Thoughts on construction law from Christopher G. Hill, Virginia construction lawyer, LEED AP, mediator, and member of the Virginia Legal Elite in Construction Law
English: Alexandria, Virginia U.S. Custom House and Post Office (1900)
Here at Construction Law Musings, we often discuss the Federal Miller Act and its Virginia equivalent (the “Little Miller Act“). These two statutes provide subcontractors on government projects (on which no mechanic’s lien can attach) the protection of payment and performance bonds.
One question that often arises in this context is which subs can claim against the payment bond. Recently, the Eastern District of Virginia District Court affirmed that a second tier subcontractor has the right to claim against a payment bond under the Federal Miller Act. In U.S. ex rel IGW Electric LLC v. Scarborough, the Virginia federal court considered the claim of an electrical “sub-subcontractor” which held a contract with the subcontractor to build cottages in Norfolk, Virginia for the U. S. Navy.
It is a privilege to be guest posting here on Construction Law Musings, and we appreciate the opportunity to introduce Gentry Locke’s new construction and OSHA blogs – Virginia Construction Law Update and Virginia OSHA Law News. We hope that you will check out our blogs from time to time. We are working hard to provide useful information and updates.
In today’s guest blog post, though, we are going to focus on Chris’s hard work over the last several years. So, using David Letterman’s Top Ten style format, I have decided to provide my Top Ten favorite posts from Construction Law Musings.
Map of Virginia highlighting Hanover County (Photo credit: Wikipedia)
You may have thought that a Virginia “Little Miller Act” bond claim, like a mechanic’s lien, could only be brought by those that provide materials and labor incorporated into the construction project. If you did, you aren’t alone.
I talk about payment bonds often here at Construction Law Musings. I talk a bit less about performance bonds and even less about the General Indemnity Agreements (GIA) that are signed by companies and their principals as part of the agreement between a construction company and its bonding company for the provision of these bonds. However, this does not mean that these GIA’s are not important. In fact, these are the agreements that allow a bonding provider to recoup any money paid out pursuant to either a payment or performance bond. Continue reading General Indemnity Agreement Can Come Back to Bite You
The Virginia General Assembly has passed a couple of bills, effective July 1, 2011, that will affect contractors’ and other construction professionals’ rights to payment and where they can and should bring their construction related claims.
The first set of changes are to Virginia’s “Little Miller Act” of which I have spoken on many occasions here at Construction Law Musings.
HB 1951 raised the minimum amount required for bid, performance and payment bonds. The new minimum contract amount increased from $100,000 to $500,000 for non-transportation construction projects. If the bond requirement is waived on projects between $100,000 and $500,000 the prospective contractors must be prequalified. What this means is that subcontractors and suppliers in particular can no longer assume that the $250,000.00 project on which they are working is bonded. They should therefore make sure to check on the financial stability and credit or the general contractor for whom they are working just as if they were working on a private construction project.
SB 1424 reduced the time within which lower tier subcontractors and vendors must provide notice to the contractor from 180 days to 90 days. Therefore, any claimant that has a contract relationship with a subcontractor or vendor, but no contract relationship with the contractor, may only pursue a payment bond claim if it first gives written notice to the contractor within 90 days (as opposed to 180 days) from the day on which the claimant performed the last of the labor or furnished the last of the materials for which it claims payment. On the one hand, the new time limit will track with the Federal Miller Act. On the other, the well known 180 day limit is no longer. Make sure that, as a second tier subcontractor or supplier, that you are aware of this shortened time limit.
A second, and in my opinion laudable, change is the increase in jurisdictional limit for Virginia General District Courts. Effective July 1, 2011, this top limit will increase from $15,000 to $25,000. As stated in the post linked above, I believe that this will open up more claims to efficient resolution, particularly for subcontractors and suppliers that may have claims in the $20,000 range for which Circuit Court may not be an efficient option.
These are only a few of the many changes in Virginia law that occurred during the last General Assembly session. Please consult with an experienced Virginia construction attorney to determine how these (and other) changes may affect your construction business.
As always, I welcome and encourage your comments below, please share your thoughts. Also, please subscribe to keep up with the latest Construction Law Musings.
