No contractor wants a payment dispute, but they’re a fact of life for many construction professionals. Lien clams provide one of the most powerful tools to protect a contractor’s financial interests and ultimately find resolution. 

But real property liens provide little help on property on which liens cannot be filed, like government property. A federal statutory scheme called the Miller Act, 40 U.S.C. §§ 3131 – 3134, provides an alternative for most federal construction projects. Since a lien cannot attach to government property, under the Miller Act, the prime contractor must instead obtain a bond to provide similar assurances.

Federal courts have held with virtual unanimity that the Miller Act serves a remedial purpose for subcontractors in providing an alternative remedy to the liens on real property typically available on private construction projects. As the Supreme Court of the United States succinctly put the purpose of the statute, “Because a lien cannot attach to Government property, persons supplying labor or materials on a federal construction project were to be protected by a payment bond.” J. W. Bateson Co. v. U.S. ex rel. Bd. of Trs. of Nat. Automatic Sprinkler Indus. Pension Fund, 434 U.S. 586, 589 (1978).

The Miller Act was first enacted in 1935 and replaced the prior Heard Act that had been in place since the late 1800s. So far as federal statutory schemes go, the Miller Act is not particularly long or complex. It contains only 4 provisions, which are likewise relatively limited. The entire text of the current Miller Act is less than 1,500 words—just a bit longer than this article.

Despite its relative simplicity and brevity—or perhaps, because of them—pursuing a successful claim under the Miller Act can prove perilous. Courts typically strictly construe the Miller Act’s provisions and some provisions, like its notice requirement, can end a claim before it begins and within just a few months of leaving the job. Some particular considerations for claims under the Miller Act include:

  • Your tier and role matters. The Miller Act applies very differently for first-tier and second-tier subcontractors. It also applies differently for contractors providing labor and materials, in contrast to those supplying materials only. Third-tier and lower subcontractors are typically not able to bring Miller Act claims. 
  • The Miller Act has tight notice requirements. For second-tier subcontractors and suppliers, the Miller Act requires notice to be provided to the prime contractor within 90 days of the last day that labor or materials were provided. Courts strictly apply this notice requirement and consider it a jurisdictional “condition precedent” to bringing a Miller Act claim.
  • The Miller Act has a very short statute of limitations. A Miller Act lawsuit must be initiated within one year of the last day that labor or materials were provided.
  • Miller Act claims must be brought in federal court. Under the Act, the United States District Courts have exclusive federal jurisdiction for Miller Act claims. 

INTERPRETATIONS

Even though the Miller Act has been on the books for nearly 100 years, courts still regularly refine their interpretation of its provisions. Some recent examples:

United States ex rel. American Civil Construction, LLC v. Hirani Engineering & Land Surveying: The United States Court of Appeals for the District of Columbia Circuit reaffirmed its position that Miller Act claims may include extracontractual or “quantum meruit” claims. The court reasoned, “That is because the Miller Act provides protection beyond what ordinary contract law affords, requiring payment bonds on federal government contracts and entitling subcontractors to recover the full value of their services and materials, including those resulting from delays not contemplated under the written contract.”

Five Rivers Carpenters District Council Health & Welfare Fund v. Covenant Construction Services, LLC: The United States Court of Appeals for the Eighth Circuit, which covers much of the Midwest, held that a Miller Act notice to the prime contractor’s attorney could suffice in some circumstances. The court reasoned that the Miller Act’s notice requirement focused on the prime contractor’s receipt of the notice, rather than how it must be sent, and it was undisputed the prime actually received the notice. In addition, as the court observed, the attorney for the prime contractor intervened, represented he had authority to receive the notice, and instructed the claimant to speak directly with him. 

Diamond Services Corp. v. RLB Contracting, Inc.: The United States Court of Appeals for the Fifth Circuit, which includes Louisiana, Mississippi, and Texas, held that while a contractor’s Miller Act claim could include increased labor and material costs caused by the government’s or a prime contractor’s delay, it could not include lost profits from the delay. It reasoned that claims that don’t involve an “actual outlay” of funds are excluded from Miller Act recovery.

United States ex rel. Dickson v. Fidelity & Deposit Co. of Maryland: The United States Court of Appeals for the Fourth Circuit, which covers several states from South Carolina to Maryland, held that supervisory work counts in calculating the last day of “labor” for a Miller Act notice, but that visiting the project to perform a final inventory does not. Relying on cases interpreting the Miller Act and its predecessor statute—some from the 1800s—the court reasoned that Congress meant the word “labor” to be limited to work with a physical component. So, while supervising others performing physical work on the job would fit within this definition, inventory work that more resembled office tasks would not. 

You might notice that several of these cases involve the United States as a plaintiff. This is because of a Miller Act requirement that civil lawsuits must be brought in the name of the United States for the use of the party bringing the claim. 

This also highlights a limitation of the Miller Act; it provides no assurance for contractors working on public projects outside the federal government. Fortunately, most states have similar statutory schemes for state-funded construction projects, commonly called “little Miller Acts.”  Like the federal Miller Act, many “little Miller Acts” similarly have tight deadlines, a short statute of limitations, and other requirements that courts strictly enforce. 

Collectively, the Miller Act and these “little Miller Acts” provide powerful alternative remedies for contractors working on public projects. But their strict requirements and deadlines can make bringing a successful claim a challenge. Involving a trusted attorney early in the process when a payment dispute arises can make navigating these potentially perilous pitfalls possible.

about the author

Dixie T. Wells is a partner in the Greensboro, North Carolina, office of Ellis & Winters LLP. She represents clients in lawsuits involving engineering issues, higher education law, complex commercial transactions, and products liability. She is a member of the Construction Law and Litigation Committee of the International Association of Defense Counsel. She can be reached at dixie.wells@elliswinters.com. Chris Flurry is an attorney in the Raleigh, North Carolina, office of Ellis & Winters LLP. He focuses his practice on construction law and commercial contract disputes. A Marine Corps veteran and son of a brick mason, he is a member of the Associated Builders and Contractors of the Carolinas. He can be reached at chris.flurry@elliswinters.com.