As most contractors are aware, if they are not paid for their labor, materials, and/or services, they can strengthen their position prior to filing a lawsuit by filing a mechanic’s lien, or by making a claim against the project’s bond claim. Of course, both options are not generally available. Typically, the choice is based upon whether the project is private or public. On private projects, a contractor (or supplier) is allowed to gain a security interest in the property by filing a mechanic’s lien. On public projects, federal and local governments passed laws requiring the general contractor on public projects to post “payment bonds,” which guarantee the payment of those who supply labor, materials, and/or services to the property. In other words, because governments were not willing to let public lands be subject to foreclosure, on public projects, statutorily required payment bonds were created to take the place of mechanic’s liens. Of course, private owners may require general contractors to post payment bonds on private projects as well, but this post only addresses the statutory payment bonds required on public projects.
The law that requires payment bonds on federal projects is known as the Miller Act. The various state laws that require payment bonds on state projects are often referred to as “Little Miller Acts.” The requirements are the Miller Act and the various Little Miller Acts are generally similar. They both require a claimant to provide notice of its claim to the surety and/or the bond principal within a certain number of days of having completed work, and they require a lawsuit based upon the bond claim to be commenced within a certain amount of time as well. For example, in Connecticut, notice of a payment bond claim must be given within 180 days of the last day of having performed work and/or supplied materials, and a lawsuit to enforce the claim must be commenced within one year of the last day of having performed work and/or supplied materials. Conn. Gen. Stat. §49-42.
The Connecticut Little Miller Act is set forth Conn. Gen. Stat. §49-41 to §49-43. However, because of the lack of case law and the similarities between the Miller Act and the Little Miller Acts, Connecticut, like most jurisdictions, look to federal law for the proper interpretation of the law’s requirements.
In a recent decision, which relied upon the interpretation of the Miller Act under federal law, Connecticut addressed the determination of the deadline to commence a lawsuit on a statutory payment bond. See Bldg. Sols. Since 1977, LLC v. Hous. Auth. of the City of New Haven, No. (X03)HHDCV136079166S, 2018 WL 650355, at *1 (Conn. Super. Ct. Jan. 9, 2018). In Building Solutions, the work was substantially complete more than a year before the commencement of the lawsuit but the question was whether the work performed and/or the materials supplied within one year of the commencement of the lawsuit was sufficient to satisfy the requirements of Connecticut’s Little Miller Act. Id.
In Building Solutions, the bond claimant gave 4 reasons that its bond claim was timely as follows:
1. It supplied replacement materials within year of having filed a lawsuit;
2. It supplied specialty hardware within one year of having filed a lawsuit;
3. It maintained its project trailer until within one year of having filed a lawsuit; and
4. It provided technical and/or consulting services within one year of having filed a lawsuit.
Id. Nonetheless, the court decided that none of these arguments extended the time to commence a lawsuit.
The analysis of 3 out of these 4 issues is informative. The project trailer was quickly dismissed. As with a mechanic’s lien, bond claims do not apply to materials that are not incorporated in the work.
Based upon the court opinion, supplying materials, and/or technical services may extend the deadline, but did not in this instance. The main reason that the plaintiff’s arguments were rejected was because the work was deemed remedial. Generally speaking, performing corrective work after the work is complete will not extend the deadline.
The interesting part of the Building Solutions decision is that they plaintiff claimed that the replacement materials were necessary because the original materials “were not stored properly.” Id. The decision does not state whose responsibility it was to store the materials. If it was not the plaintiff’s responsibility to store the materials, and that issue was raised, then the decision may have been different.
If you should have any questions about the proper determination of a deadline to commence a bond claim, please give me a call at (860) 785-4629.
Scott Orenstein