What Work Is The Right Work For Little Miller and Miller Act Limitations
May 10, 2022
In this Surety Today blog post we will provide a Case Law Note to consider the issue of when limitations begins to run under the Miller Act for a payment bond claim. The question is what “work” constitutes last work for purposes of the Florida Little Miller Act and Miller Act in general? As the case reveals, and as other case law confirms, the answer is one of perspective – i.e. the perspective of which jurisdiction you’re in. Read on to learn more about what work is the “right work.”
JD’S ASPHALT ENGINEERING CORP. v. ARCH INSURANCE COMPANY, No. 3D20-0407, 2021 WL 4558327, at *1–2 (Fla. Dist. Ct. App. Oct. 6, 2021).
In this case, Arch Insurance Company issued payment and performance bonds for the general contractor on a construction project for the Miami-Dade County School District. The general contractor entered into a subcontract with JD’s Asphalt Engineering Corp. (“Claimant”). The Claimant sued on the payment bond seeking (1) payment of retainage and (2) payment for change orders. Arch moved for summary judgment on the claim for change orders. The trial court granted Arch’s motion for summary judgment denying claimant’s claim for change orders. The Claimant’s subcontract expressly required all change orders to be in writing and signed. However, the evidence revealed that the change orders upon which the claim was based were unsigned and unauthorized. The appellate court found no genuine issue of material fact, and affirmed that Arch was entitled to summary judgment with respect to the claim based on alleged change orders.
Apparently, there were factual disputes that prevented a summary judgment on the claim for retainage and a two-day bench trial was conducted. The issue in the trial was whether the claim was barred by the statute of limitations. Section 255.05 (10) of the Florida Statutes provides in relevant part:
An action for recovery of retainage must be instituted against the contractor or the surety within 1 year after the performance of the labor or completion of delivery of materials or supplies; however, such an action may not be instituted until one of the following conditions is satisfied:
(c) At least 160 days have passed since reaching substantial compliance of the construction services purchased, as defined in the contract, or if not defined in the contract, since reaching beneficial occupancy or use of the project.
After conducting the trial, the trial court concluded that the claim for retainage was barred by limitations because the suit was not filed within one year of the claimant’s completion of its subcontract work. Suit was filed on July 19, 2017 and the court found that the claimant completed performance of the work on August 11, 2015. The architect certified the project to be substantially complete on August 22, 2015. The claimant contended that it provided additional labor and material during a July-October 2016 time period. The Court ruled that any such work was “de minimus” punch list work and not the type of labor that would extend the one-year limitations period.
Florida’s Fifth Appellate District applies the so called “substantial-trivial” test to determine the last date a claimant performed labor. Fed. Ins. Co. v. Exel of Orlando, Inc., 685 So. 2d 896, 897–98 (Fla. Dist. Ct. App. 1996)(“punch list work is trivial and unsubstantial” when compared to work done on the direct contract); In re Twelve Oaks Ltd., 59 B.R. 736, 742 (M.D. Fla.1986); Viking Builders, Inc. v. Felices, 391 So.2d 302, 303 (Fla. 5th DCA 1980) (warranty and punch list work is trivial and unsubstantial and does not extend time for filing). However, it appears that Florida has a bit of a mess. The “substantial-trivial” test used by the Fifth District has not been adopted by the Fourth District, which applies the so called “Aronson/Michnal” test. Delta Fire Sprinklers, Inc. v. OneBeacon Ins. Co., 937 So.2d 695, 699 (5th DCA 2006) (noting that the Fifth DCA applies the substantial-trivial test and that the Fourth DCA applies the Aronson/Michnal test); Fisk Elec. Co. v. SFCS, Inc., No. 07-61184-CIV, 2008 WL 1776665, at *6 (S.D. Fla. Apr. 17, 2008); Michnal v. Palm Coast Development, 842 So.2d 927, 933 (4th DCA 2003); Aronson v. Keating, 386 So.2d 822, 823 (Fla. 4th DCA 1980).
The “Aronson/Michnal test” is a four-factor test to be applied in determining whether particular work constitutes a final furnishing of labor, and looks to whether the work done was: 1) in good faith; 2) within a reasonable time; 3) in pursuance of the terms of the contract; and 4) necessary to a finished job. Michnal, 842 So. 2d at 933. I am not a Florida law expert, so if you have an issue in Florida relating to when the Little Miller Act limitations period is triggered seek competent counsel in Florida. I can only identify that there is an issue that claims handlers need to be aware of.
This case raises an interesting issue with respect to when limitations begins to run in the Little Miller and Miller Act context. Claims handlers need to be aware that when evaluating whether the statute of limitations has been met, not all work performed by the claimant may count for limitations purposes. As I noted, the Florida Little Miller Act has multiple tests for addressing the issue depending on what part of Florida you are in. The same is true with respect to the Federal Miller Act. As a general matter, the federal courts have taken a variety of approaches in determining when the statute of limitations begins to run on a claim under the Miller Act. A majority of courts have held that only work performed and materials supplied as part of the original contract—as opposed to corrective or repair work performed after final inspection and not provided for in the contract—fall within the meaning of “labor” or “materials” for purposes of the statute of limitations. See, e.g., United States ex rel. Interstate Mech. Contractors, Inc. v. Int’l Fid. Ins. Co., 200 F.3d 456, 459–60 (6th Cir. 2000); United States ex rel. Magna Masonry, Inc. v. R.T. Woodfield, Inc., 709 F.2d 249, 250–51 (4th Cir. 1983); see also United States ex rel. Hussmann Corp. v. Fid. & Deposit Co. of Md., 999 F.Supp. 734, 742, 744 (D.N.J. 1998) (collecting additional cases); cf. United States ex rel. State Elec. Supply Co. v. Hesselden Constr. Co., 404 F.2d 774, 776–77 (10th Cir. 1968) (applying this distinction to nearly identical statutory language in Section 3133(b)(2) to parse when notice is timely given); United States ex rel. Austin v. W. Elec. Co., 337 F.2d 568, 572–73 (9th Cir. 1964)
If you have questions regarding the issues discussed in this post, please do not hesitate to contact Michael A. Stover, Esq. (firstname.lastname@example.org) or any member of the Surety and Fidelity Practice Group.
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