Federal Court: Remedial Purposes of Little Miller Act Trump Statutory Notice Requirement

Notice requirements under Miller Act payment bonds, whether federal or “Little,” generate myriad court cases each year. The subject matter of the disagreements among the parties abound: the date on which the claimant last performed labor or last supplied materials on the project; the date a mailed notice is effective; the proper method of delivery of notice; among others. Courts will often cite to a (federal or Little) Miller Act’s remedial purposes in order to find that a claimant’s method of notice–which does not meet strict statutory muster–is sufficient to satisfy the notice requirement under the Miller Act.

In a recent federal district court case out of Maryland, the court considered just this question, finding that the remedial purposes of the Little Miller Act trump the statutory notice requirement. See Johnson-Lancaster & Associates v. H.M.C., Inc., 2021 U.S. Dist. Lexis 83566 (D. Md. Apr. 29, 2021). In this case Rich Moe Enterprises (RME) entered into a contract with Prince George’s County, Maryland (County), to be the general contractor for the renovation of the County Courthouse Cafeteria (Project). Pursuant to the provisions of the Maryland Little Miller Act, RME obtained a payment bond (Bond) on the Project from a surety company (Surety).

RME subcontracted a portion of the construction work to H.M.C., Inc. (HMC), which entered into a contract with Johnson-Lancaster and Associates (Johnson-Lancaster). Johnson-Lancaster supplied construction materials and equipment for the Project and sent invoices to HMC for work and services performed, for which HMC failed to pay.

Johnson-Lancaster sent an email to RME as notice of subcontractor’s HMC unpaid balance, including documents supporting the unpaid balance. Johnson-Lancaster subsequently filed a claim on the Bond for the unpaid balance. The court noted that it was undisputed that Johnson-Lancaster notified the two parties of the unpaid balance through email–and not certified mail.

The Surety denied the claim, and Johnson-Lancaster sued the Surety, alleging in part that the Surety was liable to Johnson-Lancaster for the total amount owed to it on the Project. The Surety filed a motion for summary judgment on the grounds that Johnson-Lancaster failed to comply with the certified mail service requirement to the general contractor set forth in Md. Code Ann., State Fin. & Proc. § 17-108(b)(2)(ii).

The Maryland Little Miller Act sets out the notice requirements for subcontractor and suppliers to make a claim on the bond.  It states, in relevant part, that notice under the payment bond “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” (emphasis added). The court then noted that the preamble to the Act states that “the main purpose of the Bill is to provide greater protection to subcontractors on the contracts awarded by the state.” The court further observed that, while the statute as a whole is designed to provide greater protection to subcontractors, the notice requirements aim to protect the general contractor.

Johnson-Lancaster admitted that it did not send notice to RME or the Surety by certified mail, but argued that courts have liberally interpreted the Little Miller Act’s requirements concerning the method by which notice is given. The court noted that the provisions of Maryland’s Little Miller Act require notice be sent by certified mail and that certified mail is the only means of delivery mentioned in the statute. The Surety argued that the court should apply strict construction to the words “certified mail,” without considering the purpose of the statute. The court stated the while a “liberal construction is not one that contravenes the plain language of the statute,” it would “still look to the purpose of the statute to determine whether email is a sufficient means of delivery.” The court determined that “a liberal construction of the means of delivery does not contravene the remedial purpose of the statute.” The court further observed that the “purpose of certified mail is to ensure receipt of the claim” and, in this case, “receipt of the claim was ensured by email which provided a digital history of delivery.”

The court cited to a U.S. Supreme Court case, Fleisher Engineering & Construction co. v. U.S. ex rel. Hallenbeck,311 U.S. 15 (1940), which concerned a similar claim under the federal Miller Act. Regarding the manner of service, the Johnson-Lancaster court noted that the Fleisher Engineering Court held that Congress intended to provide a method that would afford sufficient proof of service.

While the court reached a conclusion where many other courts have landed, the court’s reasoning is somewhat tortured. Interestingly, the court stated that a “liberal construction is not one that contravenes the plain language of the statute” and then proceeded to apply the remedial purpose of the statute to the issue, contravening the plain language of the statute. The court did, indeed, contravene the plain language of the statute, notwithstanding its protestations otherwise.

Accordingly, the court denied the Surety’s motion for summary judgment because “to grant summary judgment would simply provide a windfall to [the Surety] 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 court found that the “purpose of the statute is fully met because sufficient proof of service and receipt of that service was shown.”

The author of this article is Martha Perkins, General Counsel at NASBP. She can be reached at mperkins@nasbp.org or 240.200.1270.

This article is provided to NASBP members, affiliates, and associates solely for educational and informational purposes. It is not to be considered the rendering of legal advice in specific cases or to create a lawyer-client relationship. Readers are responsible for obtaining legal advice from their own counsels, and should not act upon any information contained in this article without such advice.