|
A contractor must file a payment bond claim under the Miller
Act within one year of the last day that labor was performed
or materials were supplied to the project. A recent decision by
the United States District Court for the District of Columbia
reveals just how strict the courts can be in applying the Miller
Act’s statutory limitations period.
In Highland Renovation Corp. v. Hanover
Ins. Group, 620 F. Supp. 2d 79
(D.D.C. 2009), a contractor brought an
action against the surety under the
Miller Act on October 22, 2007 for
money allegedly owed to the contractor
for work performed in renovating the
Old Post Office Pavilion in Washing ton,
D.C. (the “Project”).
The surety immediately sought to dismiss
the complaint on the grounds that
the court lacked subject-matter jurisdiction
over the contractor’s claim because
the contractor had failed to timely file suit. Courts have routinely
held that only work furnished as a part of the original
contract tolls the one-year statute of limitations. Thus, the
determinative question for a court in reviewing a Miller Act
claim is whether the last date of work consisted of original
contract work or was “remedial or corrective work or materials,
or inspections of work already completed,” which most
likely would not extend the Miller Act’s statute of limitations.
As an additional element of consideration the court added that
“the key is not whether the work was performed on the contract
but whether the work that was performed was significant
or crucial to the operation of the project.” Therefore, warranty
work or punchlist work typically cannot be relied upon in es tablishing
the last date of work for a Miller Act claim.
The surety submitted with its motion invoices reflecting that
work was performed on the Project no later than July 2006, as
well as a certified payroll record showing that the latest work
on the Project occurred on July 28, 2006. In order to establish
that the last date of work fell within the one-year period, the
contractor submitted, in addition to other evidence, a series of
its payroll sheets, which indicated that it had performed some
work on the Project. The court, however, found that the payroll
sheets bore no indicia of the nature of the work for which
the wages were paid or when such work took place.
Specifically, the court addressed one payroll sheet that contained
the statement “Millwork as of 10-23-06.” Although the
date specified was within the one-year limitations period, the
court determined that such evidence could only be relied upon
for demonstrating that work was engaged in before October
23, 2006. Further, the contractor asserted that certain of its
payroll sheets contained a certification by one of its subcontractors
that work was
|
performed between October 2 through
October 26; however, the court interpreted the representation
to mean that the subcontractor merely certified that its payroll
period was between October 2 and October 26, not that work
was necessarily performed on such dates. Thus, the court found that the payroll records could not be relied upon as they
failed to contain any evidence as to the nature of work performed
and the dates upon which such work was furnished to
the Project.
Additionally, the contractor asserted that the work performed
was not exclusively punchlist work, but rather, included certain
change order work. In support of
this contention, the contractor submitted
a memorandum of its project manager
to the contract administrator for
the Project stating that “there are a few
items that have been put on the punchlist
for phase 1 and phase 2 that are not
punchlist items, they are change orders.”
Although the alleged change order
work may have stayed the tolling
of the Miller Act statutory limitations
period, the court found that the memorandum
could not be relied upon as it
failed to distinguish between the work
that was corrective or remedial punchlist work, and that which
was change order work.
Thus, the court ruled that the contractor’s claim must be dismissed
as no sufficient evidence was submitted by the contractor
to contradict the surety’s assertion that work on the
Project was completed in July, 2006. This ruling makes clear
the necessity to maintain detailed project records as such
documents can later be used to establish the last date of work
for a Miller Act claim.
continued from page 1
the date of final payment to F&M. According to the evidence,
final payment did not occur until November 14, 1997. Again,
the court rejected Roy Farms’ argument. The court reasoned
that the date of final payment was irrelevant when specific
evidence of not only substantial completion, but total completion
of the project was presented. In the end, the court affirmed
the trial court’s finding that the claims were barred by
the statue of repose. Since the windstorm that damaged Roy
Farms’ warehouse occurred on October 29, 2003, its claims
against both defendants were beyond the six-year limit set
forth in the statute of repose.
It is important to reiterate the difference between a statute of
limitations and a statute of repose. Although the statutes vary
from state to state, the time period contained within a typical
statute of limitations begins to run when the injury to the aggrieved
party occurs. On the other hand, under a typical statute
of repose, the applicable time period commences upon the
completion of an act. As shown above, the “act” contemplated
under Washington law was the later of substantial completion
or termination of services. This distinction is important to remember,
particularly in construction-related litigation, where
a claim could end up being barred by the statute of repose
even before the injury occurs. |
