Surety Case Law Note: Is E-Mail Notice Sufficient Under A Little Miller Act?
March 22, 2022
In this Surety Today blog post we will provide a Case Law Note to consider the issue of allowing notice under a Little Miller Act by e-mail to satisfy the statutory requirement that notice be provided by certified mail. The case below wrestles with the issues of statutory compliance, statutory purpose, and actual notice. Of course, any consideration of the various Little Miller Acts or Miller Act is impacted by the general notion that such acts are to be liberally construed to effectuate their purpose of protecting subcontractors, laborers and suppliers of goods, material, equipment and labor to covered projects. But, with regard to the specific issue of the notice requirement, the courts have also noted the general notion that notice is designed to protect the bonded contractor and surety. Moreover, this issue is also impacted by further distinctions drawn between the substance of the notice and the manner or method of delivery of the notice. Read on to delve deeper into these waters born of the digital age.
JOHNSON-LANCASTER AND ASSOCIATES, INC. v. H.M.C., INC., No. ADC-20-0992, 2021 WL 1720865 (D. Md. 04/29/2021)
This case involves the question of the sufficiency of the manner of providing notice under Maryland’s Little Miller Act. The facts were pretty straight forward and the issue was fairly narrow. Prince George’s County, Maryland entered into a contract with Rich Moe Enterprises, LLC (“RME”) (if you are like me, after reading the name of the contractor you immediately started to think about Moe, Curly and Larry – the Three Stooges and how those guys would not make good principals) to serve as general contractor for the renovation of the Prince George’s County Courthouse Cafeteria. Pursuant to the provisions of the Maryland Little Miller Act, Md. State Fin. Proc. Ann. Code, § 17-101 et seq., RME was required to provide a payment and performance bond for the project. Hudson Insurance Company provided the bonds. RME entered into a subcontract for a portion of the work with H.M.C., Inc. (“HMC”). HMC in turn entered into its own sub-subcontract with Plaintiff, Johnson-Lancaster and Associates, Inc. (“Johnson”) to supply food service equipment for the project.
Johnson sent invoices to HMC for work and services performed, but HMC failed to pay, which resulted in an alleged balance owed of $175,571.90. Finally, Johnson sent an email to RME as notice of subcontractor HMC’s unpaid balance. The email identified the project, the subcontractor who failed to pay, the current balance due to Plaintiff, and included documents supporting the unpaid balance. In this email to RME, Plaintiff also requested a copy of the Bond. After receiving a copy of the bonds, Plaintiff sent an e-mail notice to Hudson asserting a claim against the Bond. Hudson responded to Plaintiff and provided a claim form, which Plaintiff subsequently completed and submitted with supporting documents. Hudson did not pay the claim.
Maryland’s Little Miller Act requires that notice of a claim against the payment bond be provided by certified mail. It was undisputed that Plaintiff only provided notice by e-mail. After Plaintiff filed suit, Hudson moved for summary judgment contending that because Plaintiff failed to comply with the certified mail service requirement set forth in the Little Miller Act, its claim under the bond was defective as a matter of law. The Maryland Little Miller Act states that a notice under the statute must state with substantial accuracy the amount claimed and the person to whom the labor or material was supplied; and “shall be sent by certified mail to the contractor at the contractor’s residence or a place where the contractor has an office or does business.” Md. Code Ann., State Fin. & Proc. § 17-108(b)(ii).
The Court began its analysis by noting that the main purpose of the Little Miller Act was to provide greater protection to subcontractors, but also noted that the notice requirements of the Act aim to protect the general contractor. The Plaintiff contended, and the Court agreed, that the case law demonstrates that reviewing courts will accept written notice as sufficient if (i) the substance of the notice of the bond claim complies with the Little Miller Act, (ii) there was actual notice to the contractor, and (iii) there is no prejudice to the contractor based on service by a method other than certified mail. See CTI/DC, Inc. v. Selective Ins. Co. of Am., 392 F.3d 120 (4th Cir. 2004)(citing Maccaferri Gabions, Inc. v. Dynateria Inc., 91 F.3d 1431, 1437 (11th Cir.1996). The Court pointed to the earlier case of State Roads Commission v. Contee Sand & Gravel Company, Inc., 308 F. Supp. 650, 652 (D. Md. 1970) in which the Maryland federal court determined that written notice of a bond claim by regular mail instead of certified mail was sufficient. In Contee, a sub-subcontractor sent notice of a bond claim by certified mail to the prime contractor’s surety, but sent notice by regular mail to the defendant subcontractor. Id. at 651. The court held that because the notice received by the surety was sent properly by certified mail and the notice sent to defendant was otherwise sufficient, that the Little Miller Act “should be liberally construed in aid of its remedial purposes.” Id. at 652.
The Johnson Court noted that the case differed from the Contee case because Plaintiff here never sent RME or Hudson notice of the bond claim by certified mail. Plaintiff only sent its notice by email. The Court stated that while “[a] liberal construction is not one that contravenes the plain language of the statute (citation omitted) this Court must still look to the purpose of the statute to determine whether email is a sufficient means of delivery.” The Johnson Court observed that in this case, a liberal construction of the means of delivery does not contravene the remedial purpose of the statute because the purpose of certified mail is to ensure receipt of the claim. Receipt of the claim was ensured by email which provided a digital history of delivery.
The Court cited Fleisher Engineering & Construction Co. v. United States for Use and Benefit of Hallenbeck, 311 U.S. 15, 18 (1940) in which the Supreme Court, addressing the Miller Act, stated, “[i]n giving a reasonable construction in order to effect its remedial purpose, we think that a distinction should be drawn between the provision explicitly stating the condition precedent to the right to sue and the provision as to the manner of serving notice.” Regarding the manner of service, the Court in Fleisher Engineering held that Congress intended to provide a method which would afford sufficient proof of service. Id. at 19. The court in Contee applied this same logic that although notice was sent by ordinary mail, where it was otherwise sufficient and actually reached one of the two joint and several contractors the Act should be liberally construed in aid of its remedial purpose. Contee, 308 F. Supp. at 652.
In the present case, the Court concluded that there was no challenge to the sufficiency of the notice and there was no Maryland authority cited by either party that limited the delivery aspect of the notice to solely certified mail. The Court stated, “to grant summary judgment would simply provide an unjust windfall to [Hudson] who has also failed to allege any prejudice in the emailed notice and most importantly, would thwart the purpose of the Little Miller Act.” The content of the e-mail notice was not at issue. The timeliness of the e-mail notice was not at issue. Even the receipt of the e-mail notice was not at issue. [Hudson] admitted timely receipt by email of the Plaintiff’s claim. The purpose of certified mail, the court continued, is to protect the parties – for a plaintiff – that notice was sent and received, and for a defendant – the date of receipt of such notice. The court held that “[t]he purpose of the statute is fully met because sufficient proof of service and receipt of that service was shown.”
There are a number of courts that have upheld delivery of notice by regular mail, when the statute required registered or certified mail in instances where actual knowledge was received. But there are very few cases addressing the issue of the sufficiency of the manner of delivery of notice by e-mail. The Court in Blue Ribbon Staffing LLC v. Flatiron Constructors, Inc., No. 5-20-CV-00686-RBF, 2021 WL 256824, at *6 (W.D. Tex. Jan. 26, 2021), held that e-mail notice was not in compliance with the Texas Little Miller Act statute utilizing a strict statutory construction approach to its analysis. Similarly, the court in P&D Mech., Inc. v. Gar-San Corp., No. MMXCV146011423, 2015 WL 5133872, at *6 (Conn. Super. Ct. July 9, 2015) held e-mail notice insufficient to satisfy the Little Miller Act statutory notice requirement. If you have questions regarding the issues discussed in this post, please do not hesitate to contact Michael A. Stover, Esq. (410-659-1321 / mstover@wcslaw.com) or any member of the Surety and Fidelity Practice Group.