Making a proper claim against a payment bond on a public works project typically requires strict adherence to the statutory requirements. Particularly when it comes to serving a notice of a the claim. However, a recent federal District Court judge in Maryland held that an emailed notice of bond claim was sufficient, despite the statute requiring service by certified mail.
Maryland notice of bond claim service requirements
Under Maryland’s Little Miller Act, any public works project whose contract is valued at $100,000 or more requires the prime contractor to post a payment bond on the project. If a subcontractor or supplier on the project goes unpaid, they can file a claim against the payment bond.
To do so, a claimant must send a Notice of Claim Against the Bond to the general contractor who posted the bond within 90 days of the claimant’s last date of furnishing labor and/or materials to the project. So how should this notice be sent?
Well, under Md. Code Ann, State Fin. & Proc. §17-108(b)(2), the notice:
- Shall state with substantial accuracy the amount claimed and the person to whom the labor or materials was supplied
- 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
There you have it: certified mail.
However, the US District Court for the District of Maryland recently held that a notice served through email is deemed to be sufficient.
Emailed MD notice of bond claim found to be a sufficient method of service
The case in question is Johnson-Lancaster and Associates, Inc. v. H.M.C. Inc., et al
- Owner/Entity: Prince George’s County (PGC)
- Surety: Hudson Insurance Company (HIC)
- General Contractor: Rich Moe Enterprises, LLC (Rich Moe)
- Subcontractor: H.M.C., Inc. (HMC)
- Material Supplier: Johnson-Lancaster & Associates, Inc. (JLA)
Supplier sends bond notice by email instead of certified mail
The facts and details aren’t overly complicated: Rich Moe was serving as the general contractor on a project to renovate the Prince George’s County Courthouse Cafeteria. As required by the Maryland Little Miller Act, Rich Moe posted a payment bond provided by HIC.
HMC was subsequently hired onto the project by Rich Moe as a subcontractor, who in turn hired JLA as a material supplier. As the project progressed, a payment dispute arose between JLA and HMC.
After a few invoices went unpaid, JLA sent separate emails to both Rich Moe and to HIC identifying the project, the subcontractor who failed to pay (HMC), the current balance due, and additional documentation as evidence of the balance due to initiate the claim against the bond. Shortly thereafter, a lawsuit was initiated to recover payments — and the fifth count in the complaint was to enforce the claim against the payment bond issued by HIC.
HIC responded by filing a motion for summary judgment to dismiss the claim against the payment bond for failure to comply with the certified mail service requirement.
Emails align with the purposes of the notice requirement to ensure actual receipt
After reviewing the language of the statute, the court began their inquiry by citing the preamble to the MD Little Miller Act when it was first enacted, which states, “the main purpose of the Bill is to provide greater protection to sub-contractors on contracts awarded by the state.”
They further noted that while the statute as a whole is designed to add protection to subs, the notice requirement is meant to protect the GC.
JLA admitted that the did not send the notice to Rich Moe and HIC by certified mail, but did email the notice in a timely fashion, and with all of the required information. They argued that the Maryland courts have liberally construed the Little Miller Act’s requirements concerning the method by which the notice is given, citing a prior case where a notice sent by regular mail was found to be sufficient.
While the statute only mentions “certified mail” as a method for service, the court still looked to the purposed of the statute to determine if an email is sufficient. The purpose behind requiring “certified mail” is to ensure the receipt of the claim. This purpose is also satisfied with an email, as it provides a digital history of the delivery.
Thus ,the court concluded the following:
“To grant summary judgment would simply provide an unjust windfall to HIC 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 notice is not at issue. The timeliness of the notice is not at issue. Even the receipt of the notice is not at issue.
HIC admitted timely receipt by email of the Plaintiff’s claim. The purpose of certified mail 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. In this case and under these specific facts, Plaintiff has an email record of that receipt and HIC was on notice of the claim and had a record of the receipt. There is no showing of prejudice nor can there be since HIC received timely notice. The purpose of the statute is fully met because sufficient proof of service and receipt of that service was shown.”
Thoughts & takeaway from a Maryland construction attorney
“Judge Copperthite found that the bonding company and the general contractor received timely actual notice. The actual notice met the intent of the Little Miller Act, regardless of the admitted failure to send notice by certified mail.”
“This is an important ruling that holds bonding companies to their obligations, regardless of technicalities, when actual notice is received in a timely manner,” Hartman continued. “We hope this ruling assists other subcontractors and suppliers in their efforts to get paid for their work and products.”
So what can we take away from this holding?
First and foremost, this reiterates the fact that notice of the bond claim must actually be received. This isn’t a “service is complete upon mailing” scenario.
Secondly, this is a huge step for the Maryland construction industry. Emailing has become the default method of communication in today’s age. And many states have thus far been reluctant to accept emails as proper notice. Thankfully this is no longer the case in Maryland. In fact, the same court held back in 2019 that an emailed notice of bond claim is sufficient under the Federal Miller Act as well!
Granted, this decision is relatively fresh, and solely sending notice by email may still be met with some contention. Best practice, for now, would be to still serve notice by certified mail — but also email a copy as a backup. It’s much easier to duck a postal worker than it is to deny opening an email!