Contractors Equipment Maintenance Co. ex rel. United States v. Bechtel Hanford, Inc.

MEMORANDUM *

P.W. Stephens (“Stephens”), a subcontractor, defaulted on its multi-year subcontract with Bechtel Hanford, Inc. (“Bechtel”) to perform environmental clean up work at the Hanford Nuclear Reservation (“the Hanford site”). The district court awarded Bechtel damages and attorney’s fees, costs, and prejudgment interest from Acstar Insurance Company (“Acstar”), a performance and payment bond surety for Stephens.

On appeal, Acstar contests the district court’s award of damages and attorney’s fees, costs, and prejudgment interest, and asserts that it was entitled to equitable subrogation from retainages and unpaid contract earnings held by Bechtel under the Stephens subcontract. We have jurisdiction under 28 U.S.C. § 1291 , and we affirm, in part, and reverse, in part.

A. Standard of Review

State law controls the interpretation of Miller Act subcontracts and surety bonds to which the United States is not a party. See United States ex rel. Bldg. Rentals Corp. v. Western Casualty and Sur. Co., 498 F.2d 335 , 338 n. 4 (9th Cir.1974); see also Mai Steel Service Inc. v. Blake Construction Company, 981 F.2d 414 , 420 (9th Cir.1992). Questions of state law are reviewed de novo…