SERVING NOTICE OF NONPAYMENT UNDER MILLER ACT

Under the federal Miller Act, if a claimant is NOT in privity with the prime contractor, it needs to serve a “notice of nonpayment” within 90 days of its final furnishing.   In this manner, 40 U.S.C. 3133 (b)(2) states:

 

A person having a direct contractual relationship with a subcontractor but no contractual relationship, express or implied, with the contractor furnishing the payment bond may bring a civil action on the payment bond on giving 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 supplied the last of the material for which the claim is made. The action must state with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. The notice shall be served–

(A) by any means that provides written, third-party verification of delivery to the contractor at any place the contractor maintains an office or conducts business or at the contractor’s residence; or

(B) in any manner in which the United States marshal of the district in which the public improvement is situated by law may serve summons.

Although the bolded language states that, “The action must state with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done…,” courts have found that this requirement also applies to the notice of nonpayment.  See Prince Payne Enterprises, Inc. f/u/b/o Prince Payne Enterprises, Inc. v. Tigua Enterprises, Inc., 2019 WL 5394197, *4 (D. South Carolina 2019).

However, there is a certain liberality regarding the format of the notice as long as it states with substantial accuracy the amount claimed and the name of the party to whom the work was done.

For instance, in Prince Payne Enterprises, a sub-subcontractor—not in privity with the prime contractor—filed a Miller Act payment bond lawsuit.  To support that it provided a notice of nonpayment to the prime contractor, the sub-subcontractor attached a hodgepodge of documentation, none of which was applicable, to its complaint, as well as alleged that it demanded payment from the prime contractor within 90 days of its final furnishing date on the project.  The prime contractor moved to dismiss the Miller Act payment bond claim based on the inapplicability of the hodgepodge of documentation which included letters that came after the 90 days expired.  But, based on the allegation that the sub-subcontractor demanded payment on the prime contractor, the Court held:

While the dates and contents of the attached exhibits may not meet the notice requirements of the Miller Act, the court must accept the allegation that Prince Payne [sub-subcontractor] demanded payment from Tigua [prime contractor] within ninety days of last performing work as true. Discovery may reveal that this is not true or that none of the communications satisfy the Miller Act’s notice requirements; however, at this early stage of litigation, the court finds that Prince Payne’s proposed amended complaint sufficiently alleges a viable cause of action for a violation of the Miller Act.

Prince Payne Enterprises, supra, at *4.

This sub-subcontractor is likely in trouble supporting that it served a notice of nonpayment within 90 days of its final furnishing date.  However, it lived to see another day by surviving a motion to dismiss.  Summary judgment will be different.  This could have been avoided had the sub-subcontractor appreciated that to preserve a Miller Act payment bond claim, it MUST serve a notice of nonpayment within 90 days of its final furnishing.  Rights preservation is everything!

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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