The Miller Act has a strict requirement that subcontractors that do not have a direct contract with the general contractor must provide notice of nonpayment to the general contractor within 90 days.
An appeals decision by the Seventh Circuit underscores the importance of strict adherence to the requirements of the Miller Act. A&C Construction & Installation, Co. WLL v. Zurich American Insurance Company and The Insurance Company of the State of Pennsylvania, No. 19-3325, decided June 30, 2020, concerns a Miller Act claim on a payment bond by a subcontractor on a federal construction project. Section 3133 of The Miller Act, 40 U.S.C. §3133(b), requires a payment bond and a performance bond to be posted on construction contracts in excess of $100,000 with the federal government. A&C Construction was a second-tier subcontractor on a project for the U.S. Army Corps of Engineers on a Qatar air base. A&C in turn subcontracted a part of its work to RNC, a third-tier subcontractor. A&C's work was terminated, at least in part, on December 16, 2015. A&C claimed that it continued work through February 28, 2017, by virtue of its supervision of RNC and the lease of its equipment to complete A&C's terminated work. The sureties contended that A&C's work ended no later than May 16, 2016.
The Miller Act has a strict requirement that subcontractors that do not have a direct contract with the general contractor must provide notice of nonpayment to the general contractor within 90 days and initiate an action to recover within one year “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.” A&C provided its notice on August 16, 2016, and commenced its action on June 7, 2017.
Appealing the district court's summary judgment ruling, A&C argued even if its notice was early it was valid for all pre-notice work. The Seventh Circuit decided A&C had not raised the argument before the district court and thus the argument was waived.
The Appellate Court did not decide the factual issue of the last day of work by A&C, instead finding that even under the last day of work claimed by A&C, February 28, 2017, A&C's notice was untimely, stating the obvious: “August 16, 2016, is not ‘within 90 days' of February 28, 2017.” The specific holding that A&C did not provide “its required Miller Act notice within ninety days of the date it claimed for its last day of recoverable work” leaves open whether notice given within 90 days of, but before, the last day of work of work, will suffice. Other courts have found that notice given before the last day of work will suffice for amounts due by the date of the notice, the very argument the Seventh Circuit found A&C had waived by its failure to raise the argument with the district court.
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Originally published by Duane Morris, July 2020
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