We here at the Lien blog devote a lot of our time to writing about mechanics liens, and all the issues and laws surrounding them in each and every state.  Another major area of interest, however, is the Miller Act, a piece of federal legislation which permits unpaid subcontractors and material suppliers on federal government construction projects to sue the prime contractor’s surety for payment.  Similar to mechanics lien requirements, the procedures that must be followed for a valid claim under the Miller Act are strict.  A recent case out of the U.S. Court of Appeals for the Eleventh Circuit affirmed that claimants under the Miller Act must ensure that they are following procedural requirements closely.

What are the Miller Act Claim Procedural Laws?

When filing a Miller Act bond claim, first- and second-tier subcontractors and material suppliers must make sure that they strictly follow the letter of the law.

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First, parties that have not directly contracted with the prime contractor, such as second-tier subcontractors and material suppliers to first-tier subcontractors must file notice of a Miller Act Claim within 90 days of last furnishing materials or labor to the federal project.  The Miller Act describes exactly what this notice must contain.

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Second, all parties must initiate suit to enforce their Miller Act claim within 1 year of last furnishing materials or labor to the project.

federal rules of appellate procedure clearly applies to Miller Act claims.

The procedural law that we are dealing with in this post is actually the law surrounding appeals.  Specifically, when the federal government is a party in an appeal, a party has 60 days to appeal a district court’s ruling.  However, when the federal government is not a party in an appellate proceeding, a party only has 30 days to appeal.  This federal rule of appellate procedure clearly applies to Miller Act claims.  

How Do Miller Act Appeals Work?

Since Miller Act claims are on federal projects but suits under the Act must be filed against the surety, it is easy to see why a party might be confused as to which limitation – the 30-day limit or the 60-day limit – applies.  However, making the correct decision is imperative if a party wishes to proceed with its appeal.

A recent case heard by the Eleventh Circuit, U.S. ex rel. Postel Erection Group, L.L.C. v. Travelers Casualty and Surety Company of America, clarifies which limitation applies.  Although its reasoning is complicated, the ruling has important consequences for parties appealing trial court orders dismissing their Miller Act claims.

Under the Act, prime contractors must post two bonds.  The first bond protects the federal government from failure to perform.  This bond is called a performance bond.  The second bond protects the subcontractor, and is called a payment bond.  Unpaid subcontractors or material suppliers, therefore, file a claim payment, bond.

Furthermore, looking carefully at how the parties are named in this case, you’ll notice that the plaintiff in the case is “U.S. ex rel. Postel Erection Group, L.L.C.”  The Latin phrase “ex rel.” can be translated of “in the name of” or “on behalf of.” The Miller Act itself requires that parties bring suit “in the name of the United States.”  Hence, the “ex rel.” exists in the plaintiff’s name in this case.

The Miller Act itself requires that parties bring suit “in the name of the United States.

If you’re still able to follow all this legalese, it would appear that since “U.S.” appears in the very title of the suit, as plaintiff, the United States is a party to the lawsuit and thus the 60-day requirement on filing appeals applied.  The plaintiff in this case, Postel Erection, thought as much, since it waited 55 days to file its appeal.

In its reply, the surety argued that the 30-day limit, not the 60-day limit applied, and since Postel had missed the 30-day limit, the court should dismiss its appeal.

The court distinguished between “nominal parties” and “real parties”

In its opinion, the Eleventh Circuit agreed with the surety and held that the 30-day limit applied.  The court distinguished between “nominal parties” and “real parties” in its reasoning.  In Miller Act claims, the U.S. is merely a nominal party since it is named as a formality only.  Furthermore, United States did not formally intervene in the case nor ever show an “active” interest in the litigation.  Since the U.S.’s involvement in this case was “in name only,” the court held that it was a nominal party.  Thus, due to the fact that the 60-day limit only applies when the United States has real interest in the litigation, the 60-day limit did not apply and instead the 30-day limit did.  Because Postel waited 55 days to file its appeal when it only had 30 days by law, the court dismissed Postel’s appeal.

Take-Aways from Postel Erection

This case is somewhat complicated for people who are not trained in appellate procedure.  So what should non-attorneys take away from this case?

The major lesson unpaid subcontractors and material suppliers can learn from Postel is that unless the United States has intervened or taken an active interest in the case, the subcontractor or supplier only has 30 days to appeal.  As the court noted, “a party [such as the United States in a Miller Act claim] can be named in the caption of a complaint without necessarily becoming a party to the action.”

Thus, if the district court issues a ruling that an unpaid subcontractor or supplier doesn’t agree with, it should appeal within 30 days or potentially lose the right to appeal forever.