Court Opinion

ID: 2994759
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:16:29.440773+00
Date Added: 2024-06-11T11:45:22.201501
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 00-2112

United States for the use and benefit
of S&G Excavating, Inc.,

Plaintiff-Appellant,

v.

The Seaboard Surety Company, et al.,

Defendants-Appellees.

Appeal from the United States District Court
for the Southern District of Indiana, Terre Haute Division.
No. TH 97-276-C-T/F--John Daniel Tinder, Judge.

Argued November 3, 2000--Decided January 10, 2001

  Before Flaum, Chief Judge, and Easterbrook and
Williams, Circuit Judges.

  Easterbrook, Circuit Judge. An unpaid
subcontractor on a federal project can obtain
compensation from a bond posted under the Miller
Act. A subcontractor hired by the general
contractor may proceed directly against the
general contractor’s bond. A sub-subcontractor--
that is, a firm hired by a subcontractor, and not
dealing directly with the general contractor--
must first notify the general contractor of its
situation. A sub-subcontractor

shall have a right of action upon the said
payment bond upon giving written notice to said
contractor within ninety days from the date on
which such person did or performed the last of
the labor or furnished or supplied the last of
the material for which such claim is made,
stating with substantial accuracy the amount
claimed and the name of the party to whom the
material was furnished or supplied or for whom
the labor was done or performed.

40 U.S.C. sec.270b(a). This statute sets up three
conditions to payment from the bond: (1) notice
must be given within 90 days of the sub-
subcontractor’s last work; (2) the notice must
"stat[e] with substantial accuracy the amount
claimed"; and (3) the notice must include "the
name of the party to whom the material was
furnished or supplied or for whom the labor was
done or performed." Our case presents the
question whether a sub-subcontractor must meet a
fourth requirement: that the notice include an
explicit demand for payment. We hold that it need
not; compliance with the Miller Act’s express
requirements suffices.

  S&G Excavating furnished materials and labor for
the construction of a new facility for the Postal
Service in Terre Haute, Indiana. Austin
Corporation was the general contractor and
engaged Seaboard Surety to supply the required
bond. Austin hired EUI Corporation to build the
project’s concrete foundation; EUI in turn
selected S&G Excavating to do part of the
foundation work, making S&G a sub-subcontractor
on the project. S&G finished its work on April 2,
1997, and sent EUI a bill for about $73,000. When
EUI did not pay, S&G filed a notice of mechanic’s
lien in the Office of the Recorder of Vigo
County, Indiana, and on May 6, 1997, mailed
Austin a notice of this fact. The envelope
contained two documents: a copy of the "Notice of
Intention to Hold Mechanic’s Lien" that had been
filed with Vigo County, and an itemized bill
revealing exactly what work had been done, what
compensation was sought, and the identity of the
firm that had hired S&G. This notice satisfied
all three requirements of sec.270b(a): It arrived
within 90 days, it stated the amount claimed
($72,526.40), and it stated the name of the party
(EUI) on whose behalf the work had been done.
What it did not do was demand explicitly that
Austin pay in EUI’s stead. S&G did not take that
additional step until a few days after the 90-day
window closed. According to the district court,
this was a fatal blunder. Five courts of appeals
have held that the notice must inform the general
contractor, either expressly or by implication,
that the sub-subcontractor wants the general
contractor to pay the bill. See United States ex
rel. Water Works Supply Corp. v. George Hyman
Construction Co., 131 F.3d 28, 32-33 (1st Cir.
1997); Maccaferri Gabions, Inc. v. Dynateria
Inc., 91 F.3d 1431, 1437 (11th Cir. 1996); United
States ex rel. Blue Circle West, Inc. v. Tucson
Mechanical Contracting Inc., 921 F.2d 911, 914-15
(9th Cir. 1990); United States ex rel. Jinks
Lumber Co. v. Federal Insurance Co., 452 F.2d
485, 487-88 (5th Cir. 1971); United States ex
rel. Charles R. Joyce & Son, Inc. v. F.A.
Baehner, Inc., 326 F.2d 556, 558 (2nd Cir. 1964).
The district judge recognized that one circuit
has held otherwise, see McWaters & Bartlett v.
United States ex rel. Wilson, 272 F.2d 291, 295
(10th Cir. 1959), but declined to follow that
decision. The judge then dismissed S&G’s effort
to collect from the retainage held by the Postal
Service, see 93 F. Supp. 2d 968 (S.D. Ind. 2000),
a final decision that sent S&G away empty handed.

  We think that McWaters & Bartlett got this
right. The district court criticized the tenth
circuit for the brevity of its explanation, but
it does not take much space to say that if a
statute sets out three conditions to payment,
then a notice meeting all three is sufficient.
Judges are not authorized to add requirements of
their own devising. It is not as if the Miller
Act were internally contradictory, or had a
logical gap that cried out to be filled, or would
produce absurd results if enforced as written.
Application of the unelaborated text is perfectly
sensible. Indeed, the circuits that require an
express or implied demand for payment essentially
concede as much. When would a notice, delivered
to the general contractor, stating the amount
claimed and the identity of the subcontractor,
not be an "implied" demand for payment? How else
would a general contractor, familiar with the
Miller Act’s rules, read such documents? S&G’s
papers alerted Austin to a problem between EUI
and S&G, implied the need for Austin to hold back
funds to resolve this dispute, and thus fulfilled
every function plausibly imputed to sec.270b(a).
Sooner or later, Austin was going to have to do
something to clear the lien, so that it could
deliver an unencumbered building to the Postal
Service. (Usually federal projects are not
subject to liens, but Congress has waived
sovereign immunity for the Postal Service, see
Loeffler v. Frank, 486 U.S. 549 (1988); Franchise
Tax Board v. USPS, 467 U.S. 512 (1984), a step
that likely renders S&G’s lien effective, see
Department of the Army v. Blue Fox, Inc., 525
U.S. 255, 265 (1999)--though this is not an issue
we need resolve.) A general contractor has to
recognize that a sub-subcontractor’s notice of
lien implies a demand to be paid. If this is all
these circuits require of an "express or implied"
demand for payment, then they have added nothing
important but have complicated litigation. But
if, as the district court thought, they require
something close to the "express" side of the
"express or implied" continuum, then they have
rewritten rather than interpreted the Miller Act.

  The only support we can imagine for requiring
the sub-subcontractor to demand that the general
contractor itself settle the account would be a
belief that this is implicit in the idea of
"notice": the sub-subcontractor is supposed to be
sending the general contractor a message that it
wants payment. Yet this would be an uncommon
reading of "notice": a notice of appeal, for
example, need not contain an express (or even an
implied) demand for reversal, which comes later
in the brief; a notice of a club’s meeting need
not contain a demand for attendance. Usually
notices provide information; a demand to act in
a particular way is not part of the ordinary
meaning of "notice." A statute requiring more
would call for a "claim" (as, for example, the
Federal Tort Claims Act does, see 28 U.S.C.
sec.2672). The word "claim" appears in
sec.270b(a) only in reference to the amount the
sub-subcontractor believes that the subcontractor
owes. The general contractor needs to know this
sum, and under sec.270b(a) must be notified of
it; more would be otiose.

  Some statutes implicitly invite the judiciary to
add implementing details. But notice rules
usually are applied mechanically, so that people
who read the statute are not tripped up, and so
that litigation does not become bogged down in
preliminary issues. See United States v. Locke,
471 U.S. 84 (1985). Adding requirements to the
Miller Act would be particularly inappropriate,
for the Supreme Court has characterized it as
"remedial legislation" that should be read
charitably to subcontractors. Fleisher
Engineering & Construction Co. v. United States
ex rel. Hallenbeck, 311 U.S. 15, 17 (1940). The
"remedial" tag does not justify dispensing with
requirements stated in the statute or otherwise
altering its rules, Director, OWCP v. Newport
News Shipbuilding & Dry Dock Co., 514 U.S. 122,
135-36 (1995), but it precludes adding to the
burdens of one who relies on it. The Miller Act
specifies means as well as ends; a court should
not use its view of the best way to achieve the
legislative ends to override the legislature’s
specification of means. S&G Excavating could have
saved itself a lot of trouble and expense by
sending Austin a cover letter making clear what
the notice and the bill implied, but it did
enough to satisfy its obligations under
sec.270b(a).

  Our resolution of S&G’s Miller Act claim makes
it unnecessary to decide whether, and if so under
what circumstances, the Postal Service could be
required to pay a sub-subcontractor out of
retainage. S&G is entitled to compensation from
the bond--if it is entitled to compensation at
all. The parties dispute whether S&G’s work was
satisfactory, and on remand the district court
must resolve that disagreement and any other
lingering matters.

Reversed and Remanded