Bankr. L. Rep. P 74,301, 37 cont.cas.fed. (Cch) P 76,201 United States of America for the Use of American Bank, Cross-Appellees v. C.I.T. Construction Incorporated of Texas, Cross-Appellant, and Fireman's Insurance Company of Newark, New Jersey, Carlos

944 F.2d 253
CourtCourt of Appeals for the Fifth Circuit
DecidedNovember 18, 1991
Docket89-1654
StatusPublished
Cited by27 cases

This text of 944 F.2d 253 (Bankr. L. Rep. P 74,301, 37 cont.cas.fed. (Cch) P 76,201 United States of America for the Use of American Bank, Cross-Appellees v. C.I.T. Construction Incorporated of Texas, Cross-Appellant, and Fireman's Insurance Company of Newark, New Jersey, Carlos) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bankr. L. Rep. P 74,301, 37 cont.cas.fed. (Cch) P 76,201 United States of America for the Use of American Bank, Cross-Appellees v. C.I.T. Construction Incorporated of Texas, Cross-Appellant, and Fireman's Insurance Company of Newark, New Jersey, Carlos, 944 F.2d 253 (5th Cir. 1991).

Opinion

944 F.2d 253

Bankr. L. Rep. P 74,301, 37 Cont.Cas.Fed. (CCH) P 76,201
UNITED STATES of America for the Use of AMERICAN BANK, et
al., Plaintiffs-Appellants Cross-Appellees,
v.
C.I.T. CONSTRUCTION INCORPORATED OF TEXAS,
Defendant-Appellee Cross-Appellant,
and
Fireman's Insurance Company of Newark, New Jersey, Defendant-Appellee.
CARLOS

No. 89-1654.

United States Court of Appeals,
Fifth Circuit.

Oct. 15, 1991.
Rehearing Denied Nov. 18, 1991.

Patrick E. Gaas, Benjamin C. Wilson, Warren J. Fields, Winstead, McGuire, Sechrest and Minich, Houston, Tex., for American Bank.

J. Mark Brewer, Brewer & Pritchard, Houston, Tex., for plaintiffs-appellants, cross-appellees.

Robert Alan York, Richard M. Kaplan, Fred H. Cook, Weycer, Kaplan, Pulaski & Zuber, Houston, Tex., for C.I.T., etc.

Roger L. Mandel, Marc R. Stanley, Dallas, Tex., for Fireman's Ins. Co., of Newark, N.J.

Appeal from the United States District Court for the Western District of Texas.

Before CLARK, Chief Judge, GOLDBERG and GARWOOD, Circuit Judges.

GOLDBERG, Circuit Judge:

We decide several interrelated issues in this Miller Act case, but our inquiry primarily focuses on one issue: Does a Miller Act claimant's failure to file its claim within the one-year limitation period of 40 U.S.C. § 270b(b) mean that a district court must dismiss both the Miller Act claim and pendent state law claims for lack of subject matter jurisdiction?

I. BACKGROUND

In January 1987,1 the Army and Air Force Exchange Service contracted with C.I.T. Construction Incorporated of Texas ("CIT") for expansion of a shopping center located at the Bergstrom Air Force base in Austin, Texas. Fireman's Insurance Company of Newark, New Jersey ("Fireman's") provided CIT's payment bond, as required under the Miller Act, 40 U.S.C. § 270a(a)(2). CIT subcontracted the plumbing and mechanical portion of the project to P.B. Elders Corporation ("Elders"), which in turn subcontracted with Carrier Corporation ("Carrier") to supply air conditioning and heating equipment to Elders for use in the project. Elders obtained a loan from American Bank ("American") secured by Elders' accounts receivable, inventory, machinery and equipment.

American claims that CIT fell behind in its progress payments to Elders as work progressed on the project, and that Elders could no longer pay Carrier. On July 21, Carrier contacted Paul Elders ("Mr. Elders"), president of Elders, to ask whether it should continue to deliver equipment to Elders at the construction site. Mr. Elders told Carrier that he would not take responsibility for any equipment delivered by Carrier. Mr. Elders also cancelled his company's purchase order with Carrier prior to Carrier's deliveries of equipment to the jobsite on and after July 29. Although Carrier delivered equipment to the project on July 29 and several times thereafter, CIT alleges that those deliveries took place pursuant to an arrangement whereby CIT agreed to pay Carrier directly for the equipment.2 In September, Elders filed for reorganization under Chapter 11 of the Bankruptcy Code.

On July 19, 1988, American brought a Miller Act claim against Fireman's and contract and quantum meruit claims against CIT (collectively, "Defendants"). American had foreclosed its security interest on Elders's accounts receivable and brought this suit as successor in interest to the claims of Elders after the bankruptcy court granted American's motion for relief from the automatic stay.

After a bench trial, the district court found that it lacked jurisdiction over American's Miller Act claim because American failed to file its suit within the one-year period specified in 40 U.S.C. § 270b(b). Because the district court concluded that American did not satisfy "the jurisdictional prerequisite to bringing suit under the Miller Act," it did not reach the merits of American's contract or quantum meruit claims. Rather, the district court dismissed with prejudice all of American's claims against the Defendants on April 8 and again on April 19, 1989.3 American filed a motion for the district court to reconsider its dismissal orders or, alternatively, to amend or alter judgment. The district court denied American's motion on June 21, 1989.

American challenges the district court's finding that American failed to file its Miller Act claim within the statutory limitation period and the district court's conclusion that it must dismiss American's Miller Act, contract, and quantum meruit claims because it lacked subject matter jurisdiction over the claims. CIT cross-appeals the district court's denial of its request for attorney's fees.4

II. MILLER ACT CLAIM

A claimant cannot commence suit under the Miller Act "after the expiration of one year after the day on which the last of the labor was performed or material was supplied by him" in prosecution of the work provided for in the contract between the government and the prime contractor. 40 U.S.C.A. § 270b(b) (1986); see 40 U.S.C.A. § 270b(a) (1986) (permitting supplier of labor or material to government construction project to sue Miller Act surety on the payment bond required by 40 U.S.C.A. § 270a(a)(2) (1986)). American claims that Carrier supplied equipment on behalf of Elders after July 18 and, thus, that the one-year limitation period had not run when American filed suit on July 19 of the following year. The district court found that American "did not demonstrate that any work was performed or materials furnished on behalf of Elders under the contract with CIT on a date after July 15, 1987," held that American did not meet the "jurisdictional prerequisite to bringing suit under the Miller Act," and thus dismissed the Miller Act claim for lack of subject matter jurisdiction.

A. Subject Matter Jurisdiction

We hold that the district court erroneously concluded that it could not exercise subject matter jurisdiction over American's Miller Act claim because it did not meet the one-year "jurisdictional prerequisite" of the Miller Act. We find the expression of the applicable rule in United States ex rel. Texas Bitulithic Co. v. Fidelity and Deposit Co., 813 F.2d 697, 699 (5th Cir.1987), wherein this Court interpreted the one-year requirement of 40 U.S.C. § 270b(b). Although we recognized our prior cases that "treated the one-year requirement as a substantive limitation of the rights conferred by the Act," we clarified that our use of the word " 'jurisdictional' " referred "to the conditional nature of the right to sue" under the Miller Act, not to the "jurisdiction of the court itself." Id. (citations omitted). We held that the district court should have exercised subject matter jurisdiction over the Miller Act claim because Congress had supplied it with "express statutory jurisdiction" over any " 'action on a bond executed under [a] law of the United States,' " which included a suit on a Miller Act payment bond. Id.

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