The Miller Act is close to my heart here at Construction Law Musings. Payment bond claims under the Miller Act help protect subcontractors on construction projects where the national government or its agencies are the owners of the property and therefore mechanic’s liens are unavailable. Even where you follow the proper claims process under this statute, the question remains as to what sorts of costs can be included in the claim.
A recent case out of the Eastern District of Virginia federal court in Alexandria, VA gives some insight into the limits of claims under the federal Miller Act. In Dickson v Forney Enterprises, Inc. et. al., the Court looked at the question of whether the costs of a project manager’s purely clerical duties can be included and correspondingly whether performing those duties can extend the relevant one-year limitations period for filing suit.
The basic facts are as follows. Plaintiff worked as a project manager on a project to repair and upgrade certain stairs at the Pentagon. Plaintiff subcontracted with prime contractor Forney Enterprises Inc. on this project. On Dec. 20, 2018, the prime contract was terminated. Plaintiff filed the Miller Act suit on Feb. 5, 2020. Dickson alleged that Fidelity and Deposit Company of Maryland, or F&D, must pay him, pursuant to the Miller Act, the amount he is owed for the labor he performed on the project. Now before the court are cross-motions for summary judgment. The Court then examined the defendant’s claims that (1) Dickson’s work did not qualify as “Labor” under the Miller Act, and (2) that the suit was not timely filed.
The Court agreed with both arguments. As to the first relating to the clerical work performed by Dickson, and after a review of legal opinions regarding the definition of “labor” the Court stated that Dickson’s work did not fall under the definition of “labor” stating:
If the Court were to accept Plaintiff’s assertion that “labor” under the statute includes even minor physical activity incidental to his contractual responsibilities, it would strip essentially all limitation from the Miller Act’s labor requirement. Any subcontractor (e.g., an accountant or engineer} would then be a proper claimant under the Miller Act so long as he performed his work at the construction site and tidied his office on occasion. The Court is unwilling to apply such an interpretation of the Miller Act’s “labor” requirement.
The Court also agreed with the statute of limitations argument, stating
In this case, the project concluded Jan. 31, 2019, when the work on the prime contract was completed. The one-year statute of limitations began to run on that date. Work performed after the termination of the prime contract, like the inventory plaintiff conducted Feb. 8, 2019, is a post-project task and thus not recoverable under the Miller Act. Further, a materials inventory is not within the scope of the Miller Act labor requirement. It is a clerical task that does not extend the statute of limitations period beyond the Jan. 31, 2019, date.
In short, because any physical “labor” performed by Dickson was purely incidental to his job duties and because that same work did not extend the accrual date of the claim, Dickson’s Miller Act claim failed.
My take? The Court is stating that, much like the qualifying labor or materials under a mechanic’s lien, to qualify for Miller Act treatment, the “labor” must have been “incorporated” into the project in a way that is directly associated with the job duties of the claimant. Where this line is drawn will likely be the subject of future court opinions. For this reason, the counsel of an experienced construction attorney is key in evaluating the timing and content of any Miller Act claim.
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