retainage, as fulfillment of its obligations to Bright, if work did not

begin within a specified period. Thereafter, Wausau required Bright to complete

the Subcontract with Rogers as the completion contractor. Bright resumed work

on the Project in June 1994.




                                           6
       In December 1994, Bright and Wausau settled a payment bond claim

previously submitted by Bright for work, labor and/or materials performed and/or

furnished under its Subcontract with A-1.1

       Near completion of the Project, Bright sought additional compensation for

delays and damages caused by the Government. Ultimately, Bright submitted to

Rogers a request for “equitable adjustment” (“REA”) under the Subcontract. As

required by the contract documents, Rogers submitted the request to Wausau for

presentation by Wausau to the Government. Bright, Rogers, Wausau and the

Government met in Denver, Colorado in February 1996 to address Project claims,

including Bright’s REA. At the meeting, the Government offered to settle Bright’s

REA for approximately $10,000, less than two percent (2%) of the amount sought

by Bright. Bright declined the settlement offer and left the meeting. After Bright

left the meeting, Wausau accepted the Government’s settlement offer without

Bright’s approval or consent. Bright did not submit any further claims against the

Government, directly or through Rogers or Wausau, regarding the amounts sought

in the REA.




       1
          Pursuant to this settlement agreement, Wausau paid Bright the agreed amount in
exchange for a release signed by Bright of all claims of any nature which Bright might have
against the Government or against Wausau under its surety bond.

                                               7
       In January 1997, Bright filed a Demand for Arbitration with the American

Arbitration Association (“AAA”) for alleged breach of contract by Rogers and

Wausau. Bright claimed losses in the amount of $944,000 plus interest, attorney’s

fees and costs.

       In February 1997, Wausau filed a complaint in the District Court for the

Southern District of Florida against Rogers and Bright seeking declaratory and

injunctive relief against the arbitration (Case No. 97-410-Civ-Marcus). In a

separate action against Wausau and Rogers, Bright filed a Motion to Compel

Arbitration, pursuant to the Federal Arbitration Act, 9 U.S.C. § 4, and based on an

arbitration clause in the Subcontract between Bright and A-1 (Case No. 97-433-

Civ-Marcus). Wausau and Rogers filed claims for declaratory and injunctive relief

seeking to stay the arbitration.2

       The two actions were consolidated and referred to Magistrate Judge Ted E.

Bandstra. On December 22, 1997, Magistrate Judge Bandstra issued an Amended

Report and Recommendation that Wausau and Rogers be compelled to arbitrate




       2
         Bright filed a counterclaim against Wausau and a cross-claim against Rogers
conditioned on the Court denying arbitration. In response to Bright’s conditional pleadings,
Rogers filed a counterclaim against Bright Metal and its surety, Preferred National Insurance
Company.

                                                8
Bright’s claim. The district court, Judge Ungaro-Benages presiding,3 conducted a

de novo review and by order entered September 22, 1998, affirmed the

Magistrate’s Amended Report and Recommendation granting Bright’s Motion to

Compel Arbitration, denying Wausau’s and Roger’s Motions for Injunctive Relief,

and denying all remaining motions as moot. In addition, the district court

dismissed each of the underlying consolidated actions in deference to arbitration,

and denied Roger’s request for reconsideration.

       Wausau and Rogers appeal from the district court’s decision. Bright

challenges our jurisdiction to hear this appeal asserting that the district court’s

order was not a final decision with respect to arbitration under 9 U.S.C. § 16(a)(3)

of the Federal Arbitration Act (“FAA”).

II     Standard of Review

       The jurisdictional issue is a question of law, which we review de novo. See

Randolph v. Green Tree Fin. Corp.-Alabama, 178 F.3d 1149, 1152 (11th Cir.

1999). We review de novo the district court’s order compelling arbitration. See

Randolph, 178 F.3d at 1152.

III    Analysis



       3
          On January 21, 1998, the district court entered an order transferring the consolidated
cases to Judge Ungaro-Benages.

                                                 9
       C.      “Final Decision” under the Federal Arbitration Act

       As a threshold matter, we decide whether we have jurisdiction over this

appeal. Special rules govern appeals from a district court’s arbitration order as set

forth in section 16 of the FAA. See 9 U.S.C. § 16; see also American Express Fin.

Advisors, Inc. v. Makarewicz, 122 F.3d 936 (11th Cir. 1997). The question here is

whether the district court’s order compelling arbitration of Bright’s claim and

dismissing the underlying actions is a “final decision with respect to an arbitration”

within the meaning of the statute. 9 U.S.C. § 16(a)(3).

       In arguing that we lack jurisdiction, Bright distinguishes between

“embedded” and “independent” proceedings, a distinction this Court has

recognized, albeit without using those labels.4 See Thomson McKinnon Sec., Inc.

v. Salter, 873 F.2d 1397, 1399 (11th Cir. 1989) (cited in Randolph, 178 F.3d at

1155 n.4). Bright correctly notes that, generally speaking, a decision of the district

court is final when it disposes of all the issues framed by the litigation and leaves

nothing for the district court to do but execute the judgment. See Randolph, 178

F.3d at 1154 (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633

(1945)). However, Bright contends that the phrase “final decision” does not

       4
          An “embedded” proceeding is one that involves both a request for arbitration and other
claims for relief. In an “independent” proceeding, the issue of arbitration is the only issue before
the court. See Green Tree Fin. Corp.-Alabama v. Randolph, 121 S.Ct. 513, 520, 148 L.Ed.2d
373 (2000).

                                                10
include an order compelling arbitration and dismissing the other claims in the

action, when that order occurs in an “embedded” proceeding such as this one.5

       We find that Bright’s argument is foreclosed by the Supreme Court’s recent

opinion in Green Tree Fin. Corp.-Alabama, 121 S.Ct. 513, 520 (2000). That

decision held that a district court order compelling arbitration and dismissing all

other claims is “final” within the meaning of § 16(a)(3), and therefore appealable,

even when that order occurs in an “embedded” proceeding involving both a request

for arbitration and other claims for relief. Green Tree Fin. Corp., 121 S.Ct. at 520-

521. Here, as in Green Tree Fin. Corp., the district court directed the parties to

resolve the dispute by arbitration and dismissed both cases,6 leaving the court

nothing to do but execute the judgment. Accordingly, we have jurisdiction over

the consolidated actions because the arbitration order disposes of all the issues

framed by the litigation and leaves nothing for the district court to resolve.

       D.      The Applicability of the Subcontract’s Arbitration Clause


       5
          Here, the consolidated actions allege, inter alia, breach of contract, release, and
performance and payment bond claims related to the underlying merits of the case, in addition to
the issue of arbitration. Thus, Bright claims that the arbitration order is not a final decision
because it does not decide the merits of the underlying claims.
       6
          Although the district court did not specify whether the dismissal was with or without
prejudice, the arbitration order clearly disposed of the entire case on the merits and left no part of
it pending before the court. Moreover, the district court could have, but did not, stay the case
pending arbitration. See Green Tree Fin.Corp., 121 S.Ct. at 520 n.2 (explaining that arbitration
order staying rather than dismissing all other claims for relief would not be appealable).

                                                 11
       Having determined that we have jurisdiction over this appeal, we now turn

to the question whether the parties agreed to arbitrate the present dispute. Wausau

contends that it may not be compelled to arbitrate because it is not a party to any

agreement containing an arbitration clause. Bright argues that Wausau ratified the

Subcontract and therefore, assumed the duty to arbitrate pursuant to an arbitration

provision therein.

       A.      Choice of Law

       Federal law establishes the enforceability of arbitration agreements, while

state law governs the interpretation and formation of such agreements. See Perry

v. Thomas, 482 U.S. 483, 107 S.Ct. 2520 (1987). Federal law counsels that

questions of arbitrability, when in doubt, should be resolved in favor of arbitration.

See Moses H. Cone Mem’l Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103

S.Ct. 927, 941 (1983). Thus, as with any other contract, the parties’ intentions

control, but those intentions are generously construed as to issues of arbitrability.7



       B.      Wausau’s duty to arbitrate.

       7
          Although the question of which state’s law should govern is an important one, neither
the parties nor the courts have focused on this issue. See Scott v. Prudential Securities, Inc., 141
F.3d 1007, 1012 n.6 (11th Cir.1998). As a federal court sitting in diversity, we apply the conflict
of law rules of Florida, including Florida contract law, unless the relevant documents provide
otherwise. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22
(1941).

                                                12
       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).

       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


       8
          The district court applied Georgia law to interpret the Subcontract based on the choice
of law provision therein. See Subcontract, ¶ 15.2. To the extent that Florida law applied, as the
place of performance, the district judge cited Florida law in accord.

                                               13
(11th Cir.1988) (compelling surety to arbitrate where performance bond

incorporated by reference subcontract that contained arbitration provision).

      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


                                         14
Subcontract between A-1 and Bright. Thus, Wausau became bound by the

arbitration provision in the Subcontract.

       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.

       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




       9
          Significantly, Rogers concedes that it succeeded to the obligations of A-1 under the
Subcontract. This could only be by assignment from Wausau. See Completion Contract
(obligating Wausau to assign to Rogers all “[Wausau’s] right, title and interest in and to [A-1's]
executory Subcontracts”).

                                                15
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.

          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.

          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



          10
               The Subcontract provides:

                   10.4 TERMINATION BY OWNER. Should the Owner terminate
                   its contract with the Contractor or any part of which includes the
                   Subcontractor’s Work, the Contractor shall so notify the
                   Subcontractor in writing and upon written notification, this
                   Agreement shall be terminated ....

           Bright/A-1 Subcontract, ¶ 10.4.
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

       C.      Roger’s Duty to Arbitrate

       Rogers concedes that it is bound by the arbitration provision in the

Subcontract. However, Rogers objects to arbitration on the basis of an exception

to arbitration contained in the Subcontract. Specifically, Rogers claims that §

14.2(b) of the Bright/A-1 Subcontract expressly excludes from arbitration “pass




       11
          Fifth Circuit cases decided before October, 1981 are binding precedent in this Circuit.
Bonner v. City of Prichard, 661 F.2d 1206, 1210 (11th Cir.1981).
       12
           Having found that the dispute is arbitrable, we do not address Wausau’s claim that
Bright released Wausau from its obligations under the Subcontract. See 9 U.S.C. § 4; see also
Aluminum, Brick & Glass Workers Int’l Union v. AAA Plumbing Pottery Corp., 991 F.2d 1545,
1550 (11th Cir.1993) (explaining that courts are not permitted to address defenses to disputes
within the scope of an arbitration clause).

                                               17
through” claims, or claims asserted by Bright up the ladder to the Government.13

Pursuant to this exception, the agreement to arbitrate between Rogers and Bright

would not apply to any “claim” brought by Bright against Rogers if Rogers

asserted that the claim, in whole or in part, was against the Government (“Owner”)

since the contract between Rogers and the Government does not provide for

binding arbitration. Based on the Magistrate Judge’s findings, the district court

concluded that the exception does not apply for two reasons: 1) Bright’s REA was

not a “claim” under the Subcontract; and 2) Bright’s REA was never asserted

against Rogers as required by the exception provision.

      Our review of the record evidence accords with the findings of the

Magistrate Judge. The arbitration exception set forth in paragraph 14.2 of the

Subcontract does not apply because Bright’s REA is not a “claim” under the

Subcontract. The Subcontract provides that claims relating to the Government had

to be submitted by Rogers “in the manner and within the time elements provided in


      13
           Paragraph 14.2 of the Subcontract provides in relevant part:
               14.2 EXCEPTIONS. The agreement to arbitrate shall not apply to any claim:
               ***
               (b) asserted by the Subcontractor against the Contractor if the
               Contractor asserts said claim, either in whole or part against the
               Owner, or asserted by the Owner against the Contractor, when the
               contract between the Contractor and Owner does not provide for
               binding arbitration ....

       Subcontract, ¶ 14.2.

                                             18
Contract Documents for like claims by the Contractor upon the [Government].”

Subcontract, ¶ 6.2. The prime contract between A-1 and the Government required

the Contractor (A-1 and later Rogers) to submit all claims in accordance with the

Contract Disputes Act.14 See Prime Contract, Article 37. Moreover, the prime

contract provided that a demand for payment of money exceeding $50,000 was not

a claim under the Contract Disputes Act until it was certified by the Contractor.15

       In the district court, Rogers conceded that Bright submitted a claim against

the Government in an amount exceeding $1,000,000 for delays and damages

caused by the Government. See Roger’s Response to Bright’s Motion to Compel.

Ultimately, Rogers and/or Wausau advised Bright to submit its claim as an REA,

rather than as a certified claim under the Contract Disputes Act. The parties agree

that Bright’s REA was never certified, as the prime contract required for any and

       14
            Contract Disputes Act of 1978, 41 U.S.C. § 601 et. seq
       15
            Article 37 of the Prime Contract provides in pertinent part:

                (c) “Claim”, as used in this clause, means a written demand or
                written assertion by one of the contracting parties seeking as a
                matter of right, the payment of money in a sum certain, the
                adjustment or interpretation of contract terms, or other relief
                arising under or relating to this contract.
                ...
                However, a written demand or written assertion by the Contractor
                seeking the payment of money exceeding $50,000 is not a claim
                under the Act until certified as required by subparagraph (d)(2)
                below.

Government/A-1 Prime Contract dated July 16, 1993, ¶ 37 (emphasis added).

                                                 19
all claims exceeding $50,000. See Prime Contract, ¶ 37. Thus, the REA is not a

“claim” as defined in Article 37 of the prime contract, and Rogers may not rely on

the arbitration exception in the Subcontract because that same Subcontract required

Rogers to certify claims relating to the Government. See e.g., Woodrow Wilson

Constr. Co., Inc. v. MMR-Radon Constructors, Inc., 635 So.2d 758 (La. Ct. App.

1994) (affirming arbitration order, under terms of subcontract providing for

arbitration unless contractor submitted claim against owner, where general

contractor did not submit claim against owner in accordance with procedures

specified).

       Given our decision that Bright’s REA was not a “claim” subject to the

arbitration exception under the Subcontract, we do not reach the district court’s

alternate basis for compelling Rogers to submit to arbitration.16 We also do not

address Roger’s argument that Bright’s claim did not require certification to be

submitted as an REA, and alternatively that only Wausau could certify Bright’s

claim. Regardless of who was responsible for certification or whether Bright’s

claim should have been certified, the exception to arbitration does not apply

because there is no “claim” as defined by Article 37 of the prime contract. See


       16
           Namely, the district court found that Bright never asserted its demand for additional
compensation against Rogers, as required by the exception provision. See Subcontract, ¶ 14.2,
supra at n.11.

                                                20
Aluminum, Brick & Glass Workers Int’l Union v. AAA Plumbing Pottery Corp.,

991 F.2d 1545, 1550 (11th Cir.1993) (explaining that courts are not permitted to

address defenses to disputes within the scope of an arbitration clause).

      Bright’s claim against Wausau and Rogers is simple. Wausau and Rogers

had no right to settle Bright’s million dollar claim against the government for any

sum and certainly not for $10,000. This dispute clearly arises out of the

contractual relationship between these parties and is covered by the arbitration

clause.

IV    Conclusion

      For these reasons, we AFFIRM the district court’s order compelling

arbitration as to both Rogers and Wausau and dismissing the underlying cases.




                                         21
GARWOOD, Circuit Judge, dissenting in part.

       I concur in all of Judge Fay’s cogent opinion except only so much thereof as

holds that Wausau is bound by the arbitration provisions in the Bright/A-1

Subcontract. I respectfully dissent from the latter holding.

       The majority correctly recognizes that the September 1993 Bright/A-1

Subcontract does not of itself bind Wausau to its arbitration provisions,

notwithstanding Wausau’s status as Miller Act performance and payment bond

surety for the project general contractor A-1, because Wausau was not a party to

the Bright/A-1 Subcontract.1 The majority instead holds that Wausau became

bound to Bright under the Bright/A-1 Subcontract, including its arbitration clause,

by the combined effect of three documents Wausau executed subsequent to the

Government’s termination of A-1 for A-1's default on the project, namely: the May

20, 1994 Takeover Agreement between Wausau and the Government; the May 26,

1994 Completion Contract between Wausau and Rogers, the new completing prime

contractor for the project hired by Wausau; and the June 14, 1994 Ratification

Agreement between Wausau and Bright, as a result of which Bright later that

month began and ultimately completed (or mostly completed), as a Rogers

       1
        Cf. U.S. v. Pool and Canfield, Inc., 778 F. Supp. 1088, at 1090 (W.D. Mo. 1991) (by
issuing Miller Act payment bond as to general contract, surety did not agree to arbitrate claims
by subcontractor merely because the subcontract between the subcontractor and the general
contractor contained an arbitration clause).

                                                22
subcontractor, the remaining work called for in the Bright/A-1 Subcontract. I

interpret these documents, and their collective effect, differently than does the

majority.

      The combined effect of the three documents relied on by the majority is

simply that Wausau, as authorized by the Government, undertook completion of

the overall project by contracting with Rogers for Rogers to complete all the

remaining work called for in A-1's contract with the Government, Wausau agreeing

to assign to Rogers its rights in the uncompleted subcontracts so that Rogers

would, in effect, be substituted for A-1 in those subcontracts with respect to the

unfinished work thereunder, and Bright and Wausau agreeing that Wausau would

pay Bright for all unpaid work done prior to A-1's termination and that Wausau

had a 120 day option to require Bright to so agree to complete for Rogers, which

option was timely exercised. The net result was in essence that Wausau paid

Bright for unpaid work performed to date and Rogers was substituted for A-1 in

the Subcontract as to the uncompleted work thereunder, and the subcontract’s

arbitration clause binds Rogers and Bright, but not Wausau, just as it had bound

Bright and A-1, but not Wausau. There is nothing unusual or unfair about this.

Bright was protected by the payment bond for the work it had done and did not

have to agree to Wausau having the option to cause Rogers to step into A-1's shoes


                                          23
under the Subcontract; but, the Subcontract was subject to termination by virtue of

A-1's termination and Bright had no right to complete the work; and thus agreeing

with Wausau as it did gave Bright, which had performed only about a third of the

Subcontract, the opportunity, which shortly thereafter materialized, of being

awarded the contract to complete the balance of the work on the same terms for a

solvent prime contractor, Rogers.

      Nothing in the documents relied on by the majority contains any agreement

on Wausau’s part be bound by A-1's obligations under the Subcontract unless

Wausau itself undertook to complete the work, as opposed to having it done by a

new completion prime contractor, and except that Wausau recognized and

discharged its payment bond obligation to pay Bright for unpaid for work

performed prior to A-1's termination.

      Wausau’s Takeover Agreement with the Government allows Wausau, in

order to fulfill its performance bond obligations to the Government, to hire a

completion prime contractor to complete the job, contains no arbitration clause

(and incorporates no agreement which contains such a clause), and expressly

provides it would not “be deemed to create any rights in favor of, or inure to the

benefit of any third party or parties” (and would not enlarge Wausau’s obligations

under its bonds).


                                         24
      Wausau’s Completion Contract with Rogers obligates Wausau to assign its

rights in the uncompleted subcontracts to Rogers, but does not purport to recognize

any obligations on the part of Wausau under those subcontracts, which Wausau

was not a party to. And, of course, Bright (like the other subcontractors) was not a

party to either the Completion Contract or the Takeover Agreement.

      The only agreement executed by both Wausau and Bright is the Ratification

Agreement. The Ratification Agreement commences by recitals that A-1 has been

terminated by the Government, which has called on Wausau (referred to

throughout as “Surety”) under its performance bond, that Bright (referred to

throughout as “Subcontractor”) has made a claim under the payment bond, and that

the total Subcontract amount is $493,653, the value of the work completed is

$154,609, of which $39,038.25 has been paid, leaving a balance of $107,040.30

now owing plus $7,730.45 as five percent retainage (specified in clause (8) of the

recitals). Paragraph (1) states that Wausau has paid Bright $107,040.30 and that

Bright releases Wausau from “all claims for monies due this day, excluding

retainage withheld.” Paragraph (2) provides that “Subcontractor ratifies and

agrees to complete its subcontract . . . and further agrees to start work within seven

(7) days after request by Surety . . .” (emphasis added). Paragraph (3) provides:

      “Since the work under the contract with the Owner of the project may
      be completed by a new completion prime contractor, Subcontractor

                                          25
       agrees that Surety may assign its rights under the subcontract and this
       agreement to the completing prime contractor if done within one
       hundred twenty (120) days of the date of this agreement.
       Subcontractor will then look to the assignee for all further payments
       including all retainages whether withheld now as set forth above or in
       the future.”

Paragraph (4), the last paragraph, makes provision respecting payment by Wausau

to Bright of the $7,730.45 retainage for previously performed work, and states that

“such payment will constitute complete fulfillment of the obligations of Surety to

Subcontractor.”2

       Nowhere does the Ratification Agreement state that Wausau ratifies or is

bound by the Subcontract. Rather, it expressly provides that if within 120 days

Wausau assigns “its rights” thereunder and under the Ratification Agreement to a

“new completion prime contractor,” Bright “will then look to the assignee for all


       2
         On December 14, 1994, Wausau paid Bright the $7,730.45 retainage and Bright
executed a release in favor of Wausau. Arguably, the payment was not required by paragraph
(4), which provides in full:
        “If within one hundred twenty (120) days of the date of this agreement Surety, its
        agent or assigns has not called upon Subcontractor to complete, Surety will pay
        the retainages withheld as set forth in Item (8) provided the work in place has
        been accepted by the Owner. Tender of such payment will constitute complete
        fulfillment of the obligations of Surety to Subcontractor.”
Wausau explains that it construed paragraph (4) to apply whenever Wausau did not (within 120
days) call on Bright to complete for Wausau itself, as opposed to completing for the new
completing prime contractor (Rogers). However, that construction is arguably inconsistent with
the portion of the last sentence of paragraph (3) relating to retainages withheld “now as set forth
above.” That possible inconsistency is, however, irrelevant to any issue on this appeal, as is also
whether the $7,730.45 payment was required by the payment bond. Bright has been paid the
retainage for work done before A-1's termination, and that was accomplished long prior to the
events giving rise to the present controversy.

                                                26
further payments.” This is just what happened. Wausau did assign its rights under

the Ratification Agreement to Rogers, Bright in June 1994 did start to complete the

unfinished Subcontract work as a subcontractor of Rogers, and Bright did look to

Rogers for further payments. Bright has been paid in full, including retainage, for

work done prior to A-1's termination. It is illogical to say that in these

circumstances Wausau is somehow implicitly bound by the Subcontract, when

Bright has expressly agreed to look only to the new prime completion

contractor–Rogers–for “all further payments” and has agreed that Wausau’s

payment of the $7,730.45 retainage for work done for A-1 “will constitute

complete fulfillment of the obligations of Surety to Subcontractor.”




                                          27
