Revised November 26, 2001
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 00-60668
J. D. FIELDS & COMPANY, INC., United States of America
for the use of,
Plaintiff-Appellant,
VERSUS
GOTTFRIED CORPORATION, ET AL.,
Defendants,
GOTTFRIED CORPORATION; CONTINENTAL CASUALTY COMPANY,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Mississippi
November 6, 2001
Before JONES and DeMOSS, Circuit Judges, and FELDMAN, District
Judge.1
DeMOSS, Circuit Judge:
Plaintiff-Appellant, J.D. Fields & Company, Inc. (J.D.
1
District Judge for the Eastern District of Louisiana, sitting
by designation.
1
Fields), appeals the district court's final judgment following a
bench trial dismissing Fields’ claims under the Miller Act, 40
U.S.C. §§ 270a-270d, against Defendants-Appellees, The Gottfried
Corporation (Gottfried) and Continental Casualty Company
(Continental Casualty), because of Fields’ failure to give adequate
notice within the 90-day period prescribed by section 270b(a). The
district court's decision is vacated and remanded for further
proceedings.
I. BACKGROUND
In 1997, Gottfried, as general contractor, contracted with the
United States Government, Department of Veterans Affairs (VA), to
perform construction work at the VA Hospital in Biloxi,
Mississippi. Continental Casualty supplied a payment bond
guaranteeing Gottfried's payment of labor and materials supplied to
the job. Cherokee Towing & Construction Co., Inc. (Cherokee)
entered into a subcontract with Gottfried wherein it agreed to
provide the labor, material, equipment, and supervision required to
complete two steel sheet-pile cofferdams on the project in
conjunction with the construction of an elevator shaft and
stairwell.
Cherokee executed a rental agreement with J.D. Fields for the
pilings it used in making the cofferdams, which it began driving on
May 19, 1997. The rental agreement required the payment of monthly
rental by Cherokee to J.D. Fields. The rental agreement was to
2
terminate when Cherokee notified J.D. Fields that the pilings were
ready for inspection and return shipment, after which J.D. Fields
would be given the opportunity to inspect the pilings at the job
site. Pursuant to the rental agreement, Cherokee was to pay final
liquidation and reconditioning charges and pay attorneys' fees in
the event of its default.
Brian McHale, Sales Manager for J.D. Fields, testified that
Cherokee's rental payments were untimely throughout the rental
period immediately prior to halting altogether in October 1997.
McHale also testified that in late December 1997, or early January
1998, he called Karl Gottfried, of The Gottfried Corporation,
regarding the failure of Cherokee to meet its obligation to pay the
rental payments for the months of October, November, and December
1997. McHale further testified during his telephone conversation
that he informed Gottfried that his corporation would be
responsible for any lien required to secure payment, as well as any
attorneys' fees, if the rental payments remained outstanding.
According to McHale, Gottfried told him that he would
investigate the matter and get back in touch with McHale.
Gottfried's testimony did not conflict with McHale's testimony on
this fact. However, the district court found that both documentary
evidence and witness testimony revealed that on December 22, 1997,
Gottfried required Cherokee to execute a release certifying that
all invoices for materials, payrolls, and other obligations
incurred by Cherokee in connection with the VA project had been
3
paid in full and that there were no outstanding obligations against
Cherokee applicable to the project. Nevertheless, the district
court concluded that it was unclear from the testimony whether
Gottfried was aware of Cherokee's outstanding obligations at the
time it required Cherokee to sign the release.
The district court found that Gottfried issued a check on
January 7, 1998, made payable jointly to Cherokee and J.D. Fields
for rental payments due in October, November, and December 1997,
bringing Cherokee’s account current through January 9, 1998.
Gottfried testified that at the time the check was issued, Cherokee
had completed driving the pilings and he believed the pilings had
been returned to J.D. Fields. Gottfried expected that no further
rental fees would be owed and was unaware that the pilings had not
been returned to J.D. Fields.
The district court noted that there was conflicting testimony
regarding when the pilings left the job site. Louis Evans, a truck
driver for Cherokee, testified that he observed the pilings in the
lay-down yard on the VA premises approximately one month after the
pilings were removed from the ground. Notably, Doug Ladner,
President of Cherokee, testified that the pilings were stored for
at least two weeks, and perhaps until late January or early
February, on the VA premises in an area where daily logs and
reports were not required. Jane Page, a Cherokee employee,
testified that the pilings remained in the “lay down” area for
about one week after they were removed from the ground. George
4
Malcolm Brooks, Jr., Project Supervisor for Gottfried, testified
that the pilings were removed and taken from the site on December
18, 1997, and that he did not see them on the “lay down” site after
that date. James Levens, President of Levins Builders, Inc.,
another subcontractor, stated that his firm began constructing
stairs for the VA project on December 19, 1997, and that the
pilings would have had to have been removed from the site by that
date in order for his company to begin work. Levin also testified
that he never saw the pilings at the lay-down yard. David Boggs,
Project Manager for the VA, recalled that the pilings remained for
a few days near the loading dock after being removed from the
ground, but he did not recall seeing them in the “lay down” yard.
On redirect, Boggs testified that the pilings may have remained on
site for two to three days after having been removed from the
ground.
In view of the conflicting testimony, the district court
concluded that the written records before it were the most reliable
evidence. Those documents included Cherokee’s Daily Manpower
Reports and Gottfried’s Daily Logs. The court noted that the Daily
Logs showed that as of December 15, 1997, Cherokee had “finished
pulling piling.” On December 17, Cherokee was “hauling sheet
piling from job site.” On December 18, Cherokee had “finished
removing piling.” The court found that there was no further
mention of the pilings and no Daily Log was admitted into evidence
on or after December 19. Although there was a Daily Manpower
5
Report completed by Cherokee on December 19, indicating its
presence on the site, there was no description of the work
completed for the day. As a result, the court concluded that the
last day the pilings were supplied to the job site was December 18,
1997. Based on this factual finding, the court found that the
statutory period for notice under the Miller Act began to run on
December 19, 1997, and expired 90 days later on March 18, 1998.
There is no dispute that the material rented by Cherokee was
returned to J.D. Fields on February 27, 1998. On March 2, 10, and
12, J.D. Fields sent letters to Cherokee regarding the charges for
reconditioning and liquidation of the pilings used in the VA
project. The letters do not indicate that they were copied to
Gottfried; however, Gottfried does not deny that it received
copies. On March 20, 1998, J.D. Fields mailed written notice to
Cherokee and Gottfried of its Miller Act claim. The notice was not
received by Gottfried until March 23, 1998.
The court found that prior to the notice of claim mailed on
March 20, 1998, and received on March 23, 1998, Gottfried received
no notice of a demand upon it for payment of Cherokee’s account.
The court found that the correspondence of March 2, 10, and 12,
1997, was inadequate as notice under the Miller Act. The court
also found that demands for rental payments due for the months of
October, November, and December 1997, could not be construed as
notice of demand for the January and February rental amounts and
the reconditioning and liquidation charges that Cherokee owed J.D.
6
Fields. Based on the lack of an adequate and timely notice of
claim, the district court entered final judgment dismissing J.D.
Fields’ claims against Gottfried and Continental Casualty.
II. STANDARD OF REVIEW
This court reviews the district court's conclusions of law de
novo. Reich v. Lancaster, 55 F.3d 1034, 1045 (5th Cir. 1995). The
factual components of the district court's determination are
reviewed for clear error. Id. The district court's findings will
be considered clearly erroneous only if we have a “definite and
firm conviction that a mistake has been committed.” B.H. Bunn Co.
v. AAA Replacement Parts Co., 451 F.2d 1254, 1260 (5th Cir. 1971).
III. DISCUSSION
The Miller Act requires general contractors on most federal
construction projects to furnish a bond for performance and to
secure payment to all suppliers of labor and materials. 40 U.S.C.
§ 270a(a)(2). The Act also provides that suppliers of materials to
subcontractors on federal construction projects may recover from
the general contractor's payment bond any unpaid amount due from
the subcontractor. 40 U.S.C. § 270b(a). To establish a right of
action against the general contractor's payment bond, the supplier
must give the contractor sufficient written notice “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.” Id. A notice to the general contractor
7
will be sufficient only if “it plainly appears that the nature and
state of the indebtedness was brought home to the general
contractor.” Houston Fire & Cas. Ins. Co. v. United States ex rel.
Trane Co., 217 F.2d 727, 730 (5th Cir. 1954). The required 90-day
notice is designed to protect the general contractor by fixing a
date beyond which it will not be held liable for subcontractors'
debts, absent proper notification from the supplier. United States
ex rel. Kinlau Sheet Metal Works v. Great Am. Ins. Co., 537 F.2d
222, 223-24 n.1 (5th Cir. 1976) (citing Nolan Co. v. Allied
Contractors, Inc., 273 F.2d 917, 920-21 (4th Cir. 1959)). Notably,
the Miller Act is highly remedial in nature and is entitled to a
liberal construction and application in order to effectuate the
Congressional intent to protect those who furnish labor or
materials for public works. Glassell-Taylor Co. v. Magnolia
Petrolium Co., 153 F.2d 527, 529-30 (5th Cir. 1946).
The issue before this court is whether the last day on which
J.D. Fields "furnished or supplied" the pilings to Cherokee was
when Cherokee returned them, or when they were removed from the
site of the VA construction project. Resolving this issue will
allow us to determine the starting date of the required 90-day
period for notice under to the Miller Act. The district court
determined that the last day the pilings were supplied to the job
site was December 18, 1997. The court reached this conclusion
primarily based on Gottfried's Daily Logs, which indicated that the
8
pilings were no longer being used by Cherokee and that they had
been removed from the premises of the VA construction project by
that date. As a result, the court concluded that the statutory
period for notice under the Miller Act began to run on December 19,
1997, and expired on March 18, 1998.
We disagree with the district court's conclusion. The rental
agreement entered into by J.D. Fields and Cherokee, called for the
rental period to end “on the date that written notice is received
by FIELDS stating that piling is ready for inspection and return
shipment as and when directed by FIELDS.” Significantly, the
record shows that the first notice J.D. Fields received regarding
the fact that the pilings were no longer in use or on the premises
of the construction project was on February 27, 1998, when the
pilings were returned. Before that date, J.D. Fields would have
had no way of knowing when the 90-day period for giving notice
would begin to run. Therefore, we conclude that the pilings were
still being made available, that is "furnished or supplied," to
Cherokee until February 27, 1998, when they were returned. This
was the date that the rental period ended according to the rental
agreement. Until that date, the pilings were still in Cherokee's
possession and, therefore, still available to Cherokee for use on
the job if necessary.
Our conclusion is not novel. Other courts have reached the
same conclusion. See, e.g., Interform Co. v. Mitchell, 575 F.2d
9
1270, 1280 (9th Cir. 1978) (holding that “a furnisher of rental
equipment continues to ‘supply’ such equipment through the entire
rental period; the date of last supply occurs not at the beginning
of a job but at the end or at the time the equipment is last
available for use on the job”); United States ex rel. Carter-
Schneider-Nelson, Inc. v. Campbell, 293 F.2d 816, 820 (9th Cir.
1961) (same); United States ex rel. Malpass Constr. Co. v. Scotland
Concrete Co., 294 F. Supp. 1299, 1302 (E.D.N.C. 1968) (same);
United States v. Continental Cas. Co., 230 F. Supp. 557, 559-60
(W.D. Pa. 1964) (same). Furthermore, a previous Miller Act
decision of this court, Mike Bradford & Co. v. F.A. Chastain
Constr., Inc., 387 F.2d 942 (5th Cir. 1968), lends considerable
support to our decision in the instant case.
In Mike Bradford, this court was faced with the issue of
whether a Miller Act suit was commenced after the expiration of one
year from the last work performed under the contract, and hence
outside the Miller Act’s statute of limitations. The governing
statute provided, as it does today, that “no such suit shall be
commenced after the expiration of one year after the day on which
the last of the labor was performed or material was supplied.” 40
U.S.C. § 270b(b). This language is substantially similar to the
provision at issue in the instant case, which requires notice of
claim “within ninety days from the date on which such person did or
performed the last of the labor or furnished or supplied the last
10
of the material for which such claim is made.” 40 U.S.C.
§ 270b(a).
The plaintiff in Mike Bradford agreed to furnish machinery and
equipment, along with operators, to the defendant. 387 F.2d at
942-43. No operators for the equipment were furnished after
September 1, 1963, but the equipment was utilized by the defendant
until October 4, 1963. Id. at 943. The equipment may have been
idle in the interim. Id. at 944. Suit was filed on September 21,
1964, and the defendant averred that it was untimely. Id. at 943-
44. This court disagreed, holding that under the plain meaning of
40 U.S.C. § 270b(b), the one-year period begins to run on the day
when the labor ceases or when the last material was supplied. Id.
at 944. The court stated that it was “undisputed that the last
material was supplied as of October 4, 1963,” which was the date
the equipment was returned. Id. at 944. Thus, the court held the
action was timely filed. Id.
Thus, the last day on which J.D. Fields "furnished or
supplied" the pilings to Cherokee was the date on which they were
returned, which was February 27, 1998. As a result, the 90-day
period for giving proper notice in the instant case began to run on
February 28, 1998, and expired on May 28, 1998. Any notice given
by J.D. Fields to Gottfried before that date would have been
premature and, therefore, insufficient. See Kinlau Sheet Metal,
537 F.2d at 224 (holding that monthly statements and summary sheets
11
delivered by the supplier to the prime contractor's agent showing
for each job the amount that the subcontractor owed the supplier,
the amount paid to that date, and the balance due, were premature
and could not be considered as sufficient notice for that job);
National Union Indem. Co. v. R.O. Davis, Inc., 393 F.2d 897, 900
(5th Cir. 1968) (stating that premature notification of a claim
under the Miller Act could not be a proper notice).
CONCLUSION
We hold that the last day on which J.D. Fields "furnished or
supplied" the pilings to Cherokee was February 27, 1998. Thus, the
90-day period for giving proper notice under the Miller Act, 40
U.S.C. § 270b(a), began to run on February 28, 1998, and expired on
May 28, 1998. We vacate the district court's decision and remand
for further proceedings consistent with this opinion.
12