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July 01, 2019 CONSTRUCTION LAW 101

What is the “Last” “Work,” “Labor,” and “Materials” that Triggers Bond and Lien Filing Deadlines?

Samuel D. Gregory

The federal Miller Act, most state “Little Miller Acts,” and  state lien statutes contain filing deadlines based upon when labor or materials were last provided.  The duration of filing deadlines may vary, but they are typically clearly stated in the controlling statute.  However, what constitutes the last provision of work, labor, or materials for purposes of triggering or extending a deadline is typically a matter of case law and is often  far from clear.  The answer can vary significantly by jurisdiction and can even vary within a state depending upon whether a bond or lien is at issue.  This article summarizes the general approaches courts have taken to determine when labor or materials were last supplied and provides some practice pointers to consider the next time you encounter a bond or lien timeliness issue.

I. Analyzing When Labor or Materials Were Last Provided.

The majority of courts generally agree that warranty or repair work, completion of trivial punch-list items, and the gratuitous provision of labor or materials cannot extend the deadline to file a bond or lien claim.  However, as discussed below, courts differ on how these concepts are applied, if they are recognized at all. 

A. Warranty or repair work typically cannot extend deadlines.

 “[A]s a general rule, repairs do not toll the notice period in Miller Act cases.”  S. Steel Co. v. United Pac. Ins. Co., 935 F.2d 1201, 1204 (11th Cir. 1991).  Indeed, “every Court of Appeals that has considered the issue” has concluded that “corrections or repairs of already-completed work do not reset the clock to begin anew.”  U.S. ex rel. Automatic Elevator Co. v. Lori Constr., 912 F. Supp. 398, 400 (N.D. Ill. 1996) (citing cases from the Fourth, Fifth, Eighth, Ninth, Tenth, and Eleventh Circuits).  This rule “is grounded in the logic that the industry practice of providing long warranty periods would frustrate the purpose of granting repose if a party could bring a suit years after the main work on project had been completed so long as they had provided some minor repair.”  U.S. ex rel. Allied Assocs. Commercial Floors Inc. v. Farr Builders Inc., No. SA-13-CV-0897, 2014 WL 280396, at *3 (W.D. Tex. Jan. 23, 2014).   

While repair or warranty work typically will not extend the deadline to file a lien or bond claim, “each case must be judged on its own facts, and sweeping rules about ‘repairs’ offer little help in the necessary analysis.”  S. Steel Co., 935 F.2d at 1204 (ellipses and quotations omitted).   Factors courts may consider “include the value of the materials, the original contract specifications, the unexpected nature of the work, and the importance of the materials to the operation of the system in which they are used.”   Id. at 1204-05. 

The Fifth Circuit has a pair of cases that provide a good illustration of when “repairs” are sufficient to extend filing deadlines and when they are not.  In Trinity Universal Ins. Co. v. Girdner, the Fifth Circuit held that the Miller Act’s “‘last labor or materials’ language is broad enough to include work performed upon the demand of the government to correct defects in the work.” 379 F.2d 317, 318 (5th Cir. 1967).  Significantly, the government inspector in that case “refused to approve the original work” until the corrections were made.  Id.  The Fifth Circuit later distinguished Trinity on this ground, holding that it did not apply to situations where “labor is supplied or material furnished to correct defects after the work has been completed.”  Gen. Ins. Co. of Am. v. U.S. for Use of Audley Moore & Son, 409 F.2d 1326, 1327 (5th Cir. 1969) (emphasis added). 

This rule is still followed in Miller Act cases, see, e.g., U.S. for Use & Benefit of T.L. Wallace Constr., Inc. v. Fireman's Fund Ins. Co., 790 F. Supp. 680, 684 (S.D. Miss. 1992), and multiple states have adopted similar approaches under their lien statutes.   See Sam Rodgers Props., Inc. v. Chmura, 61 So. 3d 432, 438 (Fla. Dist. Ct. App. 2011) (“[R]emedial work such as warranty work, corrective work, repair work, or work that is incidental and not necessary to a completed contract does not extend the time for filing a claim of lien.”); In re T. Brady Mech. Servs. Inc., 133 B.R. 441, 447 (Bankr. N.D. Ill. 1991) (repair of sensor and damper motor that “operated correctly for about 6 months” before malfunctioning was “warranty repair work that does not extend the time to file a lien”).   

A handful of states, however, have taken a far more expansive approach.  For instance, the lien claimant in Crystal Pools, Inc. v. Old Claussen's Bakery Partners, re-stretched carpeting months after it was initially installed at no additional charge to the owner.  399 S.E.2d 5, 5 (S.C. Ct. App. 1990).  The court concluded that “[t]his warranty work constitutes the furnishing of ‘labor or materials’ under [South Carolina’s lien statutes]”; therefore, the lien was timely.  Id. at 6.  Similarly, a subcontractor in Land Holdings I, LLC v. GSI Servs., LLC, repaired a surveillance and access control system pursuant to a contractual five-year warranty months after the system was installed and operational and months after final payment was made to the general contractor. 265 So. 3d 147, 148-49 (Miss. 2019), reh'g denied (Mar. 7, 2019).  Declining to follow Miller Act precedent, the Mississippi Supreme Court concluded that the warranty work was “required under the contract,” and therefore constituted “last work performed, labor, services or materials provided” within the meaning of Mississippi’s lien statutes.  Id. at 150-51.  

B. Trivial punch-list work typically will not extend deadlines. 

Another trend recognized under Miller Act precedent and many state lien statutes is that completion of minor punch-list type items will not extend deadlines for bond or lien claims.  While this general rule is easy to state, its application can be far more difficult. 

A number of courts look to whether the project was substantially complete or operational.  For example, the court in T.L. Wallace Construction, held that “Plaintiff’s punch list work did not extend the one-year statute of limitations period” to file a Miller Act claim when the project was already “substantially complete” and “operational” and the punch-list items were “of a minor nature” and did “not prohibit the project from serving its intended purpose.”  790 F. Supp. at 684-85.  See also Mitchell v. Flandro, 506 P.2d 455, 458-59 (Idaho 1972).  Applying a similar test, but reaching a different yet consistent result, the Illinois Court of Appeals held that the installation of additional ventilation pipes extended the lien deadline because it required significant rework without which the property could not serve its intended function as a restaurant.  DuPage Bank & Trust Co. v. DuPage Bank & Trust Co. as Trustee under Trust Agreement Dated Feb. 15, 1978 & Known as Trust No. 2195, 462 N.E.2d 25, 29 (Ill. Ct. App. 1984). 

Other courts have considered the value or amount of work completed compared to the overall project in assessing its triviality.  See Interiors Contracting, Inc. v. Smith, Halander & Smith Assocs., 827 P.2d 963, 967 (Utah Ct. App. 1992) (“The dollar value of the work performed after May 11 was de minimis when compared to the total contract price of $95,500.00.”); Carlisle v. Cox, 506 P.2d 60, 62 (Utah 1973) (value of one heat register that “represented .0011385 per cent of the value of the subcontract” was insubstantial and could not extend deadline for filing lien).  But, again, courts can reach different results depending upon the unique facts of each case. See Kraus-Anderson Constr. Co. v. Superior Vista LLC, No. A09-1530, 2010 WL 2650481, at *7 (Minn. Ct. App. July 6, 2010) (“Minnesota courts have held that when contractors perform substantial amounts of punch-list work or finishing work, that work extends the lien filing date for a project.”) (citing illustrative cases); Wooldridge Constr. Co. v. First Nat’l Bank of Ariz., 634 P.2d 13, 18 (Ariz. Ct. App. 1981) (performing 90 hours of work at the direction of the owner was not “so ‘trifling as to not justify postponing the time limitation for filing liens' ”). 

Another “test is whether the imperfections in the performance of the work are so trivial in character as to permit the contractor to recover for substantial performance, i.e., may it be said that if the work had not been done, that the omission to do it would have enabled the landowner to defend successfully a suit for payment on the ground that the contract had not been fully performed.”  Carlisle, 506 P.2d at 62.  This test is designed to prevent would-be claimants from taking inconsistent positions when it comes to claiming entitlement to final payment and entitlement to file a lien.  Interiors Contracting, 827 P.2d at 967.  Thus, applications for payment can be persuasive evidence that the job was already complete and that any subsequent work “was in the nature of maintenance of a completed job rather than the completion of the contract itself.”  Miller Bros. Indus. Sheet Metal Corp. v. LaSalle Nat’l Bank, 255 N.E.2d 755, 759 (Ill. Ct. App. 1969).

Still other courts hold that the trivialness of work is not part of the equation at all.  For instance, the South Carolina Supreme Court has held that if “trivial services or materials are provided at the request of the owner, rather than at the initiative of the contractor for the purpose of saving a lien, the furnishing of such work or material will extend the commencement of the period for filing a certificate of mechanic’s lien.”  Butler Contracting, Inc. v. Court St., LLC, 631 S.E.2d 252, 257-58 (S.C. 2006).  And while the Georgia Supreme Court has not formally taken a stance on the issue, at least one justice agreed that whether work extends the deadline to file a lien should “not depend on what percentage of the overall job that task equated.”  Troup Enters. v. Mitchell, Carrington & Rayfield, Inc., 404 S.E.2d 337, 341 (Ga. Ct. App. 1991) (J. Andrews, concurring).

C. Gratuitous provision of labor or materials will not extend filing deadlines.

It is universally accepted that the gratuitous provision of labor or materials cannot extend filing deadlines.  Despite this consensus, courts again differ on its application.  The majority of courts have rejected the argument “that any work performed in furtherance of a contract extends the limitations period for filing suit.” T.L. Wallace Constr., 790 F. Supp. at 684 (citation omitted).  Instead, as discussed above, most courts hold that warranty and repair work and the completion of trivial punch-list items are insufficient to extend lien and bond filing deadlines, even if required under the applicable contract. 

In contrast, a handful of states hold that the provision of any labor or materials required under a contract is not gratuitous and, therefore, extends filing deadlines.  For instance, the Mississippi Supreme Court recently held that the performance of warranty work and the offsite preparation of as-built drawings (done at the insistence of the general contractor, not the owner) extended the subcontractor’s deadline to file a file a lien because the work was “required under the contract.”  Land Holdings, 265 So. 3d at 148, n.1, & 150-51.  Similarly, in Butler Contracting, the South Carolina Supreme Court held that dropping off surplus ceiling tiles at a jobsite after the subcontractor’s work was completed was sufficient to extend the lien deadline even though the contractor was not contractually obligated to do so. 631 S.E.2d at 258.  The court reasoned that “the parties implicitly considered the provision of such materials necessary to comply with the contract and fulfill the duty of good faith and fair dealing which is an implied term of every contract.”  Id.

Other jurisdictions that have recently considered the issue have declined to affirmatively hold that any and all work performed pursuant to a contract will extend filing deadlines.  See Fraser Eng'g Co., Inc. v. IPS-Integrated Project Servs., LLC, No. 17-CV-102-JD, 2018 WL 1525725, at *5 (D.N.H. Mar. 27, 2018) (refusing “to hold as a matter of law that work done pursuant to a contract necessarily extends a mechanics lien,” but finding that performing 1,199 hours of work expressly required by contract was not “so de minimis that it did not extend [the lien filing deadline]”) (underlining in original). 

II. Practice Pointers

A. Identify the specific statutory requirements.

When faced with a potential timeliness issue for a bond or lien claim, the first step is to examine the specific statutory language that applies.  This article covers bond and lien statutes that contain deadlines based upon the last provision of labor or materials.  But statutory deadlines can vary significantly by state and can be triggered by a number of things, such as the issuance of a certificate of occupancy.  See, e.g., Del. Code Ann. tit. 25, § 2711(a)(2)(f).  While a certificate of occupancy may be determinative in Delaware, it may have little bearing in a state whose deadlines are based on when labor or materials are last provided.  See Franklin Bldg. Supply Co. v. Sumpter, 87 P.3d 955, 961 (Idaho 2004) (“The issuance of the certificate of occupancy dated November 25, 1998, should not be the ‘trigger’ for the filing period to begin to run. We reiterate that the lien limitation begins to run from the last item of the contract….”). 

B. Determine whether there is binding case law directly on point.

The next step is to determine if there is binding law directly on point.  Do not take for granted that similar deadlines in lien and bond statutes will be interpreted consistently.  For instance, Mississippi, like many other states, interprets its Little Miller Act consistent with the federal Miller Act. See Key Constructors, Inc. v. H & M Gas Co., 537 So. 2d 1318, 1321 (Miss. 1989); see also S. Steel Co., 935 F.2d at 1205 (interpreting Georgia’s Little Miller Act consistent with the Miller Act).  But unlike other states, Mississippi does not interpret similarly-worded deadlines in Mississippi’s lien statutes in accordance with Miller Act precedent.  Compare Land Holdings, 265 So. 3d at 149 (refusing to consider Miller Act precedent because it involves “bonds, not liens”), with Otis Elevator Co. v. Employers Ins. of Wausau, 526 So. 2d 727, 728 (Fla. Dist. Ct. App. 1988) (citing cases interpreting Florida’s lien statutes, Fla. Stat. Ann. § 713.08, when interpreting analogous deadlines under Florida’s Little Miller Act, Fla. Stat. Ann. § 713.23(1)(e)).

Additionally, even if your jurisdiction has interpreted the specific lien or bond statute you are proceeding under, look carefully at whether your client’s unique position may remove it from the general rule.  Assume, for example, that your client is in a jurisdiction that looks to the substantial completion date when analyzing the timeliness of liens.  Some courts have held that “[s]trict materialmen . . .  differ from builders and lien claimants who furnish only labor or labor and materials when analyzing ‘substantial completion of the contract.’”  Franklin Bldg. Supply, 87 P.3d at 959-60.  This is because contractors and subcontractors are generally on the job site and are therefore in a position to have knowledge of the project’s status.  Id. at 960.  In contrast, a material supplier with an open account does not complete its contract until the last item is delivered.  Id.  Thus, the delivery of an item of “minimal” value used to complete a punch list item after a certificate of occupancy was issued was held to reset the deadline for filing a lien.  Id. at 960-61. 

C. If in doubt, file by the earliest possible deadline.

Given the widely varying interpretation of similar statutory deadlines and the fact-specific nature of any analysis, practitioners have wide latitude to advocate for their client’s position (whether that be for or against a bond or lien claim).  Since the deadline for filing a lien or bond claim can be far from clear, the prudent course is to file a lien or bond claim based upon the earliest possible date.  See Hunzinger Constr. Corp. v. Quarles & Brady Gen. P’ship, 735 So. 2d 589, 595 (Fla. Dist. Ct. App. 1999) (holding that a construction law expert’s testimony “that a reasonably competent attorney would have filed the claim of lien within ninety days of the issuance of the certificate of occupancy, even with the existence of punch list items to be corrected,” was sufficient to survive a directed verdict on a legal malpractice claim for failing to timely file a lien).  Of course, care should be taken to avoid filing a false or improper lien, which could lead to having the lien declared void or, worse, having penalties imposed.  

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Samuel D. Gregory

Baker Donelson, Bearman, Caldwell & Berkowitz, PC, Jackson, MS, Division 9 (Subcontractors & Supplies), YLD