Federal Court Clarifies When Idle Equipment Costs Are Recoverable Under the Miller Act

United States ex rel. Am. Civ. Constr., LLC v. Hirani Eng’g & Land Surveying, P.C., 2018 U.S. Dist. LEXIS 200829 (D.D.C. Nov 28, 2018).

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R. Zachary Torres-Fowler

The case involved the construction of a levee wall on the National Mall in Washington, D.C.  In September 2010, the Army Corps of Engineers awarded Hirani Engineering & Land Surveying, P.C. (“Hirani”) the prime contract for the project.  Hirani’s surety was Colonial Surety Company (“Colonial”).  Hirani subcontracted the majority of the work to American Civil Construction, LLC (“ACC”).  Following a series of disputes and project delays, the Army Corps terminated Hirani.  ACC then filed suit in the United States District Court for the District of Columbia seeking over $2 million in damages under the Miller Act as well as state law for breach of contract.  After a bench trial, the court entered judgment in favor of ACC.

As part of its claim, ACC sought damages for costs related to idle equipment at the project site.  Although the claim was only a small part of ACC’s overall claim, the court’s approach was noteworthy.  ACC asserted that all of the costs were recoverable under the Miller Act.  Conversely, Hirani and Colonial argued that standby equipment expenses were per se unavailable under the Act.  The court disagreed with both parties and held that, although the Miller Act permitted a contractor to recover for idle equipment, it could not do so in all instances. Continue reading “Federal Court Clarifies When Idle Equipment Costs Are Recoverable Under the Miller Act”

Subcontract Provision Requiring Subcontractor to Pass Through its Claims Does Not Prevent the Subcontractor From Suing to Recover Against Miller Act Bond

Pinnacle Crushing & Constr. LLC v. Hartford Fire Ins. Co., 2018 U.S. Dist. LEXIS 67965 (W.D. Wa. Apr. 23, 2018)

The Army Corps of Engineers (the “Corps”), as owner, and Cherokee General Corporation (“CGC”), as prime contractor, entered into a contract (the “Contract”) in connection with work at the Yakima Training Center (the “Project”).  CGC subcontracted with SCI Infrastructure (“SCI”) for certain work related to the Project (the “SCI Subcontract”), and SCI subcontracted with Pinnacle Crushing & Construction, LLC (“Pinnacle”) (the “Pinnacle Subcontract”).  CGC obtained a Miller Act payment bond (the “Bond”) from Hartford Insurance Co. (the “Surety”) to provide coverage for labor and materials supplied in carrying out the work.

After the Corps terminated the Contract with CGC, CGC submitted a claim under the Contracts Disputes Act.  As required by the SCI Subcontract, CGC asserted SCI’s pass through claims against the Corps, which included amounts allegedly owed to both SCI and Pinnacle.

Separately, SCI and Pinnacle sued CGC and the Surety to recover under the Bond for the work they performed under the subcontracts, but for which CGC had not paid them. Continue reading “Subcontract Provision Requiring Subcontractor to Pass Through its Claims Does Not Prevent the Subcontractor From Suing to Recover Against Miller Act Bond”

Federal Court in Mississippi Holds That Although Projects Were Constructed With Federal Funds, They Were Not “A Public Work of the Federal Government” and Therefore the Court Had No Jurisdiction Over a Subcontractor’s Claim Under the Miller Act, Where the United States Was Not a Contracting Party and the Projects Were Not Constructed on Federal Property

United States ex rel. Metro Mech., Inc. v. Triangle Constr. Co.,  2018 U.S. Dist. LEXIS 1487 (S.D. Miss. Jan. 4, 2018)

Triangle Construction Company, Inc. (“Triangle”) contracted with Mississippi Portfolio Partners III, LP (“Mississippi Partners”) to serve as the prime contractor on four apartment complex construction projects (the “Projects”) in Mississippi.  Triangle subcontracted the HVAC and plumbing work to Metro Mechanical, Inc. (“Metro”).  After Metro completed its work, Metro filed suit in the Federal District Court under the Miller Act, to collect sums due from Triangle and its payment bond surety.  Triangle moved to dismiss, asserting that the Court was without Miller Act jurisdiction because the projects and contracting parties were private.

The Miller Act requires contractors on “public work[s] of the Federal Government” to obtain payment bonds for the protection of subcontractors and suppliers.  See 40 U.S.C. § 3131.  To that end, the Millers Act also creates a civil action in federal court in favor of any “person that has furnished labor or material in carrying out work provided for” under a Miller Act contract and “that has not paid in full within 90 days.” 40 U.S.C. 3133(b)(1).  The District Court applied two alternative tests to determine whether the Projects were “public works of the Federal Government subject to the Miller Act.” Continue reading “Federal Court in Mississippi Holds That Although Projects Were Constructed With Federal Funds, They Were Not “A Public Work of the Federal Government” and Therefore the Court Had No Jurisdiction Over a Subcontractor’s Claim Under the Miller Act, Where the United States Was Not a Contracting Party and the Projects Were Not Constructed on Federal Property”