United States ex rel. Fogle v. Hal B. Hayes & Associates, Inc.

221 F. Supp. 260, 1963 U.S. Dist. LEXIS 7739
CourtDistrict Court, N.D. California
DecidedJuly 9, 1963
DocketCiv. No. 8282
StatusPublished
Cited by7 cases

This text of 221 F. Supp. 260 (United States ex rel. Fogle v. Hal B. Hayes & Associates, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Fogle v. Hal B. Hayes & Associates, Inc., 221 F. Supp. 260, 1963 U.S. Dist. LEXIS 7739 (N.D. Cal. 1963).

Opinion

HALBERT, District Judge.

Two basic issues are raised in this action under the Capehart Act [Title 42 U.S.C. § 1594 et seq.]. First, are the requirements as to notice of default under a Capehart Act bond the same as the notice requirements under the Miller Act [Title 40 U.S.C. § 270b(a)]? Second, assuming that the Capehart Act notice requirements are not the same as the Miller Act requirements, is defendant, under the particular facts of this action, estopped to rely upon the notice requirements set forth in its Capehart Act bond ?

Notice Requirements

The interrelationship between the provisions of the Capehart Act and the Miller Act is, at best, sketchy. In a prior memorandum and order in this action, Judge Thomas J. MacBride, of this Court, ruled that a cause of action under the Capehart Act is properly set forth by use of the jurisdictional provisions of the Miller Act [Title 40 U.S.C. § 270b (b) ]. Similar holdings on that point are to be found in Lasley v. United States for Use of Westerman, 5 Cir., 285 F.2d 98; United States to Use of Acme Furnace Fitting Co. v. Fort George G. Meade Defense Housing Corp. No. 1, D.C., 186 F.Supp. 639; and Autrey & Goad Const. Co. v. Williams & Dunlap, D.C., 185 F. Supp. 802. Judge MacBride specifically left open the question of whether any provisions of the Miller Act other than those jurisdictional provisions apply to Capehart Act bonds or actions.

In the present action, plaintiff has alleged, and defendant Continental Casualty Company has not denied (Defendant Hayes-& Associates has defaulted.), that plaintiff was in a direct contractual relationship with defendant Hayes & Associates, the prime contractor on a Beale AFB job. Thus, if the Miller Act provisions are applicable to the present situation, compliance with the ninety day notice requirement set forth in § 270b (a) was unnecessary, as long as the present action was commenced within one year of the date of final settlement of the prime contract. The evidence is sufficient to [262]*262establish that work on the prime contract was still being performed in June of 1960, and that the date of plaintiff’s last shipment to Beale AFB was May 23, 1960. The instant action was filed on May 5, 1961. It thus is apparent that, if the notice requirements of the Miller Act are all that plaintiff was required to comply with, plaintiff is entitled to judgment.1

The Capehart Act itself contains no provisions specifically dealing with notice requirements. Section 1594 of Title 42 U.S.C. provides, in part, that contracts under the Capehart Act,

“ * * * shall provide for the furnishing by the contractor of a performance bond and a payment bond with a surety or sureties satisfactory to the Secretary of Defense, or his designee, and the furnishing of such bonds shall be deemed a sufficient compliance with the provisions of section 270a of Title 40, and no additional bonds shall be required under such section.”

Consequently, the only notice requirements to be found with reference to Capehart Act bonds are those contained within the provisions of each individual bond. The bond in the present ease provides, in pertinent part, that no suit or action shall be commenced under said bond unless the claimant,

* * * shall have given written notice to any two of the following: The Principal, any one of the Obligees, or the Surety above named * * *»

The evidence is clear that plaintiff failed to comply with these requirements. The question is thus whether these requirements can be enforced in derogation of the provisions of the Miller Act.

The holdings or language of the appellate courts in three different circuits appear to have established three different tests to be applied to the instant question. The Court of Appeals for the Tenth Circuit has specifically held, by a two-to-one decision, that a subcontractor is not entitled to sue on a contractor’s bond where his notice did not comply with the bond requirements, under the Cape-hart Act, even though the notice did satisfy the requirements of the Miller Act (United States for Use and Benefit of Miles Lumber Company v. Harrison and Grimshaw Construction Company, 10 Cir., 305 F.2d 363). The rationale of that opinion rested upon the determination that a project under the Capehart Act is built by a private entity, with private funds, at private risk, and is encumbered by a mortgage given by a private mortgagor to a private mortgagee, even though title to the project eventually vests in the United States. The Court thus held that such a project is not a “public work” within the meaning of that term in the Miller Act (But cf. United States to Use of Noland Co. v. Irwin, 316 U.S. 23, 62 S.Ct. 899, 86 L.Ed. 1241; and United States for Use of Gamerston & Green Lumber Co. v. Phoenix Assur. Co. of N. Y., D.C., 163 F.Supp. 713), and that therefore the Miller Act notice provisions are inapplicable. Judge Pickett, dissenting, relied on the jurisdictional cases cited previously in this opinion, and also contended that a Capehart Act project was, in fact, a public work under the Miller Act. Among the cases upon which Judge Pickett relied was United States for Use and Benefit of Robertson Lumber Co. v. Progressive Contractors, Inc., D.C., 196 F.Supp. 171, which, relying upon the above-noted jurisdictional cases, specifically held that notice under the Miller Act was sufficient compliance with whatever notice might be required under the Capehart Act.

The Robertson Lumber Co. ease, supra, was reversed on appeal by the Court of Appeals for the Eighth Circuit (Continental Casualty Company v. United States for Use and Benefit of Robertson Lumber Company, 305 F.2d 794). The rationale of the Eighth Circuit appellate court differed from that in the Tenth Circuit, however. The Robertson Lum[263]*263ber Co. case, on appeal, was decided on the basis of the language in § 1594 of Title 42 U.S.C., to the effect that the bond required thereunder was to be “satisfactory to the Secretary of Defense, or his designee,” and was to be deemed “a sufficient compliance with the provisions of section 270a of Title 40.” The Eighth Circuit indicated that, although the coverage of the bonds under the two acts was to be essentially similar, Congress apparently had intended that the procedural provisions of Capehart Act bonds should be worked out by the agencies involved in light of the peculiar problems encountered in connection with Capehart projects. The Robertson Lumber Co.

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221 F. Supp. 260, 1963 U.S. Dist. LEXIS 7739, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-fogle-v-hal-b-hayes-associates-inc-cand-1963.