Lien Alert: Recovery for Attorneys Fees in Miller Act Claims Are Based Upon Contract Provisions or State Statutes.
Subs and suppliers who furnish labor or materials directly to a contractor, or directly to a subcontractor of the subcontractor, enjoy payment bond rights. Clifford F. MacEvoy Co. v. United States ex rel. Calvin Tompkins Co., 322 U.S. 102, 64 S. Ct. 890 (1944). Consequently, a second-tier subcontractor can claim on the contractor’s payment bond due to the second-tier subcontractor’s subcontract with the first-tier subcontractor, but third-tier and lower subcontractors and suppliers cannot. J.W. Bateson Company, Inc. v. United States ex rel. National Auto. Sprinkler Indus. Pension Fund, 434 U.S. 586, 98 S. Ct. 873 (1978). Though the Miller Act is clear about who may recover, it is unclear about what may be recovered. Its old codification simply stated that the claimant could recover “sums justly due.” The present codification says simply that claimants “may bring a civil action on the payment bond for the amount unpaid [and] may prosecute the action . . . for the amount due.” 40 U.S.C. § 133(b)(1) (emphasis added). And like its predecessor, the present codification says nothing about attorneys’ fees and interest.
Payment bond claimants seek to recover both attorneys’-fees and interest awards against sureties on Miller Act payment-bond claims.
In the U.S. Supreme Court case Rich Co. v. U.S. ex rel. Indus. Lumber Co., 417 U.S. 116 at 127 (1974)introduced trend to award attorneys’ fees against the surety whenever the payment bond claimant’s contract contains an attorneys’-fees clause. Lacking a contract provision in your credit application or subcontract prevents a bond claimant from seeking legal fees unless a state statute allows otherwise. For example if the bond claimant sues under deceptive practices if the surety misrepresents to the sub that they agree to act in good faith, and it turns out the surety is held liable for that misrepresentation attorneys fees would be allowable under the deceptive practice statute. In a minority of districts, the court might examine state law to determine whether the attorneys’- fees clause is enforceable. But in spite of that narrow view attorneys’ fees may not be recoverable—many districts will readily find precedent for awarding attorneys’ fees without determining whether the contract’s attorneys’-fees clause is enforceable.
These district courts simply “assume” the clause is enforceable or they are applying an emerging federal common-law principle. The same federal common law has been allowed in federal decisions that now seem to routinely award interest against sureties. Nevertheless, recovery for interest is still largely state-law driven.
