U.S. District Court in Maryland Holds Work Performed After Termination Does Not Delay Commencement of One-Year Miller Act Statute of Limitations

United States ex rel. Tymatt Indus. v. Allen & Shariff Constr. Servs.
2013 U.S. Dist. LEXIS 114015 (D. Md. Aug. 13, 2013)

This action arose out of a subcontractor’s Miller Act claim for unpaid contract balances on a federal construction project. Allen & Shariff Construction Services, LLC (“Allen & Shariff”) was the prime contractor on a federal contract for the construction of a dam in Bethesda, Maryland, and related remediation (the “Project”). United States Security Company (“USSC”) was the surety on the Miller Act payment bond for the Project. Allen & Shariff subcontracted with Tymatt Industries, Inc. (“Tymatt”) to perform work on the Project (the “Subcontract”). The Subcontract contained a default provision stating that “should Tymatt fail to perform, after giving three days written notice Allen & Shariff had the option to terminate the [S]ubcontract for default if the defective performance was not cured.” Allen & Shariff issued three such notices to Tymatt, the last of which was issued on November 11, 2011. When Tymatt failed to cure, USSC sent Tymatt a termination notice on November 18, 2011 stating that the “[S]ubcontract…has been terminated due to lack of performance effective immediately.” Additionally, Allen & Shariff notified Tymatt that its “base access privilege [would] be terminated on November 23, 2011,” and requested that its equipment be removed prior to that date. Tymatt subsequently alleged that Allen & Shariff failed to pay $107,665.26 in amounts owed for work performed under the Subcontract. On Monday, November 26, 2012, Tymatt filed a Miller Act claim against USSC, as surety, to recover the monies allegedly due and owing.

The Miller Act authorizes any “person that has furnished labor or material in carrying out work” under a federal contract and who “has not been paid in full within 90 days after the day on which the person did or performed the last of the labor or furnished or supplied the materials” to bring “a civil action on the payment bond.” The Miller Act contains a limitations provision, which states: “An action brought under this subsection must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the person bringing the action.” In its complaint, Tymatt claimed that the “date on which the last labor was performed and equipment supplied to [Allen & Shariff] by [Tymatt] was November 25, 2011.”

USSC contended that Tymatt’s action was time-barred and moved for summary judgment. USSC disputed Tymatt’s allegation that its last day of work on the Project was November 25, 2011. Instead, they asserted that “Tymatt’s last day of work was either November 17, 2011, the last day of productive work by Tymatt on the site, or November 22, 1011, the day that Tymatt began to remove [its] equipment from the site.” However, USSC argued that even assuming the truth of Tymatt’s allegation that its last day of work was November 25, 2011, Tymatt’s claim nevertheless is time-barred on its face under the Miller Act’s one-year statute of limitations, because Tymatt filed suit on November 26, 2011—one year and one day after its alleged last day of work. Tymatt countered that Rule 6(a) of the Federal Rules of Civil Procedure applied and extended the one-year period in this circumstance because November 25, 2012 (the one-year anniversary of November 25, 2011) fell on a Sunday. Rule 6(a) provides that, “if the last day [of a given time period] is a Saturday, Sunday, or legal holiday, the period continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday.” The Court agreed with Tymatt and rejected USSC’s proposition that Rule 6(a) does not apply to the Miller Act’s limitations period. The Court held that consistent with Fourth Circuit precedent, Rule 6(a), applied by its terms, inter alia, “in computing any time specified…in any statute that does not specify a method of computing time.” Therefore, because Tymatt alleged that the day on which the last of the labor was performed or material supplied was on a Sunday, and because the Miller Act does not specify a method of computing time, the Court concluded that “the period continue[d] to run until the next day that is not a Saturday, Sunday or legal holiday,” which was Monday, November 26, 2012, the day Tymatt filed its claim.

In the alternative, USSC argued that Tymatt’s claim was still untimely because Tymatt’s last day of work on the Project was actually earlier than November 25, 2011. USSC contended that while Tymatt’s personnel were present at the Project site as late as November 25, 2011, a subcontractors mere presence on the work site is insufficient to constitute the “perform[ance]” of “labor” or the “suppl[y]” of “materials,” within the meaning of the Miller Act’s statute of limitations provision. The Court agreed. The Court began its analysis by stating the Fourth Circuits “well established rule” that, to determine the time at which the Miller Act’s limitation period begins, the court must consider “whether the work was performed and material supplied as a ‘part of the original contract’ or for the ‘purpose of correcting defects or making repairs following inspection of the Project.’” The Court clarified that the Fourth Circuit’s interpretation of the Miller Act’s “last of the labor” language turns on a distinction between “performance of the contract, on the one hand, and correction or repair, on the other…[C]ontract work sets the starting-point for the limitations period, whereas corrections and repairs do not.”

Applying that standard to the facts, the Court held that, “within the meaning of the Miller Act, it is impossible for a subcontractor to undertake labor in ‘performance of a contract’ when the subcontractor’s contract has been terminated by the prime contractor.” The Court reasoned that the only evidence provided as to what was done by Tymatt on or after November 25, 2011, with reference to the Miller Act limitations period, indicates that the Subcontract was terminated as of November 18, 2011. The Court determined the fact “[t]hat Tymatt was authorized to remove materials from the site through November 23, 2011, does not equate to providing work or materials. When a subcontractor has been terminated, the provision of a brief period of time for removal of its equipment from the job site” does not equate to labor performed or material supplied that was “part of the original contract.” Therefore, the Court concluded that as a matter of law, there was no genuine dispute of material fact that Tymatt’s last day of work on the Project occurred prior to November 25, 2011. Accordingly, the Court granted summary judgment in favor of USSC.

Jeffery R. Mullen

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