NOT ALL WORK IS COVERED UNDER THE FEDERAL MILLLER ACT

The recent opinion out of the Eastern District Court of Virginia, Dickson v. Forney Enterprises, Inc., 2021 WL 1536574 (E.D.Virginia 2021),  demonstrates that the federal Miller Act is not designed to protect ALL that perform work on a federal construction project.   This is because NOT ALL work is covered under the Miller Act.

In this case, a professional engineer was subcontracted by a prime contractor to serve on site in a project management / superintendent capacity.  The prime contractor’s scope of work was completed by January 31, 2019.  However, the prime contractor was still required to inventory certain materials on site, which was performed by the engineer.  The engineer claimed it was owed in excess of $400,000 and filed a Miller Act payment bond lawsuit on February 5, 2020 (more than a year after the project was completed).

There are two immediate questions that pop out that this court deal with: (1) are the type of project management / superintendent-type services the engineer performed covered under the Miller Act; and 2) did the engineer timely file the Miller Act payment bond lawsuit within the statute of limitations if the project was completed more than a year prior to the engineer filing suit.   Both answers resulted in a resounding No!

MILLER ACT PROTECTS LABOR

The Miller Act protects labor, and while “labor” is not a defined term under the Miller Act, “courts have limited the term to refer only to physical toil or manual labor.” Dickson, supra, at *2.   Supervisory work is generally not considered labor unless it also includes manual labor.  Id.   “[C]lerical or administrative tasks [] even if performed at the job site, do not involve the physical toil or manual work necessary to bring them within the scope of the Miller Act.” Id. (citation omitted).

Here, the engineer was hired in a management and superintendent (supervisor) capacity.  He was subcontracted to oversee manual labor.  Any manual labor, to the extent there was any such as field measurement or inspections performed by the engineer, were incidental to his supervisory duties and “[t]aking field measurements and inspecting materials…were administrative tasks incidental to his role as project manager….[and] they do not rise to the level of physical toil necessary to recover under the Miller Act.” Dickson, supra, at *2 (citations omitted).

The type of work the engineer performed and sought payment for was NOT work covered under the Miller Act.

MILLER ACT STATUTE OF LIMITATIONS

The Miller Act requires a plaintiff to file suit “no later than one year after the day on which the last of the labor was performed or material was supplied” by the plaintiff. Dickson, supra, at *3 citing 40 U.S.C. s. 3133(b)(4).

Here, the project was concluded as late as January 31, 2019.  “Work performed after the termination of the prime contract, like the inventory [the engineer] conducted February 8, 2019 is a post-project task and thus not recoverable under the Miller Act.” Dickson, supra, at *3.

Putting aside that inventory control would be deemed a clerical task and not “labor” covered under the Miller Act, the engineer cannot extend the one-year statute of limitations beyond one-year after the termination / completion of the project.  Id.

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.

 

“LABOR” THAT CAN BE PURSUED AGAINST A MILLER ACT PAYMENT BOND

It is important to ensure you consult with counsel when it comes to Miller Act payment bond rights and defenses.  One consideration is the type of “labor” that can be pursued against a Miller Act payment bond.  The opinion in Prime Mechanical Service, Inc. v. Federal Solutions Groups, Inc., 2018 WL 6199930 (N.D.Cal. 2018) contains a relevant and important discussion on this topic.

 

In this case, a prime contractor on a federal construction project hired a subcontractor to prepare and install a new HVAC system.  The subcontractor was not paid and filed a lawsuit against the prime contractor’s Miller Act payment bond.   The prime contractor moved to dismiss the claim, with one argument being that design work the subcontractor was suing for was NOT “labor” that can be pursued against a Miller Act payment bond.  The Court agreed:

 

As used in the Miller Act, the term “labor” primarily encompasses services involving “manual labor,” see United States ex rel. Shannon v. Fed. Ins. Co., 251 Fed. Appx. 269, 272 (5th Cir. 2007), or “physical toil,” see United States ex rel. Barber-Colman Co. v. United States Fid. & Guar. Co., No. 93-1665, 1994 WL 108502, at *3 (4th Cir. 1994). Although “work by a professional, such as an architect or engineer” generally does not constitute “labor” within the meaning of the Miller Act, see United States ex rel. Naberhaus-Burke, Inc. v. Butt & Head, Inc., 535 F. Supp. 1155, 1158 (S.D. Ohio 1982), some courts have found “certain professional supervisory work is covered by the Miller Act, namely, skilled professional work which involves actual superintending, supervision, or inspection at the job site see United States ex rel. Olson v. W.H. Cates Constr. Co., 972 F.2d 987, 990-92 (8th Cir. 1992) (internal quotation and citation omitted) (citing, as examples, “architect … who actually superintends the work as it is being done” and “project manager … [who] did some physical labor at the job site” (internal quotation and citation omitted)).

 

Here, plaintiff alleges it “attended 4 or 5 on-site field meetings … to determine the location and layout of the new equipment, … performed on-site field coordination with the existing equipment, … took on-site field measurements for fabrication of duct work and support hangers, … scheduled the start date and while on-site planned site access and crane locations, prepared product and equipment submittals, and obtained security passes.” (See FAC ¶ 12.) The above-listed services are, however, “clerical or administrative tasks which, even if performed at the job site, do not involve the physical toil or manual work necessary to bring them within the scope of the Miller Act.” See United States ex rel. Constructors, Inc. v. Gulf. Ins. Co., 313 F. Supp. 2d 593, 597 (E.D. Va. 2004) (holding subcontractor did not furnish “ ‘labor’ within the contemplation of the Miller Act” where subcontractor’s duties entailed paying invoices, reviewing subcontractor and vendor proposals, supervising the hiring of site personnel, and providing site coordination services). Although taking “on-site field measurements” (see FAC ¶ 12) may have involved some minor physical activity, it does not amount to the physical “toil” required by the Miller Act.

 

Prime Mechanical Service, 2018 WL 6199930, at *3.

 

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.

 

PROVIDING “LABOR” UNDER THE MILLER ACT

shutterstock_611517449A recent opinion out of the Northern District of California discusses the “labor” required to support a Miller Act payment bond claim on a federal construction project.   It is a good case that discusses the type of labor required  to support a Miller Act payment bond claim.

 

In Prime Mechanical Service, Inc. v. Federal Solutions Group, Inc., 2018 WL 619930 (N.D.Cal. 2018), a prime contractor was awarded a contract to design and install a new HVAC system.  The prime contractor subcontracted the work to a mechanical contractor. The mechanical contractor with its sub-designer prepared and submitted a new HVAC design to the prime contractor and provided 4-5 onsite services to determine the location and layout for the new HVAC equipment, perform field measurements, obtain security passes, and plan site access and crane locations.  The mechanical contractor submitted an invoice to the prime contractor and the invoice remained unpaid for more than 90 days, which the prime contractor refused to pay.  The mechanical contractor than filed a Miller Act payment bond lawsuit.

 

The prime contractor and surety argued that the mechanical contractor had no valid Miller Act payment bond claim because it was seeking professional services and not the labor covered by the Miller Act.   The trial court agreed. 

 

As used in the Miller Act, the term “labor” primarily encompasses services involving “manual labor,” or “physical toil.”  Although “work by a professional, such as an architect or engineer” generally does not constitute “labor” within the meaning of the Miller Act, some courts have found “certain professional supervisory work is covered by the Miller Act, namely, skilled professional work which involves actual superintending, supervision, or inspection at the job site.”

 

Prime Mechanical Service, Inc., 2018 WL at *3 (internal citations omitted). 

 

The mechanical contractor attempted to argue that it was onsite and the onsite services it performed should constitute “labor.”   However, the onsite services the mechanical contractor identified were clerical or administrative-type services which did NOT involve “the physical toil or manual work necessary to bring them within the scope of the Miller Act.”  Prime Contractor Mechanical Service, Inc., 2018 WL at *3.  

 

In this case, the mechanical contractor gave it a worthy go to support a Miller Act payment bond claim. But, because the services it performed did not rise up the type of “labor” covered by the Miller Act, it was out of luck.   Had these services been coupled with actual  manual labor at the site connected to the installation of the new HVAC system, the result would have been much different since the mechanical contractor would have performed “labor” covered by the Miller Act. 

 

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.