The Miller Act Trap: How to Protect Your Rights

Patrick Johnsonby Patrick J. Johnson

The Miller Act 40 U.S.C. § 3131 – § 3134, requires that any contractor performing construction on a federal building or public work over $100,000 furnish bonds guaranteeing payment to subcontractors and completion of the project. Under the Act the party having a contractual relationship with a subcontractor but no contractual relationship with the contractor furnishing the payment bond may bring an action on the payment bond following written notice within 90 days from the last date on which the party last supplied labor or materials for which the claim is made 40 U.S.C. § 3133(b)(2).

The Act contains an unexpected trap – the 90-day notice requirement is not tolled if payment remains past due for some labor or material, but payment is received for more recently supplied materials or labor which, if had gone unpaid, would have permitted a claim under the Act. In ABC Supply[1], a subcontractor supplied roofing materials on three different dates in October 1995. Subsequently, one additional shipment was made on January 11, 1996, which the defendant paid in full, leaving the three shipments from 1995 unpaid. ABC Supply gave notice to the defendant within 90 days of the January 11 shipment[2]. The court held that the notice was not timely as the “act requires notice be given within 90 days from the date on which materials were supplied….for which said claim is made[3]. Since the claim related to the unpaid shipments in 1995, the 90-day period began to run from the last shipment in 1995 and the notice was untimely.

Thus, to protect rights under the Miller Act, a subcontractor or supplier must be certain to send a notice under the Act within 90 days of when work was last performed AND unpaid for, even if subsequent payments are received that might lull the claimant into a false sense of security. Moreover, when pursuing an action against a payment bond under the Miller Act, be certain to know, specifically for the claim being made, the date on which labor or materials were last supplied for that claim to avoid a defense that the notice is inadequate.

Please contact the attorneys at Arnstein & Lehr so we can help you protect your Miller Act rights.

[1] United States ex rel. American Builders & Contrs. Supply Co. v. Bradley Constr. Co., 960 F. Supp. 145 (N.D. Ill. 1997).

[2] 960 F. Supp. 145, 147 (N.D. Ill. 1997).

[3] Id. at 148.

Patrick J. Johnson is an associate in the Chicago office of Arnstein & Lehr LLP, with experience in reviewing contracts for construction projects and negotiating agreements with opposing counsel at Fortune 500 companies, as well as smaller energy conglomerates.

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