Prime contractors on federal construction projects furnish the federal government with a Miller Act payment bond. Subcontractors and suppliers in privity of contract with the prime contractor (or sub-subcontractors or suppliers in privity with a subcontractor) must file a Miller Act payment bond lawsuit within one year from when the last of their labor was performed or material was supplied, i.e., their final furnishing date (excluding punchlist, warranty or repair-related work). If filed outside of the one-year limitations period, a claimant will have blown their rights to pursue a Miller Act payment bond lawsuit.
For example, a prime contractor hired a mechanical subcontractor for a federal project. Months after the subcontractor completed its work, it notified the surety that it would not furnish its close out documents until it received payment. The surety responded that it would get the ball rolling regarding the subcontractor’s claim. However, more than a year after the subcontractor last furnished work on the project, it still remained unpaid. The subcontractor filed a Miller Act payment bond lawsuit and the surety argued that the subcontractor filed its lawsuit outside of the one-year statute of limitations. The subcontractor tried to circumvent this argument by stating that the statute of limitations should be equitably tolled based on the surety’s response that it would get the ball rolling regarding the subcontractor’s claim. But, the surety never represented it was going to pay the subcontractor and never did anything to induce the subcontractor into not timely filing a Miller Act payment bond lawsuit. Thus, the subcontractor’s Miller Act payment bond claim failed because it was untimely filed. (In order for the statute of limitations to be equitably tolled to excuse the late filing of a Miller Act payment bond lawsuit, there generally needs to be some form of misconduct that misled the claimant into allowing its statute of limitations to expire—a very difficult burden to support).
If you are a Miller Act payment bond claimant, know when your final furnishing date is (excluding punchlist, warranty, and repair-related work) so that you timely file your Miller Act payment bond lawsuit. No excuses! And, if you are a prime contractor, you also want to know or have an idea when a claimant’s final furnishing date is in order to best preserve a potential statute of limitations defense.
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