If you’re a lower-tier subcontractor or supplier on a public construction project, it might be tempting to calendar your notice-of-claim deadline 90 days (in the case of federal Miller Act projects) or 120 days (in the case of North Carolina “Little Miller Act” projects) from your last furnishing of labor and materials, regardless the nature of that last furnishing.
Resist that temptation.
It overlooks a few simple but critical words recited in the federal Miller Act, as well as similar language contained in North Carolina’s Little Miller Act.
Meeting lien and bond claim filing deadlines can sometimes feel like a race against the clock. For claimants who provide on-site labor for a construction project, properly identifying the date such labor was last furnished is a critical component to winning that race.
An unpublished Fourth Circuit Court of Appeals decision illustrates the point. In U.S. ex rel. Mavis Mechanical Services, Inc. v. Hanover Ins. Co., 182 F.3d 910 (4th Cir. 1999), a subcontractor on a federal construction project tried to establish compliance with the Miller Act’s one-year filing deadline by arguing it furnished labor on two occasions within a year of its lawsuit. The first instance involved attendance at a coordination meeting; the second involved mobilization to the site to perform certain valve installation work it had yet to complete, but refusal by the sub to actually perform the work when the GC refused to make payment on alleged past due amounts. On these facts, the Fourth Circuit upheld the district court’s determination that neither site visit qualified as “labor” for the purposes of the Miller Act’s one-year filing deadline. That holding doomed the sub’s Miller Act claim to dismissal.
The moral of the story?
While the conservative approach is to rely on an experienced construction attorney to serve preliminary lien and bond notices for North Carolina construction projects, there are many subs and suppliers who prefer the DIY approach. I’m sure many of you do-it-yourselfers already rely on these web-based tools for facilitating your preliminary notices, but just in case, here are my three favorites:
For North Carolina general contractors, the big prize in last year’s lien and bond law legislation was protection from double payment exposure on bonded public contracts. Carolinas AGC lobbyist Dave Simpson has said on numerous occasions that he spent the better part of two decades pushing the N.C. General Assembly for double payment protection. In a similar vein, Carolinas AGC member Susie Shaw of Beam Construction added that “this has been an issue I have heard about from my father since I was a young child. It took a long time, but I am glad it is coming to pass in my lifetime.”
This post explains the “double payment” provisions of the new lien/bond laws in-depth, focusing on how prime contractors are exposed to double payment liability on public projects, how the new statute provides protection from that exposure, and the limits of the new legislation. Continue reading
Image from Wikipedia Commons
Monday is upon is, the beginning of what is likely to be the penultimate week of the General Assembly’s 2012 short session.
As my regular readers know, I’ve been tracking two key pieces of construction-related legislation: the lien law revision bill recommended by a legislative study commission, and the bill advanced by the title insurance industry to address the “hidden lien problem.”
This post provides an update on where those two bills stand, and also reports on a third construction-related bill that hit my radar last week.
Danielle Rodabaugh of SuretyBonds.com
I’m thrilled to welcome my first guest blogger, Danielle Rodabaugh, to N.C. Construction Law, Policy & News. Danielle is chief editor at SuretyBonds.com, a nationwide surety provider that issues construction bonds to contractors every day. As a part of the company’s educational outreach program, Danielle writes articles to help construction professionals understand the intricacies of surety bonds and the underwriting process. You can keep up with Danielle on Google+.
Whether you’re new to the construction industry or have decades of experience under your belt, you probably have some questions about surety bond acquisition and what goes into the underwriting process. Before we go much further, though, I’d like to review the basics of how surety bonds work and why they’re required.
Surety bonds ensure project completion.
When surety bonds are used on projects, they’re known as “contract bonds” or “construction bonds.” Project owners require them to ensure construction professionals work according to terms laid out in contracts.
There are a number of different contract bond types. Some of the most common ones are license bonds, bid bonds, performance bonds and payment bonds. No matter what kind of surety bond you need, it will function as a legally enforceable contract that binds together three parties:
- The individual contractor or contracting firm that buys the bond is the principal.
- The project owner, which is typically a state agency, that requires the contractor to be bonded is the obligee.
- The insurance company that issues the bond bond is the surety.
If a contractor fails to fulfill the bond’s terms, then the obligee can make a claim on the bond’s sum to gain reparation for any damages or financial losses.
My recent musings about the Court of Appeals’ December 6, 2011 Southern Seeding decision (my original blawg post about the case is here; a longer treatment in this quarter’s Change Order, published by the Construction Law Section of the North Carolina Bar Association, can be found here) neglect to address the opinion’s implications for surety companies issuing payment bonds in North Carolina.
Those implications are profound and potentially far-reaching, and certainly worthy of discussion. So for those of you, like me, who have a keen interest in North Carolina suretyship law, you’ll definitely want to keep reading.