2023 New Mexico Statutes › Chapter 13 - Public Purchases and Property › Article 4 - Public Works Contracts › Section 13-4-19 - Rights of person furnishing labor or materials and right of state with respect to taxes due.

A. The state shall have the right to sue on the payment bond for all taxes due arising out of construction services rendered under a contract, in respect of which a payment bond is furnished under Section 13-4-18 NMSA 1978 by a contractor that does not have its principal place of business in New Mexico, and to prosecute such action to final execution and judgment for the sum due. The court may allow, as part of the costs, interest and reasonable attorney fees.
B. Every person, firm or corporation that has furnished labor or materials in the prosecution of work provided for in a contract, in respect of which a payment bond is furnished under Section 13-4-18 NMSA 1978, and that has not been paid in full for the labor or materials before the expiration of a period of ninety days after the day on which the last of the labor was done or performed or materials were furnished or supplied for which claim is made, shall have the right to sue on the payment bond for the amount of the balance unpaid at the time of the institution of the suit and to prosecute such action to final execution and judgment for the sum or sums justly due for the labor done or performed or materials furnished to be used in the construction of the project; provided, however, that sums justly due shall be determined according to the subcontract or other contractual relationship directly with the contractor furnishing the payment bond. A person having a direct contractual relationship with a subcontractor but no contractual relationship, express or implied, with the contractor furnishing the payment bond shall have a right of action upon the payment bond upon giving written notice to the contractor, within ninety days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the materials for which the claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the materials were furnished or supplied or for whom the labor was done or performed. Notice shall be served by mailing the notice by registered mail, postage prepaid, in an envelope addressed to the contractor at any place the contractor maintains an office or conducts business or at the contractor's residence or in any manner in which the service of summons in civil process is authorized by law.
C. The claimant in the suit shall notify the obligee named in the bond of the beginning of such action, stating the amount claimed, and no judgment shall be entered in the action within thirty days after giving notice. The obligee and any person, firm, corporation or the state having a cause of action on the bond may be admitted on motion as a party to the action, and the court shall determine the rights of all parties thereto. If the amount realized on the bond is insufficient to discharge all claims in full, the amount shall be distributed among the parties entitled thereto pro rata.
D. Except for suits by the state with respect to taxes that shall be brought in the name of the revenue processing division of the taxation and revenue department, every suit instituted under this section shall be brought in the name of the state for the use of the person suing in the district court in any judicial district in which the contract was to be performed and executed or where the claimant resides, but no such suit, including one brought by the revenue processing division, shall be commenced after the expiration of one year after the date of final settlement of the contract. The date of final settlement, for purposes of this section, is that date set by the obligee in the final closing and settlement of payment, if any, due the contractor. The state shall not be liable for the payment of any costs or expenses of any such suit.
E. The obligee named in the bond is authorized and directed to furnish to any person, firm or corporation making application therefor that submits an affidavit that the person, firm or corporation has supplied labor or materials for such work and payment has not been made or that the person, firm or corporation is being sued on any such bond or to furnish to the revenue processing division of the taxation and revenue department a certified copy of the bond and the contract for which it was given, which copy shall be prima facie evidence of the contents, execution and delivery of the original, and, in case final settlement of the contract has been made, a certified statement of the date of such settlement, which shall be conclusive as to such demand upon it. Applicants shall pay for the certified copies and certified statements such fees as the obligee fixes to cover the cost of preparation.
History:
Laws 1923, ch. 136, § 2; C.S. 1929, § 17-202; 1941 Comp., § 6-512; Laws 1953, ch. 65, § 1; 1953 Comp., § 6-6-12; Laws 1975, ch. 251, § 2; 2015, ch. 109, § 1.
ANNOTATIONS
The 2015 amendment,
effective June 19, 2015, authorized a court to award costs, including interest and reasonable attorney fees when the state sues for taxes due arising out of construction services rendered under a public works contract, and clarified that a person who has furnished labor or materials under a public works contract and has not been paid in full, may sue for the amount due for the labor performed or materials furnished under the public works contract; added new Subsection A and redesignated the succeeding subsections accordingly; in Subsection B, after "firm or corporation", deleted "who" and added "that", after "furnished labor or", deleted "material" and added "materials", after "provided for in", deleted "such" and added "a", after "and", deleted "who" and added "that", after "paid in full", deleted "therfor" and added "for the labor or materials", after "labor was done or performed", deleted "by him", after "or", deleted "material was" and added "materials were", after "furnished or supplied", deleted "by him", after "for which", deleted "such", after "claim is made", deleted "and the state, in respect of which a payment bond is furnished under Section 13-4-18 NMSA 1978, by a contractor who does not have its principal place of business in New Mexico, for all taxes due arising out of construction services rendered under the contract", after "right to sue on", deleted "such" and added "the", after "for the amount of the balance", deleted "thereof", after "institution of", deleted "such" and added "the", after "sums justly due", deleted "him; provided, however, that any" and added "for the labor done or performed or materials furnished to be used in the construction of the project; provided, however, that sums justly due shall be determined according to the subcontract or other contractual relationship directly with the contractor furnishing the payment bond. A", after "person having", added "a", after "contractor furnishing", deleted "such" and added "the", after "right of action upon", deleted "said" and added "the", after "giving written notice to", deleted "said" and added the", after "the date on which", deleted "such" and added "the", after "supplied the last of the", deleted "material" and added "materials", after "for which", deleted "such" and added "the", after "party to whom the", deleted "material was" and added "materials were", after "performed.", deleted "Such", after "served by mailing the", deleted "same" and added "notice", after "contractor at any place", deleted "he" and added "the contractor", after "maintains an office or conducts", deleted "his", and after "business or", deleted "his" and added "at the contractor's"; in Subsection C, at the beginning of the first sentence, added "The", after "claimant in", deleted "such" and added "the", after "judgment shall be entered in", deleted "such" and added "the", after "thirty days after giving", deleted "such", after "cause of action on", deleted "such" and added "the", after "motion as a party to", deleted "such" and added "the", after "the amount realized on", deleted "such" and added "the", after "bond", deleted "be" and added "is", after "claims in full", deleted "such" and added "the"; in Subsection D, after "respect to taxes", deleted "which" and added "that", after "in the name of the", deleted "bureau of", after "revenue", added "processing division of the taxation and revenue department", after "name of the state", deleted "of New Mexico", after "including one brought by the", deleted "bureau of", after "revenue", added "processing division", after "final settlement of", deleted "such" and added "the", after "final settlement", deleted "herein shall be" and added "for purposes of this section, is", and after "The state", deleted "of New Mexico"; and in Subsection E, after "named in", deleted "said" and added "the", after "application therefor", deleted "who" and added "that", after "affidavit that", deleted "he or it" and added "the person, firm or corporation", after "work and payment", deleted "therefor", after "been made or that", deleted "he or it" and added "the person, firm or corporation", after "such bond or", added "to furnish", after "to the", deleted "bureau of", after "revenue", added "processing division of the taxation and revenue department", after "certified copy of", deleted "such" and added "the, after "final settlement of", deleted "such" and added "the", after "shall pay for", deleted "such" and added "the", and after "cost of preparation", deleted "thereof".
I. GENERAL CONSIDERATION.
Legislative intent.
— If no relief is available under this section, the legislature has decreed that the risk of loss must fall on the contractor or subcontractor who undertakes performance of a contract on a state project, rather than on the taxpayers who presumably have already paid all or most of the costs of the project.
Hydro Conduit Corp. v. Kemble
, 1990-NMSC-061, 110 N.M. 173, 793 P.2d 855 (1990).
Statutory remedy comparable to mechanic's lien.
— The public policy behind the Little Miller Act [13-4-18 to 13-4-20 NMSA 1978] is to provide protection for suppliers in the public contracts arena similar to the statutory materialmen's lien.
Hasse Constr. Co. v. KBK Fin., Inc.
, 1999-NMSC-023, 127 N.M. 316, 980 P.2d 641.
Section gives remedy comparable to mechanic's lien.
— Sections 13-4-18 and 13-4-19 NMSA 1978 are intended to provide a remedy comparable to a mechanic's lien to materialmen who provide supplies for a state government construction project.
State ex rel. W.M. Carroll & Co. v. K.L. House Constr. Co.
, 1982-NMSC-150, 99 N.M. 186, 656 P.2d 236.
Estoppel as a defense.
— Estoppel may be a defense in a Little Miller Act [13-4-18 to 13-4-20 NMSA 1978] case.
State ex rel. Electric Supply Co. v. Kitchens Constr., Inc.
, 1988-NMSC-013, 106 N.M. 753, 750 P.2d 114.
Estoppel.
— Supplier was not estopped from pursuing its claim under the Little Miller Act [13-4-18 to 13-4-20 NMSA 1978] against the general contractor and the surety, where the supplier made no affirmation to the general contractor concerning notification of the subcontractor's failure to make payments, and there was no conduct on the supplier's part for the general contractor to have relied on to its detriment.
State ex rel. Electric Supply Co. v. Kitchens Constr., Inc.
, 1988-NMSC-013, 106 N.M. 753, 750 P.2d 114.
Supplemental complaint after one year allowed where not prejudicial.
— A district court's decision to allow the filing of a supplemental complaint to eliminate any alleged jurisdictional defects more than one year after the filing of the initial complaint is in keeping with the remedial nature of the statute, where there is no prejudice shown by the filing of the supplemental complaint.
State ex rel. Goodmans Office Furnishings, Inc. v. Page & Wirtz Constr. Co.
, 1984-NMSC-103, 102 N.M. 22, 690 P.2d 1016.
Notice requirement for a workers' compensation insurer's claim of a lien right against a performance bond,
given in connection with a state construction project, was governed by the Mechanic's Lien Act, 48-2-1 NMSA 1978 et seq., and not by the Little Miller Act [13-4-18 to 13-4-20 NMSA 1978].
State ex rel. Mountain States Mut. Cas. Co. v. KNC, Inc.
, 1987-NMSC-063, 106 N.M. 140, 740 P.2d 690.
Burden of proof.
— The supplier of materials does not have the burden to prove that the materials were actually delivered to the project. The supplier is not required to prove anything beyond the fact that it supplied the materials to the subcontractor for and in the prosecution of the work provided for in the construction contract and also supplied the material for the project.
State ex rel. Solsbury Hill, LLC v. Liberty Mut. Ins. Co.
, 2012-NMCA-032, 273 P.3d 1, cert. granted, 2012-NMCERT-003.
Where plaintiff showed that plaintiff supplied material to a subcontractor for installation in a municipal construction project; the invoices for which plaintiff asserted its claim were for material for the project; plaintiff supplied material for the project in prosecution of the work provided for in the contract for the project, plaintiff was entitled to recover its claim for unpaid invoices for material supplied on the surety's payment bond even though plaintiff failed to prove that plaintiff actually delivered the material and that the material was actually incorporated into the project.
State ex rel. Solsbury Hill, LLC v. Liberty Mut. Ins. Co.
, 2012-NMCA-032, 273 P.3d 1, cert. granted, 2012-NMCERT-003.
Attorney fees.
— Attorney fees are awardable as a sum or sums justly due under Section 13-4-19 NMSA 1978 where the contract between the subcontractor and supplier provides for an award of attorney fees incurred by the supplier in endeavoring to collect amounts due and unpaid under the supplier's credit agreement with the subcontractor.
State ex rel. Solsbury Hill, LLC v. Liberty Mut. Ins. Co.
, 2012-NMCA-032, 273 P.3d 1, cert. granted, 2012-NMCERT-003.
II. PERSONS AND ENTITIES PROTECTED.
Materialman's right to payment on bond.
— Prompt payment provision, as incorporated in the subcontractor-supplier contract, provided an adequate basis for the subcontractor to refuse to pay the supplier or its secured creditor and instead pay the materialman who had provided supplies to the supplier.
Hasse Constr. Co. v. KBK Fin., Inc.
, 1999-NMSC-023, 127 N.M. 316, 980 P.2d 641.
Surety's liability to employee leasing company.
— General contractor's surety was liable to employee leasing company which furnished labor for project covered by surety's bond since leasing company hired the laborers, paid them weekly, and then billed general contractor in accordance with the terms of their contract.
Eastland Fin. Servs. v. Mendoza
, 2002-NMCA-035, 132 N.M. 24, 43 P.3d 375.
III. NOTICE.
Generally.
— The statute is remedial in nature and its principal purpose is to protect the supplier of labor and materials, and it should be liberally construed to effectuate the obvious legislative intent. However, the court cannot, in the guise of liberality, justify completely ignoring the very prerequisite (notice) which the legislature prescribed as a condition precedent to the accrual of any right against the contractor's bond.
State ex rel. Komac Paint & Wallpaper Store v. McBride
, 1964-NMSC-108, 74 N.M. 233, 392 P.2d 577.
Written notice is mandatory
as a strict condition precedent to the existence of any right of action upon the payment bond.
State ex rel. State Elec. Supply Co. v. McBride
, 1968-NMSC-146, 79 N.M. 467, 444 P.2d 978.
Purpose of notice requirement.
— The requirement under Subsection A that a claimant give written notice within 90 days is a necessary prerequisite to recovery. This notice requirement acts as a protection against unlimited and unascertainable contingent liabilities.
State ex rel. W.M. Carroll & Co. v. K.L. House Constr. Co.
, 1982-NMSC-150, 99 N.M. 186, 656 P.2d 236.
Notice within 90 days from final performance.
— Under express language of this section, identical with that of the Miller Act, the supplier who has no direct contractual relation with the general contractor is given a right of action against the bond only upon compliance with the condition precedent to suit " 'upon giving written notice to said contractor' within ninety days from the date of final performance."
State ex rel. Komac Paint & Wallpaper Store v. McBride
, 1964-NMSC-108, 74 N.M. 233, 392 P.2d 577.
Notice "for which such claim is made".
— The statute requires written notice of claim within 90 days of the date the last item of material "for which such claim is made" was delivered by the supplier to the subcontractor.
State ex rel. State Elec. Supply Co. v. McBride
, 1968-NMSC-146, 79 N.M. 467, 444 P.2d 978.
Substantial compliance with notice required.
— The supplier's right of action to recover on the general contractor's bond comes into being only upon substantial compliance with the notice required by the legislature.
State ex rel. Komac Paint & Wallpaper Store v. McBride
, 1964-NMSC-108, 74 N.M. 233, 392 P.2d 577.
Notice substantially complied with statutory requirements.
— Where the supplier of materials for a municipal construction project last supplied material for the project on May 3, 2007; the supplier mailed notices of claim on May 22, 2007 by certified mail to each of the contractor's addresses as reported by the contractor to the New Mexico public regulation commission, as shown by the commission's on-line records; the contractor actually received notice; the amount claimed for material did not include amounts for tools or equipment; and the notice stated that the amounts due were substantially accurate, the supplier substantially complied with the notice requirements of Section 13-4-19 NMSA 1978.
State ex rel. Solsbury Hill, LLC v. Liberty Mut. Ins. Co.
, 2012-NMCA-032, 273 P.3d 1, cert. granted, 2012-NMCERT-003.
Timeliness of notice.
— Supplying an item not called for by plans and specifications or demanded by a change or other authorization or installed as a part of the construction did not provide a basis for determining the last day on which materials were supplied.
Crane O'Fallon Co. v. Via
, 1952-NMSC-101, 56 N.M. 772, 251 P.2d 260.
Timeliness of notice to obligee.
— Where the supplier of material for a municipal construction project filed suit against the surety of the payment bond for the project in September 2007; the supplier mailed notice of its claim on the bond to the municipality in July 2009; and the district court entered a judgment in October 2007, the municipality was not prejudiced, because the judgment had not been entered before the municipality received notice.
State ex rel. Solsbury Hill, LLC v. Liberty Mut. Ins. Co.
, 2012-NMCA-032, 273 P.3d 1, cert. granted, 2012-NMCERT-003.
Early notice deemed timely.
— A supplier may give adequate notice to a contractor prior to the expiration of the 90-day time limit of Subsection A and may give notice and file suit for nonpayment prior to delivery of the last items to the contractor.
State ex rel. Goodmans Office Furnishings, Inc. v. Page & Wirtz Constr. Co.
, 1984-NMSC-103, 102 N.M. 22, 690 P.2d 1016.
Sufficiency of notice.
— Acknowledgment of receipt of claim of subcontractor for materials and supplies, under contractor's bond, by state highway department was insufficient notice to surety of such claim.
Silver v. Fidelity & Deposit Co.
, 1935-NMSC-098, 40 N.M. 33, 53 P.2d 459.
IV. AMOUNTS RECOVERABLE.
Damages recoverable.
— The Little Miller Act clearly and unequivocally limits recovery against a surety to all just claims for labor performed, and materials and supplies furnished; nothing is said about recovery for loss of profits or "delay damages," and the court would decline to extend the meaning and purpose of the statute any further than the clear language would take it.
Herzog Contracting Corp. v. A & S Constr. Co.
, 1988-NMSC-022, 107 N.M. 6, 751 P.2d 690.
Reasonable attorney's fees should be included
in a suit on the bond where the written terms of the contract sued upon expressly provided for the allowance of attorney's fees.
State ex rel. Nichols v. Safeco Ins. Co. of Am.
, 1983-NMCA-112, 100 N.M. 440, 671 P.2d 1151.
Prejudgment interest.
— Where the open account credit agreement between the supplier of materials and a subcontractor on a municipal construction project provided for interest at 18% per year, prejudgment interest was awardable as a sum justly due under Section 13-4-19 NMSA 1978 at the rate of 18% per year against the surety on the payment bond for the project.
State ex rel. Solsbury Hill, LLC v. Liberty Mut. Ins. Co.
, 2012-NMCA-032, 273 P.3d 1, cert. granted, 2012-NMCERT-003.
Subcontractor who held a judgment against contractor for debt owed under contract could sue contractor's surety for all contract liability under the bond, including amounts representing prejudgment interest, those amounts being "justly due" from contractor.
State ex rel. Bob Davis Masonry, Inc. v. Safeco Ins. Co. of Am.
, 1994-NMSC-106, 118 N.M. 558, 883 P.2d 144.
Post-judgment interest.
— Where the open account credit agreement between the supplier of materials and a subcontractor on a municipal construction project provided for interest at 18% per year, post-judgment interest was awardable as a sum justly due under Section 13-4-19 NMSA 1978 at the rate of 18% per year against the surety on the payment bond for the project.
State ex rel. Solsbury Hill, LLC v. Liberty Mut. Ins. Co.
, 2012-NMCA-032, 273 P.3d 1, cert. granted, 2012-NMCERT-003.
Law reviews.
— For comment, "The Miller Act in New Mexico - Materialman's Right to Recover on Prime's Surety Bond in Public Works Contracts - Notice as Condition Precedent to Action," see 9 Nat. Resources J. 295 (1969).
Am. Jur. 2d, A.L.R. and C.J.S. references. —
17 Am. Jur. 2d Contractors' Bonds §§ 186 to 233.
False receipts or the like as estopping materialmen or laborers from recovering on public work bond, 39 A.L.R.2d 1104.
Relative rights, as between surety on public work contractor's bond and unpaid laborers or materialmen, in percentage retained by obligee, 61 A.L.R.2d 899.
Labor or material furnished subcontractor for public work or improvements as within coverage of bond of principal contractor, 92 A.L.R.2d 1250.
State or local government's liability to subcontractors, laborers, or materialmen for failure to require general contractor to post bond, 54 A.L.R.5th 649.
Sufficiency of notice to public works contractor on United States project under Miller Act (40 USCS § 270b(a)), 98 A.L.R. Fed. 778.
63 C.J.S. Municipal Corporations § 1062; 72 Supp. Public Contracts §§ 44, 46 to 50; 78 C.J.S. Schools and School Districts § 420 et seq.; 81A C.J.S. States §§ 186 to 193.