Serving Notice of Non-Payment by Sub-Subcontractors and Suppliers to Subcontractors to Preserve Miller Act Payment Bond Claim

Sub-subcontractors and suppliers to subcontractors that want to preserve Miller Act payment bond rights MUST serve a written notice of non-payment on the prime contractor within 90 days of their last performance of labor or furnishing of materials, i.e., their final furnishing date (exclusive of punchlist, warranty, or repair-related work). Stated differently, if you were hired by a subcontractor (instead of the prime contractor) you must serve a notice of non-payment within 90 days of your final furnishing date. If you don’t, then you have not properly preserved a Miller Act payment bond claim.

Additionally, the notice of non-payment must state with substantial accuracy the amount claimed by the sub-subcontractor or supplier (or entity in privity with the subcontractor).

For example, a supplier to subcontractor sent a notice of non-payment to the Miller Act payment bond surety; however, it did not send the notice of non-payment to the prime contractor. When the supplier filed a Miller Act payment bond lawsuit, the prime contractor and surety moved for summary judgment arguing that the supplier failed to properly preserve its Miller Act payment bond rights by not sending the notice of non-payment on the prime contractor (even though it was sent to the surety). The trial court denied summary judgment finding there was a question of fact as to whether the prime contractor was on sufficient notice of the supplier’s claim based on the notice of non-payment sent to the surety (and not the prime contractor).

While there is certainly nothing wrong copying the surety on the notice of non-payment (or even sending a separate notice), it is imperative that the notice of non-payment is sent to the prime contractor within 90 days of final furnishing. Don’t give the prime contractor or surety the argument that the notice of non-payment was not property served.

 

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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