Suppliers that are pursuing Miller Act payment bond claims need to prove:
- the materials were supplied for the work provided for in the prime contract;
- the supplier was not paid for the materials;
- the supplier had a good faith belief that it supplied materials for the work; and
- the supplier properly preserved its Miller Act payment bond rights (e.g., filed suit within one year from final furnishing and served any notice of non-payment if not in privity with the prime contractor).
Importantly, the supplier does not need to prove the materials were actually incorporated into the project.
While this gives the supplier more leverage in a Miller Act payment bond dispute (assuming it properly preserved its rights), there are limitations. In other words, good faith delivery of materials does not necessarily mean that there was good faith supplying materials for the work provided for in the prime contract. For instance, a supplier delivered materials to a project for a subcontractor after the project was certified as complete. It appeared obvious that the subcontractor used the materials for another project. Although the supplier argued it delivered materials in good faith, the court denied recovery under the Miller Act payment bond because good faith delivery is not a substitute for supplying materials in furtherance of work provided for in the prime contract. Since the project was complete, there were no materials provided in furtherance of the work; thus, the prime contractor and payment bond surety should not be penalized for what was perhaps an unscrupulous endeavor by the subcontractor that ordered the materials.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.