Articles > Construction law in California

Federal Public Works Collection Remedies:
The Miller Act Payment Bond Claim

by William L. Porter, Attorney at Law

Federal public works are unique in that there are no Stop Notice or Mechanics’ Lien remedies available. Furthermore, although a remedy is available by proceeding against the original contractor’s payment bond under a federal law known as the “Miller Act” (40 USCS 3131 et seq.), these remedies are not available to all subcontractors or suppliers. In addition, there are circumstances where a different form of security can be substituted for the payment bond (40 USCS 3131(b)(2)).

Among those who cannot sue on the Miller Act Payment Bond are third-tier subcontractors and suppliers to suppliers. (See J.W. Bateson Company v. Board of Trustees, 434 U.S. 586 (1978)). As a general rule, every subcontractor, laborer, or material supplier who deals directly with the prime contractor may bring a lawsuit against the bond company providing the Miller Act Payment Bond. Further, every subcontractor, laborer, or material supplier who has a direct contractual relationship with a first tier subcontractor may bring such an action. See the diagram below. In the diagram, only subcontractors and material suppliers ABOVE the heavy black dotted line can proceed against the original contractor’s Miller Act Payment Bond.

If you are unsure whether the project is a state public work or a federal public work, or if you are not sure whether you have a close enough relationship with the public entity to sue under a federal project payment bond, you should cover your bases by following BOTH state and federal procedures. You should also consult an attorney so that your status, and the character of the project, can be clarified and so that the current state of the law can be determined.

On federal projects within California (owner is one of the agencies of the Federal Government, e.g., Corps of Engineers) the general rules are as follows:

A. If you are the original (prime) contractor, and you are not paid, your contract claim is against the government. You cannot make a claim on the Miller Act Bond. Contact your attorney about filing a lawsuit.

B. If you are a claimant who has furnished work or materials under a direct contractual relationship with the prime contractor:

1. You can sue the prime contractor for breach of contract; and

2. You can sue the surety on the Miller Act Bond posted by the prime contractor.

3. You must file suit no later than one year from the date you last furnished work or materials for the project.

C. If you are a claimant who only has a direct contractual relationship with a first tier subcontractor:

1. You can sue the subcontractor for breach of contract; and

2. You can sue the surety on the Miller Act Bond posted by the prime contractor. However, please note:

a. You must serve a 90 day notice on the prime contractor no later than 90 days after you last furnished work or materials for the project. Fill out the form entitled “Miller Act Notice For Federal Public Works Projects.” It is best to send it to the prime contractor by certified or registered mail. You must send it no later than 90 days after you last furnished work or materials. Remember to make a copy of what you send and save your proof of service by certified or registered mail.

b. You must file suit no later than one year after the date you last furnished work or materials for the project.

D. If you are a claimant who only has a direct contractual relationship with other than the prime contractor or a first tier subcontractor (see diagram):

1. You can only sue the person with whom you had a contract.

You have no right to make a claim against the Miller Act Bond.

The above information is very brief. You should contact an attorney to obtain further and more detailed information. Please remember that all laws can and do change from time to time and the rules in effect this year may not be in effect next year.

Conclusion As To Miller Act Payment Bond Claims

These instructions and the “Miller Act Notice for Federal Public Works Projects” are applicable to federal construction projects in California. Where complications arise or you feel you may not receive payment for work performed or materials supplied, then you must contact an attorney immediately for assistance. The practice of law has become very specialized. It is therefore recommended that you do not consult with an attorney who is a “general practitioner,” but instead consult with an attorney who specializes in construction law.

William L. Porter is a principal in Porter Law Group, Inc. in Sacramento, California.
He can be reached  at (916) 381-7868.