Notices are an important aspect of the construction industry, and crucial to a successful construction project. Sometimes the contract requires notice. In most states, contractors and suppliers send notice to secure their right to file a mechanics lien (or bond claim). This statutory right requires that construction businesses follow the legal requirements closely in order to protect their payment. Laws in many states require written notices to be mailed or served personally. But with “snail mail” seeming to go the way of the rotary phone, it makes you wonder: Can emails be used as valid construction notices? The U.S. District Court of Maryland seems to think so.
When are notices considered served?
If you took a look at the mechanics lien statues or little Miller Acts, almost every single state has some sort of notice requirement, whether it’s a preliminary notice, notice of intent to lien, or a notice of a lien claim. The other thing you may notice (no pun intended!) is that they all specifically address how these need to be delivered. Registered, first-class, certified mail with return receipt requested, or simply personal delivery. Lastly, every provision dealing with notices will provide when the notice is deemed to be served.
“Notice when mailed” vs. “notice when received”
Most state statutes provide that a party is deemed served when the notice is deposited in the mail by the required method, ignoring whether actual delivery was made. Take Arizona’s preliminary notice statutes, for example. A.R.S §33-992.01 states that “service is complete at the time of the deposit of the notice in the mail.” The Arizona courts have even gone so far as to state that ‘actual receipt’ isn’t even required (Columbia Group v. Jackson). But is that the right call?
It’s a tough debate. On the one hand, it’s important to protect the party who has complied with the statutory requirements and is simply looking to secure their rights. And frankly, it’s understandable. The lengths some will go to avoid being served is astonishing. On the other end of the spectrum, notices are part of the process for a very specific purpose, to notify the other party. Allowing them the ability to respond and potentially fix the situation before it escalates.
Can you just email a notice?
Construction projects are a whirlwind of paperwork. From construction documents, to pay applications, to lien waivers, and of course, notices. One solution has been part of our daily lives for the past 30 years: Email. As computers and smartphones become more and more of our daily lives and businesses, this seems like an obvious answer. Email has leapfrogged the standard mail system. Email is cheap, convenient, fast, and leaves a digital trail to confirm that that the message was (a) delivered, and (b) opened. But most laws were drafted years ago – before email existed – and are difficult to change to meet the needs of an ever-digitizing society.
So can emails be used as a sufficient legal notice?
Apparently it can, for purposes of a bond claims under the Federal Miller Act. Let’s take a look at the case.
US District Court allows email as notice
The US District Court of Maryland dealt with United States ex rel. Cummins-Wagner, Co. v. Fidelity & Deposit Company of Maryland. In that case, Cummins-Wagner, Co. (CW) was a sub-subcontractor hired by T.K. Mechanical, Inc. to supply equipment and materials. While the project was progressing, TK filed for bankruptcy. At that point, the prime contractor reached out to CW requesting information concerning the balance owed. CW sent an emailed response within the 90-day period indicating the amount and shortly thereafter copies of the invoices were provided as well. CW eventually sent a demand for payment letter to the GC and the surety, but was denied. The surety argued that the notice by email was insufficient.
Notice provisions under the Miller Act
The provisions regulating notice under the Miller Act are found in 40 USC §3133(b)(2):
Notice shall be served (a) by any means that provides written, third-party verification of delivery to the contractor at any place the contractor maintains an office or conducts business or at the contractor’s residence; or (b) in any manner in which the United State marshal of the district in which the public improvement is situated by law may serve summons.
Email was deemed to be sufficient notice
The opinion stated that the courts have repeatedly held that notice is sufficient when the contractor has actual notice. The court further stated that the purpose of providing the method by which to send notice was to ensure that the notice is actually received. It was not to deny the right to make a bond claim when the notice was provided in the specified time, and had actually been received. So suffice to say, the email was declared as a valid notice for purposes of a Miller Act bond claim.
This is an interesting development, as statutory rights are typically strictly enforced. We’ve seen this problem numerous times. Contractors in the right have been frequently denied their rights due to some minor misstep in the notice requirements. It appears that, under the Miller Act specifically, the courts have become relatively lenient when it comes to the method of notice. This is in stark contrast to the way notice provisions are handled at a state level.
So for the purposes of notice under the Miller Act, notice isn’t limited to registered or certified mail. Notice merely needs to be actually received in order to be effective.
But as of now, is relying on email worth the risk? No one want to be the first to push the issue in other courts, and potentially lose. As of now, best practices seems to be better safe than sorry. The closer you can adhere to the letter of the law when it comes to notice delivery, the more protection you will have. Who knows if this is going to be a growing trend? As the construction industry slowly embraces more and more technology, perhaps the laws regarding contractor rights might as well.