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Little Miller, Big Implications

6/20/18

By: Samantha Skolnick
In Georgia, when an individual performs work on a state construction project, they can file a lien for non-payment.  The lien is against the project through Georgia’s Little Miller Act. The claim itself is not against the state or county’s actual property. The claim is against a posted bond, and is a “Bond Claim” or “Little Miller Act Claim.”
In a recent decision by the Eleventh Circuit, the Court affirmed summary judgment for the surety based on Georgia’s one-year statute of limitations for little miller act claims. Strickland v. Arch Ins. Co., No. 17-10610, 2018 WL 327443 (11th Cir. Jan. 9, 2018) (rehearing denied Apr. 4, 2018).
Strickland was tasked with providing sand to a paving company (“Douglas”) for the Georgia Department of Transportation (“GDOT”) as they worked on a road improvement project (the “Project”).  Arch Insurance Company (“Arch”) was the surety who issued payment and performance bonds for Douglas.  In 2007, GDOT declared Douglas in default and they were removed from the Project.  The surety brought in another company to complete the work on the Project. Strickland did not supply any sand after Douglas was removed from the Project.
GDOT determined that the Project was substantially complete in August of 2010 and in September 2010 made its punch list. The new contractor brought on by the surety finished the punch list in September 2011.  In March 2012, GDOT accepted Project maintenance responsibilities and made semi-final payment to Arch in July 2012.
In September 2012, Strickland directed a demand for payment on Arch’s payment bond.  Arch acknowledged the claim but requested additional documentation, which was not provided by Strickland.  In 2014, Strickland filed a lawsuit against Arch. The trial court concluded that there was no dispute that the project was completed and accepted in September 2011.  With that ruling, Georgia’s one-year statute of limitations on payment bond claims barred Strickland’s action and consequently Strickland appealed.
The Appellate Court rejected Strickland’s arguments, holding that “completion” and “acceptance” used in the statute relate to the actual work on the project and are not dependent on the ending of future contractual duties or on the public owner’s internal policies and procedures.
The main takeaway: under Georgia law, the date a public owner states that the project is “completed” or “accepted” does not dictate whether the statute of limitation is running.  Georgia’s one-year statute of limitations under Georgia’s Little Miller Act begins when the actual work is substantially completed. Punch list items do not need to be finished.
If you have any questions, please contact Samantha Skolnick at sskolnick@fmglaw.com.