Federal Court in Oklahoma Rules that Bond Issued on a Sovereign Tribal Construction Project is Not a Miller Act Bond Even Though it Stated it was Issued Pursuant to the Act and Named The United States As Obligee

United States ex rel. J.A. Manning Constr. Co. v. Bronze Oak, 2017 U.S. Dist. LEXIS 6054 (N.D. Okla. Jan. 17, 2017)

 In May 2014 the Cherokee Nation issued a bid notice for bridge and roadway construction in Mayes County, Oklahoma (the “Project”). Funding was authorized pursuant to the Secretary of Transportation and Secretary of the Interior’s Tribal Transportation Program, 23 U.S.C. § 202, by which federal funding is offered to Native American tribal governments to pay the costs of certain transportation projects located on, or providing access to, tribal lands.

Bronze Oak, LLC submitted a bid proposal and was hired as the general contractor for Project, and J.A. Manning Construction Company (“JAMCC”) was hired as a subcontractor to supply labor and materials to the Project. Bronze Oak’s bid proposal provided that any resulting contract would be construed under U.S. and Cherokee Nation laws.  A payment bond was issued for the Project naming Bronze Oak as the principal, Mid-Continental Casualty Company as surety, and the United States as obligee.  The payment bond also stated it was for the protection of persons supplying labor and materials pursuant to the Miller Act.

JAMCC filed suit in federal court, alleging that Bronze Oak and Mid-Continental Casualty Company failed to make payment for work performed under the subcontract. Defendants moved to dismiss for lack of federal subject matter jurisdiction on grounds that the Project was not a “public work” subject to the Miller Act.

To determine whether the Project was a “public work,” the court considered several factors: i) whether the United States was a contracting party; ii) the payment bond’s obligee; iii) the ultimate owner of the project; iv) whether the work was done on federal land; v) or whether the bond was issued under the Miller Act.  The court acknowledged that while the United States will never have title to the Project, it funded the Project, is obligee of the payment bond, and retained auditing and inspection power.  Nevertheless, the court ruled that even with the United States as obligee of the payment bond and providing funding, “this is not enough to bring the [P]roject under the Miller Act.”

Relevant to the court’s holding was that the Project was owned and maintained by Mayes County, Oklahoma, was not on federal land, and was initiated by the Cherokee Nation. The federal government restrictions on the Project pursuant to the Tribal Transportation Program’s funding criteria were not sufficient to render the Project a “public work,” nor was the contracting parties’ agreement that federal law applied.  Crucially, the court noted that the United States was not a contracting party.  The court stated that “although many factors are considered in determining whether a project is a public work, courts have generally found whether the United States is a contracting party to be particularly important.”  Accordingly, the court granted defendants’ motion to dismiss for lack of federal subject matter jurisdiction.

To view the full text of the court’s decision, courtesy of Lexis®click here.

Alex Corey

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