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By: Jake Carroll
In U.S.A. f/u/b/o RMP Capital Corp. v. Turner Construction Co., et al., 2017 WL 244066 (11th Cir. 2017) (unpublished), the Court of Appeals for the Eleventh Circuit clarified a previously undecided area of law in holding that general contractors and its insurer sureties may recoup attorney’s fees under the Miller Act.
In the underlying case, Turner, the general contractor, contracted with the Department of Veterans Affairs to construct a portion of the Community Living Center in Orlando, Florida. Pursuant to the Miller Act, Turner obtained a payment bond from several sureties. Inevitably, a dispute arose between Turner and a subcontractor regarding allegedly deficient work, and Turner did not pay the subcontractor the full contract amount. The subcontractor later assigned its accounts receivable to RMP, who brought suit against Turner and its sureties under the Miller Act. RMP determined on the first day of trial that it would drop its Miller Act claims, which prompted Turner and the sureties to move for attorney’s fees, based on the subcontractor’s contract. The district court denied the motion, finding that while Eleventh Circuit precedent supports an award for attorney’s fees for subcontractors, it does not afford the same to general contractors. Turner and the sureties appealed.
The circuit court reversed the district court, and clarified that while the Miller Act does not mention attorney’s fees, Eleventh Circuit precedent dictates that “attorney’s fees are a recoverable item under [a] Miller Act bond” when provided for in a contract. This includes attorney’s fees for both subcontractors and general contractors. The holding brings the Eleventh Circuit in line with several other circuits, including the 1st, 4th, 5th, 8th and 9th. In making its determination, the court relied on the American Rule, which states that each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise. Of course, while federal law may govern the availability of attorney’s fees in Miller Act cases, state law governs the interpretation of a contract provision allowing for attorneys’ fees. See U.S. ex rel. W.W. Gay Mech. Contractor, Inc. v. Walbridge Aldinger Co., 543 Fed. App’x. 937 (11th Cir. Nov. 1, 2013).
The opinion reminds every construction professional and attorney for both subcontractors and general contractors to: (1) practice careful contract drafting; and (2) always read the contract before seeking legal action. Courts have repeatedly upheld contractual provisions, and parties should be well-aware of the terms of the agreement not only during the project, but also when pursuing legal action. For RMP, the cost of this litigation is not limited to the $240,000.00 that went unpaid by Turner, but may also include an additional $47,580.91 in attorney’s fees for bringing suit in the first place.
For any questions, please contact Jake Carroll at [email protected].