Air Control Technologies, Inc. v. Pre Con Industries, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES FOR THE USE AND No. 11-56230
BENEFIT OF AIR CONTROL
TECHNOLOGIES, INC.; AIR CONTROL D.C. No.
TECHNOLOGIES, INC., a California 2:11-cv-02281-
corporation, PA-SS
Plaintiffs-Appellants,

v. OPINION

PRE CON INDUSTRIES, INC., a
California corporation; FIRST
NATIONAL INSURANCE COMPANY OF
AMERICA , a Washington
corporation,
Defendants-Appellees.

Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding

Argued and Submitted
April 12, 2013—Pasadena, California

Filed June 28, 2013
2 AIR CONTROL TECH . V . PRE CON INDUS.

Before: Milan D. Smith, Jr. and Mary H. Murguia, Circuit
Judges, and Jack Zouhary, District Judge.*

Opinion by Judge Murguia

SUMMARY**

Miller Act

The panel vacated the district court’s order dismissing as
time-barred a subcontractor’s complaint alleging federal
question jurisdiction over a claim under the Miller Act, which
requires that a general contractor on a federal construction
project furnish a payment bond for the protection of all
persons supplying labor and material on the project.

Overruling United States ex rel. Celanese Coatings Co. v.
Gullard, 504 F.2d 466 (9th Cir. 1974), as clearly
irreconcilable with intervening higher authority, the panel
held that the Miller Act’s statute of limitations is a claim-
processing rule, not a jurisdictional requirement.

The panel held that because nothing on the face of the
complaint indicates the subcontractor did not work on the
project or rent equipment to the general contractor within one
year of the date the complaint was filed, the complaint could

*
The Honorable Jack Zouhary, District Judge for the U.S. District Court
for the Northern District of Ohio, sitting by designation.

**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 AIR CONTROL TECH . V . PRE CON INDUS. 3

not have been dismissed if the district court had treated the
Miller Act’s statute of limitations as a claim-processing rule.
The panel remanded for further proceedings.

COUNSEL

Francis Lanak and Colin McCarthy (argued), Lanak &
Hanna, P.C., Orange, California, for Plaintiffs-Appellants.

Scott Robert Baker, Law Offices of Scott R. Baker, Grover
Beach, California, for Defendants-Appellees.

OPINION

MURGUIA, Circuit Judge:

The Miller Act requires that a general contractor on a
federal construction project furnish a payment bond “for the
protection of all persons supplying labor and material” on the
project. 40 U.S.C. § 3131(b)(2). Any person who has
supplied labor or material on the project may bring a civil
action on the payment bond against the general contractor,
see 40 U.S.C.§ 3133(b)(1), but the action “must be brought
no later than one year after the day on which the last of the
labor was performed or material was supplied by the person
bringing the action,” 40 U.S.C. § 3133(b)(4).

Air Control Technologies brought this suit under the
Miller Act against Pre Con Industries and First National
Insurance Company of America. Relying on United States ex
rel. Celanese Coatings Co. v. Gullard, 504 F.2d 466 (9th Cir.
1974), where this court held that the Miller Act’s one-year
4 AIR CONTROL TECH . V . PRE CON INDUS.

statute of limitations is a jurisdictional requirement, the
district court dismissed Air Control Technologies’s complaint
for lack of subject matter jurisdiction. We overrule Celanese
Coatings because it is clearly irreconcilable with intervening
higher authority, vacate the district court’s dismissal of Air
Control Technologies’s complaint, and remand for further
proceedings.

I. Background1

Pre Con Industries (“PCI”) was the general contractor on
a construction project for the United States Veterans
Administration, and subcontracted Air Control Technologies
(“ACT”) to work on the project’s heating, ventilation, and air
conditioning (“HVAC”) systems. Pursuant to its obligations
under the Miller Act, PCI and its surety, First National
Insurance Company of America (“FNIC”), furnished a
payment bond for the project.

ACT began working on the project in December 2008,
and shortly thereafter encountered conditions on the job site
that made the work more expensive than anticipated. PCI
fired ACT in November 2009 when ACT demanded
reimbursement for its unanticipated costs. ACT then offered
to allow PCI to rent ACT’s equipment for use on the project,
and PCI accepted the offer.

On March 14, 2011, ACT filed a complaint against PCI
and FNIC in the Central District of California, alleging: (1)
PCI breached both the original HVAC-service contract and

1
At this stage in the litigation, we accept Air Control Technologies’s
version of the facts. N. Cnty. Cmty. Alliance, Inc. v. Salazar, 573 F.3d
738, 741–42 (9th Cir. 2009).
 AIR CONTROL TECH . V . PRE CON INDUS. 5

the equipment-rental contract; (2) PCI owed ACT money in
quantum meruit for the HVAC services; and (3) a claim for
recovery on the payment bond under the Miller Act. The
complaint alleged the district court had federal question
jurisdiction over the Miller Act claim and supplemental
jurisdiction over the state law claims.

Defendants filed a 12(b)(1) motion to dismiss ACT’s
complaint for lack of subject matter jurisdiction. An action
under the Miller Act “must be brought no later than one year
after the day on which the last of the labor was performed or
material was supplied by the person bringing the action,”
40 U.S.C. § 3133(b)(4), and in Celanese Coatings Co.,
504 F.2d at 468–69, this court held that the Miller Act’s
statute of limitations is a jurisdictional requirement. As is
proper with a factual attack in a 12(b)(1) motion, Defendants
submitted materials outside the pleadings that they claimed
demonstrated ACT’s complaint was untimely. See Safe Air
for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004).

The district court agreed, finding that ACT (1) performed
no labor on the federal project after November 2009, and (2)
failed to demonstrate that it supplied any materials pursuant
to the equipment-rental contract for use on the federal project
within one year of filing the complaint. See United States ex
rel. Pippin v. J.R. Youngdale Constr. Co., 923 F.2d 146,
149–50 (9th Cir. 1991). Citing Celanese Coatings, the
district court dismissed ACT’s complaint for lack of subject
matter jurisdiction. ACT timely appealed.
6 AIR CONTROL TECH . V . PRE CON INDUS.

II. Discussion

A. The Miller Act’s Statute of Limitations

There is an intra-circuit split as to the effect of a
plaintiff’s failure to meet the Miller Act’s one-year statute of
limitations. In 1963, this court held the Miller Act’s statute
of limitations was not a jurisdictional requirement, rejecting
the argument that “the prescribed period is a condition
precedent to recovery” under the Act. United States ex rel.
E.E. Black Ltd. v. Price-McNemar Constr. Co., 320 F.2d 663,
665–66 (9th Cir. 1963). Eleven years later, however, this
court held that the Miller Act’s statute of limitations is a
jurisdictional requirement, stating that because it is “an
integral part of the statute . . . [c]ompliance with the
limitation period is a condition precedent to maintaining an
action under” the Act. Celanese Coatings, 504 F.2d at 468.

Ordinarily, intra-circuit splits may only be resolved by an
en banc panel. Atonio v. Wards Cove Packing Co., Inc.,
810 F.2d 1477, 1478–79 (9th Cir. 1987) (en banc). But when
intervening higher authority has “undercut the theory or
reasoning underlying [] prior circuit precedent in such a way
that the cases are clearly irreconcilable,” Miller v. Gammie,
335 F.3d 889, 900 (9th Cir. 2003) (en banc), a three-judge
panel may overrule one line of cases in the split, see, e.g.,
Leeson v. Transamerica Disability Income Plan, 671 F.3d
969, 979 (9th Cir. 2012) (overruling Ninth Circuit cases
holding “participant status” was a jurisdictional limitation on
ERISA claims because those cases were “clearly
irreconcilable” with intervening higher authority). Celanese
Coatings is clearly irreconcilable with intervening Supreme
Court authority on jurisdictional requirements.
 AIR CONTROL TECH . V . PRE CON INDUS. 7

1. Intervening Higher Authority

In recent years, the Supreme Court has sought to “bring
some discipline” to use of the term “jurisdictional.”
Henderson ex rel. Henderson v. Shinseki, 131 S. Ct. 1197,
1202 (2011). As part of that effort, in Arbaugh v. Y&H
Corporation, 546 U.S. 500, 516 (2006), the Court adopted a
“readily administrable bright line” for distinguishing statutory
limitations that are jurisdictional from those that are, instead,
“claim-processing rules” that “seek to promote the orderly
progress of litigation by requiring that the parties take certain
procedural steps at certain specified times,” Henderson,
131 S. Ct. at 1203–04 (citations omitted). The Court’s bright
line is that, unless Congress has “‘clearly state[d]’” that the
statutory limitation is jurisdictional, “‘courts should treat the
restriction as nonjurisdictional in character.’” Sebelius v.
Auburn Reg’l Med. Ctr., 133 S. Ct. 817, 824 (2013) (quoting
Arbaugh, 546 U.S. at 515–16) (alterations in original).
Though Congress need not “incant magic words in order to
speak clearly,” there must be clear contextual evidence that
“Congress intended a particular provision to rank as
jurisdictional.” See id. (citations omitted).

In this recent wave of discipline, the Supreme Court has
repeatedly stated that filing deadlines are the “‘quintessential
claim-processing rules,’” Auburn Reg’l, 133 S. Ct. at 825
(citations omitted), and that this is true irrespective of how
“important” the rule is and irrespective of whether the rule is
phrased in “mandatory” language, Henderson, 131 S. Ct. at
1203; Arbaugh, 546 U.S. at 510 (2006) (“[T]ime
prescriptions, however emphatic, are not properly typed
‘jurisdictional’” (internal quotation marks omitted)). Thus,
the presumption against labeling statutory requirements
8 AIR CONTROL TECH . V . PRE CON INDUS.

“jurisdictional” is at its zenith in the case of filing deadlines
such as the Miller Act’s statute of limitations.

2. Clearly Irreconcilable

Celanese Coatings contains a one-sentence rationale for
holding that the Miller Act’s statute of limitations is a
jurisdictional requirement: it is “an integral part of the
statute.” 504 F.2d at 468. This rationale squarely conflicts
with the Supreme Court’s recent admonition that the
“importan[ce]” of a statutory requirement is not the proper
focus of a jurisdictional analysis. See Henderson, 131 S. Ct.
at 1203 (citation omitted). Moreover, Celanese Coatings
represents the sort of “drive-by jurisdictional ruling[]” the
Supreme Court has held should be accorded “no precedential
effect,” Arbaugh, 546 U.S. at 511 (citations omitted), because
it lacks a “close analysis” of the critical differences between
jurisdictional and non-jurisdictional limitations on causes of
action, Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237, 1244
(2010); see also Leeson, 671 F.3d at 975 (drive-by
jurisdictional rulings are those with a “cursory analysis”).

A proper analysis of the Miller Act’s statute of limitations
makes clear that it is a claim-processing rule, not a
jurisdictional requirement. As a statute of limitations,
§ 3133(b)(4) of the Miller Act is cloaked in a presumption of
non-jurisdictional status that may be stripped only if there is
an “exceptional” reason for doing so, Auburn Reg’l,
133 S. Ct. at 825 (citations omitted), and the relevant factors
all indicate there is nothing exceptional about § 3133(b)(4).
It is, instead, a “run-of-the mill statute of limitations.” See
Holland v. Florida, 130 S. Ct. 2549, 2561 (2010).
 AIR CONTROL TECH . V . PRE CON INDUS. 9

For one, § 3133(b)(4) “does not speak in jurisdictional
terms.” Auburn Reg’l, 133 S. Ct. at 824 (internal quotation
marks omitted). Neither the word “courts” nor “jurisdiction”
appears in the section, which implies that § 3133(b)(4) is “a
restriction on the rights of plaintiffs to bring suit, rather than
[] a limitation on the power of the federal courts to hear the
suit.” Payne v. Peninsula Sch. Dist., 653 F.3d 863, 869 (9th
Cir. 2011) (en banc).

Nor is § 3133(b)(4) located in a provision granting federal
courts jurisdiction over Miller Act claims. See Reed Elsevier,
130 S. Ct. at 1245–46. Federal courts have subject matter
jurisdiction over Miller Act claims pursuant to 28 U.S.C.
§ 1331, and § 1331 does not “condition[] its jurisdictional
grant” on whether the plaintiff files his claim within the one
year limitations period in § 3133(b)(4) of the Miller Act. See
id. at 1246.

There is also not a “century’s worth of precedent and
practice in American courts” holding that the Miller Act’s
statute of limitations is a jurisdictional requirement. See
Auburn Reg’l, 133 S. Ct. at 825 (internal quotation marks
omitted). Since Arbaugh, the Supreme Court has twice held,
despite the presumption against it, that a filing deadline was
jurisdictional, see Bowles v. Russell, 551 U.S. 205, 208
(2007) (notice of appeal); John R. Sand & Gravel v. United
States, 552 U.S. 130, 133 (2008) (statute of limitations for
suits filed in the Court of Federal Claims), but both decisions
hinged on the fact that the Supreme Court itself had long held
those deadlines were jurisdictional, Bowles, 551 U.S. at
210–12 (cases dating back to 1848); John R. Sand & Gravel,
552 U.S. at 134 (cases dating back to 1883); see also Reed
Elsevier, 130 S. Ct. at 1250–51 (Ginsburg, J., concurring)
(explaining Bowles and John R. Sand & Gravel in light of
10 AIR CONTROL TECH . V . PRE CON INDUS.

Arbaugh’s bright line rule). In contrast, the Supreme Court
has never held that the Miller Act’s statute of limitations is a
jurisdictional requirement, nor is there uniformity among the
circuit courts on the issue. See Highland Renovation Corp.
v. Highland Ins. Grp., 620 F. Supp. 2d 79, 81–82 (D.D.C.
2009) (compiling cases).

Lastly, the Miller Act “was intended to be highly
remedial,” and the Supreme Court has stated that courts must
construe the Miller Act’s provisions with this highly remedial
purpose in mind. Fleisher Eng’g & Constr. Co. v. United
States ex rel. Hallenbeck, 311 U.S. 15, 17–18 (1940). It is
unlikely Congress intended the Miller Act’s statute of
limitations to be a jurisdictional requirement given the Act’s
highly remedial purpose. See Henderson, 131 S. Ct. at
1202–05 (in analyzing a filing deadline for an appeal to the
Veteran’s Court, noting that, given “the solicitude of
Congress for veterans,” Congress would not have intended
the filing deadline at issue to be jurisdictional due to the
potentially “drastic” consequences of such a label).

Because Celanese Coatings is clearly irreconcilable with
intervening higher authority, we overrule it and hold the
Miller Act’s statute of limitations is a claim-processing rule,
not a jurisdictional requirement.

B. Remand

The question remains whether the district court could
have properly dismissed ACT’s complaint on a 12(b)(6)
motion had it treated the Miller Act’s statute of limitations as
a procedural requirement rather than a jurisdictional
requirement. Supermail Cargo, Inc. v. United States, 68 F.3d
1204, 1206 n.2 (9th Cir. 1995). A claim may be dismissed as
 AIR CONTROL TECH . V . PRE CON INDUS. 11

untimely pursuant to a 12(b)(6) motion “only when the
running of the statute [of limitations] is apparent on the face
of the complaint.” Von Saher v. Norton Simon Museum of
Art at Pasadena, 592 F.3d 954, 969 (9th Cir. 2009) (internal
quotation marks omitted); Supermail, 68 F.3d at 1207 (a
“complaint cannot be dismissed unless it appears beyond
doubt that the plaintiff can prove no set of facts that would
establish the timeliness of the claim”). Because nothing on
the face of ACT’s complaint indicates ACT did not work on
the project or rent equipment to PCI within one year of
the date it filed the complaint, the complaint could not
have been dismissed if the district court had treated the
Miller Act’s statute of limitations as a claim-processing rule.
Consequently, the district court’s order of dismissal must be
vacated and the case remanded for further proceedings.
Supermail, 68 F.3d at 1209.

III. Conclusion

The Miller Act’s statute of limitations is a claim-
processing rule, and ACT’s complaint would have survived
a 12(b)(6) motion. Therefore, the district court’s order of
dismissal is vacated, and the case is remanded for further
proceedings.

VACATED and REMANDED.