- Federal District Court Analyzes the Accrual Date for the Timely Filing of Claims under the Miller Act
- February 12, 2016 | Authors: David S. Coats; John T. Crook; David S. Wisz
- Law Firm: Bailey & Dixon, L.L.P. - Raleigh Office
- The Miller Act requires a contractor on a federal construction contract of more than $100,000 to furnish a payment bond through a satisfactory surety for the protection of all persons supplying labor or materials on the project. It further authorizes any person having a direct contractual relationship with a subcontractor to bring a civil action on the payment bond “on giving written notice to the contractor within 90 days 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,” 40 U.S.C. § 3133(b)(2), as long as the lawsuit is thereafter filed “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.” See 40 U.S.C. § 3133(b)(5). In Innovative Metals Company, Inc. v. Southwest Sheet Metal of NC, LLC, 2015 U.S. Dist. LEXIS 55301 (April 28, 2015), the federal district court analyzed these accrual provisions in ruling against surety’s argument that a subcontractor’s bond claim was untimely.
In Innovative Metals, the plaintiff supplied certain materials and inspection labor for the roofing installation portion of a project that involved the construction of a child development center for the U.S. Department of Navy. Westfield was the surety who issued a payment bond as part of the general contractor’s obligations under the Miller Act. The plaintiff was under contract with both the general contractor and the first-tier roofing subcontractor, and allegedly furnished all labor and materials between August 15, 2011 and May 21, 2013. When the roofing subcontractor failed to pay the plaintiff the full amount it claimed was properly due and owing, the plaintiff served written notice upon the general contractor on August 19, 2013, and then filed suit against the general contractor, roofing subcontractor, and Westfield on May 20, 2014.
Westfield sought dismissal of the plaintiff’s claim under the Miller Act alleging that materials were last delivered in June 2012 and that the provision of a written warranty in May 2013 was not part of the subcontract work, but the federal court disagreed and found that plaintiff’s claim was timely filed. Initially, the court noted that the “applicable legal test” for determining the accrual date on a Miller Act claim is “whether the work was performed and the material supplied as part of the original contract, as opposed to being for the purpose of correcting defect or making repairs following inspection of the project.” On the facts set forth in the plaintiff’s complaint and attachments, the Court identified that a factual issue existed as to the nature of the work involved in the warranty delivery by the plaintiff and whether that was included as part of the subcontract work, which precluded granting Westfield’s motion to dismiss. As the court stated, “to the extent the work may be characterized on onsite inspection work taking place on May 21, 2013, it may be included as work triggering the limitations period under the Miller Act. If, by contrast, it may be characterized as offsite work, not provided for under the subcontract, it may not be included.”