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In the legal field, the meaning of a word in a statute can be very important. Certain interpretations can determine what situations the statute will apply to. In the construction industry, the interpretation of words like “improvement” and “furnishing” can determine whether a party is entitled to financial protection under the local Mechanics Lien Statute or Miller Act. Recently, a federal court determined what “furnishing” means pertaining to the Miller Act.

The Interpretation

The case arose from a trench cutter that was leased to a general contractor, Slurry, in order to cut into bedrock. Slurry leased the trench cutter from Pileco, a wholly owned subsidiary of Bauer Maschinen GMBH. Slurry ended up refusing to pay the rental price for the trench cutter and claimed the machinery to be defective. Pileco sued Slurry and the payment bond surety on the project.

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The case, Pileco, Inc. v. Slurry Systems, Inc., 804 F.3d 889 (2015), involved a couple of different claims and counterclaims, but the main part of the courts decision we want to focus on is their interpretation of the word “furnishing” under the Miller Act. The surety tried to argue that Pileco did not have a valid claim under the Miller Act because the trench cutter was built and delivered by the parent company, Bauer. The surety believed this did not constitute as “furnishing” any materials. The specific provision being examined states

(b) Right to bring a civil action. (1) In general. Every person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131 of this title [40 USCS § 3131] and that has not been paid in full within 90 days after the day on which the person did or performed the last of the labor or furnished or supplied the material for which the claim is made may bring a civil action on the payment bond for the amount unpaid at the time the civil action is brought and may prosecute the action to final execution and judgment for the amount due.

The court interpreted this provision to apply in a broader way than argued by the surety. The court reasoned that, despite Pileco being an intermediary agent between Bauer and Slurry, Pileco still provided the trench cutter under the contract. Further, the word “furnish” is synonymous for “provide” or “outfit.” Therefore, Pileco has a valid claim under the Miller Act.

Win For Miller Act Claims

This interpretation allows for broad use of the Miller Act. Now, even more parties involved with public construction projects will have valid Miller Act claims.  Although future courts will most likely limit Miller Act claims to parties they see as reasonably associated with public projects, this decision definitely broadens the group a great deal. The decision strongly suggests that parties simply acting as agents for construction parties have valid claims. Sureties are the surely the losers from this interpretation of the word “furnish.”

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Court Determines What "Furnish" Means Under The Miller Act
The Miller Act affords certain parties financial protection on public projects. A recent decision has broadened which parties are allowed to submit claims.
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