Protecting your payments on federal construction projects, means complying with the Federal Miller Act. Similar to state or local government projects, the general contractor is required to post a payment bond that subcontractors and suppliers can file a claim against if the go unpaid. And just like state projects, there are certain deadlines that must be met, particularly when it comes to the notice of claim. A Federal Miller Act notice is ineffective if provided late…but what if it’s sent too early?
Timing under the Federal Miller Act
The Federal Miller Act is codified in USC 40 §3131 et seq. For a sub-subcontractor to properly make a bond claim against the property, there are two deadlines that they need to keep in mind: one regarding the notice, and the second regarding the enforcement action. These can be found under USC 40 §3133(b):
(2) A sub-subcontractor must give written notice to the contractor within 90 days from the date on which the person did or performed the last of the labor or furnished or supplier the last of the material for which the claim is made
(4) Action brought under this section must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the person bringing the action.
These deadlines are strictly enforced, and this was highlighted in a recent US Court of Appeals case.
Subcontractor provides Miller Act notice prior to last date of work on the project
The case in question is A&C Construction & Installation Co. v. Zurich American Insurance Co.
- Public entity: US Army Corp of Engineers (Army)
- Sureties: Zurich American Insurance Co. & Insurance Company of the State of Pennsylvania (collectively “Sureties”)
- General contractor: Amec Foster Wheeler Environment & Infrastructure, Inc. (Amec)
- Subcontractor: Black Cat Engineering & Construction (Black Cat)
- Sub-subcontractor: A&C Construction and Installation, Co. (A&C)
The project was commissioned by the US Army Corp of Engineers for the construction of lodging at an air base in Qatar. Amec was the prime contractor on the project, and hired Black Cat for a variety of work. Black Cat, in turn, subcontracted a fair amount of the work out to A&C.
As the project progressed, tension arose between Black Cat and A&C, which resulted in A&C being terminated. Subsequently, A&C filed a lawsuit against the Sureties for over $8M on June 7, 2017.
Bond claim dismissed for failure to provide timely notice
At trial, Sureties filed a motion for summary judgment arguing that the notice of the claim was not timely served. Sureties claim that A&C’s last day of work was May 16, 2016, and the notice was served on August 16, 2016. Therefore, the notice was one day late according to the 90 day notice requirement.
A&C responded by stating the last date of work was much later, as they still had equipment being leased to Black Cat up until February 28, 2017. Their argument was that they provided “too much notice” by sending notice prior to their last day of work.
The district court disagreed, and granted the Sureties’ motion for summary judgment. They stated that even if the last date of work was in February, the notice was provided outside of the 90 day requirement. A&C appealed.
Court of Appeals holds that the notice was provided too early
On appeal, the court was not concerned with establishing the actual last date of work. Instead, the court focused on the date that the notice of the claim was given. As cited above, the notice must be provided “within 90 days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material for which the claim is made.”
Regardless of which “last date of work” was correct, the notice was still provided outside the 90-day window.
If the last date of work was in May 2016 (as Sureties argued), the notice was one day late. If the last date of work was in February 2017 (as A&C contended),the notice was provided well before 90 days of the last date of work.
Thus, the Court of Appeals upheld the district court’s decision, and the bond claim was dismissed.
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